UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549

FORM 10-K

|[X] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
 SECURITIES EXCHANGE ACT OF 1934
|--- | --------------------------------------------------------------------------------------

| |  | For the fiscal year ended December 31, 2003
| |  | -------------------------------------------

or

|[  ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
 OF THE SECURITIES EXCHANGE ACT OF 1934
|---- | ------------------------------------------------------------------------------------------

| |  | For the transition period from ______ to _______
| |  | ------------------------------------------------

|Commission  | Name of Registrant, State of Incorporation,                 | IRS Employer         
|----------- | ----------------------------------------------------------- | ---------------------
|File Number | Address of Principal Executive Offices and Telephone Number | Identification Number
|1-9894      | ALLIANT ENERGY CORPORATION                                  | 39-1380265           
|            | (a Wisconsin corporation)                                  
|            | 4902 N. Biltmore Lane                                      
|            | Madison, Wisconsin 53718                                   
|            | Telephone (608)458-3311                                    
|           
|0-4117-1    | INTERSTATE POWER AND LIGHT COMPANY                          | 42-0331370           
|            | (an Iowa corporation)                                      
|            | Alliant Energy Tower                                       
|            | Cedar Rapids, Iowa 52401                                   
|            | Telephone (319)786-4411                                    
|           
|0-337       | WISCONSIN POWER AND LIGHT COMPANY                           | 39-0714890           
|            | (a Wisconsin corporation)                                  
|            | 4902 N. Biltmore Lane                                      
|            | Madison, Wisconsin 53718                                   
|            | Telephone (608)458-3311                                    

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

|Securities registered pursuant to Section 12 (b) of the Act:
|------------------------------------------------------------
|                                                            
|                                                            
|Alliant Energy Corporation                                  
|Alliant Energy Corporation                                  
|Interstate Power and Light Company                          
|                                                            
|Interstate Power and Light Company                          
|                                                            
|Wisconsin Power and Light Company                           

Securities registered pursuant to Section 12 (g) of
 the Act: Wisconsin Power and Light Company Preferred Stock       (Accumulation
 without Par Value)

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

Indicate by check mark if disclosure of delinquent
 filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to
 the best of the registrants knowledge, in definitive proxy or information statements incorporated by
 reference in Part III of the Form 10-K or any amendment to this Form 10-K. [X]

|Indicate by check mark whether the registrants are accelerated filers (as defined in Rule 12b-2 of the Exchange Act).
|---------------------------------------------------------------------------------------------------------------------
|Alliant Energy Corporation                                                                                           
|Interstate Power and Light Company                                                                                   
|Wisconsin Power and Light Company                                                                                    

|The aggregate market value of the voting and non-voting common equity held by nonaffiliates as of June 30, 2003:
|----------------------------------------------------------------------------------------------------------------
|Alliant Energy Corporation                                                                                      
|Interstate Power and Light Company                                                                              
|Wisconsin Power and Light Company                                                                               

|Number of shares outstanding of each class of common stock as of Feb. 27, 2004:
|-------------------------------------------------------------------------------
|Alliant Energy Corporation                                                     
|Interstate Power and Light Company                                             
|                                                                               
|Wisconsin Power and Light Company                                              
|                                                                               

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statements relating to Alliant
 Energy Corporations and Wisconsin Power and Light Companys 2004 Annual Meetings of Shareowners are,
 or will be upon filing with the Securities and Exchange Commission, incorporated by reference into Part
 III hereof.

TABLE OF CONTENTS

|         |                                                                               | Page Number
|-------- | ----------------------------------------------------------------------------- | -----------
|Part I   | Item 1. Business                                                              | 3          
|         | Item 2. Properties                                                            | 18         
|         | Item 3. Legal Proceedings                                                     | 20         
|         | Item 4. Submission of Matters to a Vote of Security Holders                   | 21         
|         | Executive Officers of the Registrants                                         | 21         
|Part II  | Item 5. Market for Registrants Common Equity and Related Stockholder Matters | 22         
|         | Item 6. Selected Financial Data                                               | 23         
|         | Item 7. Managements Discussion and Analysis of Financial Condition and      
|         | Results of Operations                                                         | 25         
|         | Item 7A. Quantitative and Qualitative Disclosures About Market Risk           | 50         
|         | Item 8. Financial Statements and Supplementary Data                           | 50         
|         | Item 9. Changes in and Disagreements With Accountants on Accounting and      
|         | Financial Disclosure                                                          | 121        
|         | Item 9A. Controls and Procedures                                              | 121        
|Part III | Item 10. Directors and Executive Officers of the Registrants                  | 121        
|         | Item 11. Executive Compensation                                               | 122        
|         | Item 12. Security Ownership of Certain Beneficial Owners and Management       | 123        
|         | Item 13. Certain Relationships and Related Transactions                       | 124        
|         | Item 14. Principal Accountant Fees and Services                               | 124        
|Part IV  | Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K      | 124        

DEFINITIONS

Certain abbreviations or acronyms used in the text
 and notes of this report are defined below:

|Abbreviation or Acronym | Definition                                                                           
|----------------------- | -------------------------------------------------------------------------------------
|AEG                     | Alliant Energy Generation                                                            
|AFUDC                   | Allowance for Funds Used During Construction                                         
|Alliant Energy          | Alliant Energy Corporation                                                           
|APB                     | Accounting Principles Board Opinion                                                  
|ARO                     | Asset Retirement Obligation                                                          
|ATC                     | American Transmission Company LLC                                                    
|CAA                     | Clean Air Act                                                                        
|Cargill-Alliant         | Cargill-Alliant, LLC                                                                 
|CIPCO                   | Central Iowa Power Cooperative                                                       
|Corporate Services      | Alliant Energy Corporate Services, Inc.                                              
|DAEC                    | Duane Arnold Energy Center                                                           
|DNR                     | Department of Natural Resources                                                      
|DOE                     | U.S. Department of Energy                                                            
|Dth                     | Dekatherm                                                                            
|EAC                     | Energy Adjustment Clause                                                             
|EBITDA                  | Earnings Before Interest, Taxes, Depreciation and Amortization                       
|EIP                     | 2002 Equity Incentive Plan                                                           
|EITF                    | Emerging Issues Task Force                                                           
|EITF Issue 02-3         | Issues Related to Accounting for Contracts Involved in Energy Trading and Risk       
|                        | Management Activities                                                                
|Emery                   | Emery Generating Station                                                             
|EPA                     | U.S. Environmental Protection Agency                                                 
|EPS                     | Earnings Per Average Common Share                                                    
|EWG                     | Exempt Wholesale Generator                                                           
|FASB                    | Financial Accounting Standards Board                                                 
|FERC                    | Federal Energy Regulatory Commission                                                 
|FIN                     | FASB Interpretation No.                                                              
|FIN 46                  | Consolidation of Variable Interest Entities                                          
|FSP                     | FASB Staff Position                                                                  
|FUCO                    | Foreign Utility Company                                                              
|GAAP                    | Accounting Principles Generally Accepted in the U.S.                                 
|IBEW                    | International Brotherhood of Electrical Workers                                      
|ICC                     | Illinois Commerce Commission                                                         
|IES                     | IES Industries Inc.                                                                  
|IESU                    | IES Utilities Inc.                                                                   
|Integrated Services     | Alliant Energy Integrated Services Company                                           
|International           | Alliant Energy International, Inc.                                                   
|Investments             | Alliant Energy Investments, Inc.                                                     
|IPC                     | Interstate Power Company                                                             
|IP&L                    | Interstate Power and Light Company                                                   
|IPO                     | Initial Public Offering                                                              
|IRS                     | Internal Revenue Service                                                             
|ISO                     | Independent System Operator                                                          
|IUB                     | Iowa Utilities Board                                                                 
|Kewaunee                | Kewaunee Nuclear Power Plant                                                         
|KW                      | Kilowatt                                                                             
|KWh                     | Kilowatt-hour                                                                        
|LTEIP                   | Long-Term Equity Incentive Plan                                                      
|MAIN                    | Mid-America Interconnected Network, Inc.                                             
|McLeod                  | McLeodUSA Incorporated                                                               
|MD&A                    | Management's Discussion and Analysis of Financial Condition and Results of Operations
|MG&E                    | Madison Gas & Electric Company                                                       
|MGP                     | Manufactured Gas Plants                                                              

1

|Abbreviation or Acronym | Definition                                                            
|----------------------- | ----------------------------------------------------------------------
|Moody's                 | Moody's Investors Service                                             
|MPUC                    | Minnesota Public Utilities Commission                                 
|MW                      | Megawatt                                                              
|MWh                     | Megawatt-hour                                                         
|N/A                     | Not Applicable                                                        
|Neenah                  | Alliant Energy Neenah, LLC                                            
|NEIL                    | Nuclear Electric Insurance Limited                                    
|NEPA                    | National Energy Policy Act of 1992                                    
|NERC                    | North American Electric Reliability Council                           
|NG Energy               | NG Energy Trading, LLC                                                
|NMC                     | Nuclear Management Company, LLC                                       
|NOx                     | Nitrogen Oxides                                                       
|NRC                     | Nuclear Regulatory Commission                                         
|NWPA                    | Nuclear Waste Policy Act of 1982, as amended in 1987                  
|PSCW                    | Public Service Commission of Wisconsin                                
|PUHCA                   | Public Utility Holding Company Act of 1935                            
|Resources               | Alliant Energy Resources, Inc.                                        
|SEC                     | Securities and Exchange Commission                                    
|SFAS                    | Statement of Financial Accounting Standards                           
|SFAS 115                | Accounting for Certain Investments in Debt and Equity Securities      
|SFAS 133                | Accounting for Derivative Instruments and Hedging Activities          
|SFAS 142                | Goodwill and Other Intangible Assets                                  
|SFAS 143                | Accounting for Asset Retirement Obligations                           
|SFAS 149                | Amendment of SFAS 133 on Derivative Instruments and Hedging Activities
|SmartEnergy             | SmartEnergy, Inc.                                                     
|South Beloit            | South Beloit Water, Gas and Electric Company                          
|Southern Hydro          | Southern Hydro Partnership                                            
|Standard & Poor's       | Standard & Poor's Rating Services                                     
|Synfuel                 | Alliant Energy Synfuel LLC                                            
|TBD                     | To Be Determined                                                      
|TRANSLink               | TRANSLink Transmission Company LLC                                    
|Transportation          | Alliant Energy Transportation, Inc.                                   
|U.S.                    | United States of America                                              
|VEBA                    | Voluntary Employees' Beneficiary Association                          
|WEPCO                   | Wisconsin Electric Power Company                                      
|WPC                     | Whiting Petroleum Corporation                                         
|WP&L                    | Wisconsin Power and Light Company                                     
|WPSC                    | Wisconsin Public Service Corporation                                  
|WRPC                    | Wisconsin River Power Company                                         
|WUHCA                   | Wisconsin Utility Holding Company Act                                 

2

FORWARD-LOOKING STATEMENTS
Refer to Forward-Looking Statements in MD&A
 for information and disclaimers regarding forward-looking statements contained in this Annual Report
 on Form 10-K.

PART I

This Annual Report on Form 10-K includes information
 relating to Alliant Energy, IP&L and WP&L (as well as Resources and Corporate Services). Where
 appropriate, information relating to a specific entity has been segregated and labeled as such. At Dec.
 31, 2002, the assets and liabilities of Alliant Energys oil and gas (WPC), Australian (including Southern
 Hydro), affordable housing and SmartEnergy businesses were classified as held for sale. Alliant Energy
 completed the sale of the Australian, affordable housing and SmartEnergy businesses in 2003, as well
 as the sale of over 94% of the WPC stock. The operating results for these non-regulated businesses for
 all periods presented have been separately classified and reported as discontinued operations in Alliant
 Energys Consolidated Financial Statements and Notes to Consolidated Financial Statements included in
 this Annual Report. Refer to Note 16 of Alliant Energys Notes to Consolidated Financial Statements
 for additional information.

# ITEM 1. BUSINESS

A. GENERAL
The primary first tier subsidiaries of Alliant Energy include: IP&L,
 WP&L, Resources and Corporate Services. Among various other regulatory constraints, Alliant Energy
 is operating as a registered public utility holding company subject to the limitations imposed by PUHCA.
 Alliant Energy was incorporated in Wisconsin in 1981. A brief description of the primary first-tier
 subsidiaries of Alliant Energy is as follows:

1)     IP&L incorporated
 in 1925 in Iowa as Iowa Railway and Light Corporation. IP&L is a public utility engaged principally
 in the generation, transmission, distribution and sale of electric energy; and the purchase, distribution,
 transportation and sale of natural gas in selective markets in Iowa, Minnesota and Illinois.In
 Iowa, non-exclusive franchises, which cover the use of streets and alleys for public utility facilities
 in incorporated communities, are granted for a maximum of 25 years by a majority vote of local qualified
 residents. At Dec. 31, 2003, IP&L supplied electric and gas service to 528,977 and 235,812 (excluding
 transportation and other) customers, respectively. IP&L also provides steam services to certain
 customers in one community in Iowa and various other energy-related products and services including
 construction management services for wind farms. In 2003, 2002 and 2001, IP&L had no single customer
 for which electric, gas, steam and/or other sales accounted for 10% or more of IP&Ls consolidated revenues.

2)     WP&L incorporated
 in 1917 in Wisconsin as Eastern Wisconsin Electric Company. WP&L is a public utility engaged principally
 in the generation, distribution and sale of electric energy; and the purchase, distribution, transportation
 and sale of natural gas in selective markets. Nearly all of WP&Ls customers are located in south
 and central Wisconsin. WP&L operates in municipalities pursuant to permits of indefinite duration,
 which are regulated by Wisconsin law. At Dec. 31, 2003, WP&L supplied electric and gas service to
 436,976 and 172,615 (excluding transportation and other) customers, respectively. WP&L also provides
 water services in select markets and various other energy-related products and services including construction
 management services for wind farms. In 2003, 2002 and 2001, WP&L had no single customer for which
 electric, gas, water and/or other sales accounted for 10% or more of WP&Ls consolidated revenues. WPL
 Transco LLC is a wholly-owned subsidiary of WP&L and holds WP&Ls investment in ATC. WP&L
 also owns all of the outstanding capital stock of South Beloit, a public utility supplying electric,
 gas and water service, principally in Winnebago County, Illinois, which was incorporated in 1908.

3)     RESOURCES incorporated
 in 1988 in Wisconsin. The majority of Alliant Energys non-regulated investments are organized under
 Resources. Resources significant wholly-owned subsidiaries at Dec. 31, 2003 include AEG, International,
 Integrated Services, Neenah, Transportation and Synfuel. Refer to D. Information Relating to Non-regulated
 Operations for additional details.

4)     CORPORATE SERVICES incorporated in 1997 in Iowa. Corporate Services was formed to provide administrative services to
 Alliant Energy and its subsidiaries as required under PUHCA.

Refer to Note 13 of the Notes to Consolidated Financial
 Statements for further discussion of business segments, which information is incorporated herein by
 reference.

3

# B. INFORMATION RELATING TO ALLIANT ENERGY ON A CONSOLIDATED BASIS

1) EMPLOYEESAs of Dec. 31, 2003, Alliant Energys consolidated
 subsidiaries had the following employees (full-time and part-time):

|                    | Percentage
|------------------- | ----------
|                    |           
|                    | Number of 
|                    | Employees 
|                   
|IP&L                | 1,686     
|WP&L                | 1,524     
|Resources:         
|International       | 3,239     
|Integrated Services | 652       
|Other Investments   | 120       
|Other               | 29        
|Corporate Services  | 1,693     
|                    |           
|                    | 8,943     
|                    |           

In September 2004, three bargaining agreements expire
 representing approximately 17% of employees covered under bargaining agreements and 6% of total Alliant
 Energy employees. WP&Ls bargaining agreement with IBEW Local 965 expired in 2003 and has not been renewed, which represents
 49% of employees covered under bargaining agreements and 16% of total Alliant Energy employees. While
 negotiations continue on the WP&L bargaining agreement, Alliant Energy is currently unable to predict
 the outcome. Alliant Energy has not experienced any significant work stoppage problems in the past.

2) CAPITAL EXPENDITURE AND
INVESTMENT PLANSRefer to Liquidity and Capital Resources 
 Construction and Acquisition Expenditures in MD&A for discussion of anticipated construction and
 acquisition expenditures for 2004 and 2005.

3) REGULATIONPUHCA  Alliant Energy operates as a registered
 public utility holding company subject to regulation by the SEC under PUHCA. Regulation under PUHCA
 includes provisions relating to the issuance and sales of securities, acquisitions and sales of certain
 utility properties, acquisitions and retention of interests in non-utility businesses, including EWGs
 and FUCOs, and the services provided by Corporate Services to Alliant Energy and its subsidiaries. Under
 an SEC order, Alliant Energy has aggregate investment authority for EWGs and FUCOs equivalent to 100%
 of consolidated retained earnings as defined in the regulations. At Dec. 31, 2003, Alliant Energys
 remaining investment authority under this Order was approximately $267 million.

PSCW  Alliant Energy is subject to regulation
 by the PSCW. The PSCW regulates, among other things, the type and amount of Alliant Energys investments
 in non-utility businesses. WP&L is also subject to regulation by the PSCW regarding retail utility
 rates and service, accounts, issuance and use of proceeds of securities, certain additions and extensions
 to facilities and in other respects. WP&L is required to file a rate case with the PSCW at least
 every two years based on a forward-looking test year period.

IUB  IP&L operates under the jurisdiction
 of the IUB. The IUB has authority to regulate rates and standards of service, to prescribe accounting
 requirements and to approve the location and construction of electric generating facilities having a
 capacity in excess of 25,000 KW. Requests for rate relief are based on historical test periods, adjusted
 for certain known and measurable changes. The IUB must decide on requests for rate relief within 10
 months of the date of the application for which relief is filed or the interim prices granted become
 permanent. Interim rates, if allowed, are permitted to become effective, subject to refund, no later
 than 90 days after the rate increase application is filed.

MPUC  IP&L is also subject to regulation
 by the MPUC. Requests for rate relief can be based on either historical or projected data. The MPUC
 must reach a final decision within 10 months of filing for rate relief. Interim rates are permitted.
 The MPUC also has jurisdiction to annually approve IP&Ls capital structure.

4

ICC  IP&L and South Beloit are subject
 to regulation by the ICC for retail utility rates and service, accounts, issuance and use of proceeds
 of securities, certain additions and extensions to facilities and in other respects. Requests for rate
 relief must be decided within 11 months of filing.

FERC  FERC has jurisdiction under the Federal
 Power Act over certain of the electric utility facilities and operations, wholesale rates and accounting
 practices of IP&L and WP&L, and in certain other respects. In addition, certain natural gas
 facilities and operations of IP&L and WP&L are subject to the jurisdiction of FERC under the
 Natural Gas Act.

Environmental  The EPA administers certain
 federal regulatory programs and has delegated the administration of other environmental regulatory programs
 to the applicable state environmental agencies. In general, the state agencies have jurisdiction over
 safety, air and water quality, and waste handling standards associated with electric power generation,
 including the level and flow of water pertaining to hydroelectric generation. In certain cases, the
 state environmental agencies have delegated the administration of environmental programs to local agencies.
 In addition, International has investments that are subject to environmental regulations in the countries in which
 they operate.

Nuclear  IP&L and WP&L are directly
 and indirectly subject to the jurisdiction of the NRC, with respect to DAEC and Kewaunee, respectively.
 Among other things, the NRC regulates the disposal of nuclear fuel and other radioactive wastes.

Brazil  The electric industry in Brazil, as
 it relates to Alliant Energys unconsolidated investments, is regulated by the Brazilian federal government,
 acting through the Ministry of Mines and Energy, which has exclusive authority over the electric sector
 through its regulatory powers. Regulatory policy for the sector is implemented by an autonomous national
 electric energy agency (Agencia Nacional de Energia Eletrica or ANEEL), which delegates certain functions
 to agencies based in various states of Brazil. However, ANEEL cannot delegate any authority regarding
 tariffs to state agencies. In January 2003, a new Minister of Mines and Energy was appointed, resulting
 in the cessation of the ongoing comprehensive review of the regulatory process and policies that began
 in 2002. A new plan was announced in December 2003 (effective date as yet unspecified) which is intended
 to provide limited and balanced regulation of the generation and distribution of electric energy within
 the sectors of the Brazilian economy. Although all of the details and the precise timing of the plan
 are unknown at this time, Alliant Energy does not expect the plan will have a material adverse impact
 on Alliant Energys investments in Brazil.

Refer to Note 2 of Alliant Energys Notes to Consolidated
 Financial Statements and Rates and Regulatory Matters in MD&A for additional information regarding
 regulation and utility rate matters.

4) STRATEGIC OVERVIEWRefer to Strategic Overview in MD&A for discussion
 of various strategic actions Alliant Energy has taken to strengthen its financial profile and information
 regarding Alliant Energys updated strategic plan.

C. INFORMATION RELATING TO
DOMESTIC UTILITY OPERATIONSAlliant Energy realized 48%, 47%, 3% and 2% of its
 2003 electric utility revenues in Iowa, Wisconsin, Minnesota and Illinois, respectively. Approximately
 90% was regulated by the respective state commissions while the other 10% was regulated by FERC. Alliant
 Energy realized 48%, 47%, 3% and 2% of its 2003 gas utility revenues in Iowa, Wisconsin, Minnesota and
 Illinois, respectively.

IP&L realized 92%, 6% and 2% of its 2003 electric
 utility revenues in Iowa, Minnesota and Illinois, respectively. Approximately 96% was regulated by the
 respective state commissions while the other 4% was regulated by FERC. IP&L realized 93%, 5% and
 2% of its 2003 gas utility revenues in Iowa, Minnesota and Illinois, respectively. WP&L realized
 99% of its 2003 electric utility revenues in Wisconsin and 1% in Illinois. Approximately 83% was regulated
 by the PSCW or the ICC while the other 17% was regulated by FERC. WP&L realized 97% of its 2003
 gas utility revenues in Wisconsin and 3% in Illinois.

5

1) DOMESTIC ELECTRIC UTILITY
OPERATIONSGeneral  IP&L and WP&L provide electric
 service in Iowa, southern and central Wisconsin, southern Minnesota and northern and northwestern Illinois.
 The number of electric customers and communities served at Dec. 31, 2003 was as follows:

|     | Retail Customers | Wholesale Customers | Other Customers | Communities Served
|---- | ---------------- | ------------------- | --------------- | ------------------
|    
|IP&L | 527,650          | 9                   | 1,318           | 760               
|WP&L | 434,941          | 30                  | 2,005           | 601               
|    
|     | 962,591          | 39                  | 3,323           | 1,361             
|    

2003 electric utility operations accounted for 73%
 and 75% of operating revenues and 92% and 85% of operating income for IP&L and WP&L, respectively.

Electric sales are seasonal to some extent with the
 annual peak normally occurring in the summer months. In 2003, the maximum peak hour demands for IP&L
 and WP&L were 3,123 MW and 2,782 MW, respectively, both on Aug. 20, 2003. In 2003, the maximum peak
 hour demand for Alliant Energy was 5,887 MW on Aug. 20, 2003, which was the coincident peak of the entire
 Alliant Energy system.

Transmission Business IP&L and WP&L
 are members of the MAIN Regional Reliability Council which is one of the 10 regional members of NERC.
 Each regional member of NERC is responsible for maintaining reliability in its area through coordination
 of planning and operations.

In 2002, IP&L filed for IUB and MPUC approval to
 transfer its transmission assets to TRANSLink, a proposed independent for-profit, transmission-only
 company. In November 2003, TRANSLink announced that upon direction of the participant utilities, formation
 of TRANSLink had been suspended due to continued regulatory and market uncertainty. IP&L continues
 to support the independent transmission company model but is not able to predict the ultimate outcome
 of the structure of its transmission business.

WP&L transferred its transmission assets with no
 gain or loss to a transmission-only company, ATC, on Jan. 1, 2001, and had an ownership percentage in
 ATC of approximately 25% at Dec. 31, 2003. This transfer has not resulted in a significant impact on
 WP&Ls financial condition or results of operations since FERC allows ATC to earn a return on the
 contributed assets comparable to the return formerly allowed WP&L by the PSCW and FERC. During 2003,
 ATC returned approximately 80% of its earnings to the equity holders and, although no assurance can
 be given, Alliant Energy anticipates ATC will continue this dividend payout ratio in the future. ATC
 realizes its revenues from the provision of transmission services to both participants in ATC as well
 as non-participants. ATC is a transmission-owning member of the Midwest ISO and the MAIN Regional Reliability
 Council.

In 2002, the PSCW issued a final ruling regarding incremental
 electric transmission costs, such as ATC start-up costs and ongoing network transmission costs. This
 ruling allows Wisconsin utilities, including WP&L, to continue to defer any such costs related to
 retail service for five years with deferred amounts included in future base rates. Further, in December
 2003, the PSCW issued a final order in WP&Ls 2004 retail rate case, which expanded the 2002 ruling
 allowing for the deferral of any retail transmission wheeling expenses that are different from amounts
 included in existing rates. During the remainder of this deferral period, changes in total retail electric
 transmission costs will have no material impact on WP&Ls results of operations.

IP&L and WP&L are members of the Midwest ISO,
 which is in the process of restructuring the bulk power market in its domain.  Such restructuring
 could have an impact on the costs associated with Alliant Energy serving its utility customers energy
 requirements. The Midwest ISO currently plans to implement the market restructuring effective Dec. 1,
 2004. Given the anticipated regulatory treatment of any potential cost differences, Alliant Energy does
 not currently expect the ultimate outcome will have a material impact on its results of operations or
 financial condition.

The PSCW is authorized to order construction of new
 transmission facilities. In 2001, the PSCW approved the construction of a 345-kilovolt transmission line,
 which would be constructed by ATC and would improve transmission import capabilities in Wisconsin. Due
 to significant cost increases, the PSCW re-evaluated and re-approved the project in December 2003. Pending
 various other regulatory approvals, construction could begin as early as 2004 and the transmission line
 is expected to be in service in 2008.

6

IP&L maintains and operates transmission and substation
 facilities connecting with its high voltage transmission systems pursuant to a non-cancelable operation
 agreement (the Operating Agreement) with CIPCO. The Operating Agreement, which will terminate on Dec.
 31, 2035, provides for the joint use of certain transmission facilities of IP&L and CIPCO. IP&L
 has transmission interconnections at various locations with nine other transmission owning utilities
 in the Midwest and ATC also has various transmission interconnections. These interconnections enhance
 the overall reliability of the Alliant Energy transmission system and provide access to multiple sources
 of economic and emergency energy.

In 2002, FERC issued a notice of proposed rules intended
 to standardize the wholesale electric market, which has generated significant industry discussion. Although
 Alliant Energy believes that standardization of the wholesale electric market is appropriate and would
 benefit market participants, there may be significant changes to the proposed rules before they are
 adopted. Therefore, Alliant Energy cannot determine the impact the final rules will have on its results
 of operations or financial condition.

Refer to Properties for additional information regarding
 electric properties.

Power Supply Alliant Energy currently anticipates
 meeting its 2004 power supply requirements through a variety of incremental power supply resources including
 purchased-power contracts utilizing existing firm transmission rights and additional power purchases
 from existing generating units located within and outside of Alliant Energys service territory. While
 Alliant Energy currently expects to meet utility customer demands in 2004, unanticipated reliability
 issues could still arise in the event of unexpected delays in the construction of new generating and/or
 transmission facilities, power plant outages, transmission system outages or extended periods of extremely
 hot weather. Refer to Strategic Overview  Updated Strategic Plan in MD&A for discussion
 of Alliant Energys domestic utility generation plan.

Average Fuel Costs  Refer to the Electric
 Operating Information tables for details on the sources of electric energy for Alliant Energy, IP&L
 and WP&L from 2001 to 2003. The average cost of fuel per million British Thermal Units used for electric generation
 was as follows:

|          | IP&L   | WP&L  
|--------- | ------ | ------
|         
|          | 2003   | 2002  
|         
|Gas       | $5.884 | $3.613
|Coal      | 1.072  | 1.067 
|Nuclear   | 0.546  | 0.572 
|All Fuels | 1.088  | 1.032 

Coal  Alliant Energy, through Corporate Services,
 IP&L and WP&L, has entered into contracts with different suppliers to ensure that a specified
 supply of coal is available at known prices for IP&L and WP&L for 2004 through 2008. These contracts
 provide for a portfolio of coal supplies that cover approximately 96%, 76%, 54%, 21% and 11% of the
 total utilities estimated coal supply needs for 2004 through 2008, respectively. Management believes
 this portfolio of coal supplies represents a reasonable balance between the risks of insufficient supplies
 and those associated with larger open positions subject to price volatility in the coal markets. Remaining
 coal requirements will be met from either future contracts or purchases in the spot market.

The majority of the coal utilized by IP&L and WP&L
 is from the Wyoming Powder River Basin. A majority of this coal is transported by rail-car directly
 from Wyoming to IP&Ls and WP&Ls generating stations, with the remainder transported from Wyoming
 to the Mississippi River by rail-car and then via barges to the final destination. As protection against
 interruptions in coal deliveries, IP&L and WP&L maintain average coal inventories of 25 to 50
 days for generating stations with year-round deliveries and 30 to 150 days (depending upon the time
 of year) for generating stations with seasonal deliveries.

Average delivered fossil fuel costs are expected to
 increase in the future due to price/rate structures and adjustment provisions in existing coal and transportation
 contracts and recent coal market trends. Existing coal contracts with terms of greater than one year
 have fixed future year prices that generally reflect recent upward market trends. Other factors which
 may impact coal prices are changes in various associated laws and regulations. For example, sulfur dioxide
 and NOx emission restrictions and other environmental limitations on generating stations have increased
 significantly and proposed additional restrictions (including mercury emissions), if enacted, will likely
 limit the ability to obtain, and further increase the cost of, adequate coal supplies. Rate adjustment
 provisions in transportation contracts are primarily based on changes in the Rail Cost Adjustment Factor
 as published by the U.S. Surface Transportation Board. Refer to Note 1(i) for discussion of IP&Ls and WP&Ls rate recovery
 of fuel costs, Note 10(a) for information on coal
 derivatives and Note 11(b) for details relating to coal purchase commitments in the Notes to Consolidated
 Financial Statements.

7

Purchased-Power  During 2003, approximately
 25% and 31% of IP&Ls and WP&Ls total MWh requirements, respectively, were met through purchased-power.
 Refer to Notes 3 and 11(b) of the Notes to Consolidated Financial Statements for details relating
 to purchased-power commitments and Transmission Business for discussion of proposed rules intended
 to standardize the wholesale electric market.

Nuclear  Summary  IP&L and WP&L
 own partial interests in two nuclear generating facilities, DAEC and Kewaunee, respectively, which are
 operated by the NMC under contract to the majority owners, which remain in effect until notice of termination
 is provided one year prior to such termination would be effective. Alliant Energy has a 20% ownership
 interest in the NMC. The NMC operates all nuclear plants owned by the NMC partners, which provides long-term
 safety, reliability and operational benefits for the plant owners. The NMC currently operates eight
 nuclear generating units at six sites but has no ownership interest in the plants it operates and bears
 no financial risk associated with operation of the plants. The plant owners retain all rights to the
 energy generated at the plants and all financial responsibility for their safe operation, maintenance
 and decommissioning. Certain details for DAEC and Kewaunee are as follows:

|                                 | DAEC                    | Kewaunee         
|-------------------------------- | ----------------------- | -----------------
|                                
|Rating, net electric capacity    | 583 MW (100%)           | 543 MW (100%)    
|Alliant Energy ownership         | IP&L - 70%              | WP&L - 41%       
|Other ownership                  | CIPCO - 20%; Corn Belt  | WPSC - 59%       
|                                 | Power Cooperative - 10% |                  
|Reactor type                     | Boiling water           | Pressurized water
|NRC operating license expiration | 2014                    | 2013             

DAEC License Renewal  IP&L has made no
 decision regarding license extension for DAEC. IP&Ls approach has been and continues to be to preserve
 the option of renewing the license and has directed that DAEC be operated and maintained in a manner
 that ensures license extension remains a viable option. Preserving DAECs license extension option will
 include ensuring adequate time is available for the possibility of preparing specific license renewal
 studies, submittal of study results for NRC review, evaluation of the results of the NRCs review, and
 making a decision on whether and to what degree any license extension will be pursued.

Kewaunee Sale  Refer to Note 17 of Alliant
 Energys Notes to Consolidated Financial Statements for information on the sale of Kewaunee by WP&L
 and WPSC expected to be completed by fall 2004, pending various regulatory approvals.

Nuclear Operating Issues  The NRC has significant
 regulatory authority over the design and operation of nuclear generating facilities with regard to environmental
 considerations and public health and safety. Exercise of this authority by the NRC is continuous and
 responsive to any nuclear related issue.

In February 2002, the NRC issued an order to all licensees
 formalizing their requirements for additional security resulting from the Sept. 11, 2001 terrorist attacks
 on the U.S. Prior to this order, the additional security measures were voluntary, based on NRC guidance.
 The NMC, as operator of DAEC and Kewaunee, has fully implemented the immediate actions required and
 is in the process of completing longer term actions as required. In December 2001, the PSCW authorized
 WP&L to defer incremental costs for security measures and insurance premiums related to the Sept.
 11, 2001 terrorist attacks. Both IP&L and WP&L are recovering the costs of the required immediate
 actions in their respective rates.

IP&Ls and WP&Ls share of anticipated nuclear-related
 construction expenditures at DAEC and Kewaunee for 2004 and 2005 are approximately $23 million and $19
 million, respectively. These expenditures would be reduced for WP&L if the sale of its interest
 in Kewaunee is completed prior to the end of 2005.

Refueling Outages and Procurement of Nuclear Fuel
  The NMC, acting on behalf of IP&L and the other DAEC owners, purchases uranium and enrichment
 services for DAEC using a combination of spot market and medium term contracts. This procurement is
 complete for the spring 2005 DAEC refueling outage. Arrangements for the fabrication of nuclear fuel
 are in place through the 2011 refueling of DAEC. WPSC purchases uranium concentrates and conversion,
 enrichment and fabrication services for nuclear fuel assemblies at Kewaunee. Sufficient fuel is in inventory
 for the fall 2004 refueling outage and additional fuel will be purchased in 2004 for the spring 2006
 refueling outage. WPSCs uranium inventory policy is to maintain sufficient inventory for up to two
 reloads of fuel. Refer to Note 1(j) of Alliant Energys Notes to Consolidated Financial Statements
 for information related to the timing of DAEC and Kewaunee refueling outages.

8

Nuclear Liability/Insurance  Liability for
 nuclear accidents is governed by the Price-Anderson Act of 1988 as amended (Act), which sets a statutory
 limit of $10.86 billion for liability to the public for a single nuclear power plant incident and requires
 nuclear power plant operators to provide financial protection for this amount. Financial protection
 for a nuclear incident is provided through a combination of liability insurance ($300 million)
 and industry-wide retrospective payment plans ($10.56 billion). Under the industry-wide plan, the owners
 of each operating licensed nuclear reactor in the U.S. are subject to an assessment in the event of
 a nuclear incident at any nuclear plant in the U.S. The applicability of the Act to IP&L and WP&L,
 as existing nuclear power plant owners, continues for the remainder of the operating lives of the plants
 they own. Alliant Energy expects the U.S. Congress will consider in 2004 coverage under the Act for
 new nuclear generating stations and increasing the statutory limits for liability to the public for
 a single nuclear power plant incident and the maximum annual assessment per incident for existing nuclear
 generating stations.

IP&L and WP&L are members of NEIL, which provides
 $2.0 billion and $1.8 billion of insurance coverage for DAEC and Kewaunee, respectively, for certain
 property losses for property damage, decontamination and premature decommissioning. The proceeds from
 such insurance, however, must first be used for reactor stabilization and site decontamination before
 they can be used for plant repair and premature decommissioning. NEIL also provides separate coverage
 for additional expenses incurred during certain outages. Owners of nuclear generating stations insured
 through NEIL are subject to retroactive premium adjustments if losses exceed accumulated reserve funds.
 NEILs accumulated reserve funds are currently sufficient to more than cover its exposure in the event
 of a single incident under the primary and excess property damage or additional expense coverages. However,
 IP&L and WP&L could be assessed if losses exceed the accumulated reserve funds. A summary of
 IP&Ls and WP&Ls share of maximum possible retrospective liability, property and additional
 expense assessments is as follows (in millions):

|                             | DAEC               | Kewaunee          
|---------------------------- | ------------------ | ------------------
|                            
|Price-Anderson Act liability | $70.4/incident     | $41.2/incident    
|                             | $7.0/incident/year | $4.1/incident/year
|NEIL primary property        | $3.3/year          | $1.8/year         
|NEIL excess property         | $4.4/year          | $3.5/year         
|NEIL additional expense      | $2.4/year          | $1.0/year         

These limits are subject to adjustments for changes
 in the number of participants and inflation in future years. In the event of a catastrophic loss at
 DAEC or Kewaunee, the amount of insurance available may not be adequate to cover property damage, decontamination
 and premature decommissioning. Uninsured losses, to the extent not recovered through rates, would be
 borne by IP&L or WP&L, as the case may be, and could have a material adverse effect on their
 respective financial condition and results of operations. IP&L and WP&L are not currently aware
 of any losses that they believe are likely to result in an assessment.

Spent Nuclear Fuel (High Level Waste) Disposal
  NWPA assigned responsibility to the DOE to provide for the permanent disposal of spent nuclear fuel
 in exchange for payments by contract holders and also requires generators and owners of spent nuclear
 fuel to provide for interim storage until the fuel is accepted by the DOE. IP&L, on behalf of the
 DAEC owners, and WPSC, on behalf of the Kewaunee owners, entered into contracts with the DOE for this
 disposal service and have made the agreed payments to the Nuclear Waste Fund held by the U.S. Treasury.
 The contracts provided for this service to begin in 1998, however, the DOE has experienced delays in
 its efforts and acceptance is now expected to occur no earlier than 2010. The DOE is currently proceeding
 with the licensing phase for a permanent spent fuel storage facility in the Yucca Mountain area of Nevada.

In accordance with their interim storage responsibility,
 IP&L and WPSC have been and will continue storing spent nuclear fuel on site at DAEC and Kewaunee,
 respectively, until removal by the DOE to its permanent repository occurs. Interim storage activities
 at reactor sites, regardless of DOE delays or acceptance schedules, will extend after final reactor
 shutdown. Construction of a dry cask storage facility by IP&L at DAEC has been completed and transfer
 of approximately 10 years worth of spent nuclear fuel was completed in November 2003. The dry storage
 facility provides assurance that both the operating and post-shutdown storage needs of DAEC are satisfied.
 Kewaunee has sufficient fuel storage capacity to meet its operating storage needs through 2009. Additional
 storage facilities will be needed at Kewaunee by 2010 for full offload capability for future outages.

In January 2004, IP&L filed a claim against the
 U.S. government for recovery of damages due to the DOEs delay in accepting spent nuclear fuel. IP&L
 is one of a number of utility companies with nuclear assets that has filed similar claims against the
 DOE for its failure to accept spent nuclear fuel in a timely manner. Determination and adjudication
 of the specific claim amount depends upon resolution of related court cases involving DOE acceptance
 rates and acceptance orders of spent nuclear fuel. Alliant Energy does not anticipate resolution of
 this issue until 2006 at the earliest and cannot currently predict the ultimate outcome.

9

Low-Level Radioactive Waste Disposal  The Low-Level
 Radioactive Waste Policy Amendments Act of 1985 mandates that each state must take responsibility for
 the storage of low-level radioactive waste produced within its borders. However, disposal facilities
 located near Barnwell, South Carolina and Clive, Utah continue to accept the low-level waste from DAEC
 and Kewaunee, thereby minimizing the amount of low-level waste stored on-site and delaying the need
 for any action by individual states or groups of states to develop new facilities. While it is difficult
 to predict how long the South Carolina and Utah facilities will continue to accept low-level radioactive
 waste, DAEC and Kewaunee each have on-site storage capability for at least 10 years of waste generation
 beyond any date that both facilities might cease to accept such waste.

The costs associated with high- and low-level waste
 disposal and storage are currently recovered through the rates of Alliant Energys utility subsidiaries
 and therefore do not have a material impact on its results of operations or financial condition.

Additional Nuclear Discussion  Additional discussions
 of various other nuclear issues relating to DAEC and/or Kewaunee are included in Notes 1(g), 1(j), 3,
 9, 10(c), 11(e), 11(f), 12, 17 and 18 of the Notes to Consolidated Financial Statements.

Electric Environmental Matters  Alliant
 Energy is regulated in environmental matters by federal, state and local agencies. Such regulations
 are the result of a number of environmental laws passed by the U.S. Congress, state legislatures and
 local governments and enforced by federal, state and local regulatory agencies. The laws impacting Alliant
 Energys operations include, but are not limited to, the Safe Drinking Water Act; Clean Water Act; CAA,
 as amended by the CAA Amendments of 1990; National Environmental Policy Act; Toxic Substances Control
 Act; Emergency Planning and Community Right-to-Know Act; Resource Conservation and Recovery Act; Comprehensive
 Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments
 and Reauthorization Act of 1986; Endangered Species Act; NWPA; Occupational Safety and Health Act; and
 NEPA. Alliant Energy regularly obtains federal, state and local permits to assure compliance with the
 environmental protection laws and regulations. Costs associated with such compliance have increased
 in recent years and are expected to increase moderately in the future. Although Alliant Energy cannot
 guarantee rate recovery, it anticipates its prudently incurred utility costs will be recovered in future
 rates.

In February 2003, WP&Ls Columbia Energy Center
 (Columbia) received a Notice of Violation from the Wisconsin DNR for exceeding limits in its Wisconsin
 Pollutant Discharge Elimination System (WPDES) permit, which requires Columbia to sample its
 ash pond discharge and sanitary wastewater plant discharge for various parameters, including acute and
 chronic toxicity. The WPDES permit issued in 1998 required Columbia to identify what was causing the
 toxicity in its discharge through an evaluation and to develop a reduction plan. The evaluation was
 performed and Columbia developed a reduction plan that identified carbon dioxide injection as the treatment
 to reduce the aluminum concentrations. The Wisconsin DNR did not approve this method of treatment and
 directed Columbia to revise the reduction plan, at which time Columbia began evaluating a number of
 treatment alternatives and undertaking a physical evaluation. In November 2003, WP&L submitted a
 progress report to the Wisconsin DNR for the ash pond toxicity discharges along with plans for the sanitary
 wastewater treatment plant. In December 2003, a construction permit for the sanitary wastewater treatment
 plant was submitted to the Wisconsin DNR with an anticipated construction start date in spring 2004.
 While it is possible that the Wisconsin DNR may subsequently seek to impose a civil penalty for the
 discharge toxicity, WP&L believes it can resolve this issue to the Wisconsin DNRs satisfaction
 in a manner that will not have a material adverse effect on its financial condition or results of operations.
 Refer to Legal Proceedings for further discussion.

Refer to Liquidity and Capital Resources  Environmental
 in MD&A and Note 11(e) of the Notes to Consolidated Financial Statements for further discussion
 of electric environmental matters.

10

Alliant Energy Corporation

|                                             
|---------------------------------------------
|Electric Operating Information               
|(Domestic Utility Only)                      
|                                             
|Operating Revenues (000s):                   
|Residential                                  
|Commercial                                   
|Industrial                                   
|                                             
|Total from retail customers                  
|Sales for resale                             
|Other                                        
|                                             
|Total                                        
|                                             
|                                             
|Electric Sales (000s MWh):                   
|Residential                                  
|Commercial                                   
|Industrial                                   
|                                             
|Total from retail customers                  
|Sales for resale                             
|Other                                        
|                                             
|Total                                        
|                                             
|                                             
|Customers (End of Period):                   
|Residential                                  
|Commercial                                   
|Industrial                                   
|Other                                        
|                                             
|Total                                        
|                                             
|                                             
|Other Selected Electric Data:                
|Maximum peak hour demand (MW)                
|Sources of electric energy (000s MWh):       
|Coal                                         
|Purchased power                              
|Nuclear                                      
|Gas                                          
|Other                                        
|                                             
|Total                                        
|                                             
|Revenue per KWh from retail customers (cents)
|                                             

11

Interstate Power and Light Company

|                                             
|---------------------------------------------
|Electric Operating Information               
|                                             
|Operating Revenues (000s):                   
|Residential                                  
|Commercial                                   
|Industrial                                   
|                                             
|Total from retail customers                  
|Sales for resale                             
|Other                                        
|                                             
|Total                                        
|                                             
|                                             
|Electric Sales (000s MWh):                   
|Residential                                  
|Commercial                                   
|Industrial                                   
|                                             
|Total from retail customers                  
|Sales for resale                             
|Other                                        
|                                             
|Total                                        
|                                             
|                                             
|Customers (End of Period):                   
|Residential                                  
|Commercial                                   
|Industrial                                   
|Other                                        
|                                             
|Total                                        
|                                             
|                                             
|Other Selected Electric Data:                
|Maximum peak hour demand (MW)                
|Sources of electric energy (000s MWh):       
|Coal                                         
|Purchased power                              
|Nuclear                                      
|Gas                                          
|Other                                        
|                                             
|Total                                        
|                                             
|Revenue per KWh from retail customers (cents)
|                                             

12

Wisconsin Power and Light Company

|                                             
|---------------------------------------------
|Electric Operating Information               
|                                             
|Operating Revenues (000s):                   
|Residential                                  
|Commercial                                   
|Industrial                                   
|                                             
|Total from retail customers                  
|Sales for resale                             
|Other                                        
|                                             
|Total                                        
|                                             
|                                             
|Electric Sales (000s MWh):                   
|Residential                                  
|Commercial                                   
|Industrial                                   
|                                             
|Total from retail customers                  
|Sales for resale                             
|Other                                        
|                                             
|Total                                        
|                                             
|                                             
|Customers (End of Period):                   
|Residential                                  
|Commercial                                   
|Industrial                                   
|Other                                        
|                                             
|Total                                        
|                                             
|                                             
|Other Selected Electric Data:                
|Maximum peak hour demand (MW)                
|Sources of electric energy (000s MWh):       
|Coal                                         
|Purchased power                              
|Nuclear                                      
|Gas                                          
|Other                                        
|                                             
|Total                                        
|                                             
|Revenue per KWh from retail customers (cents)
|                                             

13

2) DOMESTIC GAS UTILITY
OPERATIONSIP&L and WP&L provide gas service in Iowa,
 southern and central Wisconsin, southern Minnesota and northern and northwestern Illinois. The number
 of gas customers and communities served at Dec. 31, 2003 were as follows:

|     |                  | Transportation and |                   
|---- | ---------------- | ------------------ | ------------------
|     | Retail Customers | Other Customers    | Communities Served
|    
|IP&L | 235,812          | 214                | 253               
|WP&L | 172,615          | 266                | 232               
|    
|     | 408,427          | 480                | 485               
|    

2003 gas utility operations accounted for 21% and 22%
 of operating revenues and 8% and 13% of operating income for IP&L and WP&L, respectively, which
 include providing gas services to retail and transportation customers.

In providing gas commodity service to retail customers,
 Corporate Services administers a diversified portfolio of transportation and storage contracts on behalf
 of IP&L and WP&L. Transportation contracts with Northern Natural Gas Company (NNG), Natural Gas
 Pipeline Co. of America (NGPL) and ANR Pipeline (ANR) allow access to gas supplies
 located in the U.S. and Canada. Arrangements with Firm Citygate Supplies (FCS) provide IP&L and
 WP&L with gas delivered directly to their service territories. The maximum daily delivery capacity
 of the individual utilities for 2003 was as follows (in Dths):

|     | NNG     | NGPL   | ANR     | FCS    | Total  
|---- | ------- | ------ | ------- | ------ | -------
|    
|IP&L | 198,641 | 89,932 | 56,680  | 22,000 | 367,253
|WP&L | 100,056 | --     | 146,467 | 39,000 | 285,523

IP&L and WP&L maintain purchase agreements
 with over 30 suppliers of natural gas from all gas producing regions of the U.S. and Canada. The majority
 of the gas supply contracts are for terms of six months or less, with the remaining supply contracts
 having terms through 2004. IP&Ls and WP&Ls gas supply commitments are index-based.

In addition to sales of natural gas to retail customers,
 IP&L and WP&L provide transportation service to commercial and industrial customers by moving
 customer-owned gas through their distribution systems to the customers meters. Revenues are collected
 for this service pursuant to transportation tariffs.

The gas sales of IP&L and WP&L follow a seasonal
 pattern. There is an annual base load of gas used for cooking, heating and other purposes, with a large
 heating peak occurring during the winter season. Natural gas obtained from producers, marketers and
 brokers, as well as gas in storage, is utilized to meet the peak heating season requirements. Storage
 contracts allow IP&L and WP&L to purchase gas in the summer, store the gas in underground storage
 fields and deliver it in the winter. Gas storage met approximately 23% and 24% of IP&Ls and WP&Ls
 annual gas requirements in 2003, respectively.

Refer to Note 1(i) for information relating to utility
 natural gas cost recovery, Note 10(a) for information on natural gas derivatives and Note 11(b) for
 discussion of natural gas commitments in the Notes to Consolidated Financial Statements.

Gas Environmental Matters  Refer to Note 11(e)
 of the Notes to Consolidated Financial Statements for discussion of gas environmental matters.

14

Alliant Energy Corporation

|                                                            
|------------------------------------------------------------
|Gas Operating Information (Domestic Utility Only)           
|                                                            
|Operating Revenues (000s):                                  
|Residential                                                 
|Commercial                                                  
|Industrial                                                  
|Transportation/other                                        
|                                                            
|Total                                                       
|                                                            
|                                                            
|Gas Sales (000s Dths):                                      
|Residential                                                 
|Commercial                                                  
|Industrial                                                  
|Transportation/other                                        
|                                                            
|Total                                                       
|                                                            
|                                                            
|Customers at End of Period (Excluding Transportation/Other):
|Residential                                                 
|Commercial                                                  
|Industrial                                                  
|                                                            
|Total                                                       
|                                                            
|                                                            
|Other Selected Gas Data:                                    
|Revenue per Dth sold                                        
|(excluding transportation/other)                            
|Purchased gas costs per Dth sold                            
|(excluding transportation/other)                            
|                                                            

15

Interstate Power and Light Company

|                                                            
|------------------------------------------------------------
|Gas Operating Information                                   
|                                                            
|Operating Revenues (000s):                                  
|Residential                                                 
|Commercial                                                  
|Industrial                                                  
|Transportation/other                                        
|                                                            
|Total                                                       
|                                                            
|                                                            
|Gas Sales (000s Dths):                                      
|Residential                                                 
|Commercial                                                  
|Industrial                                                  
|Transportation/other                                        
|                                                            
|Total                                                       
|                                                            
|                                                            
|Customers at End of Period (Excluding Transportation/Other):
|Residential                                                 
|Commercial                                                  
|Industrial                                                  
|                                                            
|Total                                                       
|                                                            
|                                                            
|Other Selected Gas Data:                                    
|Revenue per Dth sold                                        
|(excluding transportation/other)                            
|Purchased gas cost per Dth sold                             
|(excluding transportation/other)                            
|                                                            

Wisconsin Power and Light Company

|                                                            
|------------------------------------------------------------
|Gas Operating Information                                   
|                                                            
|Operating Revenues (000s):                                  
|Residential                                                 
|Commercial                                                  
|Industrial                                                  
|Transportation/other                                        
|                                                            
|Total                                                       
|                                                            
|                                                            
|Gas Sales (000s Dths):                                      
|Residential                                                 
|Commercial                                                  
|Industrial                                                  
|Transportation/other                                        
|                                                            
|Total                                                       
|                                                            
|                                                            
|Customers at End of Period (Excluding Transportation/Other):
|Residential                                                 
|Commercial                                                  
|Industrial                                                  
|                                                            
|Total                                                       
|                                                            
|                                                            
|Other Selected Gas Data:                                    
|Revenue per Dth sold                                        
|(excluding transportation/other)                            
|Purchased gas cost per Dth sold                             
|(excluding transportation/other)                            
|                                                            

16

# D. INFORMATION RELATING TO NON-REGULATED OPERATIONS

Resources manages a portfolio of wholly-owned
 subsidiaries and additional investments through distinct platforms: Non-regulated Generation, International,
 Integrated Services and Other Investments. Resources intends to concentrate its strategic focus on the
 profitability and cash flow of these platforms and does not currently plan to invest significant capital
 in the growth of these platforms in the near term other than investments in Non-regulated Generation
 to support Alliant Energys domestic utility business. Refer to Strategic Overview  Updated Strategic
 Plan in MD&A for further discussion.

Non-regulated Generation  was originally formed
 to acquire, develop and operate a portfolio of competitive power generating assets across the U.S.,
 focusing primarily on the Upper Midwest. In February 2003, Resources purchased a 309- MW, non-regulated,
 tolled, natural gas-fired power plant in Neenah, Wisconsin for $109 million, which Resources financed
 with a $73 million 8-year secured credit agreement ($55 million of borrowings were outstanding at Dec.
 31, 2003), which is non-recourse to Alliant Energy. The entire power output of the facility is sold
 under contract to Milwaukee-based We Energies through June 2008. In December 2003, Alliant Energy announced
 that Non-regulated Generation will refine its focus to support the development, financing and construction
 of generation to meet the needs of Alliant Energys domestic utility business and will defer pursuit
 of other new non-regulated generation projects, other than potential projects to utilize existing equipment
 held by Non-regulated Generation, or further acquisitions of existing tolled generation
 in the near term.

International  has invested in energy generation
 and distribution companies and projects in select growing markets. Currently, International has investments
 in Brazil, China and New Zealand. International has developed local partnerships to obtain knowledge
 of each local markets business trends and customs. Refer to Note 9 of Alliant Energys Notes to Consolidated
 Financial Statements for additional information related to Alliant Energys investments in foreign
 entities.

Integrated Services  provides a wide range
 of energy and environmental services for commercial, industrial, institutional, educational and governmental
 customers. It offers large energy users an array of services to maximize customers productivity, profitability
 and energy efficiency, and provides solutions for waste remediation and other environmental engineering
 and consulting services. Integrated Services includes: Cogenex Corporation (Cogenex), Industrial Energy
 Applications, Inc. (IEA), Heartland Energy Group, Inc. (HEG), RMT, Inc. (RMT) and Alliant Energy Integrated
 Services Company  Energy Solutions L.L.C. (Energy Solutions). Cogenex installs energy efficient equipment
 for business customers. IEA provides on-site energy services with small standby generators.
 HEG owns an interest in NG Energy, a gas marketing business, and owns several natural gas and
 oil gathering systems in Texas. RMT is an environmental and engineering consulting company that serves
 clients nationwide in a variety of industrial market segments and specializes in consulting on solid
 and hazardous waste management, site remediation, ground water quality monitoring and detection, and
 air quality control. RMT is marketing SmartBurn, which is a large-scale emissions-reducing program
 for coal-burning facilities, to other U.S. companies. Energy Solutions provides energy consulting services.

Other Investments  represents various additional
 investments of Resources. Transportation is a holding company whose wholly-owned subsidiaries include
 the Cedar Rapids and Iowa City Railway Company (CRANDIC), which is a short-line railway that provides
 freight service between Cedar Rapids and Iowa City; IEI Barge Services, Inc., which provides barge terminal
 and hauling services on the Mississippi River; and Williams Bulk Transfer Inc. and Transfer Services,
 Inc., which provide transfer and storage services. Synfuel has an equity interest in a synthetic fuel
 processing facility. The synthetic fuel project generates operating losses at its fuel processing facility,
 which are more than offset by tax credits and the tax benefit of the losses generated. Investments is
 a holding company with direct and indirect interests in various small real estate and economic development
 ventures, primarily concentrated in Cedar Rapids, Iowa, and holds other passive investments, including
 an equity interest in McLeod, an integrated telecommunications and services provider. Resources also
 has a loan to a development project in Mexico, several modest investments in emerging energy technology
 businesses and approximately 6% of the outstanding shares of WPC that it intends to sell in 2004.

E. DISCLOSURE CONCERNING WEBSITE
ACCESS TO REPORTSAlliant Energy makes its periodic and current reports,
 and amendments to those reports, available, free of charge, on its website at www.alliantenergy.com/investors
 on the same day as such material is electronically filed with, or furnished to, the SEC. Alliant Energy
 is not including the information contained on its website as a part of, or incorporating it by reference
 into, this Annual Report on Form 10-K.

17

# ITEM 2. PROPERTIES

IP&LIP&Ls principal electric generating stations at
 Dec. 31, 2003, were as follows:

|Name and Location                                      | Primary Fuel | 2003 Summer Capability
|------------------------------------------------------ | ------------ | ----------------------
|of Station                                             | Type         | in KWs                
|                                                      
|Duane Arnold Energy Center, Palo, IA                   |              | Nuclear               
|                                                      
|Ottumwa Generating Station, Ottumwa, IA                |              | Coal                  
|Prairie Creek Station, Cedar Rapids, IA                |              | Coal                  
|Sutherland Station, Marshalltown, IA                   |              | Coal                  
|Sixth Street Station, Cedar Rapids, IA                 |              | Coal                  
|Burlington Generating Station, Burlington, IA          |              | Coal                  
|George Neal Unit 3, Sioux City, IA                     |              | Coal                  
|George Neal Unit 4, Sioux City, IA                     |              | Coal                  
|Dubuque Units 2, 3 and 4, Dubuque, IA                  |              | Coal                  
|M. L. Kapp Plant Units 1 and 2, Clinton, IA            |              | Coal                  
|Lansing Units 1, 2, 3 and 4, Lansing, IA               |              | Coal                  
|Louisa Unit 1, Louisa, IA                              |              | Coal                  
|                                                       |              |                       
|Total Coal                                             |              |                       
|                                                      
|Marshalltown Combustion Turbines, Marshalltown, IA     |              | Oil                   
|Centerville Combustion Turbines, Centerville, IA       |              | Oil                   
|Montgomery Combustion Turbine Unit 1, Montgomery, MN   |              | Oil                   
|Fox Lake Plant Combustion Turbine Unit 4, Sherburn, MN |              | Oil                   
|Lime Creek Plant Combustion Turbine Units 1 and 2,     |             
|Mason City, IA                                         |              | Oil                   
|Diesel Stations, in IA/MN                              |              | Oil                   
|                                                       |              |                       
|Total Oil                                              |              |                       
|                                                      
|Grinnell Station, Grinnell, IA                         |              | Gas                   
|Agency Street Combustion Turbines, West Burlington, IA |              | Gas                   
|Burlington Combustion Turbines, Burlington, IA         |              | Gas                   
|Red Cedar Combustion Turbine, Cedar Rapids, IA         |              | Gas                   
|Fox Lake Plant Units 1, 2 and 3, Sherburn, MN          |              | Gas                   
|                                                       |              |                       
|Total Gas                                              |              |                       
|                                                       |              |                       
|                                                      
|Total generating capability                            |              |                       
|                                                       |              |                       

All KWs shown below represent the 2003 summer generating
 capability.

|(1) |  | Represents
IP&Ls 70% ownership interest in this  561,500 KW generating station, which is
operated by the NMC, with IP&L as the contracting partner  for NMC operation.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Represents
IP&Ls 48% ownership interest in this  720,190 KW generating station, which is
operated by IP&L.
|--- |  | -----------------------------------------------------------------------------------------------------------

|(3) |  | Represents
IP&Ls 28% ownership  interest in this 515,000 KW generating station, which is
operated by MidAmerican Energy Company (MidAmerican).
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------

|(4) |  | Represents
IP&Ls 21.5% ownership interest in summer  2003 in this 644,000 KW generating
station, which is operated by MidAmerican. Effective Dec. 31, 2003,  IP&Ls
ownership interest in this generating station increased to 25.7%.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) |  | Represents
IP&Ls 4% ownership interest in this  700,000 KW generating station, which is
operated by MidAmerican.
|--- |  | -----------------------------------------------------------------------------------------------------------------

IP&L owns 7,078 miles of electric transmission
 lines and 795 substations, substantially all located in Iowa, Minnesota and Illinois. IP&Ls principal
 properties are suitable for their intended use and substantially all are held subject to the liens of indentures relating
 to its bonds. Refer to Strategic Overview  Updated Strategic Plan in MD&A for discussion of Alliant
 Energys domestic generation plan.

18

WP&LWP&Ls principal electric generating stations at
 Dec. 31, 2003, were as follows:

|Name and Location                              | Primary Fuel | 2003 Summer Capability
|---------------------------------------------- | ------------ | ----------------------
|of Station                                     | Type         | in KWs                
|                                              
|Kewaunee Nuclear Power Plant, Kewaunee, WI     |              | Nuclear               
|                                              
|Nelson Dewey Generating Station, Cassville, WI |              | Coal                  
|Edgewater Generating Station #3, Sheboygan, WI |              | Coal                  
|Edgewater Generating Station #4, Sheboygan, WI |              | Coal                  
|Edgewater Generating Station #5, Sheboygan, WI |              | Coal                  
|Columbia Energy Center, Portage, WI            |              | Coal                  
|                                               |              |                       
|Total Coal                                     |              |                       
|                                              
|Blackhawk Generating Station, Beloit, WI       |              | Gas                   
|Necedah Combustion Turbine, Necedah, WI        |              | Gas                   
|Rock River Generating Station, Beloit, WI      |              | Gas                   
|Rock River Combustion Turbine, Beloit, WI      |              | Gas                   
|South Fond du Lac Combustion Turbine           |             
|Units 2 and 3, Fond du Lac, WI                 |              | Gas                   
|Sheepskin Combustion Turbine, Edgerton, WI     |              | Gas                   
|                                               |              |                       
|Total Gas                                      |              |                       
|                                              
|Kilbourn Hydro Plant, Wisconsin Dells, WI      |              | Hydro                 
|Prairie du Sac Hydro Plant, Prairie du Sac, WI |              | Hydro                 
|Petenwell/Castle Rock Hydro Plants,            |             
|Wisconsin Rapids, WI                           |              | Hydro                 
|                                               |              |                       
|Total Hydro                                    |              |                       
|                                               |              |                       
|                                              
|Total generating capability                    |              |                       
|                                               |              |                       

All KWs shown below represent the 2003 summer generating
 capability.

|(1) |  | Represents
WP&Ls 41% ownership interest in this  534,000 KW generating station, which is
operated by the NMC, with WPSC as the contracting partner for  NMC operation. Refer to
Note 17 of Alliant Energys Notes to Consolidated Financial Statements for
information on the proposed sale of Kewaunee by WP&L and WPSC.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Represents
WP&Ls 68.2% ownership interest in this  337,750 KW generating station, which is
operated by WP&L.
|--- |  | -------------------------------------------------------------------------------------------------------------

|(3) |  | Represents
WP&Ls 75% ownership  interest in this 422,400 KW generating station, which is
operated by WP&L.
|--- |  | -----------------------------------------------------------------------------------------------------------

|(4) |  | Represents
WP&Ls  46.2% ownership interest in this 1,098,060 KW generating station, which
is operated by WP&L.
|--- |  | ---------------------------------------------------------------------------------------------------------------

|(5) |  | WP&L
has a 50% ownership interest in this 15,000 KW combustion turbine, which is operated by
WRPC, and  has a contract to purchase one-half of the plants
output.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) |  | WP&L
has a 50% ownership interest in this 18,000  KW hydro plant, which is operated by
WRPC, but has a contract to purchase only  one-third of the plants
output.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

WP&L owns 162 distribution substations located adjacent to
the communities served, substantially all located in Wisconsin.  WP&L's
transmission assets were transferred to ATC in 2001.  WP&L's principal properties are suitable for their intended use and
substantially all are held subject to the lien of its First Mortgage Bond indenture.  Refer to "Strategic Overview - Updated
Strategic Plan" in MD&A for further discussion of Alliant Energy's domestic generation plan.

ResourcesResources principal properties at Dec. 31, 2003 were
 as follows:

|1. | Non-regulated Generation  owns two gas and one steam
 turbines for use in future generation projects, and also owns a 309-MW, non-regulated, tolled, natural gas-fired
 power plant in Wisconsin.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. | International  owns interests in 11 combined heat
 and power facilities located in China with an aggregate generating capacity of approximately 525 MW.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------

19

|3. | Integrated Services  owns standby generation and steam
production systems.  Also has interests in oil and natural gas gathering systems, which
have 500 miles and 213 miles, respectively, of pipeline in Texas.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | Other Investments  CRANDIC has 112 railroad track
 miles all located within Iowa, and owns 17 locomotives and 192 railcars.
|-- | ----------------------------------------------------------------------------------------------------------------------------

# ITEM 3. LEGAL PROCEEDINGS

Alliant EnergyIn 2000, Alliant Energy and WP&L filed a federal
 lawsuit seeking declaratory relief regarding whether certain provisions of WUHCA are unconstitutional
 as a violation of the interstate commerce and equal protection provisions of the U.S. Constitution.
 Alliant Energy and WP&L challenged the provisions of WUHCA that restrict ownership in utility holding
 companies, limit the investments those companies can make, place significant restrictions on companies
 that invest in Wisconsin utility holding companies and impose an asset cap on non-utility investments.
 The district court ultimately dismissed the case on summary judgment grounds in May 2002. Alliant Energy
 and WP&L appealed the district courts decision to the 7th Circuit Court of Appeals which
 ruled in May 2003 that it is unconstitutional to require public utility holding companies with Wisconsin
 utility subsidiaries to be incorporated in the state of Wisconsin. The remaining WUHCA provisions that
 Alliant Energy challenged were upheld as constitutional. Alliant Energy filed a petition with the U.S.
 Supreme Court asking it to review the case. The Supreme Court decided in January 2004 not to review
 the case which effectively ended this lawsuit.

Alliant Energy received an adverse ruling in 1999 from
 a U.S. district court dealing with an income tax refund claim Alliant Energy filed relating to capital
 losses disallowed under audit by the IRS. The district court also disallowed certain related deductions
 allowed by the IRS to reduce a tax refund due to Alliant Energy related to another tax issue. Alliant
 Energy appealed the district courts ruling and the government appealed the decision that led to the
 tax refund due to Alliant Energy. In June 2001, the U.S. Court of Appeals for the 8th Circuit
 ruled in Alliant Energys favor with respect to both tax issues and ultimately remanded the case back
 to the district court for entry of judgment. The federal government decided not to pursue the 8th
 Circuits ruling in favor of Alliant Energy with respect to these two tax issues. As a result, Alliant
 Energy recorded the applicable tax benefit and interest income in 2001 related to these events. An additional
 potential refund of approximately $14 million, plus interest, was also contested by the government,
 resulting in the district court ruling in favor of the government in July 2002. Alliant Energy was not
 successful in its appeal of this decision. However, the adverse decision by the 8th Circuit
 did not result in Alliant Energy recording any charges to earnings, as the refund sought represented
 a gain contingency. As a result, Alliant Energy will receive a tax refund of approximately $20 million
 in 2004, which includes interest.

In the fourth quarter of 2003, the Wisconsin Environmental
 Law Advocates (WELA) filed a complaint in the U.S. District Court for the Western District of Wisconsin against
 WP&L and Alliant Energy alleging violations of the federal Clean Water Act at the Columbia generating
 station. The complaint seeks certain upgrades to Columbias wastewater treatment program, as well as
 unspecified penalties and attorney fees. In addition, the Wisconsin DNR has been pursuing enforcement
 of this same matter and has recently referred the matter to the Wisconsin Department of Justice (WDOJ).
 To date, no action has been filed by the State of Wisconsin; however, Alliant Energy expects a complaint
 to be filed in due course. Alliant Energy, WDOJ and WELA have initiated settlement discussions. Alliant
 Energy believes that the total cost to resolve any potential penalties and implement any required upgrades
 in this matter will not be material.  Refer to "Electric Environmental Matters" in "Business" for further discussion.

IP&L None.

WP&L  Refer to Legal Proceedings  Alliant
 Energy for information regarding joint Alliant Energy and WP&L lawsuits.

Environmental MattersAdditional information required by Item 3 with regards to
 environmental matters is included in C. Information Relating to Domestic Utility Operations  1) Domestic
 Electric Utility Operations in Business, Liquidity and Capital Resources  Environmental in MD&A
 and Note 11(e) of the Notes to Consolidated Financial Statements, which information is incorporated
 herein by reference.

Rate MattersThe information required by Item 3 with regards to
 rate matters is included in "Business," Note 2 of Alliant Energys Notes to Consolidated Financial Statements
 and Rates and Regulatory Matters in MD&A, which information is incorporated herein by reference.

20

ITEM 4. SUBMISSION OF MATTERS TO
A VOTE OF SECURITY HOLDERSNone.

EXECUTIVE OFFICERS OF THE
REGISTRANTSThe executive officers of Alliant Energy, IP&L
 and WP&L as of the date of this filing are as follows (figures following the names represent the
 officers age as of Dec. 31, 2003):

Executive Officers of Alliant EnergyErroll B. Davis, Jr., 59, was elected Chairman of the Board effective April 2000, has
served as Chief Executive Officer (CEO) since 1990 and has been a board member since
1988.  He previously also served as President from 1990 through 2003.
William D. Harvey, 54,
was elected President and Chief Operating Officer (COO) effective January 2004.  He
previously served as Executive Vice President (EVP)-Generation since 1998.
Eliot G.
Protsch, 50, was elected Senior EVP and Chief Financial Officer (CFO) effective January
2004.  He previously served as EVP and CFO since September 2003 and as EVP-Energy
Delivery from 1998 to September 2003.
James E. Hoffman, 50, was elected EVP-Business Development
effective April 1998.
Barbara J. Swan, 52, was elected EVP and General Counsel effective
October 1998.
Pamela J. Wegner, 56, was elected EVP-Strategy and Performance effective
January 2004.  She previously served as EVP-Shared Solutions since 1998.
Thomas L. Aller,
54, was elected Senior Vice President-Energy Delivery effective January 2004.  He
previously served as interim EVP-Energy Delivery since September 2003 and as Vice President (VP)-Investments at
Resources from 1998 to 2003.
Thomas L. Hanson, 50, was elected VP and Treasurer effective
April 2002.  He previously served as Managing Director-Generation Services since 2001 and
General Manager-Business and Financial Performance, Generation from 1998 to 2001.
John E.
Kratchmer, 41, was elected VP-Controller and Chief Accounting Officer (CAO) effective
October 2002.  He previously served as Corporate Controller and Chief Accounting Officer
since October 2000 and Assistant Controller from 1998 to 2000.

None of the executive officers
listed above is related to any member of the Board of Directors or nominee for director
or any other executive officer.  Mr. Davis has an employment agreement with Alliant
Energy pursuant to which his term of office is established. All other executive officers
have no definite terms of office and serve at the pleasure of the Board of Directors.

Executive Officers of IP&LErroll B. Davis, Jr., 59, was elected Chairman of the Board effective April 2000 and CEO
effective April 1998.  Mr. Davis is also an officer of Alliant Energy and WP&L.
William D. Harvey, 54, was elected COO effective January 2004.  Mr. Harvey is also an
officer of Alliant Energy and WP&L.
Thomas L. Aller, 54, was elected President
effective January 2004.  Mr. Aller is also an officer of Alliant Energy and WP&L.
Eliot G. Protsch, 50, was elected CFO effective January 2004.  He previously served as
EVP and CFO since September 2003 and also as President from 1998 through 2003.  Mr. Protsch is
also an officer of Alliant Energy and WP&L.
Barbara J. Swan, 52, was elected EVP and
General Counsel effective October 1998.  Ms. Swan is also an officer of Alliant Energy
and WP&L.
Thomas L. Hanson, 50, was elected VP and Treasurer effective April 2002.
 Mr. Hanson is also an officer of Alliant Energy and WP&L.
John E. Kratchmer, 41, was
elected VP-Controller and CAO effective October 2002.  Mr. Kratchmer is also an officer
of Alliant Energy and WP&L.

None of the executive officers
listed above is related to any member of the Board of Directors or nominee for director
or any other executive officer.  Mr. Davis has an employment agreement with Alliant
Energy pursuant to which his term of office is established. All other executive officers
have no definite terms of office and serve at the pleasure of the Board of Directors.

21

Executive Officers of WP&LErroll B. Davis, Jr., 59, was elected Chairman of the Board effective April 2000 and CEO
effective April 1998.  Mr. Davis is also an officer of Alliant Energy and IP&L.
William D. Harvey, 54, was elected COO effective January 2004.  He previously served as
President since 1998.  Mr. Harvey is also an officer of Alliant Energy and IP&L.
Barbara J. Swan, 52, was elected President effective January 2004.  She previously served
as EVP and General Counsel since 1998.  Ms. Swan is also an officer of Alliant Energy and
IP&L. Eliot G. Protsch, 50, was elected CFO effective January 2004.  He previously
served as EVP and CFO since September 2003.  Mr. Protsch is also an officer of Alliant
Energy and IP&L. Thomas L. Aller, 54, was elected Senior VP-Energy Delivery effective
January 2004.  Mr. Aller is also an officer of Alliant Energy and IP&L. Thomas L.
Hanson, 50, was elected VP and Treasurer effective April 2002.  Mr. Hanson is also an
officer of Alliant Energy and IP&L. John E. Kratchmer, 41, was elected VP-Controller
and CAO effective October 2002.  Mr. Kratchmer is also an officer of Alliant Energy and IP&L.

None of the executive officers listed above is related
 to any member of the Board of Directors or nominee for director or any other executive officer. Mr.
 Davis has an employment agreement with Alliant Energy pursuant to which his term of office is established.
 All other executive officers have no definite terms of office and serve at the pleasure of the Board
 of Directors.

PART II

ITEM 5. MARKET FOR REGISTRANTS'
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Alliant Energys common stock trades on the New York
 Stock Exchange under the symbol LNT. Quarterly sales price ranges and dividends with respect to Alliant
 Energys common stock were as follows:

|        | 2003   | 2002  
|------- | ------ | ------
|       
|Quarter | High   | Low   
|First   | $18.30 | $14.98
|Second  | 20.60  | 16.03 
|Third   | 22.70  | 18.69 
|Fourth  | 25.09  | 21.94 
|Year    | 25.09  | 14.98 

Stock closing price at Dec. 31, 2003: $24.90

Although Alliant Energys practice has been to pay
 cash dividends on its common stock quarterly, the timing of payment and amount of future dividends are
 necessarily dependent upon future earnings, capital requirements, general financial condition, general
 business conditions, the ability of Alliant Energys subsidiaries to pay dividends and other factors.

At Dec. 31, 2003, there were approximately 53,231 holders
 of record of Alliant Energys stock, including holders through Alliant Energys Shareowner Direct Plan.

Alliant Energy is the sole common shareowner of all
 13,370,788 shares of IP&L common stock currently outstanding. During 2003 and 2002, IP&L paid
 dividends on its common stock of $89 million and $82 million, respectively, to its parent. In accordance
 with the IUB order authorizing the IP&L merger, IP&L must inform the IUB if its common equity
 ratio falls below 42% of total capitalization. Alliant Energy is the sole common shareowner of all 13,236,601
 shares of WP&L common stock currently outstanding. During 2003 and 2002, WP&L paid dividends
 on its common stock of $71 million and $60 million, respectively, to its parent. In its December 2003
 rate order, the PSCW stated that WP&L may not pay annual common stock dividends, including pass-through
 of subsidiary dividends, in excess of $89 million to Alliant Energy if WP&Ls actual average common
 equity ratio, on a regulatory financial basis, is or will fall below the authorized level of 54.01%.
 WP&Ls dividends are also restricted to the extent that such dividend would reduce the common stock
 equity ratio to less than 25%. IP&L and WP&L each have common stock dividend payment restrictions
 based on their respective bond indentures and the terms of their outstanding preferred stock. At Dec.
 31, 2003, IP&L and WP&L were in compliance with all such dividend restrictions.

22

ITEM 6.  SELECTED FINANCIAL DATA

Alliant Energy Corporation

|                                                            
|------------------------------------------------------------
|Financial Information                                       
|                                                            
|                                                            
|Income Statement Data:                                      
|Operating revenues                                          
|Income from continuing operations                           
|Income from discontinued operations, net of tax             
|Income before cumulative effect of changes in               
|accounting principles                                       
|Cumulative effect of changes in accounting                  
|principles, net of tax                                      
|Net income                                                  
|                                                            
|Common Stock Data:                                          
|Earnings per average common share (diluted):                
|Income from continuing operations                           
|Income from discontinued operations                         
|Cumulative effect of changes in accounting principles       
|Net income                                                  
|Common shares outstanding at year-end (000s)                
|Dividends declared per common share                         
|Market value per share at year-end                          
|Book value per share at year-end (4)                        
|                                                            
|Other Selected Financial Data:                              
|Cash flows from operating activities (continuing operations)
|Construction and acquisition expenditures                   
|Total assets at year-end (4)                                
|Long-term obligations, net                                  
|Times interest earned before income taxes (5)               
|Capitalization ratios:                                      
|Common equity (4)                                           
|Preferred stock                                             
|Long- and short-term debt                                   
|                                                            
|Total                                                       
|                                                            
|                                                            

|(1) |  | Refer
to "Alliant Energy Results of Operations" in MD&A for a discussion of the 2003, 2002 and
2001 results of operations.
|--- |  | --------------------------------------------------------------------------------------------------------------------------

|(2) |  | Includes
$204 million ($2.58 per diluted share) of non-cash net income related to Alliant Energy's
adoption of SFAS 133 and        $16 million ($0.20 per diluted share) of net income from
gains on sales of McLeod stock.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | Includes
$25 million ($0.32 per diluted share) of net income from gains on sales of McLeod stock.
|--- |  | -------------------------------------------------------------------------------------------------

|(4) |  | Alliant
Energy adjusts the carrying value of its investments in McLeod to its estimated fair
value, pursuant to the applicable        accounting rules.  At Dec. 31, 2003, 2002, 2001,
2000 and 1999, the carrying amount reflected an unrealized gain (loss) of
       approximately $2 million, $1 million, ($13) million, $543 million and $1.1
billion, respectively, with a net of tax increase        (decrease) to common equity of
$1 million, $0.4 million, ($9) million, $317 million and $640 million, respectively.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) |  | Represents
income from continuing operations before income taxes plus preferred dividend
requirements of subsidiaries plus        interest expense divided by interest expense.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

23

|IP&L                                    | 2003 (1)       | 2002 (1)   | 2001 (1) | 2000       | 1999
|--------------------------------------- | -------------- | ---------- | -------- | ---------- | ----
|                                       
|                                        | (in thousands)
|                                       
|Operating revenues                      |                | $1,371,207 |          | $1,242,410 |     
|Earnings available for common stock     |                | 87,137     |          | 88,015     |     
|Cash dividends declared on common stock |                | 89,144     |          | 81,790     |     
|Cash flows from operating activities    |                | 321,918    |          | 250,430    |     
|Total assets                            |                | 3,599,040  |          | 3,158,695  |     
|Long-term obligations, net              |                | 910,527    |          | 902,243    |     

(1)     Refer to IP&L
 Results of Operations in MD&A for a discussion of the 2003, 2002 and 2001 results of operations.

Alliant Energy is the sole common shareowner of all
 13,370,788 shares of IP&Ls common stock outstanding. As such, earnings per share data is not disclosed
 herein.

|WP&L                                    | 2003 (1)       | 2002 (1)   | 2001 (1) | 2000      | 1999
|--------------------------------------- | -------------- | ---------- | -------- | --------- | ----
|                                       
|                                        | (in thousands)
|                                       
|Operating revenues                      |                | $1,216,981 |          | $989,525  |     
|Earnings available for common stock     |                | 111,564    |          | 77,614    |     
|Cash dividends declared on common stock |                | 70,580     |          | 59,645    |     
|Cash flows from operating activities    |                | 138,495    |          | 223,750   |     
|Total assets                            |                | 2,469,277  |          | 2,335,138 |     
|Long-term obligations, net              |                | 453,509    |          | 523,308   |     

(1)     Refer to WP&L
 Results of Operations in MD&A for a discussion of the 2003, 2002 and 2001 results of operations.

Alliant Energy is the sole common shareowner of all
 13,236,601 shares of WP&Ls common stock outstanding. As such, earnings per share data is not disclosed
 herein.

24

|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND  RESULTS OF
OPERATIONS
|------- | --------------------------------------------------------------------------------------

FORWARD-LOOKING
STATEMENTS

Statements contained in this report
that are not of historical fact are forward-looking statements intended to qualify for the
safe harbors from liability established by the Private Securities Litigation Reform Act of
1995. Such forward-looking statements are subject to risks and uncertainties that could
cause actual results to differ materially from those expressed in, or implied by, such
statements. Some, but not all, of the risks and uncertainties include: weather effects on
sales and revenues; economic and political conditions in Alliant Energys domestic
and international service territories; federal, state and international regulatory or
governmental actions, including the impact of potential energy-related legislation in
Congress and the ability to obtain adequate and timely rate relief to allow for, among
other things, the recovery of operating costs and the earning of reasonable rates of
return, as well as the payment of expected levels of dividends; unanticipated construction
and acquisition expenditures; unanticipated issues in connection with Alliant
Energys construction of new generating facilities; issues related to purchased
electric supplies and price thereof, including the ability to recover purchased-power and
fuel costs through rates; issues related to electric transmission, including recovery of
costs incurred, and federal legislation and regulation affecting such transmission; risks
related to the operations of Alliant Energys nuclear facilities and unanticipated
issues relating to the sale of Alliant Energys interest in Kewaunee; costs
associated with Alliant Energys environmental remediation efforts and with
environmental compliance generally; developments that adversely impact Alliant
Energys ability to implement its strategic plan; the amount of premiums incurred in
connection with Alliant Energys planned debt reductions; improved results from
Alliant Energys Brazil investments and no material adverse changes in the rates
allowed by the Brazilian regulators or from the expected utility sector reform currently
being considered by Brazil regulators; improved performance by Alliant Energys other
non-regulated businesses as a whole; no material permanent declines in the fair market
value of, or expected cash flows from, Alliant Energys investments; Alliant
Energys ability to continue cost controls and operational efficiencies; Alliant
Energys ability to identify and successfully complete proposed acquisitions and
development projects; access to technological developments; employee workforce factors,
including changes in key executives, collective bargaining agreements or work stoppages;
continued access to the capital markets; the ability to successfully complete ongoing tax
audits and appeals with no material impact on Alliant Energys earnings or cash
flows; inflation rates; and factors listed in Other Matters  Other Future
Considerations. Alliant Energy assumes no obligation, and disclaims any duty, to
update the forward-looking statements in this report.

STRATEGIC OVERVIEW

November 2002 Plan
 In 2003, Alliant Energy completed the plan it outlined in November 2002 to
strengthen its financial profile. A summary of the five strategic actions completed under
the plan follows.

|o | Asset
sales and related debt reduction -
|- | ----------------------------------------

|o |  | By
July 2003, Alliant Energy had completed the sales of its Australian, affordable housing
and SmartEnergy businesses.
|- |  | ----------------------------------------------------------------------------------------------------------------------

|o |  | In
November 2003, Alliant Energy completed an IPO of WPC, leaving Alliant Energy with a
5.76% ownership interest in WPC.          Alliant Energy currently plans to divest its
remaining interest in WPC during 2004, subject to market conditions.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o |  | In
2003, Alliant Energy sold its water utility serving the Beloit area.  Alliant Energy
continues to pursue the sale of its          water utilities serving the Ripon and South
Beloit areas.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o |  | As
a result of the above completed asset sales, Alliant Energy reduced debt by approximately
$875 million during 2003.          Alliant Energy incurred charges to continuing
operations of approximately $0.10 per diluted share in the fourth quarter of
         2003 related to debt repayment premiums from long-term debt repurchases.
 Alliant Energy also had $242 million of cash and          temporary cash investments as
of Dec. 31, 2003.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Common
equity offering - in July 2003, Alliant Energy sold 17.25 million shares (net proceeds of
$318 million) of its common      stock in a public offering and infused $200 million and
$118 million into WP&L and IP&L, respectively, in support of their      respective
domestic utility generation and reliability initiatives.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Common
stock dividend - Alliant Energy reduced its targeted annual common stock dividend from
$2.00 per share to $1.00 per      share effective with the dividend paid in the first
quarter of 2003.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Anticipated
construction and acquisition expenditures for 2002 and 2003 - Alliant Energy reduced such
aggregate expenditures      by approximately $400 million, largely in its non-regulated
business, from the plan that existed earlier in 2002.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o | Cost
control - Alliant Energy has implemented a comprehensive Lean Six Sigma program, which it
expects to help reduce its      operating costs and improve the efficiency of its
operations.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

25

Updated Strategic Plan
Alliant Energys domestic utility business is its core business and the
sole growth platform within its updated strategic plan. As a result, Alliant Energy views
its domestic utility business as the area of its business that is expected to provide the
larger share of its long-term earnings growth. It will also be the area of the business
that Alliant Energy will invest the bulk of its capital in during 2004 and 2005. Alliant
Energys remaining non-regulated businesses will serve as ongoing business platforms.
Alliant Energy expects these businesses to contribute to its earnings growth, but to a
lesser degree than its growth platform (i.e., domestic utility business). Alliant Energy
does not expect to invest significant capital into these ongoing business platforms in
2004 and 2005. In addition,Alliant Energys Non-regulated Generation business
has refined its focus to support the development, financing and construction of generation
to meet the needs of Alliant Energys domestic utility business. Refer to
Liquidity and Capital Resources  Construction and Acquisition
Expenditures for additional information.

Alliant Energys updated
strategy reflects the fact that it has investment opportunities in its domestic utility
business that did not exist several years ago. Progressive legislation was passed in Iowa
that provides companies with the necessary rate making principles  and resulting
increased regulatory and investment certainty  prior to making certain generation
investments in Iowa. Wisconsin also enacted legislation with the goal of assuring reliable
electric energy for Wisconsin. The law allows the construction of merchant power plants in
the state and streamlines the regulatory approval process for building new generation and
transmission facilities. More recently, the PSCW approved a plan proposed by another
Wisconsin utility which provides a similar level of investment certainty by leasing
generation from an affiliate. These changes have enabled Alliant Energy to pursue
additional generation investments in its domestic utility business to serve its customers
and to provide shareowners with greater certainty regarding the returns on these
investments.

In December 2003, Alliant Energy
announced its updated domestic utility generation plan, which is expected to add a
diversified portfolio of nameplate generation between 2004 and 2010 as follows (in MW):

|                                         | IP&L | WP&L | Total
|---------------------------------------- | ---- | ---- | -----
|                                        
|Natural gas-fired generation             | 840  | 300  | 1,140
|Wind (purchased-power and/or generation) | 130  | 100  | 230  
|Coal                                     | --   | 200  | 200  
|Other                                    | 15   | 15   | 30   
|                                        
|Total                                    | 985  | 615  | 1,600
|                                        

Alliant Energy intends to add this
new generation to meet increasing customer demand, reduce reliance on purchased-power
agreements and mitigate the impacts of potential future plant retirements. Alliant Energy
will continue to purchase energy and capacity in the market and intends to remain a net
purchaser of both, but at a reduced level assuming the successful completion of these
generation projects. Alliant Energy expects that 590 MW of the natural gas-fired
generation will be installed as combustion turbines for peaking generation. The plan also
reflects continued commitments to Alliant Energys energy efficiency and
environmental protection programs. The capital expenditures associated with this plan are
expected to be approximately $650 million over the seven-year period of 2004 to 2010.

IP&L is currently constructing a
$400 million 550 MW natural gas-fired plant (Emery) near Mason City, Iowa under its Power
Iowa program to develop new electric generation capacity in Iowa. The Emery plant is
expected to be placed in-service late in the second quarter of 2004. The rate making
principles established for this investment reflect, among other things, recovery of the
investment over 28 years based on a fixed 12.23% return on the common equity component of
this investment. In January 2004, Alliant Energy announced that Resources
Non-regulated Generation business has assumed an option to purchase a site for a 300 MW
natural gas-fired power plant outside Sheboygan Falls, Wisconsin. Subject to PSCW
approval, Resources Non-regulated Generation business would construct and own the
approximately $150 million plant (of which $75 million has been expended as of Dec. 31,
2003 to purchase two gas turbines) and lease the facility to WP&L. WP&L will
operate the plant and utilize the plants output. With the appropriate timely
regulatory approvals, Alliant Energy currently intends to have this facility placed
in-service in 2005. Both the Emery and Sheboygan Falls facilities are included in the
figures in the previous table. In addition, Calpine Corporation is currently constructing a 600 MW
natural gas-fired combined cycle power plant in Wisconsin at WP&Ls Rock River
plant (Riverside). WP&L has entered into a purchased-power agreement for 453 MW of
this plants output and the plant is expected to be placed in-service prior to the
2004 summer peak demand.

RATES AND REGULATORY
MATTERS

Overview Alliant
Energy has two primary utility subsidiaries, IP&L and WP&L. WP&L has one
utility subsidiary, South Beloit. Alliant Energys utility subsidiaries are currently
subject to federal regulation by FERC and state regulation in Iowa, Wisconsin, Minnesota
and Illinois. Such regulatory oversight covers not only current facilities and operations,
but also the utilities plans for construction and financing of new generation
facilities and related activities.

26

As a public utility holding company
with significant utility assets, Alliant Energy conducts its utility operations in an
ever-changing business environment. Electric energy generation, transmission and
distribution are facing a period of fundamental change resulting from potential
legislative, regulatory, economic and technological changes. These changes could impact
competition in the electric wholesale and retail markets in the event customers of
electric utilities are offered alternative suppliers. Such competitive pressures could
result in electric utilities losing customers and incurring stranded costs (i.e., assets
and other costs rendered unrecoverable as the result of competitive pricing), which would
be borne by security holders if the costs cannot be recovered from customers. FERC
regulates competition in the electric wholesale power generation market and each state
regulates whether to permit retail competition, the terms that would apply and the
recovery of any portion of stranded costs that are ultimately determined to have resulted
from retail competition. Alliant Energy cannot predict the timing of a restructured
electric industry or the impact on its financial condition or results of operations. The
pace of restructuring in its primary retail electric service territories has been delayed
(and may continue to be delayed for a long period of time) due to uncertainty and
developments in the industry.

Certain Recent Developments
 Details of Alliant Energys rate cases impacting its results of operations
since 2001 are as follows (dollars in millions):

|                 | Expected | Return  |          
|---------------- | -------- | ------- | ---------
|                 | Interim  | Interim | Final    
|                 | Utility  | Filing  | Increase 
|Case             | Type     | Date    | Requested
|                
|WP&L:           
|2002 retail      | E/G/W    | 8/01    | $104     
|2003 retail      | E/G/W    | 5/02    | 123      
|2004 retail      | E/G/W    | 3/03    | 87       
|Wholesale        | E        | 2/02    | 6        
|Wholesale        | E        | 3/03    | 5        
|South Beloit    
|retail - IL      | G/W      | 10/03   | 1        
|2004 retail     
|(fuel-only)      | E        | 2/04    | 16       
|IP&L retail - IA | E        | 3/02    | 82       
|IP&L retail - IA | G        | 7/02    | 20       
|IP&L retail - MN | E        | 5/03    | 5        

|(1) | Interim
rate relief is implemented, subject to refund, pending determination of final rates.  The
final rate relief granted       replaces the amount of interim rate relief granted.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | A
party representing selected commercial and industrial electric customers had appealed the
rate case to a court, seeking remand       back to the PSCW for further consideration on
issues of revenue increase amount and rate design.  In December 2003, the court
      denied the request for remand and affirmed the PSCW's earlier decision.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | A
number of factors contributed to the final rate relief being set lower than the original
request, including lower projected       fuel and purchased-power costs, reduced
operation and maintenance costs, lower purchased-power incentive costs and reduced
      capital expenditures.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Since
the final increase was lower than the interim relief granted, a refund to customers was
made in 2003.
|--- | -----------------------------------------------------------------------------------------------------------

A significant portion of the rate
increases included in the previous table reflect the recovery of increased costs incurred
by IP&L and WP&L, or costs they expect to incur, thus the total increase in revenues
related to these rate increases have not or are not expected to result in a corresponding
increase in net income.  IP&L expects to file for an Iowa electric rate increase in March
2004 which will include costs associated with the Emery plant currently under
construction in interim rates pursuant to the rate making principles approved earlier.
 Refer to "Strategic Overview - Updated Strategic Plan" for further information regarding
Emery.

WP&L's retail electric rates are
based on annual forecasted fuel and purchased-power costs.  Under PSCW rules, WP&L can
seek rate increases if it experiences an extraordinary increase in the cost of fuel or if
the annual costs are more than 3% higher than the estimated costs used to establish
rates.  Such rules were revised effective for 2003 for WP&L and significantly reduce the
regulatory lag for Wisconsin utilities and customers related to the timing of changes in
rates for increased or decreased fuel and purchased-power costs.  The revised rules
require that an interim increase/decrease in rates subject to increased/decreased fuel
costs, if determined to be justified, be approved within 21 days of notice to customers.
 Any such change in rates would be effective prospectively, would require a refund with
interest if final rates are determined to be lower than interim rates approved, and would
not include a provision for collection of retroactive fuel cost variances.  The revised
rules also include a process whereby Wisconsin utilities can seek deferral treatment of
emergency changes in fuel costs between fuel-only or base rate cases.  Such deferrals
would be subject to review, approval and recovery in future fuel-only or base rate cases.

27

In 2002, IP&L filed with the IRS for
a change in method of accounting for tax purposes for 1987 through 2001 that would allow
a current deduction related to mixed service costs.  Such costs had previously been
capitalized and depreciated for tax purposes over the appropriate tax lives.  This change
would create a significant current tax benefit that has not been reflected in IP&L's results
of operations pending a decision from the IUB on the required rate making treatment of
the benefit.  In its April 2003 order, the IUB approved IP&L's proposed accounting
treatment to defer the tax savings resulting from the change of accounting method until
the IRS audit on this issue is complete.  The rate making impact will be addressed once
the issue is resolved with the IRS, which is expected to occur in 2004.  There would be
no material negative impact on IP&L's results of operations or financial position should
the IRS reject IP&L's proposal.

Energy-related legislation is
currently pending in the U.S. Congress that, among other proposals, would repeal PUHCA.
 However, it is uncertain when or whether such legislation will be enacted or what impact
it would have on Alliant Energy.

ALLIANT ENERGY
RESULTS OF OPERATIONS

Unless otherwise noted, all "per
share" references in the Results of Operations section refer to earnings per diluted share. Refer to Note 1(a) of Alliant Energy's "Notes to Consolidated Financial
Statements" for discussion of the various components of Alliant Energy's business.

Overview -Alliant Energy's EPS was
as follows:

|                                                      | 2003 | 2002 | 2001
|----------------------------------------------------- | ---- | ---- | ----
|                                                     
|Income from continuing operations                     |      | $1   | .57 
|Income from discontinued operations                   |      | 0    | .30 
|Cumulative effect of changes in accounting principles |      | (0   | .06)
|                                                     
|Net income                                            |      | $1   | .81 
|                                                     

Additional details regarding Alliant
Energys net income were as follows (in millions):

|                                                               | 2003 | 2002 | 2001
|-------------------------------------------------------------- | ---- | ---- | ----
|                                                              
|Continuing operations:                                         |      |      |     
|Domestic utility operations                                    |      | $197 | .2  
|Non-regulated (Resources)                                      |      | (25  | .7) 
|Alliant Energy parent and other (primarily taxes, interest and |     
|administrative and general)                                    |      | (11  | .8) 
|                                                              
|Income from continuing operations                              |      | 159  | .7  
|Discontinued operations:                                       |     
|Operating results (includes SFAS 133 and tax adjustments)      |      | 27   | .9  
|Losses on sales of discontinued operations, net                |      | (22  | .9) 
|Discontinuing depreciation, depletion and amortization of      |     
|assets held for sale                                           |      | 24   | .8  
|                                                              
|Income from discontinued operations                            |      | 29   | .8  
|Cumulative effect of changes in accounting principles          |      | (6   | .0) 
|                                                              
|Net income                                                     |      | $183 | .5  
|                                                              

The 2003 increase in domestic utility
income from continuing operations was largely due to higher electric and gas margins,
which were partially offset by higher operating expenses. The significant improvement in
Alliant Energys non-regulated results from continuing operations for 2003 was
primarily due to improved results from its International and Integrated Services
businesses and lower non-cash valuation charges of $0.35 per share, which were partially
offset by $0.10 per share of charges in 2003 related to early debt reductions. Income from
continuing operations for domestic utility operations increased slightly in 2002 as higher
electric and gas margins were largely offset by increased operating expenses and a higher
effective income tax rate. The lower 2002 results from continuing operations for Alliant
Energys non-regulated businesses were primarily due to higher losses of $23 million
from Alliant Energys Brazil investments, higher non-cash valuation charges of $0.15
per share and higher interest expense, partially offset by improved results from Alliant
Energys China and New Zealand businesses. Alliant Energy incurred non-cash valuation
charges of $0.06, $0.41 and $0.26 per share in 2003, 2002 and 2001, respectively. Refer to
Cumulative Effect of Changes in Accounting Principles for discussion of the
charges recorded in 2003 and 2001.

28

Domestic Utility Electric
Margins Electric margins and MWh sales for Alliant Energy were as follows
(in thousands):

|                     | Revenues and Costs | MWhs Sold 
|-------------------- | ------------------ | ----------
|                     |                   
|                     | 2003               | 2002      
|                     |                   
|Residential          |                    | $684,574  
|Commercial           |                    | 409,704   
|Industrial           |                    | 571,608   
|                     |                    |           
|Total from retail    |                   
|customers            |                    | 1,665,886 
|Sales for resale     |                    | 195,822   
|Other                |                    | 55,360    
|                     |                    |           
|Total revenues/sales |                    | 1,917,068 
|                     |                    |           
|Electric production  |                   
|fuel and purchased-  |                   
|power expense        |                    | 730,594   
|                     |                    |           
|Margin               |                    | $1,186,474
|                     |                    |           

|* | Reflects
the % change from 2002 to 2003.  ** Reflects the % change from 2001 to 2002.
|- | -------------------------------------------------------------------------------------

Electric margin increased $85.8
million, or 8%, and $39.3 million, or 4%, for 2003 and 2002, respectively, primarily due
to the impact of rate increases implemented in 2003 and 2002, including increased revenues
to recover a significant portion of higher utility operating expenses, lower
purchased-power and fuel costs impacting margins, the impact of WP&L implementing
seasonal rates in 2003 for the first time and increased sales resulting from continued
modest retail customer growth. The 2003 increase was also due to higher sales to
non-retail customers, partially offset by milder weather conditions in 2003 compared to
2002. The 2002 increase was also due to more favorable weather conditions, partially
offset by reduced energy conservation revenues (which were largely offset by lower energy
conservation expenses) and the impact of a sluggish economy.

In April 2003, WP&L implemented
seasonal electric rates that are designed to result in higher rates for the peak demand
period from June 1 through Sept. 30 and lower rates in all other periods during each
calendar year. As a result, total annual revenues are not expected to be impacted
significantly. However, given the seasonal rates were not implemented in 2003 until April,
the impact of seasonal rates increased electric margins by approximately $6 million in
2003 compared to 2002 when no seasonal rates were in effect. As a result, the first
quarter of 2004 margins are expected to be negatively impacted in comparison to the 2003
margin for the same period by a similar amount.

Domestic Utility Gas
Margins Gas margins and Dth sales for Alliant Energy were as follows (in
thousands):

|                     | Revenues and Costs | Dths Sold
|-------------------- | ------------------ | ---------
|                     |                   
|                     | 2003               | 2002     
|                     |                   
|Residential          |                    | $310,658 
|Commercial           |                    | 162,651  
|Industrial           |                    | 34,201   
|Transportation/other |                    | 59,416   
|                     |                    |          
|Total revenues/sales |                    | 566,926  
|                     |                    |          
|Cost of gas sold     |                    | 396,102  
|                     |                    |          
|Margin               |                    | $170,824 
|                     |                    |          

|* | Reflects
the % change from 2002 to 2003.  ** Reflects the % change from 2001 to 2002.
|- | -------------------------------------------------------------------------------------

Gas revenues and cost of gas sold
were higher in 2003 and 2001 as compared to 2002 primarily due to increased natural gas
prices. Due to Alliant Energys rate recovery mechanisms for gas costs, these price
differences alone had little impact on gas margin. Gas margin increased $25.8 million, or
18%, and $18.0 million, or 14%, for 2003 and 2002, respectively, primarily due to the
impact of several rate increases implemented during 2003 and 2002, improved results of $3
million from WP&Ls performance-based gas commodity cost recovery program
(benefits are shared by ratepayers and shareowners), and continued modest customer growth.
The 2003 increase was also due to slightly more favorable weather conditions during the
heating season in 2003 compared to 2002. The 2002 increase was also due to the negative
impact high gas prices in early 2001 had on gas consumption during that period, partially
offset by reduced energy conservation revenues (which were largely offset by lower energy
conservation expenses).

29

Refer to Note 1(i)of Alliant
Energys Notes to Consolidated Financial Statements for information
relating to utility fuel and natural gas cost recovery.

Domestic Utility Other
Revenues Other revenues for the domestic utilities increased $18.8 million
and decreased $16.5 million for 2003 and 2002, respectively. The 2003 increase was largely
due to increased revenues from WindConnect, which includes Alliant Energys
wind farm construction management projects. The 2002 decrease was primarily due to lower
non-commodity products and services revenues. These 2003 and 2002 variances were largely
offset by variances in other operation and maintenance expenses for the domestic
utilities.

Non-regulated Revenues
Details regarding Alliant Energys non-regulated revenues were as follows
(in millions):

|                              | 2003 | 2002 | 2001
|----------------------------- | ---- | ---- | ----
|                             
|Integrated Services           | $382 | $134 | $193
|International                 | 117  | 100  | 77  
|Non-regulated Generation      | 15   | --   | --  
|Other (includes eliminations) | 26   | 21   | 18  
|                             
|                              | $540 | $255 | $288
|                             

The 2003 Integrated Services increase
was primarily due to increased gas revenues at Alliant Energys natural gas marketing
business, NG Energy, largely due to the impact of a new accounting pronouncement, higher
natural gas prices and increased volumes sold. Increased revenues at Alliant Energys
energy and environmental services businesses also contributed to the increase. Refer to
Note 10(d) of Alliant Energys Notes to Consolidated Financial Statements
for further discussion of the impact of the new accounting pronouncement. The 2002
Integrated Services decrease was primarily due to decreased gas prices and lower energy
services revenues. The increased International revenues for 2003 and 2002 were primarily
due to acquisitions of additional combined heat and power facilities in China during 2001,
2002 and 2003. The 2003 Non-regulated Generation revenues were due to generation from a
309-MW, non-regulated, tolled, natural gas-fired power plant in Neenah, Wisconsin.

Other Operating Expenses
Other operation and maintenance expenses for the domestic utilities increased
$78.5 million in 2003, primarily due to increases in the amortization of deferred costs
that are now being recovered in rates and increased employee and retiree benefits
(primarily compensation, medical and pension costs), WindConnect and nuclear
expenses. The increased nuclear expenses resulted primarily from a planned refueling
outage at Kewaunee in 2003. There was no refueling outage in 2002. These items were
partially offset by lower fossil generation expenses due to the timing of boiler plant
maintenance. The 2002 increase of $36.7 million was primarily due to increased fossil and
nuclear generation expenses, employee and retiree benefits, transmission and distribution
expenses and higher regulatory amortizations, partially offset by lower energy
conservation and non-commodity products and services expenses and uncollectible account
balances. A significant portion of these cost increases are being recovered as a result of
the rate increases implemented during 2003 and 2002. Refer to Rates and Regulatory
Matters for additional information.

Non-regulated operation and
maintenance expenses were as follows (in millions):

|                              | 2003 | 2002 | 2001
|----------------------------- | ---- | ---- | ----
|                             
|Integrated Services           | $366 | $119 | $181
|International                 | 90   | 77   | 59  
|Non-regulated Generation      | 10   | 7    | 5   
|Other (includes eliminations) | 27   | 20   | 14  
|                             
|                              | $493 | $223 | $259
|                             

The Integrated Services,
International and Non-regulated Generation variances were largely driven by the same
factors impacting the revenue variances discussed previously. The 2003 Integrated Services
increase was also due to an asset valuation charge of $6 million in 2003 related to a
small waste-to-energy plant. Charges of $4 million, $5 million and $2 million are included
in Non-regulated Generation in 2003, 2002 and 2001, respectively, for
cancelled contracts and generation projects.

30

Depreciation and amortization expense
increased $23.0 million and decreased $12.2 million in 2003 and 2002, respectively. The
2003 increase was primarily due to utility property additions, an increase of $9.5 million
in non-regulated depreciation and amortization due largely to acquisitions at the
non-regulated businesses and higher contributions of $4 million to IP&Ls nuclear
decommissioning trust fund. The 2002 decrease was primarily due to: a decrease of $14
million from implementation of lower depreciation rates at IP&L on Jan. 1, 2002,
resulting from an updated depreciation study; lower decommissioning expense based on
reduced retail funding levels at WP&L; and the elimination of $5 million of goodwill
amortization expense in compliance with new accounting rules effective in 2002. These
items were partially offset by utility property additions, acquisitions at the
non-regulated businesses and increased software amortizations.

Taxes other than income taxes
decreased $14.4 million in 2003 primarily due to decreased property taxes related to a
2003 property tax settlement and expiration of provisions which required additional
payments in the early years of the revised property tax regulations in Iowa at IP&L.
In 2003, IP&L settled a property tax appeal it had filed with the Iowa Department of
Revenue and Finance. In addition to the benefits realized in 2003, IP&L expects to
realize reductions in property tax expense of $5.1 million, $3.6 million and $2.1 million
in 2004, 2005, and 2006 and thereafter, respectively, in comparison to what property tax
expense would have been without the settlement. The impact of the settlement on ratepayers
will be addressed in future rate making proceedings.

Interest Expense and Other
Interest expense increased $24.4 million and $0.7 million in 2003 and 2002,
respectively. The 2003 increase was due to higher average borrowing rates at Resources due
to an increase in the mix of long- versus short-term debt outstanding, higher credit
facility fees at Resources and higher interest expense at the parent company. These items
were partially offset by the impact of lower average borrowings at Resources. The 2002
increase was due to higher non-regulated borrowings, substantially offset by the impact of
lower interest rates on Alliant Energys variable rate borrowings and lower
short-term debt at the Alliant Energy parent level, largely due to the impact of proceeds
received in 2001 from a common equity offering.

Loss on early extinguishment of debt
in 2003 includes debt repayment premiums and charges for the unamortized debt expenses
related to long-term debt retirements of $71.5 million of senior notes at Resources and
$24.0 million of senior notes at the Alliant Energy parent company.

Equity (income) loss from Alliant
Energys unconsolidated investments was as follows (in millions):

|                                | 2003 | 2002 | 2001
|------------------------------- | ---- | ---- | ----
|                               
|ATC                             |      | ($16 | )   
|Brazil                          |      | (9   | )   
|New Zealand                     |      | (8   | )   
|WRPC                            |      | (5   | )   
|Cargill-Alliant (sold in 2002)  |      | --   |     
|Synfuel (began operations 5/02) |      | 20   |     
|Other                           |      | (1   | )   
|                               
|                                |      | ($19 | )   
|                               

Equity income from unconsolidated investments
increased $32 million and decreased $32 million in 2003 and 2002, respectively. The
improved results for Brazil during 2003 were primarily due to: rate increases implemented
at all five of the Brazil operating companies throughout 2003; an increase in electric
sales volumes of approximately 7% in 2003 compared to 2002; foreign currency transaction
gains of $2.4 million and losses of $6.5 million during 2003 and 2002, respectively,
related to approximately $40 million in debt at one of the Brazilian operating companies;
and charges of $7.7 million during 2002 resulting from the receipt of regulatory orders
related to the recovery of various costs. The lower 2002 results from the Brazil
investments were also due to higher interest expense at the Brazil operating companies,
partially offset by an approximate 5% increase in electric sales volumes during 2002 (a
drought-driven rationing program was in place for seven months in 2001 and only two months
in 2002). The 2001 Brazil results included a charge related to the impacts of a settlement
reached between the Brazilian government and the distribution companies on the economic
resolution of various cost recovery issues. The increased earnings from New Zealand during
2003 were primarily due to higher energy prices and gains on asset sales in 2003. The 2002
increased earnings from New Zealand were primarily due to the negative impacts of drought
conditions in 2001. In 2002, Synfuel purchased an equity interest in a synthetic fuel
processing facility. The synthetic fuel project generates operating losses at its fuel
processing facility, which are more than offset by tax credits and the tax benefit of the
losses the project generates. All tax benefits are included in Income taxes in
Alliant Energys Consolidated Statements of Income. Refer to Other Matters
 Other Future Considerations for further discussion of the tax credits
associated with the Synfuel investment.

31

AFUDC increased $13.0 million in
2003, primarily due to ongoing construction of the Emery plant. Preferred dividend
requirements of subsidiaries increased $10.7 million in 2003 due to an increase in the
aggregate amount of preferred stock outstanding at IP&L and a higher dividend rate.
Refer to Note 9 of Alliant Energys Notes to Consolidated Financial
Statements for discussion of the asset valuation charges recorded by Alliant Energy
in 2002 related to its McLeod available-for-sale securities.

Miscellaneous, net income increased
$22.9 million and decreased $4.7 million in 2003 and 2002, respectively, largely due to
the recording of pre-tax asset valuation charges related to Alliant Energys
investments in Enermetrix, Inc. ($8.5 million in 2002) and Energy Technologies ($2.8 million in
2003 and $10.3 million in 2002). The 2003 increase was also due to improvements in the
non-cash valuation adjustments related to Alliant Energys McLeod trading securities,
foreign currency transaction gains and gains from asset sales realized in 2003. These
items were partially offset by lower interest income from loans to discontinued operations
due to asset sales during 2003. The 2002 decrease was also impacted by lower interest
income (the 2001 results included $10 million from tax settlements), gains from asset
sales realized in 2001 and lower pre-tax, non-cash SFAS 133 valuation charges of $29
million, related to the net change in the value of the McLeod trading securities and the
derivative component of Resources exchangeable senior notes. Refer to Note 1(p) of
Alliant Energys Notes to Consolidated Financial Statements for further
discussion.

Income Taxes The
effective income tax rates for Alliant Energys continuing operations were 28.9%,
31.2% and 27.8% in 2003, 2002 and 2001, respectively. Alliant Energy recorded tax benefits
of $6.4 million in 2001 related to a court ruling on a federal tax case. Refer to Note
5of Alliant Energys Notes to Consolidated Financial Statements
for additional information.

Income from Discontinued
Operations  Refer to Overview and Note 16 of Alliant
Energys Notes to Consolidated Financial Statements for discussion of
Alliant Energys discontinued operations.

Cumulative Effect of Changes in
Accounting Principles  In 2003, Alliant Energy recorded after-tax charges of
$4 million and $2 million for the cumulative effect of changes in accounting principles
related to the adoption on Jan. 1, 2003 of SFAS 143 and EITF Issue 02-3 within WPC and
Integrated Services, respectively. Refer to Notes 10(d) and 10(a) of Alliant Energys
Notes to Consolidated Financial Statements for further information on the EITF
Issue 02-3 charge and for discussion of the charge incurred in 2001 for a cumulative
effect of a change in accounting principle, respectively.

IP&L RESULTS OF
OPERATIONS

Overview IP&Ls earnings available for common stock decreased $0.9 million and $6.6
million in 2003 and 2002, respectively. The 2003 decrease was primarily due to increased
other operation and maintenance, depreciation and amortization, and preferred dividend
expenses, largely offset by higher electric and gas margins, lower property taxes and
higher AFUDC. The 2002 decrease was primarily due to increased operating expenses, a
higher effective income tax rate and lower interest income, partially offset by higher
electric and gas margins.

Electric Margins Electric margins and MWh sales for IP&L were as follows (in thousands):

|                     | Revenues and Costs | MWhs Sold
|-------------------- | ------------------ | ---------
|                     |                   
|                     | 2003               | 2002     
|                     |                   
|Residential          |                    | $367,681 
|Commercial           |                    | 239,362  
|Industrial           |                    | 327,838  
|                     |                    |          
|Total from retail    |                   
|customers            |                    | 934,881  
|Sales for resale     |                    | 40,249   
|Other                |                    | 31,852   
|                     |                    |          
|Total revenues/sales |                    | 1,006,982
|                     |                    |          
|Electric production  |                   
|fuel and purchased-  |                   
|power expense        |                    | 320,852  
|                     |                    |          
|Margin               |                    | $686,130 
|                     |                    |          

|* | Reflects
the % change from 2002 to 2003.  ** Reflects the % change from 2001 to 2002.
|- | -------------------------------------------------------------------------------------

32

Electric margin increased $20.6
million, or 3%, and $19.6 million, or 3%, for 2003 and 2002, respectively, primarily due
to the impact of retail rate increases implemented during 2003 and 2002, including
increased revenues to recover a significant portion of IP&Ls increased operating
expenses, lower purchased-power capacity costs of $6 million, and increased sales
resulting from continued modest retail customer growth. Higher sales to non-retail
customers also contributed to the 2003 increase, which was partially offset by the impact
of milder weather conditions in 2003 compared to 2002 and a sluggish economy. Also
contributing to the 2002 increase were more favorable weather conditions in 2002 compared
to 2001. The 2002 increase was partially offset by reduced energy conservation revenues of
$10 million (which were largely offset by lower energy conservation expenses).

Gas Margins Gas
margins and Dth sales for IP&L were as follows (in thousands):

|                     | Revenues and Costs | Dths Sold
|-------------------- | ------------------ | ---------
|                     |                   
|                     | 2003               | 2002     
|                     |                   
|Residential          |                    | $173,598 
|Commercial           |                    | 88,057   
|Industrial           |                    | 24,595   
|Transportation/other |                    | 8,299    
|                     |                    |          
|Total revenues/sales |                    | 294,549  
|                     |                    |          
|Cost of gas sold     |                    | 209,817  
|                     |                    |          
|Margin               |                    | $84,732  
|                     |                    |          

|* | Reflects
the % change from 2002 to 2003.  ** Reflects the % change from 2001 to 2002.
|- | -------------------------------------------------------------------------------------

Gas revenues and cost of gas sold
were higher in 2003 and 2001 as compared to 2002 due to increased natural gas prices.
These increases alone had no impact on IP&Ls gas margin given its rate recovery
mechanism for gas costs. Gas margin increased $8.7 million, or 11%, and $2.1 million, or
3%, for 2003 and 2002, respectively, primarily due to the impact of a retail rate increase
implemented during 2002. Also contributing to the 2003 increase were increased sales,
primarily due to slightly more favorable weather conditions during the heating season in
2003 compared to 2002. Also contributing to the 2002 increase was the negative impact high
gas prices in early 2001 had on gas consumption during that period, partially offset by
reduced energy conservation revenues of $4 million (which were largely offset by lower
energy conservation expenses).

Refer to Note 1(i)of Alliant
Energys Notes to Consolidated Financial Statements for information
relating to utility fuel and natural gas cost recovery.

Steam and Other
Revenues  Steam and other revenues increased $7.0 million and
decreased $5.8 million for 2003 and 2002, respectively. The 2003 increase was primarily
due to increased construction management revenues from WindConnect. The 2002
decrease was primarily due to lower non-commodity products and services revenues. These
2003 and 2002 variances were largely offset by variances in other operation and
maintenance expenses.

Other Operating Expenses
Other operation and maintenance expenses increased $23.1 million and $8.0
million for 2003 and 2002, respectively. The 2003 increase was largely due to higher
employee and retiree benefits (primarily compensation, medical and pension costs),
WindConnect and steam production fuel costs. These items were partially offset by
decreased transmission and distribution and generation expenses. The 2002 increase was
largely due to increased generation, employee and retiree benefits and transmission and
distribution expenses. These items were partially offset by lower expenses for energy
conservation, non-commodity products and services and uncollectible customer account
balances.

Depreciation and amortization expense
increased $17.3 million and decreased $2.4 million for 2003 and 2002, respectively. The
2003 increase was largely due to higher amortization of software of $7 million, property
additions and increased contributions of $4 million to the nuclear decommissioning trust
fund. The 2002 decrease was largely due to a $14 million reduction in depreciation expense
from implementation of lower depreciation rates on Jan. 1, 2002, resulting from an updated
depreciation study, largely offset by property additions.

Taxes other than income taxes
decreased $13.8 million for 2003 largely due to decreased property taxes, related to a
2003 property tax settlement and expiration of provisions which required additional
payments in the early years of the revised property tax regulations in Iowa. Refer to
Alliant Energy Results of Operations  Other Operating Expenses for
further discussion.

33

Interest Expense and Other
 AFUDC increased $11.6 million for 2003 due to ongoing construction of the Emery
plant. Interest income and other decreased $5.6 million for 2002 largely due to IP&L
realizing $5 million in interest income from tax settlements in 2001.

Income Taxes The
effective income tax rates were 41.4%, 40.7% and 35.1% in 2003, 2002 and 2001,
respectively. Refer to Note 5 of IP&Ls Notes to Consolidated Financial
Statements for additional information.

Preferred Dividend
Requirements Preferred dividend requirements increased $10.7 million for
2003 due to an increase in the aggregate amount of preferred stock outstanding and a
higher dividend rate.

WP&L RESULTS OF
OPERATIONS

Overview WP&Ls earnings available for common stock increased $34.0 million and $7.4
million in 2003 and 2002, respectively, primarily due to higher electric and gas margins,
partially offset by increased operating expenses.

Electric Margins Electric margins and MWh sales for WP&L were as follows (in thousands):

|                     | Revenues and Costs | MWhs Sold
|-------------------- | ------------------ | ---------
|                     |                   
|                     | 2003               | 2002     
|                     |                   
|Residential          |                    | $316,893 
|Commercial           |                    | 170,342  
|Industrial           |                    | 243,770  
|                     |                    |          
|Total from retail    |                   
|customers            |                    | 731,005  
|Sales for resale     |                    | 155,573  
|Other                |                    | 23,508   
|                     |                    |          
|Total revenues/sales |                    | 910,086  
|                     |                    |          
|Electric production  |                   
|fuel and purchased-  |                   
|power expense        |                    | 409,742  
|                     |                    |          
|Margin               |                    | $500,344 
|                     |                    |          

|* | Reflects
the % change from 2002 to 2003.  ** Reflects the % change from 2001 to 2002.
|- | -------------------------------------------------------------------------------------

Electric margin increased $65.2
million, or 15%, and $19.7 million, or 5%, for 2003 and 2002, respectively, primarily due
to the implementation of rate increases during 2003 and 2002, including increased revenues
to recover a significant portion of WP&Ls increased operating expenses and
increased sales from continued modest retail customer growth. Also contributing to the
2003 increase were the impact of WP&L implementing seasonal rates in 2003 for the
first time, lower purchased-power and fuel costs impacting margin and higher sales to
non-retail customers. These items were partially offset by lower energy conservation
revenues and the impact of milder weather conditions in 2003 compared to 2002. Also
contributing to the 2002 increase were more favorable weather conditions in 2002 compared
to 2001, partially offset by the sluggish economy.

In April 2003, WP&L implemented
seasonal electric rates that are designed to result in higher rates for the peak demand
period from June 1 through Sept. 30 and lower rates in all other periods during each
calendar year. As a result, total annual revenues are not expected to be impacted
significantly. However, given the seasonal rates were not implemented in 2003 until April,
the impact of seasonal rates increased electric margins by approximately $6 million in
2003 compared to 2002 when no seasonal rates were in effect. As a result, the first
quarter of 2004 margins are expected to be negatively impacted in comparison to the 2003
margin for the same period by a similar amount.

34

Gas Margins Gas
margins and Dth sales for WP&L were as follows (in thousands):

|                     | Revenues and Costs | Dths Sold
|-------------------- | ------------------ | ---------
|                     |                   
|                     | 2003               | 2002     
|                     |                   
|Residential          |                    | $137,060 
|Commercial           |                    | 74,594   
|Industrial           |                    | 9,606    
|Transportation/other |                    | 51,117   
|                     |                    |          
|Total revenues/sales |                    | 272,377  
|                     |                    |          
|Cost of gas sold     |                    | 186,285  
|                     |                    |          
|Margin               |                    | $86,092  
|                     |                    |          

|* | Reflects
the % change from 2002 to 2003.  ** Reflects the % change from 2001 to 2002.
|- | -------------------------------------------------------------------------------------

Gas revenues and cost of gas sold
were higher in 2003 and 2001 as compared to 2002 due to increased natural gas prices.
These increases alone had little impact on WP&Ls gas margin given its rate
recovery mechanism for gas costs. Gas margin increased $17.1 million, or 25%, and $15.9
million, or 30%, for 2003 and 2002, respectively, primarily due to the impact of rate
increases implemented during 2003 and 2002, improved performance of $3 million from
WP&Ls performance-based commodity cost recovery program (benefits are shared by
ratepayers and shareowners), and continued modest customer growth. The 2002 increase was
also due to the negative impact high gas prices in early 2001 had on gas consumption
during that period.

Refer to Note 1(i)of Alliant
Energys Notes to Consolidated Financial Statements for information
relating to utility fuel and natural gas cost recovery.

Other Revenues
 Other revenues increased $11.8 million and decreased $10.6 million for 2003 and
2002, respectively. The 2003 increase was primarily due to increased revenues from
WindConnect. The 2002 decrease was primarily due to decreased non-commodity products
and services revenues. These 2003 and 2002 variances were largely offset by variances in
other operation and maintenance expenses.

Other Operating Expenses
 Other operation and maintenance expenses increased $52.9 million and $28.7
million for 2003 and 2002, respectively. The 2003 increase was largely due to increases in
the amortization of deferred costs that are now being recovered in rates, employee and
retiree benefits (primarily compensation, medical and pension costs), WindConnect
and nuclear expenses. The increased nuclear expenses resulted primarily from a planned
refueling outage at Kewaunee in 2003. There was no refueling outage in 2002. These items
were partially offset by lower fossil generation expenses. The 2002 increase was largely
due to higher fossil generation, employee and retiree benefits, energy conservation, and
transmission and distribution expenses, and higher regulatory amortization, partially
offset by decreased non-commodity products and services expenses. A significant portion of
these cost increases are being recovered as a result of the rate increases implemented
during 2003 and 2002.

Depreciation and amortization expense
decreased $3.8 million and $12.3 million for 2003 and 2002, respectively. The 2003
decrease was primarily due to lower software amortizations, partially offset by property
additions. The 2002 decrease was largely due to lower decommissioning expense based on
reduced retail funding levels, partially offset by higher software amortizations.

Interest Expense and Other
Interest expense decreased $2.3 million and $3.3 million for 2003 and 2002,
respectively. The 2003 decrease was largely due to lower average borrowings outstanding.
The 2002 decrease was largely due to lower average interest rates on the outstanding
borrowings. Equity income from unconsolidated investments increased $3.7 million for 2003
due to higher earnings at WRPC and ATC.

Income Taxes The
effective income tax rates were 36.4%, 35.6% and 35.9% in 2003, 2002 and 2001,
respectively. Refer to Note 5 of WP&Ls Notes to Consolidated Financial
Statements for additional information.

LIQUIDITY AND
CAPITAL RESOURCES

Overview  Based
on expected operating cash flows, coupled with actions Alliant Energy has taken and
expects to take to strengthen its balance sheet, Alliant Energy believes it will be able
to secure the capital it requires to implement its updated strategic plan. Alliant Energy
believes its ability to secure additional capital has been significantly enhanced by the
successful execution of the strategic actions it announced in November 2002. Refer to
Strategic Overview  November 2002 Plan for further discussion.

35

Alliant Energys capital
requirements are primarily attributable to construction programs and its debt maturities.
Cash flows from Alliant Energys utility subsidiaries are expected to cover dividends
and capital expenditures related to infrastructure and reliability investments. The
capital expenditures associated with building additional generation are expected to total
$650 million through 2010 and are expected to be financed largely through external
financings, supplemented by internally generated funds. In order to balance its capital
structure, Alliant Energy may periodically issue additional common equity as well as debt.

Cash Flows 
Selected information from Alliant Energys, IP&Ls and WP&Ls
Consolidated Statements of Cash Flows was as follows (in thousands):

|                            | Alliant Energy | IP&L     | WP&L
|--------------------------- | -------------- | -------- | ----
|                           
|Cash flows from (used for): | 2003           | 2002     | 2001
|                           
|Operating activities        |                | $419,990 |     
|Financing activities        |                | 34,080   |     
|Investing activities        |                | (274,648 | )   

In 2003, Alliant Energys cash
flows from operating activities decreased $135 million primarily due to changes in working
capital caused largely by changes in the levels of accounts receivable sold and higher
inventory balances, partially offset by higher net income. Cash flows from financing
activities decreased $38 million primarily due to changes in the amounts of debt and
preferred stock issued and retired, partially offset by proceeds from a 2003 common equity
offering and lower common stock dividends due to the dividend reduction implemented in
2003. Cash flows used for investing activities decreased $358 million primarily due to
proceeds from asset sales, partially offset by construction and acquisition expenditures
associated with the construction of the Emery plant. In 2002, Alliant Energys cash
flows from operating activities increased $122 million primarily due to changes in working
capital. Cash flows from financing activities decreased $89 million primarily due to
proceeds from the issuance of common stock in 2001, partially offset by a net increase in
the amount of preferred stock outstanding at IP&L. Cash flows used for investing
activities decreased $22 million primarily due to lower construction and acquisition
expenditures, partially offset by proceeds received in 2001 from the transfer of
WP&Ls transmission assets to ATC.

In 2003, IP&Ls cash flows
from operating activities increased $71 million primarily due to changes in working
capital caused largely by changes in the levels of accounts receivable sold. Cash flows
from financing activities increased $200 million primarily due to a higher capital
contribution from Alliant Energy in 2003 compared to 2002 and changes in the amount of
debt and preferred stock issued and retired. Cash flows used for investing activities
increased $281 million primarily due to construction and acquisition expenditures
associated with the construction of the Emery plant. In 2002, IP&Ls cash flows
from operating activities decreased $56 million primarily due to changes in working
capital caused largely by changes in the levels of accounts receivable sold. Cash flows
used for financing activities decreased $108 million due to a net increase in the amount
of preferred stock outstanding and a capital contribution of $60 million by Alliant
Energy. Cash flows used for investing activities increased $47 million due to increased
levels of construction expenditures.

In 2003, WP&Ls cash flows
from operating activities decreased $85 million primarily due to changes in working
capital, partially offset by higher net income. Cash flows used for financing activities
decreased $16 million primarily due to a higher capital contribution from Alliant Energy
in 2003 compared to 2002, partially offset by changes in the amount of debt issued and
retired. Cash flows used for investing activities decreased $79 million primarily due to
proceeds from the sale of WP&Ls water utility serving the Beloit area and lower
contributions to its nuclear decommissioning trust fund. In 2002, WP&Ls cash
flows from operating activities increased $88 million due to changes in working capital
and cash flows used for investing activities increased $71 million primarily due to
proceeds received from the transfer of WP&Ls transmission assets to ATC in 2001.

Certain Regulatory
Approvals/Requirements  PUHCA  In 2001, Alliant
Energy and Resources received SEC approval under an Omnibus Financing Order for their
ongoing program of external financing, credit support arrangements and other related
proposals for the period through Dec. 31, 2004. Among other things, the approval
authorized Alliant Energy, directly or through financing subsidiaries, to issue common and
preferred stock, unsecured long-term debt securities and other equity-linked securities up
to an amount of $1.5 billion; to provide guarantees and credit support for obligations of
its subsidiaries up to an amount of $3 billion; to enter into hedging transactions to
manage interest rate costs and risk exposure; and to increase its aggregate investment
limit in EWGs and FUCOs to 100% of consolidated retained earnings. The approval, among
other things, also authorized Resources to provide guarantees and credit support for
obligations of non-utility subsidiaries up to an amount of $600 million outstanding at any
one time.

36

In June 2002, Alliant Energy received
approval (valid through Dec. 31, 2004) from the SEC to issue and sell up to an aggregate
amount of $1 billion of short-term debt outstanding at any one time and to guarantee
short-term borrowings by Resources in an aggregate amount that would not exceed $700
million at any one time in addition to its other guarantee authority granted in the
Omnibus Financing Order discussed previously. In October 2002, IP&L received SEC
approval (valid through Dec. 31, 2004) to issue short-term debt in a principal amount
which would not at any one time exceed $300 million. Issuance of debt securities by
WP&L is exempt from regulation under provisions of PUHCA.

In 2004, Alliant Energy and certain
of its subsidiaries will file appropriate applications with the SEC for renewal of
financing, guarantee and other authority required to accommodate its financing needs.
Alliant Energy expects that such authority will be granted by the SEC on a timely basis.

Alliant Energy is also subject to a
PUHCA requirement whereby Alliant Energys common equity balance must be at least 30%
of its total consolidated capitalization, including short-term debt. Alliant Energys
common equity ratio as of Dec. 31, 2003, as computed under this requirement, was 46.8%.

State Regulatory Agencies
 At Dec. 31, 2003, IP&L and WP&L were authorized by the appropriate
state regulatory agencies to issue short-term debt of $250 million and $240 million,
respectively. The $240 million borrowing authority for WP&L includes $85 million for
general corporate purposes, an additional $100 million should WP&L no longer sell its
utility receivables and an additional $55 million should WP&L need to repurchase its
variable rate bonds.

Shelf Registrations  In
2003, Alliant Energy and Resources, in a joint filing, and IP&L filed shelf
registrations. The joint filing relates to proposed offerings, from time to time, of an
aggregate amount of up to $400 million of Alliant Energys common stock, stock
purchase contracts, and stock purchase units; and Resources senior unsecured debt
securities inclusive of the full and unconditional guarantee by Alliant Energy of
Resources debt securities. A total of $68 million of securities remains available
under the joint shelf registration. The IP&L shelf registration relates to proposed
offerings, from time to time, of an aggregate of up to $150 million of preferred stock,
senior unsecured debt securities and collateral trust bonds. A total of $110 million of
securities remains available under the IP&L shelf registration.

Cash and Temporary Cash
Investments  As of December 31, 2003, Alliant Energy and its subsidiaries
had approximately $242 million of cash and temporary cash investments, of which
approximately $67 millionconsisted of deposits in foreign bank accounts. Due to
Alliant Energy electing permanent investment of earnings for federal income tax purposes
for certain foreign subsidiaries, a majority of the cash held in foreign banks cannot be
repatriated without material tax obligations. Alliant Energy plans to use a portion of
this cash held in foreign bank accounts to invest in future capital projects in China.

Sale of Accounts Receivable
 Refer to Note 4 of the Notes to Consolidated Financial Statements
for information on Alliant Energys sale of accounts receivable program.

Short-term Debt 
Alliant Energy and its subsidiaries are party to various credit facilities and other
borrowing arrangements. In September 2003, Alliant Energy completed the syndication of
three 364-day revolving credit facilities (facilities) totaling $650 million ($200 million
for Alliant Energy at the parent company level, $250 million for IP&L and $200 million
for WP&L), available for direct borrowing or to support commercial paper. Alliant
Energy has the option to convert these facilities into one-year term loans. The facility
at the parent company level is used to fund Resources and Corporate Services as well as
its own needs. It is expected that Alliant Energy, IP&L and WP&L will be able to
renew or replace these facilities on favorable terms when they mature in 2004. In addition
to funding working capital needs, the availability of short-term financing provides the
companies flexibility in the issuance of long-term securities. The level of short-term
borrowing fluctuates based on seasonal corporate needs, the timing of long-term financings
and capital market conditions. Information regarding commercial paper at Dec. 31, 2003 and
during 2003 was as follows (dollars in millions):

|                                             | Alliant    | Parent  |            |       
|-------------------------------------------- | ---------- | ------- | ---------- | ------
|                                             | Energy     | Company | IP&L       | WP&L  
|                                            
|Commercial paper:                            |            |         |            |       
|Amount outstanding at Dec. 31, 2003          | $107.5     | $--     | $107.5     | $--   
|Weighted average maturity at Dec. 31, 2003   | 13 days    | N/A     | 13 days    | N/A   
|Discount rates at Dec. 31, 2003              | 1.20-1.22% | N/A     | 1.20-1.22% | N/A   
|Available capacity at Dec. 31, 2003          | $542.5     | $200.0  | $142.5     | $200.0
|Average daily amount outstanding during 2003 | $187.7     | $97.4   | $60.5      | $29.8 
|Maximum daily amount outstanding during 2003 | $346.5     | $215.0  | $190.0     | $84.5 

37

Alliant Energys,
IP&Ls and WP&Ls credit facility agreements contain various covenants,
including the following:

|                                   | Covenant              | Status at    
|---------------------------------- | --------------------- | -------------
|Covenant Description (*)           | Requirement           | Dec. 31, 2003
|                                  
|Alliant Energy:                    |                       |              
|Consolidated debt-to-capital ratio | Less than 65%         | 48.7%        
|Consolidated net worth             | At least $1.4 billion | $2.4 billion 
|EBITDA interest coverage ratio     | At least 2.5x         | 3.6x         
|IP&L debt-to-capital ratio         | Less than 58%         | 47.3%        
|WP&L debt-to-capital ratio         | Less than 58%         | 29.9%        

|(*) | In
compliance with the agreements, results of discontinued operations have been included in
the covenant calculations.
|--- | ----------------------------------------------------------------------------------------------------------------------

The debt component of the capital
ratios includes long- and short-term debt (excluding non-recourse debt and trade
payables), capital lease obligations, letters of credit and guarantees of the foregoing
and unfunded vested benefits under qualified pension plans. The equity component excludes
accumulated other comprehensive income (loss). The EBITDA component of the interest
coverage ratio is calculated by adding back depreciation and amortization expense to
operating income.

Alliant Energys credit facility
contains a cross default provision providing it is a default under the credit facility if
the majority-owned subsidiaries of Alliant Energy default on debt totaling $25 million or
more. A default by a minority-owned affiliate would not create a cross default. A default
by Alliant Energy or Resources would not be a cross default for WP&L or IP&L, nor
would a default by either of the utilities create a cross default for the other utility.

Alliant Energys,
IP&Ls and WP&Ls credit facilities contain negative pledge provisions,
which generally prohibit placing liens on any of the property of Alliant Energy or its
subsidiaries with certain exceptions, including among others, for the issuance of secured
debt under first mortgage bond indentures by IP&L and WP&L, non-recourse project
financing, purchase money liens, and liens on the ownership interests in or assets of
foreign subsidiaries to secure not more than $200 million aggregate principal amount of
foreign debt.

Alliant Energys,
IP&Ls and WP&Ls credit facilities contain material adverse change
(MAC) clauses. Before each extension of credit (each borrowing under the facilities), each
borrower must represent and warrant that no MAC has occurred since December 31, 2002. A
MAC is defined as a change that would create: (1) a MAC in, or a material adverse effect
upon, the operations, business, properties, liabilities (actual or contingent), condition
(financial or otherwise) or prospects of the borrower or the borrower and its subsidiaries
taken as a whole; (2) a material impairment of the ability of the borrower to perform its
obligations under a credit facility agreement to which it is a party; or (3) a MAC upon
the legality, validity, binding effect or enforceability against the borrower of any
credit agreement to which it is a party.

Alliant Energys,
IP&Ls and WP&Ls credit facilities contain provisions that require,
during the term of the facilities, any proceeds from asset sales, with certain exclusions,
in excess of 5% of their respective consolidated assets in any 12-month period be used to
reduce commitments under their respective facilities. Exclusions include, among others,
certain inter-company sales, certain sale and lease-back transactions and the WPC IPO.

Long-term Debt
 In September 2003, IP&L issued $100 million of 5.875% unsecured senior
debentures due 2018 and used the majority of the net proceeds to redeem $27.5 million of
its 7.25% first mortgage bonds, $20 million of its 8.625% first mortgage bonds and $50
million of its 7.875% subordinated deferrable interest debentures. In October 2003,
IP&L completed a $100 million issuance of 6.45% unsecured senior debentures due 2033
and used the majority of the net proceeds to redeem $94.0 million of its 7.625% first
mortgage bonds.

In the fourth quarter of 2003, a
portion of the proceeds from the WPC IPO were used to retire approximately $96 million of
long-term debt, consisting of $24 million of Alliant Energys 8.59% senior notes (at
parent company), $17.5 million of Resources 7% senior notes, $39 million of
Resources 7.375% senior notes and $15 million of Resources 9.75% senior notes.
Premiums of approximately $0.10 per share were incurred in the fourth quarter of 2003
related to these long-term debt repurchases. Alliant Energy estimates it will incur $0.04
to $0.08 per share of debt repayment premiums in 2004 related to additional long-term debt
repurchases by Resources. Refer to Strategic Overview  November 2002
Plan for additional discussion of Alliant Energys debt reduction and other
strategic actions to strengthen its financial profile.

In September 2003, WP&L retired
$70 million of its 8.6% first mortgage bonds due 2027 largely from proceeds of a capital
contribution from Alliant Energy.

38

Refer to Contractual
Obligations for the timing of Alliant Energys long-term debt maturities.
Depending upon market conditions, it is currently anticipated that a majority of the
maturing debt will be refinanced with the issuance of long-term securities. Refer to Note
8 of the Notes to Consolidated Financial Statements for additional information
on short- and long-term debt.

Preferred Stock 
In September 2003, IP&L issued 1.6 million shares of 7.10% cumulative preferred stock
at a price to the public of $25.00 per share in a public offering and received proceeds of
approximately $38.7 million, which were used to reduce short-term debt.

Common Equity
 Refer to Strategic Overview  November 2002 Plan for
discussion of a common equity offering completed by Alliant Energy in July 2003. Subject
to market and other conditions, Alliant Energy intends to sell additional equity in 2004.
These equity sales may involve traditional underwritten offerings, continuous equity
offerings or other transactions. The purpose of these equity sales would be to fund, among
other things, the recently announced domestic generation build-out program. In addition to
such common equity offerings, Alliant Energy also issues new common shares through its
Shareowner Direct (dividend reinvestment and stock purchase plan) and 401(k) Savings Plans
and generally uses the proceeds from these issuances to assist in funding construction and
acquisition expenditures and for general corporate purposes.

Credit Ratings and Balance
Sheet  Access to the capital and credit markets, and costs of obtaining
external financing, are dependent on creditworthiness. Alliant Energy is committed to
taking the necessary steps required to maintain investment-grade credit ratings and a
strong balance sheet. Refer to Strategic Overview  November 2002 Plan
for a discussion of specific actions taken in this regard. Although Alliant Energy
believes the actions taken in 2003 to strengthen its balance sheet will enable it to
maintain investment-grade credit ratings, no assurance can be given that it will be able
to maintain its existing credit ratings. If Alliant Energys credit ratings are
downgraded in the future, then Alliant Energys borrowing costs may increase and its
access to capital markets may be limited.  If access to capital markets becomes
significantly constrained, then Alliant Energys results of operations and financial
condition could be materially adversely affected. Alliant Energys current credit
ratings and outlook that were affirmed in January 2004 by both Standard & Poors
and Moodys are as follows (long-term debt ratings only apply to senior debt):

|               |                          | Standard & Poor's | Moody's  
|-------------- | ------------------------ | ----------------- | ---------
|              
|IP&L           | Secured long-term debt   | A-                | A3       
|               | Unsecured long-term debt | BBB               | Baa1     
|               | Commercial paper         | A-2               | P-2      
|               | Corporate/issuer         | BBB+              | Baa1     
|WP&L           | Secured long-term debt   | A                 | A1       
|               | Unsecured long-term debt | BBB+              | A2       
|               | Commercial paper         | A-2               | P-1      
|               | Corporate/issuer         | A-                | A2       
|Resources (a)  | Unsecured long-term debt | BBB               | Baa3     
|               | Commercial paper         | Not rated         | P-3      
|               | Corporate/issuer         | BBB+              | Not rated
|Alliant Energy | Unsecured long-term debt | BBB               | Not rated
|               | Commercial paper         | A-2               | P-3      
|               | Corporate/issuer         | BBB+              | Not rated
|All Entities   | Outlook                  | Negative          | Stable   

|(a) | Resources'
debt is fully and unconditionally guaranteed by Alliant Energy.
|--- | --------------------------------------------------------------------------

Ratings Triggers The long-term debt of Alliant Energy and its subsidiaries is not subject to any
repayment requirements as a result of explicit credit rating downgrades or so-called
ratings triggers. Pre-existing ratings triggers in certain lease agreements
were eliminated during 2003. However, Alliant Energy and its subsidiaries are parties to
various agreements, including purchased-power agreements, fuel contracts, accounts
receivable sale contracts and corporate guarantees that are dependent on maintaining
investment-grade credit ratings.  In the event of a downgrade below investment-grade,
Alliant Energy or its subsidiaries may need to provide credit support, such as letters of
credit or cash collateral equal to the amount of the exposure, or may need to unwind the
contract or pay the underlying obligation. Both IP&L and WP&L are party to
accounts receivable sale agreements that provide that any respective utility downgraded
below investment-grade becomes ineligible to sell receivables under the program. In the
event of downgrades below investment-grade, management believes the credit facilities at
Alliant Energy, IP&L and WP&L provide sufficient liquidity to cover counterparty
credit support or collateral requirements under the various purchased-power, fuel and
receivables sales agreements.

39

Off-Balance Sheet
Arrangements  Alliant Energy utilizes off-balance sheet synthetic operating
leases to finance its corporate headquarters, corporate aircraft, certain utility railcars
and a utility radio dispatch system. Synthetic leases provide favorable financing rates to
Alliant Energy while allowing it to maintain operating control of its leased assets. Refer
to Note 3 of the Notes to Consolidated Financial Statements for future minimum
lease payments under, and residual value guarantees by Alliant Energy, of these synthetic
leases. Alliant Energys credit facility agreements prohibit it from entering into
any additional synthetic leases. Alliant Energy uses special purpose entities for its
limited recourse utility sale of accounts receivable program whereby IP&L and WP&L
use proceeds from the sale of the accounts receivable and unbilled revenues to maintain
flexibility in their capital structures, take advantage of favorable short-term interest
rates and finance a portion of their long-term cash needs. The sale of accounts
receivables generates a significant amount of short-term financing for IP&L and
WP&L. Refer to Note 4 of the Notes to Consolidated Financial Statements
for aggregate proceeds from the sale of accounts receivable. While Alliant Energy does not
have any reason to believe this program would be discontinued, if this financing
alternative were not available, IP&L and WP&L anticipate they would have enough
short-term borrowing capacity to compensate. Refer to Ratings Triggers for the
impact of certain credit rating downgrades on IP&L and WP&L related to the
accounts receivable sales program. Alliant Energy has reviewed these entities during its
implementation of FIN 46, for those entities that are considered to be special-purpose
entities, and determined that consolidation of these entities is not required. Alliant
Energy continues to evaluate non-special purpose entities that may require consolidation
as of March 31, 2004.

Sales of Non-strategic
Assets Alliant Energy is currently pursuing the sales in 2004 of its
interest in its Kewaunee facility, its remaining interest of 1.1 million shares in WPC and
its water utilities serving the Ripon and South Beloit areas. Alliant Energy also
continues to divest other less material assets and will continue reviewing other ways to
narrow its strategic focus and business platforms. The proceeds realized from these asset
sales are expected to be available for debt reduction and other general corporate
purposes.

Credit Risk 
Alliant Energys subsidiaries have limited credit exposure from electric and natural
gas sales and non-performance of contractual obligations by its counterparties. Alliant
Energy maintains credit risk oversight and sets limits and policies with regards to its
counterparties, which management believes minimizes its overall credit risk exposure.
However, there is no assurance that such policies will protect Alliant Energy against all
losses from non-performance by counterparties.

Construction and Acquisition
Expenditures Capital expenditures, investments and financing plans are
continually reviewed, approved and updated as part of Alliant Energys ongoing
strategic planning and budgeting processes. In addition, material capital expenditures and
investments are subject to a rigorous cross-functional review prior to approval. Changes
in Alliant Energys anticipated construction and acquisition expenditures may result
from a number of reasons including economic conditions, regulatory requirements, ability
to obtain adequate and timely rate relief, the level of Alliant Energys
profitability, Alliant Energys desire to maintain investment-grade credit ratings
and reasonable capitalization ratios, variations in sales, changing market conditions and
new opportunities. Alliant Energy believes its capital control processes adequately reduce
the risks associated with large capital expenditures and investments. Alliant Energy
currently anticipates construction and acquisition expenditures during 2004 and 2005 as
follows (in millions):

|                                                                                           | 2004 | 2005
|------------------------------------------------------------------------------------------ | ---- | ----
|                                                                                          
|Domestic utility business:                                                                 |      |     
|IP&L utility infrastructure and reliability investments                                    | $252 | $262
|IP&L Power Iowa (Emery)                                                                    | 80   | --  
|WP&L utility infrastructure and reliability investments                                    | 228  | 248 
|Non-regulated Generation in support of domestic                                           
|utility generation plan (Sheboygan Falls project)                                          | 50   | 30  
|China (anticipated to be funded with internally generated cash or non-recourse financings) | 50   | 35  
|Other non-regulated (primarily synthetic fuel/energy services)                             | 40   | 35  
|                                                                                          
|                                                                                           | $700 | $610
|                                                                                          

Alliant Energy has not yet entered
into contractual commitments relating to the majority of its anticipated capital
expenditures. As a result, Alliant Energy does have discretion with regard to the level of
capital expenditures eventually incurred and it closely monitors and updates such
estimates on an ongoing basis based on numerous economic and other factors. Refer to
Strategic Overview  Updated Strategic Plan for a further discussion of
Alliant Energys domestic generation plan.

40

Contractual Obligations
 Alliant Energys long-term contractual cash obligations as of Dec. 31,
2003 were as follows (in millions):

|                                                  | 2004 | 2005 | 2006 | 2007 | 2008 | Thereafter | Total 
|------------------------------------------------- | ---- | ---- | ---- | ---- | ---- | ---------- | ------
|                                                 
|Long-term debt (Note 8(b))                        | $69  | $102 | $69  | $199 | $196 | $1,985     | $2,620
|Capital leases (Note 3)                           | 17   | 14   | 40   | 6    | 5    | 1          | 83    
|Operating leases (Note 3)                         | 82   | 103  | 106  | 132  | 77   | 326        | 826   
|Purchase obligations:                            
|Purchased-power and fuel commitments (Note 11(b)) | 242  | 147  | 118  | 76   | 39   | 164        | 786   
|Other (Note 11(b))                                | 26   | --   | --   | --   | --   | --         | 26    
|                                                 
|                                                  | $436 | $366 | $333 | $413 | $317 | $2,476     | $4,341
|                                                 

IP&Ls long-term contractual
cash obligations as of Dec. 31, 2003 were as follows (in millions):

|                                                  | 2004 | 2005 | 2006 | 2007 | 2008 | Thereafter | Total 
|------------------------------------------------- | ---- | ---- | ---- | ---- | ---- | ---------- | ------
|                                                 
|Long-term debt (Note 8(b))                        | $--  | $3   | $60  | $80  | $52  | $645       | $840  
|Capital leases (Note 3)                           | 17   | 13   | 40   | 6    | 5    | 1          | 82    
|Operating leases (Note 3)                         | 9    | 12   | 6    | 5    | 5    | 39         | 76    
|Purchase obligations:                            
|Purchased-power and fuel commitments (Note 11(b)) | 83   | 54   | 49   | 32   | 7    | 33         | 258   
|Other (Note 11(b))                                | 8    | --   | --   | --   | --   | --         | 8     
|                                                 
|                                                  | $117 | $82  | $155 | $123 | $69  | $718       | $1,264
|                                                 

WP&Ls long-term contractual cash
obligations as of Dec. 31, 2003 were as follows (in millions):

|                                                  | 2004 | 2005 | 2006 | 2007 | 2008 | Thereafter | Total 
|------------------------------------------------- | ---- | ---- | ---- | ---- | ---- | ---------- | ------
|                                                 
|Long-term debt (Note 8(b))                        | $62  | $88  | $--  | $105 | $60  | $139       | $454  
|Operating leases (Note 3)                         | 63   | 79   | 80   | 80   | 68   | 259        | 629   
|Purchase obligations:                            
|Purchased-power and fuel commitments (Note 11(b)) | 67   | 31   | 30   | 28   | 21   | 76         | 253   
|Other (Note 11(b))                                | 6    | --   | --   | --   | --   | --         | 6     
|                                                 
|                                                  | $198 | $198 | $110 | $213 | $149 | $474       | $1,342
|                                                 

At Dec. 31, 2003, long-term debt and
capital lease obligations as noted in the previous tables were included on the respective
Consolidated Balance Sheets. The long-term debt amounts exclude reductions related to
unamortized debt discounts. Purchased-power and fuel commitments represent normal business
contracts used to ensure adequate purchased-power, coal and natural gas supplies and to
minimize exposure to market price fluctuations. Other purchase obligations represent
individual commitments incurred during the normal course of business which exceeded $1
million at Dec. 31, 2003. Alliant Energy has entered into various coal and purchased-power commitments
that have not yet been directly assigned to IP&L and WP&L. Such commitments are
included in the Alliant Energy purchase obligations but are not included in the IP&L
or WP&L purchase obligations. In connection with their construction and acquisition
programs, Alliant Energy, IP&L and WP&L also enter into commitments related to
such programs on an ongoing basis; these amounts are not reflected in the previous tables.
Refer to Construction and Acquisition Expenditures for additional information.
In addition, at Dec. 31, 2003, there were various other long-term liabilities and deferred
credits included on the respective Consolidated Balance Sheets that, due to the nature of
the liabilities, the timing of payments cannot be estimated and are therefore excluded
from the tables. Refer to Note 6(a) of the Notes to Consolidated Financial
Statements for anticipated 2004 pension and other postretirement benefit funding
amounts, which are not included in the previous tables.

Environmental Alliant Energys pollution abatement programs are subject to continuing review
and are periodically revised due to changes in environmental regulations, construction
plans and escalation of construction costs. Alliant Energy continually evaluates the
impact of potential future international, federal, state and local environmental
rulemakings on its operations. While the final outcome of these rule makings cannot be
predicted, Alliant Energy believes that required capital investments and/or modifications
resulting from them could be significant, but expects that prudent expenses incurred by
IP&L and WP&L likely would be recovered in rates from its customers. The
environmental rulemaking process continually evolves and the following are major emerging
issues that could potentially have a significant impact on Alliant Energys
operations.

41

Air Quality  With regard
to current environmental rules, Alliant Energys Edgewater facility spent $21 million
from 1999 to 2003 to improve its combustion performance. This facility now meets the 2008
Wisconsin DNR NOx compliance goal.

WP&L also has responded to
multiple data requests from the EPA, related to the historical operation and associated
air permitting for certain major Wisconsin coal-fired generating units. Similar requests
have been precursor to penalties and capital expenditures requiring installation of air
pollution controls at other utilities. However, WP&L has received no response in this
regard from the EPA related to information submitted.

The 1990 CAA Amendments
mandate preservation of air quality through existing regulations and periodic reviews to
ensure adequacy of these provisions based on scientific data. In 1997, the EPA revised
National Ambient Air Quality Standards (NAAQS) for ozone and fine particulate matter. In
December 2003, the EPA proposed an Interstate Air Quality Rule related to transport of
these emissions that would require significant upgrades to power plants. This rule would
reduce the current level of nationwide sulfur dioxide emissions approximately 40% by 2010
and 70% by 2015, and NOx emission levels 50% by 2015. Additional reduction requirements
may also be imposed at the state level for those areas that are in non-attainment with
NAAQS.

In 2000, the EPA determined that
regulation of hazardous air pollutant emissions from coal-fired and oil-fired electric
utility steam generating units was necessary. Under an existing settlement agreement,
Maximum Achievable Control Technology requirements or alternative regulations must be
implemented by Dec. 15, 2004. Accordingly, the EPA has published rules for comment
requiring control of mercury from coal-fired and nickel from oil-fired generating units.
The impact of these regulations on IP&Ls and WP&Ls generating
facilities is subject to the control level mandated in the final rules. In 2001, the
Wisconsin DNR also independently developed proposed mercury emission control rules that
could require reductions from Wisconsin generating facilities of 40% by 2010 and 80% by
2015. These rules have been sent back to the Wisconsin DNR for revision by the Wisconsin
legislature due to the pending federal mercury regulations.

In December 2003, the State
Environmental Protection Agency of China issued a regulation requiring thermal power
plants to lower emissions to meet new limits for particulate, sulfur and nitrous oxide
from coal- and oil-fired boilers. Facilities are required to meet the first phase of this
emission standard by 2005 and the second phase by 2010. Alliant Energy is currently
reviewing the impact of this new regulation on its China business.

Alliant Energy is also currently
monitoring various other potential international, federal, state and local environmental
rulemakings and activities, including, but not limited to: litigation of federal New
Source Review Reforms; Regional Haze evaluations for Best Available Retrofit Technology;
and several other legislative and regulatory proposals regarding the control of emissions
of air pollutants and greenhouse gases from a variety of sources, including generating
facilities.

Water Quality  In 2002,
the EPA published a proposed regulation under the Clean Water Act referred to as
316(b) that is anticipated to be finalized in 2004. This rule would require
existing large power plants with cooling water intake structures to ensure that the
location, design, construction, and capacity of cooling water intake structures reflect
the best technology available for minimizing adverse environmental impacts to fish and
other aquatic life. Alliant Energy is also currently evaluating proposed revisions to the
Wisconsin Administrative Code concerning the amount of heat that WP&Ls
generating stations can discharge into Wisconsin waters.

Land and Solid Waste 
Alliant Energy is monitoring possible significant land and solid waste regulatory changes.
This includes a potential EPA regulation for management of coal combustion product in
landfills and surface impoundments that could require installation of monitoring wells at
some facilities and an ongoing expanded groundwater monitoring program. Compliance with
the polychlorinated biphenols (PCB) Fix-it Rule/Persistent Organic Pollutants Treaty could
possibly require replacement of all electrical equipment containing PCB insulating fluid
which is a substance known to be harmful to human health. The Wisconsin Department of
Commerce is proposing new rules related to flammable, combustible and hazardous liquids
stored in above-ground storage tanks in which the main financial impact would be from a
secondary containment requirement for all hazardous materials tanks and for hazardous
material unloading areas. In addition, in December 2003, at the request of the Wisconsin
DNR, WP&L submitted a written plan for facility closure of the Rock River Generating
Station landfill and clean-up of the support ponds and all areas where coal combustion
waste is present.

Refer to Note 11(e) of the
Notes to Consolidated Financial Statements and Business for
further discussion of environmental matters.

42

OTHER MATTERS

Market Risk Sensitive
Instruments and Positions  Alliant Energys primary
market risk exposures are associated with interest rates, commodity prices, equity prices
and currency exchange rates. Alliant Energy has risk management policies to monitor and
assist in controlling these market risks and uses derivative instruments to manage some of
the exposures.

Interest Rate Risk 
Alliant Energy is exposed to risk resulting from changes in interest rates as a result of
its issuance of variable-rate debt, utility customer accounts receivable sale program and
variable-rate leasing agreements. Alliant Energy manages its interest rate risk by
limiting its variable interest rate exposure and by continuously monitoring the effects of
market changes on interest rates. Alliant Energy also periodically uses interest rate swap
and interest rate forward agreements to assist in the management of its interest exposure.
In the event of significant interest rate fluctuations, management would take actions to
minimize the effect of such changes on Alliant Energys results of operations and
financial condition. Assuming no change in Alliant Energys, IP&Ls and
WP&Ls consolidated financial structure, if variable interest rates were to
average 100 basis points higher (lower) in 2004 than in 2003, interest expense would
increase (decrease) by approximately $5.3 million, $2.9 million and $1.2 million,
respectively. These amounts were determined by considering the impact of a hypothetical
100 basis point increase (decrease) in interest rates on Alliant Energys,
IP&Ls and WP&Ls consolidated variable-rate debt held, the amount
outstanding under the utility customer accounts receivable sale program and variable-rate
lease balances at Dec. 31, 2003.

Commodity Risk  Non-trading
Alliant Energy is exposed to the impact of market fluctuations in the commodity
price and transportation costs of electric and natural gas products it markets. Alliant
Energy employs established policies and procedures to manage its risks associated with
these market fluctuations including the use of various commodity derivatives. Alliant
Energys exposure to commodity price risks in its utility business is significantly
mitigated by the current rate making structures in place for the recovery of its electric
fuel and purchased energy costs as well as its cost of natural gas purchased for resale.
Refer to Note 1(i) of Alliant Energys Notes to Consolidated Financial
Statements for further discussion.

WP&L periodically utilizes
commodity derivative instruments to reduce the impact of price fluctuations on electric
fuel and purchased energy costs needed to meet its power supply requirements. Under PSCW
rules, WP&L can also seek rate increases if it experiences an extraordinary increase
in the cost of electric fuel and purchased energy costs or if the annual costs are more
than 3% higher than the estimated costs used to establish rates. Such rules were revised
effective for 2003 for WP&L and significantly reduce the regulatory lag for Wisconsin
utilities and customers related to the timing of changes in rates for increased or
decreased fuel and purchased energy costs. Based on these revised rules, WP&L does not
anticipate any significant earnings exposure related to fuel and purchased energy costs.

WP&L periodically utilizes
natural gas commodity derivative instruments to reduce the impact of price fluctuations on
natural gas purchased and injected into storage during the summer months and withdrawn and
sold at current market prices during the winter months. The natural gas commodity swaps in
place approximate the forecasted storage withdrawal plan during this period. Therefore,
market price fluctuations that result in an increase or decrease in the value of the
physical commodity are substantially offset by changes in the value of the natural gas
commodity swaps. A 10% increase (decrease) in the price of natural gas would not have a
significant impact on the combined fair market value of the natural gas in storage and
related swap arrangements in place at Dec. 31, 2003. To the extent actual storage
withdrawals vary from forecasted withdrawals, WP&L has physical gas price exposure.

IP&L also utilizes commodity
derivative instruments to mitigate the risk of rising prices. Since the IUB allows for the
prudently incurred costs associated with these instruments and the underlying supply of
commodities to be recovered from ratepayers, IP&L does not have significant commodity
risk exposure.

NG Energy utilizes natural gas
commodity derivative instruments to reduce the impact of natural gas price fluctuations on
physical natural gas sales from storage. These natural gas commodity swaps and forward
sales contracts are entered into at the same time and for the same volumes that are
purchased and injected into storage, thereby minimizing natural gas commodity risk
exposure. Based on the volume of natural gas sales from storage at NG Energy, a 10%
increase (decrease) in the price of natural gas would not have a significant impact on
Alliant Energys results of operations or financial condition. Refer to Note 10(a) of
Alliant Energys Notes to Consolidated Financial Statements for
additional information concerning the impact of SFAS 149 on NG Energys earnings.

Equity Price Risk 
IP&L and WP&L maintain trust funds to fund their anticipated nuclear
decommissioning costs. At Dec. 31, 2003 and 2002, these funds were invested primarily in
domestic equity and debt instruments. Fluctuations in equity prices or interest rates do
not affect Alliant Energys consolidated results of operations. In 2001, WP&L
entered into a four-year hedge on equity assets in its nuclear decommissioning trust fund.
In January 2004, WP&L liquidated all of its qualified decommissioning trust fund
assets into money market funds as a result of the pending Kewaunee sale. Refer to Notes
10(c) and 17 of Alliant Energys Notes to Consolidated Financial
Statements for further discussion. Refer to Critical Accounting Policies
 Accounting for Pensions and Other Postretirement Benefits for the impact on
Alliant Energys pension and other postretirement benefit costs of changes in the
rate of returns earned by its plan assets, which include equity securities.

43

Currency Risk  Alliant
Energy has investments in various countries where the net investments are not hedged,
including Brazil, China and New Zealand. As a result, these investments are subject to
currency exchange risk with fluctuations in currency exchange rates. At Dec. 31, 2003,
Alliant Energy had a cumulative foreign currency translation loss, net of any tax benefits
realized, of $81 million, which related to decreases in the value of the Brazil real of
$92 million and increases in the value of the New Zealand dollar of $11 million in
relation to the U.S. dollar. This loss is recorded in Accumulated other
comprehensive loss on Alliant Energys Consolidated Balance Sheets. Based on
Alliant Energys investments at Dec. 31, 2003, a 10% sustained increase/decrease over
the next 12 months in the foreign exchange rates of Brazil, China and New Zealand would
result in a corresponding increase/decrease in the cumulative foreign currency translation
loss of $48 million. Alliant Energys equity income (loss) from its foreign
investments is also impacted by fluctuations in currency exchange rates. At Dec. 31, 2003,
Alliant Energy also had currency exchange risk associated with approximately $40 million
of debt outstanding at one of the Brazilian operating companies. Alliant Energy recorded
equity income of $2.4 million and equity losses of $6.5 million in 2003 and 2002,
respectively, related to its share of the foreign currency transaction gains/losses on
such debt. Based on the loan balance and currency rates at Dec. 31, 2003, a 10% change in
the currency rates would result in a $2.9 million pre-tax increase/decrease in net income.

In addition, Alliant Energy has
currency exchange risk associated with approximately $30 million of payables at a Canadian
subsidiary within Alliant Energys Integrated Services business. In 2003, Alliant
Energy recorded pre-tax income of $3.2 million related to the foreign currency transaction
gains on such payables. In November 2003, Alliant Energy acquired an option to protect $11
million of its exposure against declines in currency rates while still retaining the
opportunity to participate in the benefits of increases in currency rates. Based on the
payables balance, option and currency rates at Dec. 31, 2003, a 10% increase and 10%
decrease in the currency rates would result in a $3.0 million pre-tax increase and $2.2
million pre-tax decrease in income, respectively.

Refer to Notes 1(l) and 10 of Alliant
Energys Notes to Consolidated Financial Statements for further
discussion of Alliant Energys derivative financial instruments.

Accounting Pronouncements
 In January 2003, the FASB issued FIN 46 which addresses consolidation by
business enterprises of variable interest entities. FIN 46 requires consolidation where
there is a controlling financial interest in a variable interest entity or where the
variable interest entity does not have sufficient equity at risk to finance its activities
without additional subordinated financial support from other parties. Alliant Energy
adopted FIN 46, related to those entities that are considered to be special-purpose
entities, on Dec. 31, 2003 with no material impact on its financial condition or results
of operations. Alliant Energy continues to evaluate tolling arrangements, renewable energy
entities and any other non-special purpose entities, to determine if they require
consolidation under the revised FIN 46 guidance issued by the FASB in December 2003.
Alliant Energy will apply the provisions of the revised guidance as of March 31, 2004.

Alliant Energy adopted SFAS 143 on
Jan. 1, 2003, which provides accounting and disclosure requirements for retirement
obligations associated with long-lived assets (AROs). Refer to Note 18 of Alliant
Energys Notes to Consolidated Financial Statements for additional
information.

Alliant Energy adopted SFAS 149 for
contracts entered into or modified after June 30, 2003, except for certain implementation
issues and certain provisions of forward purchase and sale contracts and for hedging
relationships designated after June 30, 2003. Refer to Note 10(a) of Alliant Energys
Notes to Consolidated Financial Statements for additional information.

In May 2003, the FASB issued SFAS
150, Accounting for Certain Financial Instruments with Characteristics of Both
Liabilities and Equity, which requires an issuer to classify outstanding
free-standing financial instruments within its scope as a liability on its balance sheet
even though the instruments have characteristics of equity. Alliant Energy adopted SFAS
150 on July 1, 2003 with no material impact on its financial condition or results of
operations. Alliant Energy continues to evaluate the implications of FSP No. FAS 150-3,
Effective Date, Disclosures, and Transition for Mandatorily Redeemable Financial
Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable
Noncontrolling Interests under FASB Statement No. 150, Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity issued in November
2003, which defers the effective date for applying the provisions of SFAS 150 for certain
mandatorily redeemable non-controlling interests.

44

In December 2003, the President
signed into law the Medicare Prescription Drug, Improvement and Modernization Act of 2003
(the Act). The Act introduces a prescription drug benefit under Medicare Part D, as well
as a federal subsidy to sponsors of retiree health care benefit plans, that provide a
benefit that is at least actuarially equivalent to Medicare Part D. As permitted by FSP
No. FAS 106-1, Accounting and Disclosure Requirements Related to the Medicare
Prescription Drug, Improvement and Modernization Act of 2003, Alliant Energy has
elected to defer reflecting the effect of the Act on postretirement net periodic benefit
cost and the accumulated postretirement benefit obligation in the Consolidated Financial
Statements, since specific authoritative guidance on the accounting for the federal
subsidy is pending and that guidance, when issued, could require Alliant Energy to change
previously reported information. Alliant Energy is currently evaluating the effect of the
Act on its other postretirement benefits expense.

Alliant Energy does not expect the
various other new accounting pronouncements not mentioned above that were effective in
2003 to have a material impact on its results of operations or financial condition.

Critical Accounting
Policies Based on historical experience and various other factors,Alliant Energy believes the policies identified below are critical to its business and
the understanding of its results of operations as they require critical estimates be made
based on the assumptions and judgment of management. The preparation of consolidated
financial statements requires management to make various estimates and assumptions that
affect revenues, expenses, assets, liabilities and the disclosure of contingencies. The
results of these estimates and judgments form the basis for making judgments about the
carrying values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates and judgments. Alliant
Energys management has discussed these critical accounting policies with the Audit
Committee of its Board of Directors. Refer to Note 1 of Alliant Energys Notes
to Consolidated Financial Statements for a discussion of Alliant Energys
accounting policies and the estimates and assumptions used in the preparation of the
consolidated financial statements.

Regulatory Assets and Liabilities
Alliant Energys domestic utility business is regulated by various federal
and state regulatory agencies. As a result, it qualifies for the application of SFAS 71,
Accounting for the Effects of Certain Types of Regulation. SFAS 71 recognizes
that the actions of a regulator can provide reasonable assurance of the existence of an
asset or liability. Regulatory assets or liabilities arise as a result of a difference
between GAAP and the accounting principles imposed by the regulatory agencies. Regulatory
assets generally represent incurred costs that have been deferred as they are probable of
recovery in customer rates. Regulatory liabilities generally represent obligations to make
refunds to customers for various reasons.

Alliant Energys utility
subsidiaries recognize regulatory assets and liabilities in accordance with the rulings of
their federal and state regulators and future regulatory rulings may impact the carrying
value and accounting treatment of Alliant Energys regulatory assets and liabilities.
Alliant Energy periodically assesses whether the regulatory assets are probable of future
recovery by considering factors such as regulatory environment changes, recent rate orders
issued by the applicable regulatory agencies and the status of any pending or potential
deregulation legislation. The assumptions and judgments used by regulatory authorities
continue to have an impact on the recovery of costs, the rate of return on invested
capital and the timing and amount of assets to be recovered by rates. A change in these
assumptions may result in a material impact on Alliant Energys results of
operations. Refer to Note 1(c) of Alliant Energys Notes to Consolidated
Financial Statements for further discussion.

Asset Valuations Long-Lived Assets 
Alliant Energys Consolidated Balance Sheets include significant long-lived assets,
which are not subject to recovery under SFAS 71. As a result, Alliant Energy must generate
future cash flows from such assets in a non-regulated environment to ensure the carrying
value is not impaired. Some of these assets are the result of capital investments which
have been made in recent years and have not yet reached a mature life cycle. Alliant
Energy assesses the carrying amount and potential impairment of these assets whenever
events or changes in circumstances indicate that the carrying value may not be
recoverable. Factors Alliant Energy considers in determining if an impairment review is
necessary include a significant underperformance of the assets relative to historical or
projected future operating results, a significant change in Alliant Energys use of
the acquired assets or business strategy related to such assets, and significant negative
industry or economic trends. When Alliant Energy determines an impairment review is
necessary, a comparison is made between the expected undiscounted future cash flows and
the carrying amount of the asset. If the carrying amount of the asset is the larger of the
two balances, an impairment loss is recognized equal to the amount the carrying amount of
the asset exceeds the fair value of the asset. The fair value is determined by the use of
quoted market prices, appraisals, or the use of valuation techniques such as expected
discounted future cash flows. Alliant Energy must make assumptions regarding these
estimated future cash flows and other factors to determine the fair value of the
respective assets.

45

At Dec. 31, 2003, Resources
Non-regulated Generation business owned $96 million of generation equipment consisting of
two gas turbines and one steam turbine. Alliant Energy plans to deploy the two gas
turbines ($75 million) in a 300 MW natural gas-fired power plant outside Sheboygan Falls,
Wisconsin and continues to review for potential generation projects to utilize the steam
turbine ($21 million). As a result, Alliant Energy has assessed the recoverability of the
$96 million equipment cost compared to the future anticipated cash flows from these
generation projects. The future anticipated cash flows are a significant estimate. Alliant
Energy has no current intentions to sell any of this equipment. If a decision was made to
sell such equipment, the recoverability of the equipment cost would be assessed by
comparing the future anticipated sales proceeds to the carrying value of the equipment.

Investments  Alliant
Energys Consolidated Balance Sheets include investments in several
available-for-sale securities accounted for in accordance with SFAS 115. Alliant Energy
monitors any unrealized losses from such investments to determine if the loss is
considered to be a temporary or permanent decline. The determination as to whether the
investment is temporarily versus permanently impaired requires considerable judgment. When
the investment is considered permanently impaired, the previously recorded unrealized loss
would be recorded directly to the income statement as a realized loss. In 2002, Alliant
Energy incurred pre-tax valuation charges under the provisions of SFAS 115 of $27 million
and $10 million related to its McLeod and Energy Technologies investments, respectively.
Alliant Energys Consolidated Balance Sheets also contain various other investments
that are evaluated for recoverability when indicators of impairment may exist. Refer to
Note 9 of Alliant Energys Notes to Consolidated Financial Statements for
further information related to Alliant Energys investments accounted for in
accordance with SFAS 115.

Resources holds a non-controlling
interest in five Brazilian electric utility companies accounted for under the equity
method of accounting. The recoverability of these equity method investments is assessed by
comparing the future anticipated local currency cash flows from these investments and the
local currency carrying value of these investments. The future anticipated cash flows
currently include anticipated periodic distributions that, when aggregated, exceed the
carrying value of these investments. The future anticipated cash flows represent a
significant estimate. The $283 million carrying value of Alliant Energys Brazil
investments has been reduced by $162 million of pre-tax cumulative foreign currency
translation losses. The net of tax balance of $92 million has been recorded in
Accumulated other comprehensive loss on Alliant Energys Consolidated
Balance Sheet at Dec. 31, 2003. Cumulative foreign currency translation losses are
reflected in Alliant Energys results of operations only if the related investment is
sold or substantially liquidated. If Alliant Energy would decide to exit these Brazil
investments in the future, the recoverability of these equity method investments would be
assessed by comparing the future anticipated sales proceeds to the carrying value.

Resources investment in Mexico
consists primarily of a loan receivable (including accrued interest income) from a Mexican
development company aggregating approximately $79 million at Dec. 31, 2003. The proceeds
from the loan have been used by the Mexican development company to complete substantially
all of the construction and development of the infrastructure of a master planned resort
community. The loan accrues interest at 8.75% and is secured by a first lien on the land
parcels to be developed for the master planned community. Repayment of the loan principal
and interest will be based on a portion of the proceeds from the sales, performed by the
Mexican development company, of real estate lots in the master planned community and
therefore is dependent on the successful development of the project and sale of real
estate. The recoverability of this loan receivable is currently assessed by comparing the
fair value of the land used to secure the loan and the carrying value of the loan
including accrued interest. An updated, independent appraisal completed in the fourth
quarter of 2003 indicated that the fair value of the collateral, which is a significant
estimate, exceeded the carrying value of the loan and accrued interest at Dec. 31, 2003,
by a modest amount. Notwithstanding the developers expectations regarding the
development of the project and the impending lot sales, Alliant Energy has expressed
concerns with the developers regarding the pace of the project and its marketing efforts.
Alliant Energy is providing options to the developers to hasten the marketing and sales of
the lots of the master planned community and to ensure faster recovery of its secured
loan. If the development of the project and related real estate sales are not successfully
executed, it is possible that Alliant Energy could incur material asset valuation charges
and/or be required to discontinue recording interest income on the loan in the future.
Refer to Note 9 of Alliant Energys Notes to Consolidated Financial
Statements for additional information concerning Alliant Energys investments
in Brazil and Mexico.

Goodwill  In accordance
with SFAS 142, Alliant Energy is required to evaluate its goodwill for impairment at least
annually and more frequently when indicators of impairment may exist. At Dec. 31, 2003,
Alliant Energy had $56 million of net goodwill (including $41 million and $10 million
within its Cogenex and China reporting units, respectively) on its Consolidated Balance
Sheet. If the fair value of a reporting unit is less than its carrying value, including
goodwill, a goodwill impairment charge may be necessary. Alliant Energy estimates the fair
value of its reporting units utilizing a combination of market value indicators and the
expected discounted future cash flows. This process requires the use of significant
management estimates and judgments regarding cash flow assumptions from future sales,
operating costs and discount rates over an indefinite life. Alliant Energys cash
flow assumptions are derived using a combination of historical trends, internal budgets,
strategic plans and other market information. Each reporting unit is evaluated separately
based on the nature of its operations and therefore the assumptions vary by reporting unit
relative to its applicable circumstances. To determine its discount rates, Alliant Energy
utilizes the capital asset pricing model which is based upon market comparables adjusted
for company-specific risk. In the event market comparables are not available, Alliant
Energy utilizes expected industry returns based upon published information. Refer to Note
14 of Alliant Energys Notes to Consolidated Financial Statements for
further discussion.

46

Derivative Financial Instruments
Alliant Energy uses derivative financial instruments to hedge exposures to
fluctuations in interest rates, certain commodity prices, certain currency rates,
volatility in a portion of natural gas sales volumes due to weather and to mitigate the
equity price volatility associated with certain investments in equity securities. Alliant
Energy does not use such instruments for speculative purposes. To account for these
derivative instruments in accordance with the applicable accounting rules, Alliant Energy
must determine the fair value of its derivatives. In accordance with SFAS 133, the fair
value of all derivative instruments are recognized as either assets or liabilities in the
balance sheet with the changes in their value recognized in earnings for the non-regulated
businesses, unless specific hedge accounting criteria are met. For IP&L and WP&L,
changes in the derivatives fair values are generally recorded as regulatory assets or
liabilities. If an established, quoted market exists for the underlying commodity of the
derivative instrument, Alliant Energy uses the quoted market price to value the derivative
instrument. For other derivatives, Alliant Energy estimates the value based upon other
quoted prices or acceptable valuation methods. Alliant Energy also reviews the nature of
its contracts for the purchase and sale of non-financial assets to assess whether the
contracts meet the definition of a derivative and the requirements to follow hedge
accounting as allowed by the applicable accounting rules. The determination of derivative
status and valuations involves considerable judgment.

SFAS 149 amends and clarifies
accounting for derivative instruments, including certain derivative instruments embedded
in other contracts, and for hedging activities under SFAS 133. Although SFAS 149 is
expected to result in more energy contracts in Alliant Energys domestic utility
business qualifying as derivatives, changes in the fair value of these derivatives are
generally reported as changes in regulatory assets and liabilities rather than being
reported currently in earnings, based on the regulatory treatment. SFAS 149 will likely
result in more earnings volatility at NG Energy given the majority of its derivatives may
not qualify for hedge accounting. Additionally, Alliant Energy has some commodity purchase
and sales contracts that have been designated, and qualify for, the normal purchase and
sale exception. Based on this designation, these contracts are not accounted for as
derivative instruments.

A number of Alliant Energys
derivative transactions are in its domestic utility business and are based on the fuel and
natural gas cost recovery mechanisms in place, as well as other specific regulatory
authorizations. As a result, changes in fair market values of such derivatives generally
have no impact on Alliant Energys results of operations. Alliant Energy does have an
embedded derivative within its exchangeable senior notes that is impacted by the value of
McLeod stock. Changes in the fair value of this derivative impact Alliant Energys
results of operations and the changes did have a material impact on Alliant Energys
2001 results of operations. However, given a significant decline in the value of the
McLeod stock, Alliant Energy does not expect changes in the fair value of this derivative
to have a material impact on Alliant Energys results of operations in the
foreseeable future. Refer to Notes 10(d) and 10(a) of Alliant Energys Notes to
Consolidated Financial Statements for a further discussion of the impacts of EITF
Issue 02-3 and SFAS 149, respectively, on the derivatives entered into by NG Energy.

Unbilled Revenues 
Unbilled revenues are primarily associated with Alliant Energys utility operations.
Energy sales to individual customers are based on the reading of their meters, which
occurs on a systematic basis throughout the month. At the end of each month, amounts of
energy delivered to customers since the date of the last meter reading are estimated and
the corresponding estimated unbilled revenue is recorded. The unbilled revenue estimate is
based on daily system demand volumes, estimated customer usage by class, weather impacts,
line losses and the most recent customer rates. Such process involves the use of various
estimates, thus significant changes in the estimates could have a material impact on
Alliant Energys results of operations.

Accounting for Pensions and Other
Postretirement Benefits Alliant Energy accounts for pensions and other
postretirement benefits under SFAS 87, Employers Accounting for Pensions
and SFAS 106, Employers Accounting for Postretirement Benefits Other Than
Pensions, respectively. Under these rules, certain assumptions are made which
represent significant estimates. There are many factors involved in determining an
entitys pension and other postretirement liabilities and costs each period including
assumptions regarding employee demographics (including age, life expectancies, and
compensation levels), discount rates, assumed rate of returns and funding. Changes made to
the plan provisions may also impact current and future pension and other postretirement
costs. Alliant Energys assumptions are supported by historical data and reasonable
projections and are reviewed annually with an outside actuary firm and an investment
consulting firm. As of Dec. 31, 2003, Alliant Energy was using a 6% discount rate to
calculate benefit obligations and a 9% annual rate of return on investments. In selecting
an assumed discount rate, Alliant Energy reviews various corporate Aa bond indices. The 9%
annual rate of return is consistent with Alliant Energys historical returns and is
based on projected long-term equity and bond returns, maturities and asset allocations. A
100 basis point change in the discount rate would result in approximate changes of $102
million and $23 million in Alliant Energys pension and other postretirement benefit
obligations and $7 million and $2 million in expense, respectively. A 100 basis point
change in the rate of return would result in an approximate change of $5 million and $1
million in pension and other postretirement benefit expense, respectively. Refer to Note
6(a) of Alliant Energys Notes to Consolidated Financial Statements for
discussion of the impact of a change in the medical trend rates.

47

Income Taxes  Alliant
Energy accounts for income taxes under SFAS 109, Accounting for Income Taxes.
Under these rules, certain assumptions are made which represent significant estimates.
There are many factors involved in determining an entitys income tax assets,
liabilities, benefits and expense each period. These factors include assumptions regarding
Alliant Energys future taxable income and its ability to utilize tax credits and
loss carryovers as well as the impacts from the completion of audits of the tax treatment
of certain transactions. Alliant Energys assumptions are supported by historical
data and reasonable projections and are reviewed quarterly by management. Significant
changes in these assumptions could have a material impact on Alliant Energys
financial condition and results of operations. Refer to Note 5 of Alliant Energys
Notes to Consolidated Financial Statements for further discussion.

Other Future
Considerations  In addition to items discussed earlier in
MD&A, the following items could impact Alliant Energys future financial
condition or results of operations:

Exchangeable Senior Notes
 At Dec. 31, 2003, the carrying amount of the debt component of Resources
exchangeable senior notes was $37.9 million, consisting of the par value of $402.5
million, less unamortized debt discount of $364.6 million. The terms of the exchangeable
senior notes required Resources to pay interest on the par value of the notes at 7.25%
from February 2000 to February 2003, and at 2.5% thereafter until maturity in February
2030. As explained in Note 10(a) of Alliant Energys Notes to Consolidated
Financial Statements, Resources accounted for the net proceeds from the issuance of
the notes as two separate components, a debt component and an embedded derivative
component. In accordance with SFAS 133, Alliant Energy determined the initial carrying
value of the debt component by subtracting the fair value of the derivative component from
the net proceeds realized from the issuance of the exchangeable senior notes. This
resulted in a very low initial carrying amount of the debt component which results in the
recording of interest expense at an effective rate of 26.8% of the carrying amount of the
debt component. For 2003, interest expense on the notes was $10.2 million. Interest
payments in excess of interest expense are recorded as a reduction of the carrying amount
of the debt component. As a result of the higher interest payments for the first three
years, the carrying amount of the debt component declined until it reached $37.8 million
in February 2003, and then gradually increases over the next 27 years to the ultimate
repayment amount of $402.5 million in 2030. Interest expense on the debt component of the
notes will be $10.2 million in 2004, 2005 and 2006.

The interest deductions Alliant
Energy has taken on its federal tax returns related to Resources exchangeable
notes are currently under audit by the IRS.  Alliant Energy believes these
interest deductions comply with the Internal Revenue Code, however, if Alliant Energy
receives an adverse ruling related to these interest deductions it could have a material
impact on its results of operations.

Brazil  In the fourth
quarter of 2003, the Brazilian electric utility companies Alliant Energy holds
unconsolidated investments in completed the restructuring of approximately $245 million,
as converted from local currency to U.S. dollars, of short- and long-term debt into new
long-term debentures and commercial loans. The Brazilian electric utility companies have
also arranged for the restructuring of the approximately $40 million loan for the joint
venture gas-fired generating facility (Juiz de Fora) in which Alliant Energy holds a 50%
direct ownership interest. Alliant Energy does not expect these debt restructurings will
have a material impact on its 2004 earnings as the primary changes relate to extending the
debt repayment dates. However, interest rates in general have been declining in Brazil,
which would have a favorable impact on the comparison of Alliant Energys 2004 and
2003 earnings, should the average 2004 rates remain lower than the average 2003 rates.

To complete earlier plans, the Juiz
de Fora facility is scheduled for a 20-MW expansion from a single cycle to a combined
cycle facility at an estimated cost of $24 million. If the Juiz de Fora combined cycle
construction is not completed as anticipated, the future performance obligations of this
generation asset might be significantly adversely affected. In such an event, Alliant
Energy is not required to invest any additional capital in Brazil, however, it could lead
to material asset valuation charges with respect to Alliant Energys investment in
the Juiz de Fora facility.

Alliant Energy continues to closely
monitor the financial performance of its Brazilian investments. While such performance
improved significantly in 2003, and Alliant Energy expects continued improvements in 2004,
Alliant Energy believes more can be done to hasten the rate of improvement 
particularly in regard to controlling costs and reduction of debt  and this has been
a source of dispute with its Brazilian partners. Alliant Energy believes the potential of
the Brazilian market is significant and it is discussing with its Brazilian partners
various alternatives in order to strengthen and secure its investments in this market.
Alliant Energy continues its ongoing review of options related to its Brazilian investments.
Alliant Energy cannot currently predict the ultimate outcome of these reviews and discussions.

48

Synfuel  In June 2003,
the IRS announced it was reviewing the scientific validity of test procedures and results
used by companies claiming tax credits for producing synthetic fuels from coal and may
withdraw such credits for operations that fail to meet federal standards which require,
among other things, a significant chemical change to occur in the process. In October
2003, the IRS stated this review was complete and that the test procedures and results
used by taxpayers for chemical change are scientifically valid if the procedures are
applied in a consistent and unbiased manner. Since the second quarter of 2002, Alliant
Energy has been an investor in a synthetic fuel facility and continued to record these tax
credits as of Dec. 31, 2003. Currently, the IRS is auditing this facility to determine if
its procedures are applied in a consistent and unbiased manner. Alliant Energy expects the
audit to be completed in 2004 and cannot predict its outcome. The synthetic fuel facility
Alliant Energy partially owns previously received a private letter ruling from the IRS,
which states that based on the facts submitted, a significant chemical change was achieved
in its process. Alliant Energy has recognized tax credits for producing synthetic fuels of
$23 million and $15 million for 2003 and 2002, respectively, and expects to recognize
approximately $23 million of additional credits in 2004.

49

# ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and Qualitative Disclosures About Market
 Risk are reported under Other Matters  Market Risk Sensitive Instruments and Positions in MD&A.

# ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL
STATEMENTS

|Alliant Energy                                                                         | Page Number
|-------------------------------------------------------------------------------------- | -----------
|Alliant Energy Report on the Financial Information                                     | 51         
|Independent Auditors' Report                                                           | 52         
|Consolidated Statements of Income for the Years Ended Dec. 31, 2003, 2002 and 2001     | 53         
|Consolidated Balance Sheets as of Dec. 31, 2003 and 2002                               | 54         
|Consolidated Statements of Cash Flows for the Years Ended Dec. 31, 2003, 2002 and 2001 | 56         
|Consolidated Statements of Capitalization as of Dec. 31, 2003 and 2002                 | 57         
|Consolidated Statements of Changes in Common Equity for the Years Ended               
|Dec. 31, 2003, 2002 and 2001                                                           | 58         
|Notes to Consolidated Financial Statements                                             | 59         
|                                                                                       |            
|IP&L                                                                                  
|Independent Auditors' Report                                                           | 91         
|Consolidated Statements of Income for the Years Ended Dec. 31, 2003, 2002 and 2001     | 92         
|Consolidated Balance Sheets as of Dec. 31, 2003 and 2002                               | 93         
|Consolidated Statements of Cash Flows for the Years Ended Dec. 31, 2003, 2002 and 2001 | 95         
|Consolidated Statements of Capitalization as of Dec. 31, 2003 and 2002                 | 96         
|Consolidated Statements of Changes in Common Equity for the Years Ended               
|Dec. 31, 2003, 2002 and 2001                                                           | 97         
|Notes to Consolidated Financial Statements                                             | 98         
|                                                                                       |            
|WP&L                                                                                  
|Independent Auditors' Report                                                           | 106        
|Consolidated Statements of Income for the Years Ended Dec. 31, 2003, 2002 and 2001     | 107        
|Consolidated Balance Sheets as of Dec. 31, 2003 and 2002                               | 108        
|Consolidated Statements of Cash Flows for the Years Ended Dec. 31, 2003, 2002 and 2001 | 110        
|Consolidated Statements of Capitalization as of Dec. 31, 2003 and 2002                 | 111        
|Consolidated Statements of Changes in Common Equity for the Years Ended               
|Dec. 31, 2003, 2002 and 2001                                                           | 112        
|Notes to Consolidated Financial Statements                                             | 113        

Refer to Note 15 of Alliant Energys, IP&Ls
 and WP&Ls Notes to Consolidated Financial Statements for the quarterly financial data required
 by Item 8.

50

ALLIANT ENERGY
CORPORATION REPORT ON THE FINANCIAL INFORMATION

Alliant Energy Corporation management is responsible
 for the information and representations contained in the financial statements and in other sections
 of this Annual Report. The consolidated financial statements that follow have been prepared in accordance
 with accounting principles generally accepted in the United States of America. In addition to selecting
 appropriate accounting principles, management is responsible for the manner of presentation and for
 the reliability of the financial information. In fulfilling that responsibility, it is necessary for
 management to make estimates based on currently available information and judgments of current conditions
 and circumstances.

Through a well-developed system of internal controls,
 management seeks to ensure the integrity and objectivity of the financial information presented in this
 report. This system of internal controls is designed to provide reasonable assurance that the assets
 of the company are safeguarded and that the transactions are executed according to managements authorizations
 and are recorded in accordance with the appropriate accounting principles.

The Board of Directors participates in the financial
 information reporting process through its Audit Committee.

/s/ Erroll B. Davis, Jr.Erroll B. Davis, Jr.Chairman and Chief Executive Officer

/s/ Eliot G. ProtschEliot G. ProtschSenior Executive Vice President and Chief Financial
 Officer

/s/ John E. KratchmerJohn E. KratchmerVice President-Controller and Chief Accounting Officer

March 3, 2004

51

# INDEPENDENT AUDITORS REPORT

To the Board of Directors and Shareowners of Alliant
 Energy Corporation:

We have audited the accompanying
consolidated balance sheets and statements of capitalization of Alliant Energy
Corporation and subsidiaries (the "Company") as of December 31, 2003 and 2002, and the
related consolidated statements of income, cash flows and changes in common equity for
each of the three years in the period ended December 31, 2003.  Our audits also included
the financial statement schedule listed in Item 15(a)(2).  These financial statements and
the financial statement schedule are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements and financial
statement schedule based on our audits.

We conducted our audits in
accordance with auditing standards generally accepted in the United States of America.
 Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement.  An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated
financial statements present fairly, in all material respects, the financial position of
the Company as of December 31, 2003 and 2002, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 2003, in
conformity with accounting principles generally accepted in the United States of America.
 Also, in our opinion, such financial statement schedule, when considered in relation to
the basic consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.

As discussed in Note 18 to the
consolidated financial statements, on January 1, 2003, the Company adopted Statement of
Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations."

/s/ DELOITTE & TOUCHE LLP

Milwaukee, Wisconsin  March 3, 2004

52

ALLIANT ENERGY CORPORATION CONSOLIDATED STATEMENTS
 OF INCOME

|                                                                   
|-------------------------------------------------------------------
|2002                                                               
|                                                                   
|(in thousands, except per share amounts)                           
|Operating revenues:                                                
|Domestic utility:                                                  
|Electric                                                           
|Gas                                                                
|Other                                                              
|Non-regulated                                                      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Operating expenses:                                                
|Domestic utility:                                                  
|Electric production fuel and purchased power                       
|Cost of gas sold                                                   
|Other operation and maintenance                                    
|Non-regulated operation and maintenance                            
|Depreciation and amortization                                      
|Taxes other than income taxes                                      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Operating income                                                   
|                                                                   
|                                                                   
|Interest expense and other:                                        
|Interest expense                                                   
|Loss on early extinguishment of debt                               
|Equity (income) loss from unconsolidated investments               
|Allowance for funds used during construction                       
|Preferred dividend requirements of subsidiaries                    
|Impairment of available-for-sale securities of McLeodUSA Inc.      
|Miscellaneous, net                                                 
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Income from continuing operations before income taxes              
|                                                                   
|                                                                   
|Income taxes                                                       
|                                                                   
|                                                                   
|Income from continuing operations                                  
|                                                                   
|                                                                   
|Income from discontinued operations, net of tax (Note 16)          
|                                                                   
|                                                                   
|Income before cumulative effect of changes in accounting principles
|                                                                   
|                                                                   
|Cumulative effect of changes in accounting principles, net of tax  
|                                                                   
|                                                                   
|Net income                                                         
|                                                                   
|                                                                   
|Average number of common shares outstanding (basic)                
|                                                                   
|                                                                   
|Average number of common shares outstanding (diluted)              
|                                                                   
|                                                                   
|Earnings per average common share (basic and diluted):             
|Income from continuing operations                                  
|Income from discontinued operations                                
|Cumulative effect of changes in accounting principles              
|                                                                   
|Net income                                                         
|                                                                   
|                                                                   
|Dividends declared per common share                                
|                                                                   
|                                                                   

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

53

ALLIANT ENERGY CORPORATION CONSOLIDATED BALANCE
 SHEETS

|                                                                         | December 31,  
|------------------------------------------------------------------------ | --------------
|ASSETS                                                                   | 2003          
|                                                                        
|                                                                         | (in thousands)
|Property, plant and equipment:                                          
|Domestic utility:                                                       
|Electric plant in service                                                |               
|Gas plant in service                                                     |               
|Other plant in service                                                   |               
|Accumulated depreciation                                                 |               
|                                                                        
|Net plant                                                                |               
|Construction work in progress:                                           |               
|Emery generating facility                                                |               
|Other                                                                    |               
|Other, less accumulated depreciation (accum. depr.) of $3,242 and $2,952 |               
|                                                                        
|Total domestic utility                                                   |               
|                                                                        
|Non-regulated and other:                                                 |               
|Non-regulated Generation, less accum. depr. of $3,380 and $73            |               
|International, less accum. depr. of $33,708 and $20,737                  |               
|Integrated Services, less accum. depr. of $32,903 and $31,021            |               
|Other Investments, less accum. depr. of $26,179 and $24,108              |               
|Corporate Services and other, less accum. depr. of $25,283 and $9,427    |               
|                                                                        
|Total non-regulated and other                                            |               
|                                                                        
|                                                                         |               
|                                                                        
|                                                                        
|Current assets:                                                          |               
|Cash and temporary cash investments                                      |               
|Restricted cash                                                          |               
|Accounts receivable:                                                     |               
|Customer, less allowance for doubtful accounts of $5,522 and $4,364      |               
|Unbilled utility revenues                                                |               
|Other, less allowance for doubtful accounts of $786 and $845             |               
|Income tax refunds receivable                                            |               
|Production fuel, at average cost                                         |               
|Materials and supplies, at average cost                                  |               
|Gas stored underground, at average cost                                  |               
|Regulatory assets                                                        |               
|Assets of discontinued operations (Note 16)                              |               
|Other                                                                    |               
|                                                                        
|                                                                         |               
|                                                                        
|                                                                        
|Investments:                                                             |               
|Investments in unconsolidated foreign entities                           |               
|Nuclear decommissioning trust funds                                      |               
|Investment in ATC and other                                              |               
|                                                                        
|                                                                         |               
|                                                                        
|                                                                        
|Other assets:                                                            |               
|Regulatory assets                                                        |               
|Deferred charges and other                                               |               
|                                                                        
|                                                                         |               
|                                                                        
|                                                                        
|Total assets                                                             |               
|                                                                        
|                                                                        

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

54

ALLIANT ENERGY CORPORATION CONSOLIDATED BALANCE
 SHEETS (Continued)

|                                                                   | December 31,                        
|------------------------------------------------------------------ | ------------------------------------
|CAPITALIZATION AND LIABILITIES                                     | 2003                                
|                                                                  
|                                                                   | (in thousands, except share amounts)
|Capitalization (See Consolidated Statements of Capitalization):   
|Common stock - $0.01 par value - authorized 200,000,000 shares;   
|outstanding 110,962,910 and 92,304,220 shares                      |                                     
|Additional paid-in capital                                         |                                     
|Retained earnings                                                  |                                     
|Accumulated other comprehensive loss                               |                                     
|Shares in deferred compensation trust - 264,673 and 239,467 shares |                                     
|at an average cost of $27.84 and $28.80 per share                  |                                     
|                                                                  
|Total common equity                                                |                                     
|                                                                  
|Cumulative preferred stock of subsidiaries, net                    |                                     
|Long-term debt, net (excluding current portion)                    |                                     
|                                                                  
|                                                                   |                                     
|                                                                  
|                                                                  
|Current liabilities:                                               |                                     
|Current maturities and sinking funds                               |                                     
|Variable rate demand bonds                                         |                                     
|Commercial paper                                                   |                                     
|Other short-term borrowings                                        |                                     
|Accounts payable                                                   |                                     
|Accrued interest                                                   |                                     
|Accrued taxes                                                      |                                     
|Liabilities of discontinued operations (Note 16)                   |                                     
|Other                                                              |                                     
|                                                                  
|                                                                   |                                     
|                                                                  
|                                                                  
|Other long-term liabilities and deferred credits:                  |                                     
|Accumulated deferred income taxes                                  |                                     
|Accumulated deferred investment tax credits                        |                                     
|Regulatory liabilities                                             |                                     
|Asset retirement obligations (Note 18)                             |                                     
|Pension and other benefit obligations                              |                                     
|Cost of removal obligations                                        |                                     
|Other                                                              |                                     
|                                                                  
|                                                                   |                                     
|                                                                  
|                                                                  
|Minority interest                                                  |                                     
|                                                                  
|                                                                  
|Commitments and contingencies (Note 11)                            |                                     
|                                                                  
|Total capitalization and liabilities                               |                                     
|                                                                  
|                                                                  

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

55

ALLIANT ENERGY CORPORATION CONSOLIDATED STATEMENTS
 OF CASH FLOWS

|                                                                                 | Year Ended December 31,
|-------------------------------------------------------------------------------- | -----------------------
|                                                                                 | 2003                   
|                                                                                
|                                                                                 | (in thousands)         
|Cash flows from operating activities:                                           
|Net income                                                                       |                        
|Adjustments to reconcile net income to net cash flows from operating activities:
|Income from discontinued operations, net of tax                                  |                        
|Depreciation and amortization                                                    |                        
|Other amortizations                                                              |                        
|Deferred tax expense (benefit) and investment tax credits                        |                        
|Equity (income) loss from unconsolidated investments, net                        |                        
|Distributions from equity method investments                                     |                        
|Non-cash valuation charges                                                       |                        
|Cumulative effect of changes in accounting principles, net of tax                |                        
|Other                                                                            |                        
|Other changes in assets and liabilities:                                         |                        
|Accounts receivable                                                              |                        
|Sale of utility accounts receivable                                              |                        
|Gas stored underground                                                           |                        
|Accounts payable                                                                 |                        
|Accrued taxes                                                                    |                        
|Other                                                                            |                        
|                                                                                
|Net cash flows from operating activities                                         |                        
|                                                                                
|                                                                                
|Cash flows from financing activities:                                            |                        
|Common stock dividends                                                           |                        
|Proceeds from issuance of common stock                                           |                        
|Proceeds from issuance of preferred stock of subsidiary                          |                        
|Redemption of preferred stock of subsidiary                                      |                        
|Net change in Resources' credit facility                                         |                        
|Proceeds from issuance of other long-term debt                                   |                        
|Reductions in other long-term debt                                               |                        
|Net change in commercial paper and other short-term borrowings                   |                        
|Net change in loans with discontinued operations                                 |                        
|Other                                                                            |                        
|                                                                                
|Net cash flows from financing activities                                         |                        
|                                                                                
|                                                                                
|Cash flows used for investing activities:                                        |                        
|Construction and acquisition expenditures:                                       |                        
|Domestic utility business                                                        |                        
|Non-regulated businesses                                                         |                        
|Corporate Services and other                                                     |                        
|Nuclear decommissioning trust funds                                              |                        
|Proceeds from asset sales                                                        |                        
|Other                                                                            |                        
|                                                                                
|Net cash flows used for investing activities                                     |                        
|                                                                                
|                                                                                
|Net increase (decrease) in cash and temporary cash investments                   |                        
|                                                                                
|                                                                                
|Cash and temporary cash investments at beginning of period                       |                        
|                                                                                
|                                                                                
|Cash and temporary cash investments at end of period                             |                        
|                                                                                
|                                                                                
|Supplemental cash flows information:                                             |                        
|Cash paid during the period for:                                                 |                        
|Interest                                                                         |                        
|                                                                                
|Income taxes, net of refunds                                                     |                        
|                                                                                
|Noncash investing and financing activities:                                      |                        
|Debt repaid directly by buyer in the sale of Australian business                 |                        
|                                                                                
|Debt assumed by buyer of affordable housing business                             |                        
|                                                                                
|Capital lease obligations incurred and other                                     |                        
|                                                                                
|                                                                                

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

56

ALLIANT ENERGY CORPORATION CONSOLIDATED STATEMENTS
 OF CAPITALIZATION

|                                                                         | December 31,  
|------------------------------------------------------------------------ | --------------
|                                                                         | 2003          
|                                                                        
|                                                                         | (in thousands)
|                                                                        
|Common equity (See Consolidated Balance Sheets)                          |               
|                                                                        
|                                                                        
|Cumulative preferred stock of subsidiaries, net (Note 7(b))              |               
|                                                                        
|                                                                        
|Long-term debt:                                                          |               
|Domestic utility:                                                        |               
|First Mortgage Bonds:                                                    |               
|7.75%, due 2004                                                          |               
|1.73% variable rate at Dec. 31, 2003 to 7.6% fixed rate, due 2005        |               
|8% at Dec. 31, 2003, due 2007, partially retired in 2003                 |               
|1.37% variable rate at Dec. 31, 2003, due 2014                           |               
|1.29% to 1.73% variable rate at Dec. 31, 2003, due 2015                  |               
|7-5/8%, retired in 2003                                                  |               
|8.6%, retired in 2003                                                    |               
|8-5/8%, retired in 2003                                                  |               
|                                                                        
|                                                                         |               
|Collateral Trust Bonds:                                                  |               
|7.25%, due 2006                                                          |               
|6-7/8%, due 2007                                                         |               
|6%, due 2008                                                             |               
|5.5% to 7%, due 2023                                                     |               
|                                                                        
|                                                                         |               
|Pollution Control Revenue Bonds:                                         |               
|2.5% to 4.2% through 2004, due 2005 to 2023                              |               
|6.25% to 6.35%, due 2009 to 2012, partially retired in 2003              |               
|2.4% variable rate at Dec. 31, 2003, due 2010, partially retired in 2003 |               
|                                                                        
|                                                                         |               
|Other long-term debt:                                                    |               
|Debentures, 7%, due 2007                                                 |               
|Debentures, 5.7%, due 2008                                               |               
|Senior debentures, 6-5/8%, due 2009                                      |               
|Debentures, 7-5/8%, due 2010                                             |               
|Senior debentures, 6-3/4%, due 2011                                      |               
|Senior debentures, 5.875%, due 2018                                      |               
|Senior debentures, 6.45%, due 2033                                       |               
|Subordinated deferrable interest debentures, 7-7/8%, retired in 2003     |               
|                                                                        
|Total domestic utility                                                   |               
|                                                                        
|Non-regulated and other:                                                 |               
|Senior notes, 4.55%, due 2008                                            |               
|Senior notes, 7.375%, due 2009, partially retired in 2003                |               
|Alliant Energy Neenah, LLC credit facility, 2.69%                       
|at Dec. 31, 2003, due 2010                                               |               
|Senior notes, 7%, due 2011, partially retired in 2003                    |               
|Senior notes, 9.75%, due 2013, partially retired in 2003                 |               
|Exchangeable senior notes, 2.5%, due 2030                                |               
|Senior notes, 8.59%, retired in 2003                                     |               
|WPC credit facility, 3.63% at Dec. 31, 2002 (a)                          |               
|Multifamily housing revenue bonds, 1.75% variable rate to 7.55%         
|at Dec. 31, 2002 (b)                                                     |               
|Other, 1% to 6.70%, due 2004 to 2010 (c)                                 |               
|                                                                        
|Total non-regulated and other                                            |               
|                                                                        
|                                                                         |               
|                                                                        
|Less:                                                                    |               
|Current maturities                                                       |               
|Variable rate demand bonds                                               |               
|Unamortized debt discount, net                                           |               
|                                                                        
|Total long-term debt, net (excluding current portion)                    |               
|                                                                        
|                                                                        
|Total capitalization                                                     |               
|                                                                        
|                                                                        

|(a) |  | Not included on Alliant Energy's Consolidated Balance Sheet at Dec. 31, 2003 as a result of the WPC IPO.
|--- |  | --------------------------------------------------------------------------------------------------------

|(b) |  | Balance at Dec. 31, 2002 was assumed by buyer of affordable housing business in 2003.
|--- |  | -------------------------------------------------------------------------------------

|(c) |  | Balance at Dec. 31, 2002 includes debt repaid directly by buyer in the sale of Australian business and debt assumed by buyer of affordable housing business.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------

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

57

ALLIANT ENERGY CORPORATION CONSOLIDATED
 STATEMENTS OF CHANGES IN COMMON EQUITY

|                                                                  |                |            |          | Accumulated   | Shares in    |         
|----------------------------------------------------------------- | -------------- | ---------- | -------- | ------------- | ------------ | --------
|                                                                  |                | Additional |          | Other         | Deferred     | Total   
|                                                                  | Common         | Paid-In    | Retained | Comprehensive | Compensation | Common  
|                                                                  | Stock          | Capital    | Earnings | Income (Loss) | Trust        | Equity  
|                                                                 
|                                                                  | (in thousands)
|2001:                                                             |               
|Beginning balance (a)                                             |                | $790       |          | $947,504      |              | $818,162
|Net income                                                        |                |            |          |               |              | 172,362 
|Unrealized holding losses on securities, net of tax of ($240,579) |                |            |          |               |              |         
|Less: reclassification adjustment for gains                       |               
|included in net income, net of tax of $--                         |                |            |          |               |              |         
|                                                                  |                |            |         
|Net unrealized losses on securities                               |                |            |          |               |              |         
|                                                                  |                |            |         
|Foreign currency translation adjustments                          |                |            |          |               |              |         
|                                                                  |                |            |         
|Minimum pension liability adjustments, net of tax of ($11,022)    |                |            |          |               |              |         
|                                                                  |                |            |         
|Unrealized holding losses on derivatives, net of tax of ($1,569)  |                |            |          |               |              |         
|Less: reclassification adjustment for losses included             |               
|in net income, net of tax of ($2,078)                             |                |            |          |               |              |         
|                                                                  |                |            |         
|Net unrealized gains on qualifying derivatives                    |                |            |          |               |              |         
|                                                                  |                |            |         
|Total comprehensive loss                                          |                |            |          |               |              |         
|Common stock dividends                                            |                |            |          |               |              | (158,231
|Common stock issued                                               |                | 107        |          | 292,289       |              |         
|                                                                 
|Ending balance                                                    |                | 897        |          | 1,239,793     |              | 832,293 
|2002:                                                             |               
|Net income                                                        |                |            |          |               |              | 106,881 
|Unrealized holding losses on securities, net of tax of ($8,544)   |                |            |          |               |              |         
|Less: reclassification adjustment for losses                      |               
|included in net income, net of tax of ($14,393)                   |                |            |          |               |              |         
|                                                                  |                |            |         
|Net unrealized gains on securities                                |                |            |          |               |              |         
|                                                                  |                |            |         
|Foreign currency translation adjustments, net of tax              |                |            |          |               |              |         
|                                                                  |                |            |         
|Minimum pension liability adjustments, net of tax of ($18,874)    |                |            |          |               |              |         
|                                                                  |                |            |         
|Unrealized holding losses on derivatives, net of tax of ($2,765)  |                |            |          |               |              |         
|Less: reclassification adjustment for gains                       |               
|included in net income, net of tax of $1,658                      |                |            |          |               |              |         
|                                                                  |                |            |         
|Net unrealized losses on qualifying derivatives                   |                |            |          |               |              |         
|                                                                  |                |            |         
|Total comprehensive income                                        |                |            |          |               |              |         
|Common stock dividends                                            |                |            |          |               |              | (180,987
|Common stock issued                                               |                | 26         |          | 58,338        |              |         
|Redemption of preferred stock of subsidiary                       |                |            |          | (4,212        | )            |         
|                                                                 
|Ending balance                                                    |                | 923        |          | 1,293,919     |              | 758,187 
|2003:                                                             |               
|Net income                                                        |                |            |          |               |              | 183,543 
|Unrealized holding gains on securities, net of tax of $6,467      |                |            |          |               |              |         
|Less: reclassification adjustment for gains                       |               
|included in net income, net of tax of $1,420                      |                |            |          |               |              |         
|                                                                  |                |            |         
|Net unrealized gains on securities                                |                |            |          |               |              |         
|                                                                  |                |            |         
|Foreign currency translation adjustments, net of tax              |                |            |          |               |              |         
|                                                                  |                |            |         
|Minimum pension liability adjustments, net of tax of $4,279       |                |            |          |               |              |         
|                                                                  |                |            |         
|Unrealized holding losses on derivatives, net of tax of ($886)    |                |            |          |               |              |         
|Less: reclassification adjustment for losses                      |               
|included in net income, net of tax of ($3,802)                    |                |            |          |               |              |         
|                                                                  |                |            |         
|Net unrealized gains on qualifying derivatives                    |                |            |          |               |              |         
|                                                                  |                |            |         
|Total comprehensive income                                        |                |            |          |               |              |         
|Common stock dividends                                            |                |            |          |               |              | (101,313
|Common stock issued                                               |                | 187        |          | 349,653       |              |         
|                                                                 
|Ending balance                                                    |                | $1,110     |          | $1,643,572    |              | $840,417
|                                                                 

|(a) |  | Accumulated other comprehensive income (loss) at January 1, 2001 consisted of $335,523 of net unrealized gains on securities, ($59,978) of foreign currency translation adjustments and ($3,678) of net unrealized losses on qualifying derivatives.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

58

ALLIANT ENERGY
CORPORATION  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES(a)    
          General The consolidated financial statements include the accounts of
          Alliant Energy and its consolidated subsidiaries. Alliant Energy is an
          investor-owned public utility holding company, whose primary subsidiaries are
          IP&L, WP&L, Resources and Corporate Services. IP&L and WP&L are
          utility subsidiaries that are engaged principally in the generation,
          transmission (IP&L only), distribution and sale of electric energy; and the
          purchase, distribution, transportation and sale of natural gas in Iowa,
          Wisconsin, Minnesota and Illinois. Resources (through its numerous direct and
          indirect subsidiaries) is comprised of four primary business platforms:
          Non-regulated Generation, International, Integrated Services and Other
          Investments. Non-regulated Generation owns a 309-MW, non-regulated, tolled,
          natural gas-fired power plant in Neenah, Wisconsin and intends to support the
          development, financing and construction of generation to meet the needs of
          Alliant Energys domestic utility business. International holds interests
          in various businesses to develop energy generation, delivery and infrastructure
          in growing international markets, including Brazil, China and New Zealand.
          Integrated Services provides a wide range of energy and environmental services
          for commercial, industrial, institutional, educational and governmental
          customers. Other Investments includes ownership of transportation companies, an
          equity interest in a synthetic fuel processing facility, Alliant Energys
          loan receivable from a Mexican development company and related utility
          operations and various other investments. Corporate Services is the subsidiary
          formed to provide administrative services to Alliant Energy and its subsidiaries
          as required under PUHCA.

At Dec. 31, 2002, the assets and
liabilities of Alliant Energys oil and gas (WPC), Australian (including Southern
Hydro), affordable housing and SmartEnergy businesses were classified as held for sale. In
2003, Alliant Energy completed the sale of the Australian, affordable housing and
SmartEnergy businesses, as well as the sale of over 94% of the WPC stock. The operating
results for these non-regulated businesses for all periods presented have been separately
classified and reported as discontinued operations in Alliant Energys Consolidated
Financial Statements and Notes to Consolidated Financial Statements. Refer to Note 16 for
additional information.

The consolidated financial statements
reflect investments in controlled subsidiaries on a consolidated basis. FIN 46, issued by
the FASB in January 2003, requires consolidation where there is a controlling financial
interest in a variable interest entity or where the variable interest entity does not have
sufficient equity risk to finance its activities without additional subordinated financial
support from other parties. All significant intercompany balances and transactions, other
than certain energy-related transactions affecting the utility subsidiaries, have been
eliminated from the consolidated financial statements. Such energy-related transactions
not eliminated are made at prices that approximate market value and the associated costs
are recoverable from customers through the rate making process. The consolidated financial
statements are prepared in conformity with GAAP, which give recognition to the rate making
and accounting practices of FERC and state commissions having regulatory jurisdiction. The
preparation of the consolidated financial statements requires management to make estimates
and assumptions that affect: a) the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial statements;
and b) the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Certain prior period amounts have been
reclassified on a basis consistent with the current year presentation. The most
significant reclassifications relate to the reporting of accumulated costs of removal
which are non-legal retirement obligations and accumulated decommissioning costs accrued
prior to January 1, 2003. Previously, these costs were included as components of
Accumulated Depreciation but in accordance with recent SEC guidance are now
shown in Cost of removal obligations on the Consolidated Balance Sheet at Dec.
31, 2002.

Unconsolidated investments for which
Alliant Energy does not control, but does have the ability to exercise significant
influence over operating and financial policies (generally, 20% to 50% voting interest),
are accounted for under the equity method of accounting. These investments are stated at
acquisition cost, increased or decreased for Alliant Energys equity in net income or
loss, which is included in Equity (income) loss from unconsolidated
investments in the Consolidated Statements of Income and decreased for any dividends
received. These investments are also increased or decreased for Alliant Energys
proportionate share of the investees other comprehensive income (loss), which is
included in Accumulated other comprehensive loss on the Consolidated Balance
Sheets. Investments that do not meet the criteria for consolidation or the equity method
of accounting are accounted for under the cost method.

(b)    
          Regulation Alliant Energy is a registered public utility holding
          company subject to regulation by the SEC under PUHCA. The utility subsidiaries
          are subject to regulation under PUHCA, FERC and their respective state
          regulatory commissions.

59

(c)    
          Regulatory Assets and Liabilities Alliant Energy is subject to the
          provisions of SFAS 71, Accounting for the Effects of Certain Types of
          Regulation, which provides that rate-regulated public utilities record
          certain costs and credits allowed in the rate making process in different
          periods than for non-regulated entities. These are deferred as regulatory assets
          or accrued as regulatory liabilities and are recognized in the Consolidated
          Statements of Income at the time they are reflected in rates. As of Dec. 31,
          2003 and 2002, IP&L had $24 million and $7 million and WP&L had $7
          million and $6 million of regulatory assets that were not earning returns,
          respectively. At Dec. 31, 2003 and 2002, regulatory assets and liabilities were
          comprised of the following items (in millions):

|                                       | Regulatory Assets | Regulatory Liabilities
|-------------------------------------- | ----------------- | ----------------------
|                                      
|                                       | 2003              | 2002                  
|                                      
|Tax-related (Note 1(d))                |                   | $187                  
|Environmental-related (Note 11(e))     |                   | 58                    
|Energy efficiency program costs        |                   | 36                    
|Asset retirement obligations (Note 18) |                   | 28                    
|Cost of removal obligations            |                   | --                    
|Other                                  |                   | 89                    
|                                      
|                                       |                   | $401                  
|                                      

Alliant Energy believes it is
probable that any differences between expenses for legal AROs calculated under SFAS 143
and expenses recovered currently in rates will be recoverable in future rates, and is
deferring the difference of $28.8 million ($20.5 million at IP&L and $8.3 million
at WP&L) as a regulatory asset. Alliant Energy also collects in rates
future removal costs for many assets that do not have an associated legal
ARO. Alliant Energy records a liability for the estimated amounts it has collected
in rates for these future removal costs less amounts spent on removal activities. At Dec.
31, 2003 and 2002, non-legal removal obligations of $535.8 million ($325.9 million at
IP&L and $209.9 million at WP&L) and $497.1 million ($298.0 million at IP&L
and $199.1 million at WP&L) were recorded in Regulatory liabilities and
Cost of removal obligations, respectively, on the Consolidated Balance Sheets.

If a portion of the utility
subsidiaries operations becomes no longer subject to the provisions of SFAS 71 as a
result of competitive restructuring or otherwise, a write-down of related regulatory
assets would be required, unless some form of transition cost recovery is established by
the appropriate regulatory body that would meet the requirements under GAAP for continued
accounting as regulatory assets during such recovery period. In addition, each utility
subsidiary would be required to determine any impairment of other assets and write-down
such assets to their fair value.

(d)    
          Income Taxes Alliant Energy is subject to the provisions of SFAS 109,
          Accounting for Income Taxes, and follows the liability method of
          accounting for deferred income taxes, which requires the establishment of
          deferred tax assets and liabilities, as appropriate, for temporary differences
          between the tax basis of assets and liabilities and the amounts reported in the
          consolidated financial statements. Deferred taxes are recorded using currently
          enacted tax rates.

Except as noted below, income tax
expense includes provisions for deferred taxes to reflect the tax effects of temporary
differences between the time when certain costs are recorded in the accounts and when they
are deducted for tax return purposes. As temporary differences reverse, the related
accumulated deferred income taxes are reversed to income. Investment tax credits have been
deferred and are subsequently credited to income over the average lives of the related
property. Other tax credits reduce income tax expense in the year claimed and are
generally related to nonconventional fuel and research and development.

Consistent with Iowa rate making
practices for IP&L, deferred tax expense is not recorded for certain temporary
differences (primarily related to utility property, plant and equipment) because rates are
reduced for the current tax benefits. As the deferred taxes become payable (over periods
exceeding 30 years for some generating plant differences) they are recovered through
rates. Accordingly, IP&L has recorded deferred tax liabilities and regulatory assets
for certain temporary differences, as identified in Note 1(c). In Wisconsin, the PSCW has
allowed rate recovery of deferred taxes on all temporary differences since August 1991.
WP&L established a regulatory asset associated with those temporary differences
occurring prior to August 1991 that will be recovered in future rates through 2007.

(e)    
          Common Shares Outstanding  A reconciliation of the weighted average
          common shares outstanding used in the basic and diluted earnings per share
          calculation was as follows:

|Weighted average common shares outstanding: | 2003        | 2002       | 2001      
|------------------------------------------- | ----------- | ---------- | ----------
|                                           
|Basic earnings per share calculation        | 101,365,877 | 90,896,885 | 80,497,823
|Effect of dilutive securities               | 178,510     | 62,177     | 138,006   
|                                           
|Diluted earnings per share calculation      | 101,544,387 | 90,959,062 | 80,635,829
|                                           

60

In 2003, 2002 and 2001, 3,799,938,
3,338,978, and 1,501,854 options, respectively, to purchase shares of common stock, with
average exercise prices of $28.68, $29.67, and $31.08, respectively, were excluded from
the calculation of diluted earnings per share as the exercise prices were greater than the
average market price.

(f)    
          Temporary Cash Investments and Restricted Cash Temporary cash
          investments are stated at cost, which approximates market value, and are
          considered cash equivalents for the Consolidated Balance Sheets and the
          Consolidated Statements of Cash Flows. These investments consist of short-term
          liquid investments that have maturities of less than 90 days. Alliant
          Energys short-term restricted cash at Dec. 31, 2003 and 2002 primarily
          related to borrowing requirements for various power plants in China. At Dec. 31,
          2003, Alliant Energy also had $6.7 million of long-term restricted cash related
          to borrowing requirements for the acquisition and maintenance of Resources
          309-MW, non-regulated, tolled, natural gas-fired power plant in Neenah,
          Wisconsin, which was acquired in 2003.

(g)    
          Property, Plant and Equipment  Domestic utility plant (other
          than acquisition adjustments) is recorded at original cost, which includes
          overhead, administrative costs and AFUDC. At Dec. 31, 2003 and 2002, IP&L
          had $20.8 million and $22.0 million, respectively, of acquisition adjustments,
          net of accumulated amortization, included in utility plant ($4.6 million and
          $4.9 million, respectively, of such balances are currently being recovered in
          IP&Ls rates). The aggregate AFUDC recovery rates, computed in
          accordance with the prescribed regulatory formula, were as follows:

|     | 2003 | 2002 | 2001
|---- | ---- | ---- | ----
|    
|IP&L | 7.9% | 6.9% | 7.7%
|WP&L | 9.5% | 2.6% | 7.9%

IP&L and WP&L use a
combination of remaining life, straight-line and sum-of-the-years-digits depreciation
methods as approved by their respective regulatory commissions. The remaining life of
DAEC, of which IP&L is a co-owner, is based on the NRC license end-of-life of 2014.
The remaining depreciable life of Kewaunee, of which WP&L is a co-owner, is based on
the PSCW approved revised end-of-life of 2010. Depreciation expense related to the
decommissioning of DAEC and Kewaunee is discussed in Note 11(f). The average rates of
depreciation for electric and gas properties, consistent with current rate making
practices, were as follows:

|         | IP&L | WP&L
|-------- | ---- | ----
|        
|         | 2003 | 2002
|        
|Electric | 3.3% | 3.4%
|Gas      | 2.7% | 2.9%

Nuclear fuel for DAEC is leased.
Annual nuclear fuel lease expenses include the cost of fuel, based on the quantity of heat
produced for electric generation, plus the lessors interest costs related to fuel in
the reactor and administrative expenses. Nuclear fuel for Kewaunee is recorded at its
original cost and is amortized to expense based upon the quantity of heat produced for
electric generation. This accumulated amortization assumes spent nuclear fuel will have no
residual value. Estimated future disposal costs of such fuel are expensed based on KWhs
generated. Refer to Note 3 for additional information on DAECs nuclear fuel lease.

Non-regulated property, plant and
equipment is recorded at cost. The majority of the non-regulated property, plant and
equipment is depreciated using the straight-line method over periods ranging from 10 to 32
years. Upon retirement or sale of property and equipment, the cost and related accumulated
depreciation are removed from the accounts and any gain or loss is included in the
Consolidated Statements of Income. Ordinary retirements of utility plant and salvage value
are netted and charged to accumulated depreciation upon removal from utility plant
accounts and no gain or loss is recognized. Removal costs reduce the regulatory liability
previously established.

(h)    
          Operating Revenues  Revenues from IP&L and WP&L are primarily
          from electric and natural gas sales and deliveries and are recorded under the
          accrual method of accounting and recognized upon delivery. Revenues from Alliant
          Energys non-regulated businesses are primarily from the sale of energy or
          services and are recognized based on output delivered or services provided as
          specified under contract terms. Alliant Energys non-regulated businesses
          also account for the revenues of certain contracts on the percentage of
          completion method. Alliant Energy accrues revenues for services rendered but
          unbilled at month-end. Revenues and expenses from non-regulated gas marketing
          contracts that are designated as trading are reported on a net basis in the
          Consolidated Statements of Income. Refer to Note 10(d) for discussion of
          energy-trading contracts. Certain of Alliant Energys subsidiaries serve as
          collection agents for sales or various other taxes and record revenues on a net
          basis. The revenues do not include the collection of the aforementioned taxes.

61

(i)    
          Domestic Utility Fuel Cost Recovery  IP&Ls retail tariffs
          provide for subsequent adjustments to its electric and natural gas rates for
          changes in the cost of fuel, purchased energy and natural gas purchased for
          resale. Changes in the under/over collection of these costs are reflected in
          Electric production fuel and purchased power and Cost of gas
          sold in the Consolidated Statements of Income. The cumulative effects are
          reflected on the Consolidated Balance Sheets as a current regulatory asset or
          liability, pending automatic reflection in future billings to customers. At
          IP&L, purchased-power capacity costs are not recovered from electric
          customers through EACs. Recovery of these costs must be addressed in base rates
          in a formal rate proceeding.

WP&Ls retail electric rates
are based on annual forecasted fuel and purchased-power costs. Under PSCW rules, WP&L
can seek rate increases if it experiences an extraordinary increase in these costs or if
the annual costs are more than 3% higher than the estimated costs used to establish rates.
WP&L has a gas performance incentive which includes a sharing mechanism whereby 50% of
all gains and losses relative to current commodity prices, as well as other benchmarks,
are retained by WP&L, with the remainder refunded to or recovered from customers.

(j)    
          Generating Facility Outages The IUB allows IP&L to collect, as
          part of its base revenues, funds to offset other operation and maintenance
          expenditures incurred during refueling outages at DAEC. These costs include
          incremental internal labor costs, contractor labor and materials directly
          related to activities performed during the outage. As these revenues are
          collected, an equivalent amount is charged to other operation and maintenance
          expense with a corresponding credit to a reserve. During a refueling outage, the
          reserve is reversed to offset the refueling outage expenditures. Operating
          expenses incurred during refueling outages at Kewaunee are expensed by WP&L
          as incurred. The maintenance costs incurred during outages for Alliant
          Energys various other generating facilities are also expensed as incurred.
          The timing of the DAEC and Kewaunee refueling outages during 2001-2003 and
          anticipated refueling outages for 2004-2006 are as follows:

|         | 2001   | 2002 | 2003   | 2004 | 2005   | 2006  
|-------- | ------ | ---- | ------ | ---- | ------ | ------
|        
|DAEC     | Spring | None | Spring | None | Spring | None  
|Kewaunee | Fall   | None | Spring | Fall | None   | Spring

(k)    
          Translation of Foreign Currency Assets and liabilities of
          international investments, where the local currency is the functional currency,
          have been translated at year-end exchange rates and related income statement
          results have been translated using average exchange rates prevailing during the
          year. Adjustments resulting from translation, including gains and losses on
          intercompany foreign currency transactions which are long-term in nature, and
          which Alliant Energy does not intend to settle in the foreseeable future, have
          been recorded in Accumulated other comprehensive loss on Alliant
          Energys Consolidated Balance Sheets.

(l)    
          Derivative Financial Instruments Alliant Energy uses derivative
          financial instruments to hedge exposures to fluctuations in interest rates,
          certain commodity prices, certain currency rates and volatility in a portion of
          natural gas sales volumes due to weather. Alliant Energy also utilizes
          derivatives to mitigate the equity price volatility associated with certain
          investments in equity securities. Alliant Energy does not use such instruments
          for speculative purposes. The fair value of all derivatives are recorded as
          assets or liabilities on the Consolidated Balance Sheets and gains and losses
          related to derivatives that are designated as, and qualify as hedges, are
          recognized in earnings when the underlying hedged item or physical transaction
          is recognized in income. Gains and losses related to derivatives that do not
          qualify for, or are not designated in hedge relationships, are recognized in
          earnings immediately. A number of Alliant Energys derivative transactions
          are in its domestic utility business and based on the fuel and natural gas cost
          recovery mechanisms in place, as well as other specific regulatory
          authorizations, changes in fair market values of such derivatives generally have
          no impact on Alliant Energys results of operations. Alliant Energy has
          some commodity purchase and sales contracts that have been designated, and
          qualify for, the normal purchase and sale exception and based on this
          designation, these contracts are not accounted for as derivative instruments.

Alliant Energy is exposed to losses
related to financial instruments in the event of counterparties non-performance.
Alliant Energy has established controls to determine and monitor the creditworthiness of
counterparties in order to mitigate its exposure to counterparty credit risk. Alliant
Energy is not aware of any material exposure to counterparty credit risk related to its
derivative financial instruments. Refer to Note 10 for further discussion of Alliant
Energys derivative financial instruments.

62

(m)    
          Accounting for Stock Options  At Dec. 31, 2003, Alliant Energy had two
          stock-based incentive compensation plans, which are described more fully in Note
          6(b). Alliant Energy accounts for stock options issued under these plans under
          the recognition and measurement principles of APB 25, Accounting for Stock
          Issued to Employees. No stock-based compensation cost is reflected in net
          income in Alliant Energys Consolidated Statements of Income, as all
          options granted under those plans had an exercise price equal to the quoted
          market price of the underlying common stock on the date of grant. The effect on
          net income and EPS if Alliant Energy had applied the fair value recognition
          provisions of SFAS 123, Accounting for Stock-Based Compensation, to
          the stock options issued under these plans was as follows (in thousands):

|                                                    | 2003     | 2002     | 2001    
|--------------------------------------------------- | -------- | -------- | --------
|                                                   
|Net income, as reported                             | $183,543 | $106,881 | $172,362
|Less:  stock-based compensation expense, net of tax | 2,044    | 2,541    | 2,446   
|                                                   
|Pro forma net income                                | $181,499 | $104,340 | $169,916
|                                                   
|EPS (basic and diluted):                           
|As reported                                         | $1.81    | $1.18    | $2.14   
|Pro forma                                           | $1.79    | $1.15    | $2.11   

(n)    
          Pension Plan For the defined benefit pension plan sponsored by
          Corporate Services, Alliant Energy allocates pension costs and contributions to
          IP&L, WP&L, Resources and the parent company based on labor costs of
          plan participants and any additional minimum pension liability based on each
          groups funded status.

(o)    
          Asset Valuations  Long-lived assets, excluding goodwill and
          regulatory assets, are reviewed for possible impairment whenever events or
          changes in circumstances indicate the carrying value of the assets may not be
          recoverable. Impairment is indicated if the carrying value of an asset exceeds
          its undiscounted future cash flows. An impairment charge is recognized equal to
          the amount the carrying value exceeds the assets fair value. The fair
          value is determined by the use of quoted market prices, appraisals, or the use
          of other valuation techniques such as expected discounted future cash flows. The
          estimated fair value, less cost to sell assets held for sale, is compared each
          reporting period to their carrying values. Impairment charges are recorded for
          assets held for sale if the carrying value of such asset exceeds the estimated
          fair value less cost to sell.

Goodwill represents the excess of the
purchase price over the fair value of the identifiable net tangible and intangible assets
acquired in a business combination. In accordance with SFAS 142,
goodwill is required to be evaluated for impairment at least
annually and more frequently if indicators of impairment exist. If the fair value of a
reporting unit is less than its carrying value, including goodwill, an impairment charge
may be necessary. The fair value of reporting units is determined by utilizing a
combination of market value indicators and expected discounted future cash flows. Refer to
Note 14 for additional information.

If events or circumstances indicate
the carrying value of investments accounted for under the equity method of accounting may
not be recoverable, potential impairment is assessed by comparing the future anticipated
cash flows from these investments to their carrying values. If an impairment is indicated,
a charge is recognized equal to the amount the carrying value exceeds the
investments fair value.

(p)    
          Miscellaneous, net  The other (income) and deductions included in
          Miscellaneous, net in Alliant Energys Consolidated Statements
          of Income are as follows (in millions):

|                                                | 2003 | 2002 | 2001
|----------------------------------------------- | ---- | ---- | ----
|                                               
|Interest income:                                |      |      |     
|From loans to discontinued operations           |      | ($3  | .8) 
|Other                                           |      | (14  | .0) 
|Valuation charges/(income):                     |     
|Unconsolidated investments                      |      | 2    | .8  
|McLeod trading securities (Note 10(a))          |      | (0   | .6) 
|Derivative component of Resources' exchangeable |     
|senior notes (Note 10(a))                       |      | --   |     
|(Gains) losses on asset sales, net              |      | (5   | .8) 
|Currency transaction (gains) losses, net        |      | (5   | .6) 
|Minority interest of subsidiaries' net earnings |      | 4    | .8  
|Other                                           |      | 1    | .3  
|                                               
|                                                |      | ($20 | .9) 
|                                               

63

(2) DOMESTIC UTILITY RATE MATTERSIn February 2004, WP&L received
approval from the PSCW to refund $5.3 million to its natural gas customers as relates to
its annual performance under the gas performance incentive. The PSCW has not yet audited
the refund calculation, but agreed with WP&Ls request to refund approximately
80% of the total refund amount at this time. This refund was completed in February 2004
and the remainder of the refund will be completed after the PSCW completes their audit and
issues a ruling. At Dec. 31, 2003, WP&L had reserves for all amounts related to these
refunds. Refer to Note 1(i) for further discussion of WP&Ls fuel cost recovery.

(3) LEASESIP&L has a capital lease covering
its 70% undivided interest in nuclear fuel purchased for DAEC. Annual nuclear fuel lease
expenses (included in Electric production fuel and purchased power in the
Consolidated Statements of Income) for 2003, 2002 and 2001 were $12.7 million, $15.5
million and $14.1 million, respectively. Alliant Energys operating lease rental
expenses, which include certain purchased-power agreements, for 2003, 2002 and 2001 were
$46.3 million, $44.5 million and $40.2 million, respectively. The purchased-power
agreements total below includes $464 million and $69 million related to the Riverside and
RockGen plants, respectively, in Wisconsin. Riverside is expected to be placed in-service
in 2004. Alliant Energy continues to evaluate Riverside, RockGen and other tolling
arrangements, renewable energy entities and any other non-special purpose entities, to
determine if they require consolidation under the revised FIN 46 guidance issued by the
FASB in December 2003. Alliant Energy will apply the provisions of the revised guidance as
of March 31, 2004. The synthetic leases relate to the financing of the corporate
headquarters, corporate aircraft, utility railcars and a utility radio dispatch system.
These leases do not meet the consolidation requirements per FIN 46 and are not included on
Alliant Energys Consolidated Balance Sheets. Alliant Energy has guaranteed the
residual value of its synthetic leases totaling $75 million in the aggregate. The
guarantees extend through the maturity of each respective underlying lease with remaining
terms up to 12 years. Residual value guarantees have been included in the future minimum
lease payments noted in the table below (in millions):

|                                   | 2004 | 2005 | 2006 | 2007 | 2008 | Thereafter | Total
|---------------------------------- | ---- | ---- | ---- | ---- | ---- | ---------- | -----
|                                  
|Operating leases:                  |      |      |      |      |      |            |      
|Certain purchased-power agreements |      | $52  | .6   | $69  | .5   | $70        | .9   
|Synthetic leases                   |      | 11   | .5   | 18   | .8   | 24         | .5   
|Other                              |      | 17   | .7   | 14   | .5   | 11         | .1   
|                                  
|Total operating leases             |      | $81  | .8   | $102 | .8   | $106       | .5   
|                                  

|                       | Less:  | Present value | Gross  
|---------------------- | ------ | ------------- | -------
|                       | amount | of net        | assets 
|                       | repre- | minimum       | under  
|                       | There  |               | senting
|                       | 2004   | 2005          | 2006   
|                      
|Capital leases:        |        |               |        
|Nuclear fuel (IP&L)    |        | $15           | .4     
|Office building (IP&L) |        | 1             | .5     
|Other                  |        | 0             | .2     
|                      
|Total capital leases   |        | $17           | .1     
|                      

|(a) |  | The
difference between the gross assets under the lease and the present value of
          the net minimum capital lease payments relates to cash received by IP&L at
          the inception of the lease.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(4) SALES OF ACCOUNTS RECEIVABLEDomestic utility customer accounts
receivable, including unbilled revenues, arise primarily from electric and natural gas
sales. At Dec. 31, 2003 and 2002, the utility subsidiaries were serving a diversified base
of residential, commercial and industrial customers and did not have any significant
concentrations of credit risk.

Alliant Energys utility
subsidiaries participate in a combined utility customer accounts receivable sale program
whereby IP&L and WP&L may sell up to a combined maximum amount of $250 million
(there are no individual subsidiary limits) of their respective accounts receivable to a
third-party financial institution on a limited recourse basis through wholly-owned and
consolidated special purpose entities. Corporate Services acts as a collection agent for
the buyer and receives a fee for collection services. The agreement expires in April 2006
and is subject to annual renewal or renegotiation for a longer period thereafter. Under
terms of the agreement, the third-party financial institution purchases the receivables
initially for the face amount. On a monthly basis, this sales price is adjusted, resulting
in payments to the third-party financial institution of an amount that varies based on
interest rates and length of time the sold receivables remain outstanding. Collections on
sold receivables are used to purchase additional receivables from the utility
subsidiaries.

64

At Dec. 31, 2003 and 2002, Alliant
Energy had sold $176 million and $202 million of receivables, respectively. In 2003, 2002
and 2001, Alliant Energy received $1.8 billion, $2.3 billion and $2.2 billion,
respectively, in aggregate proceeds from the sale of accounts receivable. The utility
subsidiaries use proceeds from the sale of accounts receivable and unbilled revenues to
maintain flexibility in their capital structures, take advantage of favorable short-term
rates and finance a portion of their long-term cash needs. Alliant Energy paid fees
associated with these sales of $2.6 million, $4.2 million and $7.9 million in 2003, 2002
and 2001, respectively.

Alliant Energy and its utility
subsidiaries account for the sale of accounts receivable to the third-party financial
institution as sales under SFAS 140, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities which do not require
consolidation per the guidelines of FIN 46. Retained receivables are available to the
third-party financial institution to pay any fees or expenses due it, and to absorb all
credit losses incurred on any of the sold receivables. Resources also sells receivables in
its Integrated Services business that allows financing without incurring additional debt.

(5) INCOME TAXESThe components of income taxes for
Alliant Energy were as follows (in millions):

|                                       | 2003 | 2002 | 2001
|-------------------------------------- | ---- | ---- | ----
|                                      
|Current tax expense:                   |      |      |     
|Federal                                |      | $19  | .2  
|State                                  |      | 12   | .7  
|Deferred tax expense (benefit):        |     
|Federal                                |      | 62   | .3  
|State                                  |      | 0    | .5  
|Foreign tax expense                    |      | 8    | .2  
|Research and development tax credits   |      | (1   | .1) 
|Amortization of investment tax credits |      | (5   | .1) 
|Nonconventional fuel credits           |      | (23  | .1) 
|Other tax credits                      |      | (1   | .8) 
|                                      
|                                       |      | $71  | .8  
|                                      

Included in Cumulative effect
of changes in accounting principles, net of tax in the Consolidated Statements of
Income for 2003 and 2001 were income tax benefits of $3.8 million and $5.5 million,
respectively, related to the adoption of EITF Issue 02-3 and SFAS 143 by Alliant Energy on Jan.
1, 2003, and the adoption of SFAS 133 by an equity method foreign affiliate of Alliant
Energy on Jan. 1, 2001, respectively. Refer to Note 16 for discussion of taxes associated
with Alliant Energys discontinued operations.

Alliant Energys subsidiaries
calculate income tax provisions using the separate return methodology. Separate return
amounts are adjusted to reflect state apportionment benefits net of federal tax and the
fact that PUHCA prohibits the retention of tax benefits at the parent level. Any
difference between the separate return methodology and the actual consolidated return is
allocated as prescribed in Alliant Energys tax allocation agreement.

The overall effective income tax
rates shown in the following table were computed by dividing total income tax expense by
income from continuing operations before income taxes and preferred dividend requirements
of subsidiaries.

|                                                      | 2003 | 2002 | 2001
|----------------------------------------------------- | ---- | ---- | ----
|                                                     
|Statutory federal income tax rate                     |      | 35   | .0% 
|Effect of rate making on property related differences |      | 4    | .0  
|State income taxes, net of federal benefits           |      | 3    | .2  
|Research and development tax credits                  |      | (0   | .4) 
|Adjustment of prior period taxes                      |      | (0   | .6) 
|Amortization of investment tax credits                |      | (2   | .1) 
|Foreign operations                                    |      | (2   | .7) 
|Nonconventional fuel credits                          |      | (9   | .2) 
|Other items, net                                      |      | 1    | .7  
|                                                     
|Overall effective income tax rate                     |      | 28   | .9% 
|                                                     

65

The accumulated deferred income tax
(assets) and liabilities included on the Consolidated Balance Sheets at Dec. 31 arise from
the following temporary differences (in millions):

|                                  | 2003       | 2002        
|--------------------------------- | ---------- | ------------
|                                 
|                                  | Deferred   | Deferred Tax
|                                  | Tax Assets | Liabilities 
|                                 
|Property related                  |            | ($37        
|Exchangeable senior notes         |            | --          
|Capital loss carryover            |            | (37         
|Decommissioning related           |            | (30         
|Other                             |            | (67         
|                                 
|Total                             |            | ($172       
|                                 
|                                 
|                                  |            |             
|                                  |            |             
|Other current assets              |            |             
|Accumulated deferred income taxes |            |             
|                                  |            |             
|Total deferred tax liabilities    |            |             
|                                  |            |             

At Dec. 31, 2003, Alliant Energy had
the following tax carryforwards: alternative minimum tax credits of $31.6 million, capital
losses of $107.4 million, net operating losses (primarily state) of $422.9 million, and
general business credits of $17.7 million. The alternative minimum tax credit
carryforwards can be carried forward indefinitely. The majority of the capital loss
carryforwards expire in 2007. The net operating loss carryforwards have expiration dates
ranging from 2004 to 2023. The general business credit carryforwards have expiration dates
ranging from 2022 to 2023. Due to the uncertainty of the realization of certain tax
carryforwards, Alliant Energy has established valuation allowances of $35.8 million and
$21.4 million as of Dec. 31, 2003 and 2002, respectively. At Dec. 31, 2003 and 2002, $19.6
million and $16.3 million, respectively, of these valuation allowances have been recorded
to Accumulated other comprehensive loss on Alliant Energys Consolidated
Balance Sheets and relate to unrealized tax benefits on certain foreign currency
translation losses that are subject to capital loss carryover limitations.

At Dec. 31, 2003, 2002 and 2001,
Alliant Energy had not recorded U.S. tax provisions of $19.2 million, $16.3 million and
$6.8 million relating to $54.9 million, $46.6 million and $19.5 million of unremitted
earnings from foreign investments, respectively, as these earnings are expected to be
reinvested indefinitely.

U.S.
          and foreign sources of income (loss) from continuing operations before income
          taxes were as follows (in millions):

|                                                      | 2003 | 2002 | 2001
|----------------------------------------------------- | ---- | ---- | ----
|                                                     
|U.S. sources                                          |      | $174 | .9  
|Foreign sources                                       |      | 56   | .6  
|                                                     
|Income from continuing operations before income taxes |      | $231 | .5  
|                                                     

66

(6) BENEFIT PLANS(a)    
          Pension Plans and Other Postretirement Benefits  Alliant Energy has
          various non-contributory defined benefit pension plans that cover a significant
          number of its employees. Benefits are based on the employees years of
          service and compensation. Alliant Energy also provides certain postretirement
          health care and life benefits to eligible retirees. In general, the health care
          plans are contributory with participants contributions adjusted regularly
          and the life insurance plans are non-contributory. The weighted-average
          assumptions for qualified and non-qualified pension benefits and other
          postretirement benefits at the measurement date of Sept. 30 were as follows:

|                                       | Pension Benefits | Other Postretirement Benefits
|-------------------------------------- | ---------------- | -----------------------------
|                                      
|                                       | 2003             | 2002                         
|                                      
|Discount rate for benefit obligations  |                  | 6                            
|Discount rate for net periodic cost    |                  | 6.75                         
|Expected return on plan assets         |                  | 9                            
|Rate of compensation increase          |                  | 3.5-4.5                      
|Medical cost trend on covered charges: |                 
|Initial trend rate                     |                  | N/A                          
|Ultimate trend rate                    |                  | N/A                          

The expected return on plan assets
was determined by analysis of historical and forecasted asset class returns as well as
actual returns for the plan over the past 10 years. An adjustment to the returns to
account for active management is also made in the analysis. The obligations are viewed as
long-term commitments and a long-term approach is used when determining the expected rate
of return on assets, which is reviewed on an annual basis.

The components of Alliant
Energys qualified and non-qualified pension benefits and other postretirement
benefits costs were as follows (in millions):

|                               | Pension Benefits | Other Postretirement Benefits
|------------------------------ | ---------------- | -----------------------------
|                              
|                               | 2003             | 2002                         
|                              
|Service cost                   |                  | $16                          
|Interest cost                  |                  | 43                           
|Expected return on plan assets |                  | (40                          
|Amortization of:               |                 
|Transition obligation (asset)  |                  | (0                           
|Prior service cost             |                  | 3                            
|Actuarial loss (gain)          |                  | 8                            
|                              
|                               |                  | $30                          
|                              

The assumed medical trend rates are
critical assumptions in determining the service and interest cost and accumulated
postretirement benefit obligation related to postretirement benefits costs. A 1% change in
the medical trend rates for 2003, holding all other assumptions constant, would have the
following effects (in millions):

|                                                        | 1% Increase | 1% Decrease
|------------------------------------------------------- | ----------- | -----------
|                                                       
|Effect on total of service and interest cost components |             | $2         
|Effect on postretirement benefit obligation             |             | $24        

67

A reconciliation of the funded status
of Alliant Energys qualified and non-qualified pension benefit and other
postretirement benefit plans to the amounts recognized on Alliant Energys
Consolidated Balance Sheets at Dec. 31 was as follows (in millions):

|                                                      | Pension Benefits | Other Postretirement Benefits
|----------------------------------------------------- | ---------------- | -----------------------------
|                                                     
|                                                      | 2003             | 2002                         
|                                                     
|Change in projected benefit obligation:               |                  |                              
|Net projected benefit obligation at beginning of year |                  | $646                         
|Service cost                                          |                  | 16                           
|Interest cost                                         |                  | 43                           
|Plan participants' contributions                      |                  | --                           
|Plan amendments                                       |                  | 1                            
|Actuarial loss                                        |                  | 47                           
|Gross benefits paid                                   |                  | (34                          
|                                                     
|Net projected benefit obligation at end of year       |                  | 721                          
|                                                     
|Change in plan assets:                                |                 
|Fair value of plan assets at beginning of year        |                  | 466                          
|Actual return on plan assets                          |                  | 86                           
|Employer contributions                                |                  | 12                           
|Plan participants' contributions                      |                  | --                           
|Gross benefits paid                                   |                  | (34                          
|                                                     
|Fair value of plan assets at end of year              |                  | 530                          
|                                                     
|Funded status at end of year                          |                  | (190                         
|Unrecognized net actuarial loss                       |                  | 175                          
|Unrecognized prior service cost                       |                  | 22                           
|Unrecognized net transition obligation (asset)        |                  | (0                           
|                                                     
|Net amount recognized at end of year                  |                  | $6                           
|                                                     
|Amounts recognized on the Consolidated                |                 
|Balance Sheets consist of:                            |                 
|Prepaid benefit cost                                  |                  | $60                          
|Accrued benefit cost                                  |                  | (53                          
|Additional minimum liability                          |                  | (77                          
|Intangible asset                                      |                  | 14                           
|Accumulated other comprehensive loss                  |                  | 62                           
|                                                     
|Net amount recognized at measurement date             |                  | 6                            
|                                                     
|                                                     
|Contributions paid after 9/30 and prior to 12/31      |                  | 0                            
|                                                     
|Net amount recognized at 12/31                        |                  | $7                           
|                                                     

The funded status of the qualified
pension plans based on the projected benefit obligation at Sept. 30, 2003, was ($147.6)
million. Included in the following table are Alliant Energys accumulated benefit obligations,
aggregate amounts applicable to pension and other postretirement
benefits with accumulated benefit obligations in excess of plan assets, as well as pension
plans with projected benefit obligations in excess of plan assets as of the measurement
date of Sept. 30 (in millions):

|                                                     | Pension Benefits | Other Postretirement Benefits
|---------------------------------------------------- | ---------------- | -----------------------------
|                                                    
|                                                     | 2003             | 2002                         
|                                                    
|Accumulated benefit obligation                       |                  | $663                         
|Plans with accumulated benefit obligations in excess |                 
|of plan assets:                                      |                 
|Accumulated benefit obligation                       |                  | 497                          
|Fair value of plan assets                            |                  | 355                          
|Plans with projected benefit obligations in excess   |                 
|of plan assets:                                      |                 
|Projected benefit obligations                        |                  | 721                          
|Fair value of plan assets                            |                  | 530                          

68

Alliant Energys net periodic
benefit cost is primarily included in Domestic utility  other operation and
maintenance in Alliant Energys Consolidated Statements of Income. Alliant
Energy calculates the fair value of plan assets by using the straight market value of
assets approach.

Postretirement benefit plans are
funded via specific assets within certain retirement plans (401(h) assets) as well as
VEBA trusts. The asset allocation of
the 401(h) assets mirrors the pension plan assets and the asset allocation of the VEBA
trusts are reflected in the table below under Other Postretirement Plans. The
asset allocation for Alliant Energys pension and other postretirement benefit plans
at Sept. 30, 2003 and 2002, and the pension plan target allocation for 2003 were as
follows:

|                  | Pension Plans | Other Postretirement Plans
|----------------- | ------------- | --------------------------
|                 
|                  | Target        | Percentage of Plan        
|                  | Allocation    | Assets at Sept. 30        
|                 
|Asset Category    | 2003          | 2003                      
|                 
|Equity securities | 50-65%        | 61%                       
|Debt securities   | 25-40%        | 33%                       
|Other             | 0-5%          | 6%                        
|                 
|                  |               | 100%                      
|                 

For the various Alliant Energy
pension and postretirement plans, Alliant Energy common stock represented less than 1% of
total plan assets at Dec. 31, 2003 and 2002. Alliant Energys plan assets are managed
by outside investment managers. Alliant Energys investment strategy and its policies
employed with respect to pension and postretirement assets is to combine both preservation
of principal, and prudent and reasonable risk-taking to protect the integrity of the
assets in meeting the obligations to the participants while achieving the optimal return
possible over the long-term. It is recognized that risk and volatility are present to some
degree with all types of investments; however, high levels of risk are minimized at the
total fund level. This is accomplished through diversification by asset class, number of
investments, and sector and industry limits when applicable.

For the pension plans, the mix among
asset classes is controlled by long-term asset allocation targets. The assets are viewed
as long-term with moderate liquidity needs. Historical performance results and future
expectations suggest that equity securities will provide higher total investment returns
than debt securities over a long-term investment horizon. Consistent with the goals to
maximize returns and minimize risk over the long-term, the pension plans have a long-term
investment posture more heavily weighted towards equity holdings. The asset allocation mix
is monitored quarterly and appropriate action is taken as needed to rebalance the assets
within the prescribed range. Assets related to postretirement plans are viewed as
long-term. A balanced mix of both equity and debt securities are utilized to maximize
returns and minimize risk over the long-term.

Prohibited investment vehicles
related to the pension and postretirement plans include, but may not be limited to, direct
ownership of real estate, real estate investment trusts, private placements, unregistered
or restricted stock, options and futures unless specifically approved, margin trading, oil
and gas limited partnerships, commodities, short selling, commercial mortgage obligations
and securities of the managers firms or affiliate firms.

Alliant Energy estimates that funding
for the pension and postretirement benefit plans for 2004 will be approximately $60
million and $15 million, respectively.

In December 2003, the President
signed into law the Medicare Prescription Drug, Improvement and Modernization Act of 2003
(the Act). The Act introduces a prescription drug benefit under Medicare Part D, as well
as a federal subsidy to sponsors of retiree health care benefit plans, that provide a
benefit that is at least actuarially equivalent to Medicare Part D. As permitted by FSP
No. FAS 106-1, Accounting and Disclosure Requirements Related to the Medicare
Prescription Drug, Improvement and Modernization Act of 2003, Alliant Energy has
elected to defer reflecting the effect of the Act on postretirement net periodic benefit
cost and the accumulated postretirement benefit obligation in the Consolidated Financial
Statements, since specific authoritative guidance on the accounting for the federal
subsidy is pending and that guidance, when issued, could require Alliant Energy to change
previously reported information. Alliant Energy is currently evaluating the effect of the
Act on its other postretirement benefits expense.

Alliant Energy has various life
insurance policies that cover certain key employees and directors. At Dec. 31, 2003 and
2002, the cash surrender value of these investments was $35 million and $32 million,
respectively. Under Alliant Energys deferred compensation plans, certain key
employees and directors can defer part or all of their current compensation in company
stock or interest accounts, which are held in grantor trusts. At Dec. 31, 2003 and 2002,
the fair market value of the trusts totaled $7.6 million and $4.9 million, respectively,
the majority of which consisted of Alliant Energy common stock. A significant number of
Alliant Energy employees also participate in defined contribution pension plans (401(k)
and Employee Stock Ownership plans). Alliant Energys contributions to the 401(k)
plan, which are based on the participants level of contribution, were $8.0 million,
$9.2 million, and $8.2 million in 2003, 2002 and 2001, respectively. For the Alliant
Energy 401(k) plan, Alliant Energy common stock represented 22.6% and 18.2% of total plan
assets at Dec. 31, 2003 and 2002.

69

(b)    
          Equity Incentive Plans Alliant Energy has an EIP that permits the
          grant of incentive stock options, non-qualified stock options, stock
          appreciation rights, restricted stock, restricted stock units, performance
          shares and performance units to key employees. At Dec. 31, 2003, non-qualified
          stock options were outstanding under this plan. The maximum number of shares of
          Alliant Energy common stock that may be issued under the plan is 4 million.
          Alliant Energy also had an LTEIP, under which no awards may be granted after
          January 2004, and under which non-qualified stock options, restricted stock and
          performance shares were outstanding at Dec. 31, 2003.

Options granted to date under the
plans were granted at the quoted market price of the shares on the date of grant, vest
over three years and expire no later than 10 years after the grant date. Options become
fully vested upon retirement and remain exercisable at any time prior to their expiration
date, or for three years after the effective date of the retirement, whichever period is
shorter. Options become fully vested upon death or disability and remain exercisable at
any time prior to their expiration date, or for one year after the effective date of the
death or disability, whichever period is shorter. Participants options that are not
vested become forfeited when participants leave Alliant Energy and their vested options
expire after three months. A summary of the stock option activity was as follows:

|                                 | 2003   | 2002      | 2001  
|-------------------------------- | ------ | --------- | ------
|                                
|                                 |        | Weighted  |       
|                                 |        | Average   |       
|                                 |        | Exercise  |       
|                                 | Shares | Price     | Shares
|                                
|Outstanding at beginning of year |        | 3,842,136 |       
|Options granted                  |        | 957,200   |       
|Options exercised                |        | --        |       
|Options forfeited                |        | (582,622  | )     
|                                 |        |           |       
|Outstanding at end of year       |        | 4,216,714 |       
|                                 |        |           |       
|Exercisable at end of year       |        | 2,514,908 |       

The weighted-average remaining
contractual life of outstanding options at Dec. 31, 2003, 2002 and 2001 was 7.1 years,
7.4 years and 7.7 years, respectively.  Additional information as of Dec. 31, 2003 is as
follows:

|                | Options Outstanding | Options Exercisable
|--------------- | ------------------- | -------------------
|               
|Range of        |                     | Weighted Average   
|Exercise Prices | Options             | Exercise Price     
|               
|$16.82          | 907,714             | $16.82             
|$27.50-$31.56   | 3,309,000           | 29.46              

The value of the options granted
during the year using the Black-Scholes pricing method was as follows:

|                                         | 2003    | 2002     | 2001    
|---------------------------------------- | ------- | -------- | --------
|                                        
|Value of options                         | $1.94   | $9.14    | $4.30   
|Volatility                               | 22.8%   | 40.6%    | 18.9%   
|Risk free interest rate                  | 3.5%    | 5.0%     | 5.0%    
|Expected life                            | 7 years | 10 years | 10 years
|Expected dividend yield on date of grant | 5.9%    | 6.0%     | 6.6%    

At Dec. 31, 2003 and 2002, Alliant
Energy had 1,745 shares of restricted stock outstanding. Any unvested shares of restricted
stock become fully vested upon retirement. Participants unvested restricted stock is
forfeited when the participant leaves Alliant Energy. Compensation cost is measured at the
date of the award based on the fixed number of shares awarded and the market price of the
shares at the award date. Compensation cost, which is recognized ratably over the
three-year restriction period, was $0, $0.2 million and $0.6 million in 2003, 2002 and
2001, respectively.

70

The payout to key employees of
Corporate Services for performance shares granted through 2002 is contingent upon
achievement over a three-year period of specified EPS growth and total return to
shareowners of Alliant Energy compared with an investor-owned utility peer group (TSR),
and for performance shares granted in 2003 is contingent solely upon TSR. The payout to
key employees of Resources is contingent upon achievement over a three-year period of
specified Resources EPS growth. Performance shares are paid out in shares of Alliant
Energys common stock or a combination of cash and stock and are modified by a
performance multiplier, which ranges from zero to two, based on the performance criteria.
Performance shares have an intrinsic value equal to the quoted market price of a share on
the date of payout. Pursuant to APB 25, Alliant Energy accrues the plan expense over the
three-year period the services are performed and recognized (income) expense of $4.1
million, ($1.6) million and $2.4 million in 2003, 2002 and 2001, respectively.

(7) COMMON AND PREFERRED STOCK(a)    
          Common Stock  The number of shares of common stock issued by Alliant
          Energy under its various stock plans was as follows:

|                       | 2003        | 2002       | 2001      
|---------------------- | ----------- | ---------- | ----------
|                      
|Beginning balance      | 92,304,220  | 89,682,334 | 79,010,114
|Shares issued:        
|Public offering        | 17,250,000  | --         | 9,775,000 
|Shareowner Direct Plan | 970,445     | 1,877,032  | 668,379   
|401(k) Savings Plan    | 438,245     | 689,336    | 161,239   
|Equity incentive plans | --          | 55,518     | 67,602    
|                      
|Ending balance         | 110,962,910 | 92,304,220 | 89,682,334
|                      

In July 2003, Alliant Energy
completed a public offering of its common stock generating net proceeds of $318 million,
which were used to make capital contributions to WP&L of $200 million and IP&L of
$118 million in support of their respective generation and reliability initiatives. In
November 2001, Alliant Energy completed a public offering of its common stock generating
net proceeds of $263 million which were used to repay short-term debt. From January 2001
to June 2001, Alliant Energy satisfied its requirements under the Shareowner Direct Plan
(dividend reinvestment and stock purchase plan) by acquiring Alliant Energy common stock
on the open market, rather than through original issue. At Dec. 31, 2003 and 2002, Alliant
Energy had a total of 4.7 million and 6.8 million shares, respectively, available for
issuance in the aggregate, pursuant to its Shareowner Direct Plan, LTEIP, EIP and 401(k)
Savings Plan.

Alliant Energy has a Shareowner
Rights Plan whereby rights will be exercisable only if a person or group acquires, or
announces a tender offer to acquire, 15% or more of Alliant Energys common stock.
Each right will initially entitle shareowners to buy one-half of one share of Alliant
Energys common stock. The rights will only be exercisable in multiples of two at an
initial price of $95.00 per full share, subject to adjustment. If any shareowner acquires
15% or more of the outstanding common stock of Alliant Energy, each right (subject to
limitations) will entitle its holder to purchase, at the rights then current
exercise price, a number of common shares of Alliant Energy or of the acquirer having a
market value at the time of twice the rights per full share exercise price. The
Board of Directors is also authorized to reduce the 15% ownership threshold to not less
than 10%.

IP&L and WP&L each have
dividend payment restrictions based on their respective bond indentures, the terms of
their outstanding preferred stock and state regulatory limitations applicable to them. In
its December 2003 rate order, the PSCW stated WP&L may not pay annual common stock
dividends, including pass-through of subsidiary dividends, in excess of $89 million to
Alliant Energy if WP&Ls actual average common equity ratio, on a regulatory
financial basis, is or will fall below the authorized level of 54.01%. In accordance with
the IUB order authorizing the IP&L merger, IP&L must inform the IUB if its common
equity ratio falls below 42% of total capitalization. As of Dec. 31, 2003, IP&L and
WP&L were in compliance with all such dividend restrictions.

In 2003, 2002 and 2001, 13, 11 and 14
non-employee directors voluntarily elected to purchase up to 1,000, 1,000 and up to 1,000
shares each of Alliant Energy common stock through the Shareowner Direct Plan utilizing
cash compensation received as part of the directors compensation program, for a
total of $181,000, $337,000 and $338,000, respectively.

(b)    
          Preferred Stock  In September 2003, IP&L issued 1.6 million shares
          of preferred stock at $25.00 per share in a public offering and received net
          proceeds of $39 million. The fair market value of Alliant Energys
          cumulative preferred stock of subsidiaries, based upon the market yield of
          similar securities and quoted market prices, at Dec. 31, 2003 and 2002 was $286
          million and $198 million, respectively. Information related to the carrying
          value of Alliant Energys cumulative preferred stock of subsidiaries, net
          (none are mandatorily redeemable) at Dec. 31 was as follows (in millions):

71

|Liquidation Preference/                                                            |  | Authorized |  | Shares      |  |               |  |      |     |      |    
|---------------------------------------------------------------------------------- |  | ---------- |  | ----------- |  | ------------- |  | ---- | --- | ---- | ---
|Stated Value                                                                       |  | Shares     |  | Outstanding |  | Series        |  | 2003 |     | 2002 |    
|                                                                                  
|$25                                                                                |  | *          |  | 6,000,000   |  | 8.375%        |  | $150 | .0  | $150 | .0 
|$25                                                                                |  | *          |  | 1,600,000   |  | 7.10%         |  | 40   | .0  | --   |    
|$100                                                                               |  | **         |  | 449,765     |  | 4.40% - 6.20% |  | 45   | .0  | 45   | .0 
|$25                                                                                |  | **         |  | 599,460     |  | 6.50%         |  | 15   | .0  | 15   | .0 
|                                                                                  
|                                                                                   |  |            |  |             |  |               |  | 250  | .0  | 210  | .0 
|Less:  discount                                                                    |  |            |  |             |  |               |  | (6   | .2) | (4   | .9)
|                                                                                  
|                                                                                   |  |            |  |             |  |               |  | $243 | .8  | $205 | .1 
|                                                                                  
|* 16,000,000 authorized shares in total.  ** 3,750,000 authorized shares in total.

(8) DEBT(a)    
          Short-Term Debt  To provide short-term borrowing flexibility and
          security for commercial paper outstanding, Alliant Energy and its subsidiaries
          maintain committed bank lines of credit, all of which require a fee. Information
          regarding short-term debt was as follows (dollars in millions):

|                                                     | 2003      | 2002    
|---------------------------------------------------- | --------- | --------
|                                                    
|At Dec. 31:                                          |           |         
|Commercial paper outstanding                         | $107.5    | $195.5  
|Discount rates on commercial paper                   | 1.2%      | 1.6-1.9%
|Bank facility borrowings                             | $--       | $85.0   
|Interest rates on bank facility borrowings           | N/A       | 2.3-2.4%
|Other borrowings (primarily at foreign subsidiaries) | $21.5     | $28.7   
|Interest rates on other borrowings                   | 5.3-10.8% | 5.3-6.9%
|                                                    
|For the year ended:                                 
|Average amount of short-term debt                   
|(based on daily outstanding balances)                | $269.8    | $337.9  
|Average interest rates on short-term debt            | 2.6%      | 2.7%    

(b)    
          Long-Term Debt  Substantially all of IP&Ls utility plant is
          pledged as collateral under one or more of several outstanding indentures. These
          indentures secure IP&Ls Collateral Trust and First Mortgage Bonds.
          WP&Ls First Mortgage Bonds are secured by substantially all of its
          utility plant. IP&L, WP&L and Resources also maintain indentures related
          to the issuance of unsecured debt securities.

In October 2003 and September 2003,
IP&L issued $100 million and $100 million of 6.45% and 5.875% unsecured senior
debentures due 2033 and 2018, respectively, and used the majority of the net proceeds to
redeem long-term debt. In December 2002, Resources issued $300 million of 9.75% senior
notes due 2013 and used the proceeds to repay short-term debt.

Alliant Energy utilized the proceeds
from its non-regulated asset sales in 2003 to reduce short-term debt outstanding and also
retired various Non-regulated and other long-term debt as noted on Alliant
Energys Consolidated Statements of Capitalization.

Debt maturities for 2004 to 2008 are
$69 million, $102 million, $69 million, $199 million and $196 million, respectively.
Depending upon market conditions, it is currently anticipated that a majority of the
maturing debt will be refinanced with the issuance of long-term securities.

The carrying value of Alliant
Energys long-term debt (including current maturities and variable rate demand bonds)
at Dec. 31, 2003 and 2002 was $2.2 billion and $2.7 billion, respectively. The fair market
value, based upon the market yield of similar securities and quoted market prices, at Dec.
31, 2003 and 2002 was $2.6 billion and $2.9 billion, respectively.

Alliant Energy has fully and
unconditionally guaranteed the payment of principal and interest on various debt
securities issued by Resources. No other Alliant Energy subsidiaries are guarantors of
Resources debt securities. Alliant Energy does not have any intercompany debt
cross-collateralizations or intercompany debt guarantees.

72

(9) INVESTMENTS AND ESTIMATED
FAIR VALUE OF FINANCIAL INSTRUMENTSThe carrying amount of Alliant
Energys current assets and current liabilities approximates fair value because of
the short maturity of such financial instruments. Since IP&L and WP&L are subject
to regulation, any gains or losses related to the difference between the carrying amount
and the fair value of their financial instruments may not be realized by Alliant
Energys shareowners. Information relating to various investments held by Alliant
Energy at Dec. 31 that are marked-to-market as a result of SFAS 115 was as follows (in
millions):

|                                     | 2003          | 2002         
|------------------------------------ | ------------- | -------------
|                                    
|                                     |               | Unrealized   
|                                     | Carrying/Fair | Gains, Net of
|                                     | Value         | Tax          
|                                    
|Available-for-sale securities:       |               |              
|Nuclear decommissioning trust funds: |              
|Debt securities                      |               | $215         
|Equity securities                    |               | 167          
|Total                                |               | 382          
|WPC                                  |               | 20           
|Various other investments            |               | 29           
|Trading securities (McLeod)          |               | 1            

In accordance with SFAS 115, the
carrying values of the investments are adjusted to estimated fair value based upon market
values at the end of each quarter. Changes in fair value of investments designated as
available-for-sale securities are reported in other comprehensive income, and impact
current earnings when gains or losses are realized through sale or if a decline in value
is determined to be other-than-temporary. Changes in fair value of investments
designated as trading securities are reflected in earnings in the Miscellaneous,
net line in the Consolidated Statements of Income.

Nuclear Decommissioning Trust
Funds At Dec. 31, 2003, $110 million, $65 million and $40 million of the debt
securities mature in 2004-2010, 2011-2020 and 2021-2040, respectively. The fair value of
the nuclear decommissioning trust funds, as reported by the trustee, was adjusted for the
tax effect of unrealized gains and losses. In 2003, net unrealized holding gains were
recorded as part of regulatory liabilities or as an offset to regulatory assets related to
AROs (recorded in 2002 as part of cost of removal obligations). The funds realized gains
(losses) from the sales of securities of ($6.0) million, $10.4 million and $2.0 million in
2003, 2002 and 2001, respectively (cost of the investments based on specific
identification was $385.6 million, $111.1 million and $169.8 million, respectively, and
proceeds from the sales were $379.6 million, $121.5 million and $171.8 million,
respectively). In January 2004, WP&L liquidated all of its qualified decommissioning
assets into money market funds as a result of the pending Kewaunee sale.

Investment in McLeod Alliant Energy has investments in the common stock of McLeod, a telecommunications
company. On Jan. 31, 2002, McLeod filed a pre-negotiated plan of reorganization in a
Chapter 11 bankruptcy proceeding and the trading of McLeods common stock was
suspended by Nasdaq. Consequently, Alliant Energy discontinued accounting for its
investment in McLeod under the provisions of SFAS 115 and reduced the cost basis of its
investments to the last quoted market price on Jan. 30, 2002. In June 2002, Alliant Energy
received from McLeod under its plan of reorganization an initial distribution of 3.3
million shares of new common stock and classified 0.9 million and 2.4 million shares as
trading and available-for-sale securities, respectively. With the receipt of the new
McLeod common shares and the resumption of trading on Nasdaq, Alliant Energy resumed
accounting for its McLeod investments under SFAS 115 and adjusted its cost basis to the
quoted market price on the date the shares were received. As a result of these events,
Alliant Energy recognized pre-tax impairment charges in 2002 for available-for-sale
securities totaling $27.2 million.

Investments in Foreign Entities
 The geographic concentration of Alliant Energys significant foreign
investments at Dec. 31 was as follows (in millions):

|               | Brazil | China | New Zealand | Mexico | Total
|-------------- | ------ | ----- | ----------- | ------ | -----
|              
|2003           |        |       |             |        |      
|Unconsolidated | $283   | $17   | $103        | $79    | $482 
|Consolidated   | --     | 178   | --          | --     | 178  
|              
|Total          | $283   | $195  | $103        | $79    | $660 
|              
|2002          
|Unconsolidated | $214   | $19   | $86         | $55    | $374 
|Consolidated   | --     | 161   | --          | --     | 161  
|              
|Total          | $214   | $180  | $86         | $55    | $535 
|              

73

Brazil  Resources holds
a non-controlling interest in five Brazilian electric utility companies through several
direct investments accounted for under the equity method of accounting. At Dec. 31, 2003
and 2002, Resources direct investments included a 49.9% direct ownership interest in
GIPAR, S.A., an electric utility holding company; a 39.4% direct ownership interest in
Companhia Forca e Luz Cataguazes  Leopoldina, S.A., an electric
utility; a 45.6% direct ownership interest in Energisa, S.A., an energy development
company; a 49.9% direct ownership interest in Pbpart  SE 1 Ltda., an electric
utility holding company; and a 50.0% direct ownership interest in Usina Termeletrica de
Juiz de Fora S.A., a thermal power plant. The increase in Alliant Energys foreign
investments in Brazil from Dec. 31, 2002 to Dec. 31, 2003 is largely due to the impacts of
changes in the Brazil currency exchange rate.

China  Resources
consolidated investments included a controlling interest in Peak Pacific Investment
Company, Ltd., a company that develops investment opportunities in generation
infrastructure projects in China, and Anhui New Energy Heat & Power Co., Ltd., a
combined heat and power facility. Resources unconsolidated investments included a
50.0% ownership interest in Jiaxing JIES Power & Heat Co., Ltd. and a 30.0% ownership
interest in Tongxiang TIES Power & Heat Co., Ltd. Both of these combined heat and
power facilities are accounted for under the equity method.

New Zealand 
Resources investments included a 23.8% ownership interest in TrustPower Ltd., a
hydro and wind generation utility company, accounted for under the equity method, and
several other smaller investments accounted for under the cost method. Based on the
exchange rates and trading prices at Dec. 31, 2003 and 2002, the TrustPower Ltd.
investment carrying value was $81 million and $65 million, respectively, and the market
value was $157 million and $69 million, respectively.

Mexico  Resources
investment in Mexico consisted of a loan receivable (including accrued interest income)
from a Mexican development company. Under provisions of the loan, Resources has agreed to
lend up to $65 million to the Mexican development company to build the utility
infrastructure of a master planned resort community. The loan accrues interest at 8.75%
and is secured by a first lien on the land parcels of the master planned community.
Repayment of the loan principal and interest will be based on a portion of the proceeds
from the sales, performed by the Mexican development company, of real estate lots in the
master planned community and therefore is dependent on the successful development of the
project and sale of real estate. Additionally, in the third quarter of 2003, Alliant
Energy Servicios de Mexico, S. de R. L. de C. V. and Alliant Energy Operaciones de Mexico
S. de R. L. de C. V. began operations in Mexico and provide contract services solely to
the resort communitys utility company, which are paid monthly on a cost-plus basis.

Investment in ATC At
Dec. 31, 2003 and 2002, WP&L had ownership interests in ATC of approximately 25% and
27%, respectively, and accounts for this investment under the equity method. At Dec. 31,
2003 and 2002, the carrying value of WP&Ls investment in ATC was $121 million
and $112 million, respectively. Pursuant to various agreements, WP&L receives a range
of transmission services from ATC. WP&L provides operation, maintenance, and
construction services to ATC. WP&L and ATC also bill each other for use of shared
facilities owned by each party. ATC billed WP&L $41.3 million, $38.7 million and $36.4
million in 2003, 2002 and 2001, respectively. WP&L billed ATC $12.4 million, $18.1
million and $18.4 million in 2003, 2002 and 2001, and recorded equity earnings of $16.2
million, $14.3 million and $14.6 million in 2003, 2002 and 2001, respectively.

Unconsolidated Equity Investments
Summary financial information from Alliant Energys unconsolidated equity
investments financial statements is as follows (in millions):

|                                                                    | 2003     | 2002 *   | 2001    
|------------------------------------------------------------------- | -------- | -------- | --------
|                                                                   
|Operating revenues                                                  | $1,804.9 | $1,440.6 | $2,214.1
|Operating income                                                    | 220.4    | 159.8    | 138.2   
|Net income                                                          | 19.8     | 36.6     | 52.1    
|As of Dec. 31:                                                     
|Current assets                                                      | 395.1    | 383.0   
|Non-current assets                                                  | 2,488.5  | 1,976.4 
|Current liabilities                                                 | 452.4    | 435.9   
|Non-current liabilities                                             | 815.4    | 505.1   
|Minority interest                                                   | 172.8    | 133.4   
|*  Alliant Energy's investment in Cargill-Alliant was sold in 2002.

(10) DERIVATIVE FINANCIAL
INSTRUMENTS(a)    
          Accounting for Derivative Instruments and Hedging Activities Alliant
          Energy records derivative instruments at fair value on the balance sheet as
          assets or liabilities and changes in the derivatives fair values for
          non-regulated entities in earnings unless specific hedge accounting criteria are
          met. For IP&L and WP&L, changes in the derivatives fair values are
          generally recorded as regulatory assets or liabilities. At Dec. 31, 2003 and
          2002, Alliant Energy had $15.4 million and $6.4 million of derivative assets
          included in Other current assets on its Consolidated Balance Sheets
          and $17.1 million and $9.1 million of derivative liabilities included in
          Other current liabilities on its Consolidated Balance Sheets,
          respectively.

74

In the first quarter of 2001, Alliant
Energy recorded a net loss of $12.9 million for a cumulative effect of a change in
accounting principle representing the impact of adopting SFAS 133 as of Jan. 1, 2001 at
Alliant Energys equity method investees. This transition adjustment represents
Alliant Energys share of the difference between the carrying amount of Southern
Hydros electric derivative contracts under the applicable accounting principles in
effect at Dec. 31, 2000, and the carrying values of these electric derivative contracts as
determined in accordance with SFAS 133 as of Jan. 1, 2001. Alliant Energy sold its
Southern Hydro business in 2003.

In April 2003, the FASB issued SFAS
149, which amends and clarifies accounting for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities under SFAS
133. Although SFAS 149 is expected to result in more energy contracts in Alliant
Energys domestic utility business qualifying as derivatives, changes in the fair
value of these derivatives are generally reported as changes in regulatory assets and
liabilities rather than being reported currently in earnings, based on the regulatory
treatment. SFAS 149 will likely result in more earnings volatility at NG Energy given the
majority of its derivatives may not qualify for hedge accounting.

Cash Flow Hedging
Instruments  During 2003 and/or 2002, Alliant Energy held various derivative
instruments designated as cash flow hedging instruments. WP&L utilized natural gas
commodity financial swap arrangements to reduce the impact of price fluctuations on
natural gas purchased and injected into storage during the summer months and withdrawn and
sold at current market prices during the winter months pursuant to the natural gas cost
incentive sharing mechanism with customers in Wisconsin. NG Energy utilizes natural gas
commodity derivative instruments to reduce the impact of natural gas price fluctuations on
physical natural gas sales from storage. WP&L utilized physical coal purchase
contracts, some of which did not qualify for the normal purchase and sale exception, to
manage the price of anticipated coal purchases and sales. Treasury rate locks and interest
rate swaps were used by Resources to mitigate risk associated with movements in the 10
year treasury yield used to price $300 million of Resources senior notes issued in
November 2001 and a portion of long-term debt used to finance the 309-MW, non-regulated, tolled,
natural gas-fired power plant in Neenah, Wisconsin purchased by Resources in February 2003.

In 2003 and 2002, $0 and a net loss
of $0.1 million, respectively, were recognized relating to the amount of hedge
ineffectiveness in accordance with SFAS 133. In 2003 and 2002, Alliant Energy did not
exclude any components of the derivative instruments gain or loss from the
assessment of hedge effectiveness and in 2003, Alliant Energy reclassified net gains of
$2.9 million into earnings as a result of the discontinuance of hedges. At Dec. 31, 2003,
the maximum length of time over which Alliant Energy hedged its exposure to the
variability in future cash flows for forecasted transactions was eight months and Alliant
Energy estimated that an insignificant amount will be reclassified from accumulated other
comprehensive loss into earnings in 2004 as the hedged transactions affect earnings.

Other Derivatives Not
Designated in Hedge Relationships  Alliant Energys derivatives that
were not designated in hedge relationships during 2003 and/or 2002 included the embedded
derivative component of Resources exchangeable senior notes; electric, coal, gas and
oil contracts; and a foreign currency option.

At maturity, the holders of
Resources exchangeable senior notes are paid the higher of the principal amount of
the notes or an amount based on the value of McLeod common stock. SFAS 133 requires that
Alliant Energy split the initial value of the notes into debt and derivative components.
The payment feature tied to McLeod stock is considered an embedded derivative under SFAS
133 that must be accounted for as a separate derivative instrument. This component is
classified as a derivative liability on the Consolidated Balance Sheets. Subsequent
changes in the fair value of the option are reflected as increases or decreases in Alliant
Energys reported net income. The carrying amount of the host debt security,
classified as long-term debt, is adjusted for amortization of the debt discount in
accordance with the interest method as prescribed by APB 21, Interest on Receivables
and Payables.

Changes in the fair value of the
McLeod shares designated as trading are reflected as increases or decreases in Alliant
Energys net income. These trading gains or losses are expected to correspond with,
and partially offset, changes in the intrinsic value of the embedded derivative component
of Resources exchangeable senior notes. Changes in the time value portion of the
derivative component will result in non-cash increases or decreases to Alliant
Energys net income. Refer to Note 1(p) for the valuation charges (income) recorded
in 2003, 2002 and 2001 related to the exchangeable senior notes and the McLeod trading
securities.

Electric contracts were used to
manage utility energy costs during supply/demand imbalances. Coal, gas and oil contracts
that do not qualify for the normal purchase and sale exception were used to manage the
price of anticipated coal, gas and oil purchases and sales. The foreign currency option
was used to mitigate fluctuations in Canadian currency rates. Refer to Note 10(d) for
additional information on NG Energys derivatives.

75

(b)    
          Weather Derivatives Alliant Energy uses weather derivatives to reduce
          the impact of weather volatility on its domestic utility natural gas sales
          volumes. In 2003 and 2002, Corporate Services, as agent for IP&L and
          WP&L, entered into non-exchange traded options based on heating degree days
          in which Corporate Services receives payment from the counterparty if actual
          heating degree days are less than the strike price in the contract. Corporate
          Services paid premiums to enter into these contracts, which are amortized to
          expense over the contract period. Alliant Energy has used the intrinsic value
          method to account for these weather derivatives.

(c)    
          Nuclear Decommissioning Trust Fund Investments Historically, WP&L
          has entered into combinations of options to mitigate the effect of significant
          market fluctuations on its common stock investments in its nuclear
          decommissioning trust funds. The derivative transactions are designed to protect
          the portfolios value while allowing the funds to earn a total return
          modestly in excess of long-term expectations over the hedge period. In 2003,
          fair value changes of these instruments did not impact net income as they were
          recorded as equally offsetting changes in the investment in nuclear
          decommissioning trust funds and regulatory liabilities or, for AROs, as an
          offset to regulatory assets (in 2002 as an offset to cost of removal
          obligations).

(d)    
          Energy-trading Contracts  Resources is the majority owner of a natural
          gas marketing business, NG Energy. NG Energy enters into financial and physical
          contracts for the sale, purchase, storage, transportation and loan of natural
          gas. NG Energy accounts for gas in storage at the weighted average cost of gas.
          NG Energy is impacted by EITF Issue 02-3, which requires that all sales of
          energy and the related cost of energy purchased under contracts that meet the
          definition of energy trading contracts and that are derivatives under SFAS 133,
          must be reflected on a net basis in the income statement for all periods
          presented. Alliant Energy adopted EITF Issue 02-3 on Jan. 1, 2003 for all of NG
          Energys trading contracts and storage gas acquired prior to Oct. 25, 2002,
          and reclassified prior period trading contracts on a net basis in the income
          statement. The impact of transitioning from reporting inventory and existing
          contracts that were not derivatives under SFAS 133 at fair value to historical
          cost resulted in a cumulative effect charge of $2.1 million (net of a deferred
          tax benefit of $1.4 million) in the first quarter of 2003. Any new contracts
          entered into after Oct. 25, 2002 have been reported on a historical cost basis
          rather than at fair market value unless the contract meets the definition of a
          derivative. Commencing Jan. 1, 2003, NG Energy has very few contracts that are
          accounted for as derivatives under SFAS 133 and that are also classified as
          trading contracts, therefore almost all of its sales of energy and cost of sales
          in 2003 are reported on a gross basis. Because substantially all of its
          contracts prior to 2003 were classified as trading contracts under EITF Issue
          98-10, "Accounting for Contracts Involved in Energy Trading and Risk Management Activities,"
          primarily all of its sales of energy and cost of sales for 2002 and 2001
          are reported on a net basis. NG Energy recorded gas revenues and gas costs on
          Alliant Energys Consolidated Statements of Income as follows (in
          millions):

|                                                 | 2003 | 2002 | 2001
|------------------------------------------------ | ---- | ---- | ----
|                                                
|Non-regulated operating revenues                 | $209 | $6   | $1  
|Non-regulated operation and maintenance expenses | 204  | --   | --  

(11)
          COMMITMENTS AND CONTINGENCIES  (a)     Construction and Acquisition Expenditures
          Certain commitments have been made in connection with 2004 capital
          expenditures. During 2004, total construction and acquisition expenditures are
          estimated to be approximately $700 million (unaudited).

(b)    
          Purchase Obligations Alliant Energy, through its subsidiaries
          Corporate Services, IP&L and WP&L, has entered into purchased-power,
          coal and natural gas supply, transportation and storage contracts. Certain
          purchased-power commitments are considered operating leases and are therefore
          not included here, but are included in Note 3. The natural gas supply
          commitments are all index-based. Alliant Energy expects to supplement its coal
          and natural gas supplies with spot market purchases as needed. The table
          includes commitments for take-or-pay contracts which result in
          dollar commitments with no associated tons or Dths. At Dec. 31, 2003, Alliant
          Energys minimum commitments related to its domestic utility business were
          as follows (dollars and Dths in millions; MWhs and tons in thousands):

|           | Purchased-power | Coal  | Natural gas
|---------- | --------------- | ----- | -----------
|          
|           | Dollars         | MWhs  | Dollars    
|          
|2004       | $38.4           | 1,032 | $109.9     
|2005       | 2.3             | --    | 85.0       
|2006       | 2.3             | --    | 59.4       
|2007       | 0.1             | --    | 33.2       
|2008       | 0.1             | --    | 19.0       
|Thereafter | 0.2             | --    | 68.6       

76

In addition, Alliant Energy, through
its non-regulated business, has entered into coal and natural gas supply, transportation
and storage contracts. At Dec. 31, 2003, Alliant Energys minimum fuel commitments
related to its non-regulated business were $8.9 million, $6.6 million, $4.9 million, $3.8
million, $3.8 million and $55.1 million for 2004, 2005, 2006, 2007, 2008, and 2009 and
thereafter, respectively.

Also, at Dec. 31, 2003, Alliant
Energys other purchase obligations, which represent individual commitments incurred
during the normal course of business which exceeded $1 million at Dec. 31, 2003, were
$26.4 million for 2004. This excludes lease obligations which are included in Note 3.

(c)    
          Legal Proceedings Alliant Energy is involved in legal and
          administrative proceedings before various courts and agencies with respect to
          matters arising in the ordinary course of business. Although unable to predict
          the outcome of these matters, Alliant Energy believes that appropriate reserves
          have been established and final disposition of these actions will not have a
          material adverse effect on its financial condition or results of operations.

(d)    
          Guarantees  In accordance with the provisions of FIN 45, "Guarantor's
          Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others," as of Dec.
          31, 2003 and 2002, Alliant Energy had guarantees outstanding to support
          unconsolidated affiliate and third-party financing arrangements of $5 million
          and $4 million, respectively. Such guarantees are not included on Alliant
          Energys Consolidated Balance Sheets. At Dec. 31, 2003, the maximum
          remaining term of the guarantees and the underlying debt was 10 years. Refer to
          Note 3 for discussion of Alliant Energys residual value guarantees of its
          synthetic leases.

Under the purchase and sale agreement
(Meridian Agreement) with Meridian Energy Limited (Meridian) relating to the sale of Alliant Energys
Australian business, Alliant Energy agreed to indemnify Meridian for losses resulting from
the breach of the representations and warranties made by Alliant Energy as of the closing
date, and for breach of its obligations under the Meridian Agreement. Based on exchange
rates as of Dec. 31, 2003, the indemnification is limited to $223 million until July 2004,
and will then be reduced to $64 million until October 2007. Alliant Energy believes the
likelihood of having to make any material cash payments under this indemnification is
remote.

Alliant Energy provided certain
indemnifications associated with the sale of its affordable housing business for losses
resulting from breach of the representations and warranties made by Alliant Energy as of
the closing date, for the breach of its obligations under the sale agreement and for its
obligations for periods prior to the date of sale. The indemnifications are limited to $11
million in aggregate and expire in July 2005. Alliant Energy also retains any tax
obligations that may arise from its ownership prior to the date of sale. Alliant Energy
believes the likelihood of having to make any material cash payments under these
indemnifications is remote.

Alliant Energy continues to
guarantee the abandonment obligations of WPC under the Point Arguello partnership
agreements. As of Dec. 31, 2003, the guarantee does not include a maximum limit, but is
currently estimated at approximately $4 million, which is the present value of the
abandonment liability. Alliant Energy believes that no payments will be made under this
guarantee.

(e)    
          Environmental Liabilities Alliant Energy had recorded the following
          environmental liabilities, and regulatory assets associated with certain of
          these liabilities, at Dec. 31 (in millions):

|Environmental liabilities | 2003  | 2002  |  | Regulatory assets | 2003  | 2002 
|------------------------- | ----- | ----- |  | ----------------- | ----- | -----
|                          |       |       |  |                  
|MGP sites                 | $45.5 | $49.3 |  | MGP sites         | $51.1 | $54.1
|NEPA                      | 5.0   | 6.6   |  | NEPA              | 6.2   | 7.9  
|Other                     | 0.1   | 0.2   |  | Other             | 1.3   | 2.9  
|                          |       |       |  |                  
|                          | $50.6 | $56.1 |  |                   | $58.6 | $64.9
|                          |       |       |  |                  

MGP Sites
IP&L and WP&L have current or previous ownership interests in 43 and
14 sites, respectively, previously associated with the production of gas for which they
may be liable for investigation, remediation and monitoring costs relating to the sites.
IP&L and WP&L have received letters from state environmental agencies requiring no
further action at nine and six sites, respectively. IP&L and WP&L are working
pursuant to the requirements of various federal and state agencies to investigate,
mitigate, prevent and remediate, where necessary, the environmental impacts to property,
including natural resources, at and around the sites in order to protect public health and
the environment.

77

IP&L and WP&L record
environmental liabilities based upon periodic studies, most recently updated in the third
quarter of 2003, related to the MGP sites. Such amounts are based on the best current
estimate of the remaining amount to be incurred for investigation, remediation and
monitoring costs for those sites where the investigation process has been or is
substantially completed, and the minimum of the estimated cost range for those sites where
the investigation is in its earlier stages. It is possible that future cost estimates will
be greater than current estimates as the investigation process proceeds and as additional
facts become known. The amounts recognized as liabilities are reduced for expenditures
made and are adjusted as further information develops or circumstances change. Costs of
future expenditures for environmental remediation obligations are not discounted to their
fair value. Management currently estimates the range of remaining costs to be incurred for
the investigation, remediation and monitoring of IP&Ls and WP&Ls sites
to be $34 million to $61 million.

Under the current rate making
treatment approved by the PSCW, the MGP expenditures of WP&L, net of any insurance
proceeds, are deferred and collected from gas customers over a four-year period effective
with rates set to recover such amounts. The MPUC also allows the deferral of MGP-related
costs applicable to the Minnesota sites and IP&L has been successful in obtaining
approval to recover such costs in rates in Minnesota. The IUB has permitted utilities to
recover prudently incurred costs. Regulatory assets have been recorded by IP&L and
WP&L, which reflect the probable future rate recovery, where applicable. Considering
the current rate treatment, and assuming no material change therein, IP&L and WP&L
believe that the clean-up costs incurred for these MGP sites will not have a material
adverse effect on their respective financial conditions or results of operations.
Settlement has been reached with all of IP&Ls and WP&Ls insurance
carriers regarding reimbursement for their MGP-related costs.

NEPA NEPA
requires owners of nuclear power plants to pay a special assessment into a Uranium
Enrichment Decontamination and Decommissioning Fund. The assessment is based upon
uranium enrichment services provided in conjunction with prior nuclear fuel purchases.
IP&L and WP&L elected to pay their assessment in 15 annual installments. The costs
associated with this assessment for IP&L and WP&L are being recovered through EACs
and fuel costs, respectively. The final installment payment is scheduled to be made in
fall 2006. Alliant Energy continues to pursue relief from this assessment through
litigation.

(f)    
          Decommissioning of DAEC and Kewaunee Decommissioning expense is
          included in Depreciation and amortization in the Consolidated
          Statements of Income and the cumulative amount for 2003 is included in
          Regulatory liabilities or, for AROs, is netted in Regulatory
          assets on the Consolidated Balance Sheets. For 2002, the cumulative amount
          is included in Cost of removal obligations. The PSCW, in an order
          effective Jan. 1, 2002, eliminated WP&Ls recovery from retail
          customers for the cost to decommission Kewaunee, due to the trust fund being
          adequately funded. Additional information relating to the decommissioning of
          DAEC and Kewaunee was as follows (dollars in millions):

|                                                                                                                    | DAEC                | Kewaunee           
|------------------------------------------------------------------------------------------------------------------- | ------------------- | -------------------
|                                                                                                                   
|Assumptions relating to current rate recovery amounts (1):                                                          |                     |                    
|Alliant Energy's share of estimated decommissioning cost                                                            | $374.3              | $263.2             
|Year dollars in                                                                                                     | 2002                | 2002               
|Method to develop estimate                                                                                          | Site-specific study | Site-specific study
|Annual inflation rate                                                                                               | 4.30%               | 6.50%              
|Decommissioning method                                                                                              | Prompt dismantling  | Prompt dismantling 
|                                                                                                                    | and removal         | and removal        
|Year decommissioning to commence                                                                                    | 2014                | 2013               
|After-tax return on external investments:                                                                          
|Qualified                                                                                                           | 7.10%               | 6.12%              
|Non-qualified                                                                                                       | 4.70%               | 5.14%              
|Current annual rate recovery:                                                                                      
|Iowa                                                                                                                | $10.6               | N/A                
|Minnesota (interim rates effective July 2003, subject to refund)                                                    | $1.0                | N/A                
|FERC                                                                                                                | --                  | $2.9               
|External trust fund balance at Dec. 31, 2003                                                                        | $147.9              | $233.7             
|Internal reserve at Dec. 31, 2003                                                                                   | $21.7               | $--                
|After-tax earnings (losses) on external trust funds in 2003                                                         | $4.1                | ($4.7)             
|(1)  Information for DAEC and Kewaunee is related to their most recent IUB order and FERC settlement, respectively.

The current rate recovery amounts
for DAEC only include an inflation estimate for three years.  Both IP&L and WP&L are
funding all rate recoveries for decommissioning into external trust funds and funding on
a tax-qualified basis to the extent possible.  In 2003, the earnings accumulate in the
external trust fund balances and as an offset to regulatory assets for ARO related
earnings or regulatory liabilities for non-ARO related earnings.  Refer to Note 17 for
information regarding the pending sale of WP&L's interest in Kewaunee and Note 18 for
information related to the impact of SFAS 143.

78

(g)     Credit
Risk -Alliant Energy's subsidiaries have limited credit exposure from electric and
natural gas sales and non-performance of contractual obligations by its counterparties.
 Alliant Energy maintains credit risk oversight and sets limits and policies with regards
to its counterparties, which management believes minimizes its overall credit risk
exposure.  However, there is no assurance that such policies will protect Alliant Energy
against all losses from non-performance by counterparties.

(12)  JOINTLY-OWNED ELECTRIC
UTILITY PLANTUnder joint ownership agreements
with other Iowa and Wisconsin utilities, IP&L and WP&L have undivided ownership interests
in jointly-owned electric generating stations.  IP&L also has joint ownership agreements
related to transmission facilities.  Each of the respective owners is responsible for the
financing of its portion of the construction costs.  KWh generation and operating
expenses are divided on the same basis as ownership with each owner reflecting its
respective costs in its Consolidated Statements of Income. Information relative to IP&L's and
WP&L's ownership interest in these facilities at Dec. 31, 2003 was as follows (dollars in
millions):

|                       | Accumulated | Construction
|---------------------- | ----------- | ------------
|                       | Fuel        | Ownership   
|                       | Type        | Interest %  
|                      
|IP&L                   |             |             
|DAEC                   | Nuclear     | 70.0        
|Ottumwa                | Coal        | 48.0        
|Neal Unit 4            | Coal        | 25.7        
|Neal Unit 3            | Coal        | 28.0        
|Louisa Unit 1          | Coal        | 4.0         
|                      
|                       |             |             
|                      
|WP&L                  
|Edgewater Unit 5       | Coal        | 75.0        
|Columbia Energy Center | Coal        | 46.2        
|Kewaunee               | Nuclear     | 41.0        
|Edgewater Unit 4       | Coal        | 68.2        
|                      
|                       |             |             
|                      
|                      
|                       |             |             
|                      

Refer to Note 17 for information
regarding the pending sale of WP&Ls interest in Kewaunee.

(13)
          SEGMENTS OF BUSINESSAlliant Energys principal businesses are:

|o |  | Domestic utility business includes IP&L and WP&L, serving customers
in Iowa, Wisconsin, Minnesota and Illinois, and Alliant Energys investments in NMC
and TRANSLink (investment has been fully reserved as of Dec. 31, 2003). The domestic
utility business is broken down into three segments: a) electric operations, including the
impacts of NMC and TRANSLink; b) gas operations; and c) other, which includes the steam
business, water business, various other energy-related products and services including
construction management services for wind farms and the unallocated portions of the
utility business. Various line items in the following tables are not allocated to the
electric and gas segments for management reporting purposes and therefore are included in
Total Domestic Utility Business.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o |  | Non-regulated businesses  represents the operations of Resources, its
subsidiaries and Alliant Energys investment in Cargill-Alliant (sold in 2002), and
is broken down into three segments: a) International (Intl); b) Integrated Services
(ISCO); and c) other, which includes the operations of the Non-regulated Generation and
Other Investments business platforms described in Note 1(a); the operations of Resources
(the non-regulated holding company); and any non-regulated reconciling/eliminating
entries.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o |  | Other  includes the operations of Alliant Energy (the parent company) and
Corporate Services, as well as any Alliant Energy parent company reconciling/eliminating
entries.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Alliant Energys administrative
support services are directly charged to the applicable segment where practicable. In all
other cases, administrative support services are allocated to the applicable segment based
on Alliant Energys corporate services agreements, as prepared and approved pursuant
to PUHCA. Intersegment revenues were not material to Alliant Energys operations and
there was no single customer whose revenues were 10% or more of Alliant Energys
consolidated revenues. Refer to Note 9 for a breakdown of Alliant Energys
international investments by country. Certain financial information relating to Alliant
Energys significant business segments, products and services and geographic
information was as follows (in millions):

79

|                                  | Domestic Utility Business | Non-regulated Businesses |        | Alliant
|--------------------------------- | ------------------------- | ------------------------ | ------ | -------
|                                  |                           |                          | Energy
|                                  | Electric                  | Gas                      | Other  | Total  
|                                 
|2003                             
|Operating revenues                |                           | $1,917                   | .1     | $566   
|Depreciation and amortization     |                           | 238                      | .8     | 25     
|Operating income (loss)           |                           | 363                      | .6     | 42     
|Interest expense, net of AFUDC    |                           |                          |        |        
|Loss on early extinguishment      |                          
|of debt                           |                           |                          |        |        
|Equity (income) loss from         |                          
|unconsolidated investments        |                           |                          |        |        
|Preferred dividends               |                           |                          |        |        
|Miscellaneous, net                |                           |                          |        |        
|Income tax expense (benefit)      |                           |                          |        |        
|Income (loss) from continuing     |                          
|operations                        |                           |                          |        |        
|Income (loss) from discontinued   |                          
|operations, net of tax            |                           |                          |        |        
|Cumulative effect of changes in   |                          
|accounting principles, net of tax |                           |                          |        |        
|Net income (loss)                 |                           |                          |        |        
|Total assets                      |                           | 5,007                    | .5     | 671    
|Investments in equity method      |                          
|subsidiaries                      |                           | 137                      | .0     | --     
|Construction and acquisition      |                          
|expenditures                      |                           | 649                      | .5     | 37     
|                                 

|                                 | Domestic Utility Business | Non-regulated Businesses |        | Alliant
|-------------------------------- | ------------------------- | ------------------------ | ------ | -------
|                                 |                           |                          | Energy
|                                 | Electric                  | Gas                      | Other  | Total  
|                                
|2002                            
|Operating revenues               |                           | $1,752                   | .5     | $394   
|Depreciation and amortization    |                           | 225                      | .0     | 26     
|Operating income (loss)          |                           | 320                      | .1     | 26     
|Interest expense, net of AFUDC   |                           |                          |        |        
|Equity (income) loss from        |                          
|unconsolidated investments       |                           |                          |        |        
|Preferred dividends              |                           |                          |        |        
|Impairment of available-for-sale |                          
|securities of McLeodUSA Inc.     |                           |                          |        |        
|Miscellaneous, net               |                           |                          |        |        
|Income tax expense (benefit)     |                           |                          |        |        
|Income (loss) from continuing    |                          
|operations                       |                           |                          |        |        
|Income from discontinued         |                          
|operations, net of tax           |                           |                          |        |        
|Net income (loss)                |                           |                          |        |        
|Total assets                     |                           | 4,472                    | .2     | 642    
|Investments in equity method     |                          
|subsidiaries                     |                           | 125                      | .4     | --     
|Construction and acquisition     |                          
|expenditures                     |                           | 372                      | .4     | 28     
|                                

80

|                                 | Domestic Utility Business | Non-regulated Businesses |        | Alliant
|-------------------------------- | ------------------------- | ------------------------ | ------ | -------
|                                 |                           |                          | Energy
|                                 | Electric                  | Gas                      | Other  | Total  
|                                
|2001                            
|Operating revenues               |                           | $1,756                   | .6     | $487   
|Depreciation and amortization    |                           | 238                      | .1     | 28     
|Operating income (loss)          |                           | 313                      | .6     | 11     
|Interest expense, net of AFUDC   |                           |                          |        |        
|Equity (income) loss from        |                          
|unconsolidated investments       |                           |                          |        |        
|Preferred dividends              |                           |                          |        |        
|Miscellaneous, net               |                           |                          |        |        
|Income tax expense (benefit)     |                           |                          |        |        
|Income (loss) from continuing    |                          
|operations                       |                           |                          |        |        
|Income from discontinued         |                          
|operations, net of tax           |                           |                          |        |        
|Cumulative effect of a change in |                          
|accounting principle, net of tax |                           |                          |        |        
|Net income (loss)                |                           |                          |        |        
|Total assets                     |                           | 4,014                    | .1     | 557    
|Investments in equity method     |                          
|subsidiaries                     |                           | 119                      | .2     | --     
|Construction and acquisition     |                          
|expenditures                     |                           | 298                      | .7     | 36     

Products and Services
In 2003, Alliant Energys domestic utility electric and gas revenues
represented 67% and 19% of consolidated operating revenues, respectively. No other
products or services represented more than 10% of Alliant Energys consolidated
operating revenues in 2003.

# Geographic Information

|Non-regulated and other - Long Lived Assets
|-------------------------------------------
|                                           
|Year                                       
|                                           
|                                           
|2003                                       
|2002                                       
|2001                                       

(14) GOODWILL AND OTHER
INTANGIBLE ASSETSAlliant Energy adopted SFAS 142 on
Jan. 1, 2002, which resulted in goodwill no longer being subject to amortization. Had SFAS
142 been adopted Jan. 1, 2001, net income for 2001 would have increased $4 million and
basic and diluted EPS would have increased $0.05 per share. Alliant Energy continues to
monitor its equity method investments in accordance with APB 18, "The Equity Method of
Accounting for Investments in Common Stock." Certain information
regarding net goodwill and other intangible assets included on Alliant Energys
Consolidated Balance Sheets at Dec. 31 was as follows (in millions):

|                                                                           | 2003 | 2002
|-------------------------------------------------------------------------- | ---- | ----
|                                                                          
|Net goodwill:                                                              |      |     
|Deferred charges and other (consolidated investments):                    
|Integrated Services                                                        | $46  | $47 
|International                                                              | 10   | 10  
|Investments in unconsolidated foreign entities (equity method investments)
|International                                                              | 17   | 9   
|Net other intangible assets:                                              
|Deferred charges and other (consolidated investments)                      | 19   | 19  
|Investments in unconsolidated foreign entities (equity method investments) | 26   | 22  
|Investment in ATC and other (equity method investments)                    | 20   | 25  

In February 2003, Resources acquired
100% of an entity that owns a 309-MW, non-regulated, tolled, natural gas-fired power
plant in Neenah, Wisconsin for $109 million.  Substantially all of the purchase price was
allocated to property, plant and equipment and resulted in no goodwill from this
acquisition.

81

(15) SELECTED CONSOLIDATED
QUARTERLY FINANCIAL DATA (UNAUDITED)All per share references
refer to earnings per diluted share. Summation of the individual quarters may not
equal annual totals due to rounding.

|                                         | 2003                                 | 2002   
|---------------------------------------- | ------------------------------------ | -------
|                                        
|                                         | March 31                             | June 30
|                                        
|                                         | (in millions, except per share data)
|                                        
|Operating revenues                       |                                      | $908   
|Operating income                         |                                      | 76     
|Income (loss) from continuing operations |                                      | 14     
|Income (loss) from discontinued          |                                     
|operations, net of tax                   |                                      | (9     
|Cumulative effect of changes in          |                                     
|accounting principles, net of tax        |                                      | (6     
|Net income (loss)                        |                                      | (0     
|EPS:                                     |                                     
|Income (loss) from continuing operations |                                      | 0      
|Income (loss) from discontinued          |                                     
|operations                               |                                      | (0     
|Cumulative effect of changes in          |                                     
|accounting principles                    |                                      | (0     
|Net income (loss)                        |                                      | (0     

(16) DISCONTINUED OPERATIONS AND
ASSETS HELD FOR SALEAlliant Energy announced in November
2002 its commitment to pursue the sale of, or other exit strategies for, certain
non-regulated businesses during 2003. Alliant Energy applied the provisions of SFAS 144,
Accounting for the Impairment or Disposal of Long-Lived Assets, to certain of
its assets which were held for sale. SFAS 144 requires that a long-lived asset classified
as held for sale be measured at the lower of its carrying amount or fair value, less costs
to sell, and to cease depreciation, depletion and amortization. At Dec. 31, 2002, the
assets and liabilities of Alliant Energys oil and gas (WPC), Australian (including
Southern Hydro), affordable housing and SmartEnergy businesses were classified as held for
sale. The operating results for these non-regulated businesses for all periods presented
have been separately classified and reported as discontinued operations in Alliant
Energys Consolidated Financial Statements.

Alliant Energy completed the sale of
its Australian, affordable housing and SmartEnergy businesses in the second, third and
third quarters of 2003, respectively. In the fourth quarter of 2003, Alliant Energy
completed an IPO of WPC, leaving Alliant Energy with an approximate 6% ownership interest
in WPC that is accounted for under the cost method as of Dec. 31, 2003.

Prior to the IPO, Alliant Energy and
WPC entered into a tax separation and indemnification agreement pursuant to which Alliant
Energy and WPC made tax elections with the effect that the tax basis of the assets of
WPCs consolidated tax group were increased based on the sales price of WPCs
shares in the IPO. This increase will be included in income in the consolidated federal
income tax return filed by Alliant Energy. WPC has agreed to pay Resources 90% of any tax
benefits realized annually due to the increase in tax basis for years ending on or prior
to Dec. 31, 2013. Such tax benefits will generally be calculated by comparing WPCs
actual taxes to the taxes that would have been owed by WPC had the increase in basis not
occurred. In 2014, WPC will be obligated to pay Resources the present value of the
remaining tax benefits assuming all such tax benefits will be realized in future years. As
of the IPO closing date, Resources recorded a receivable from WPC based on the estimated
present value of the payments expected from WPC. As of Dec. 31, 2003, Resources estimated
the present value of these anticipated future tax benefits from WPC was approximately $30
million and has recorded this as a receivable from WPC in Deferred charges and
other on Alliant Energys Consolidated Balance Sheets.

82

A summary of the components of
discontinued operations in Alliant Energys Consolidated Statements of Income was as
follows (in thousands):

|                                                | 2003 | 2002     | 2001
|----------------------------------------------- | ---- | -------- | ----
|                                               
|Operating revenues                              |      | $187,677 |     
|Operating expenses (a)                          |      | 101,084  |     
|Interest expense and other (pre-tax numbers):   |     
|Gain on sale of Australian business             |      | (72,115  | )   
|Loss on sale of affordable housing business     |      | 60,685   |     
|Loss on sale of oil and gas business (a)        |      | 16,696   |     
|Loss on sale of SmartEnergy business            |      | 13,645   |     
|Southern Hydro SFAS 133 income                  |      | (14,689  | )   
|Other                                           |      | 17,949   |     
|                                               
|Income before income taxes                      |      | 64,422   |     
|Income tax expense (benefit)                    |      | 34,597   |     
|                                               
|Income from discontinued operations, net of tax |      | $29,825  |     
|                                               

|(a) | Operating expenses were lower in 2003 as compared to 2002 partially due to
          Alliant Energy ceasing depreciation, depletion and amortization (DD&A) of
          its assets held for sale. Ceasing DD&A of WPCs assets also resulted in
          a higher carrying value of WPCs assets and had a direct impact on the
          amount of loss on the sale.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Alliant Energys Australian
business entered into electric derivative contracts that were not designated as hedges (as
defined by SFAS 133) to manage the electric commodity price risk associated with
anticipated sales into the spot market. SFAS 133 income in the previous table reflects the
change in the fair value of these electric derivative contracts. In 2002, Alliant Energy
recorded a SFAS 142 after-tax non-cash goodwill impairment charge related to SmartEnergy
of $4.5 million primarily due to less favorable market conditions. Income tax
expense (benefit) in the previous table includes $3 million, $10 million and $10
million of affordable housing tax credits earned by Alliant Energys affordable
housing business during 2003, 2002 and 2001, respectively. These tax credits, along with
2003 income tax impacts of the sales transactions, had a significant impact on the
effective tax rate of Alliant Energys discontinued operations.

A summary of the components of assets
and liabilities of discontinued operations on Alliant Energys Consolidated Balance
Sheet at Dec. 31, 2002 was as follows (in thousands):

|                                                 | 2002
|------------------------------------------------ | ----
|                                                
|Assets of discontinued operations:               |     
|Property, plant and equipment, net               |     
|Current assets                                   |     
|Investments                                      |     
|Deferred charges and other                       |     
|                                                
|Total assets of discontinued operations          |     
|                                                
|Liabilities of discontinued operations:          |     
|Current liabilities                              |     
|Other long-term liabilities and deferred credits |     
|Minority interest                                |     
|                                                
|Total liabilities of discontinued operations     |     
|                                                
|Net assets of discontinued operations            |     
|                                                

83

A summary of the components of cash
flows for discontinued operations for the years ended Dec. 31 was as follows (in
thousands):

|                                                               | 2003 | 2002     | 2001
|-------------------------------------------------------------- | ---- | -------- | ----
|                                                              
|Net cash flows from operating activities                       |      | $61,015  |     
|Net cash flows from (used for) financing activities            |      | (43,228  | )   
|Net cash flows used for investing activities                   |      | (33,831  | )   
|                                                              
|Net increase (decrease) in cash and temporary cash investments |      | (16,044  | )   
|Cash and temporary cash investments at beginning of period     |      | 16,044   |     
|                                                              
|Cash and temporary cash investments at end of period           |      | $--      |     
|                                                              
|Supplemental cash flows information:                           |     
|Cash paid (refunded) during the period for:                    |     
|Interest                                                       |      | $19,517  |     
|                                                              
|Income taxes, net of refunds                                   |      | ($34,618 | )   
|                                                              

(17) PENDING SALE OF WP&LS
INTEREST IN KEWAUNEEWP&L has signed a definitive
agreement to sell its 41% ownership interest in Kewaunee to Richmond, Va.-based Dominion
Energy Kewaunee, Inc. (Dominion), a subsidiary of Dominion Resources, Inc. Joint owner of
Kewaunee, WPSC, also agreed to sell its 59% ownership interest in Kewaunee to Dominion.
Pending various regulatory approvals, including the PSCW and NRC, the transaction is
expected to be completed by fall 2004. WP&L anticipates that, based on an expected
Nov. 1, 2004 closing date, it will receive approximately $90 million in cash and retain
ownership of the trust assets contained in one of the two decommissioning funds it has
established to cover the eventual decommissioning of Kewaunee. The fund that will be
retained had an after-tax value of $67.3 million on Dec. 31, 2003. The gross cash proceeds
from the sale are expected to slightly exceed WP&Ls carrying value of the assets
being sold. WP&L has requested deferral of any gain and related costs from the PSCW.
Because any gain realized and the retained decommissioning fund will likely be returned to
customers in future rate filings, WP&L does not expect this transaction will have a
significant impact on its operating results. Dominion will assume responsibility for the
eventual decommissioning of Kewaunee and WP&L is required to provide qualified
decommissioning trust assets of at least $160.7 million on an after-tax basis. The
after-tax value of the qualified fund was $166.3 million on Dec. 31, 2003. In January
2004, WP&L liquidated all of the qualified decommissioning assets into money market
funds as a result of the pending Kewaunee sale. At the closing of the sale, WP&L will
enter into a long-term purchased-power agreement with Dominion to purchase energy and
capacity equivalent to the amounts received had current ownership continued. The
purchased-power agreement, which also will require regulatory approval, will extend
through 2013 when the plants current operating license will expire.

(18) ASSET RETIREMENT OBLIGATIONSAlliant Energy adopted SFAS 143 on
Jan. 1, 2003, which provides accounting and disclosure requirements for AROs associated
with long-lived assets. SFAS 143 requires that when an asset is placed in service the
present value of retirement costs for which Alliant Energy has a legal obligation must be
recorded as liabilities with an equivalent amount added to the asset cost. The liability
is accreted to its present value each period and the capitalized cost is depreciated over
the useful life of the related asset. Upon settlement of the liability, an entity settles
the obligation for its recorded amount or incurs a gain or loss.

The scope of SFAS 143 as it relates
to Alliant Energy primarily includes decommissioning costs for DAEC and Kewaunee. The differences
between the estimated decommissioning costs disclosed in Note 11(f) for DAEC and Kewaunee and the recorded SFAS 143
liability are primarily related to fuel management costs, non-nuclear demolition costs and the timing of future cash flows. It also
applies to a smaller extent to several other domestic utility and non-regulated assets
including, but not limited to, active ash landfills, water intake facilities, underground
storage tanks, groundwater wells, transmission and distribution equipment, easements,
leases and the dismantlement of certain hydro facilities. Other than DAEC and Kewaunee,
Alliant Energys current AROs are not significant. A reconciliation of the changes in
the AROs is depicted below (in millions):

|                              | IP&L | WP&L | Total
|----------------------------- | ---- | ---- | -----
|                             
|Balance at Jan. 1, 2003       |      | $180 |      
|Accretion expense             |      | 11   |      
|Change in cash flow estimates |      | (33  | )    
|                             
|Balance at Dec. 31, 2003      |      | $158 |      
|                             

84

If SFAS 143 had been adopted as of
Jan. 1, 2001, IP&L and WP&L would have recorded ARO SFAS 143 liabilities of $180
million and $175 million at Dec. 31, 2002 and $168 million and $161 million at Dec. 31,
2001, respectively. Refer to Note 17 for information regarding the pending sale of
WP&Ls interest in Kewaunee.

Upon adoption of SFAS 143, Alliant
Energy also recognized a $3.9 million impact as a cumulative effect of a change in
accounting principle at WPC (in the fourth quarter of 2003, Alliant Energy completed an
IPO of WPC).

At Dec. 31, 2002, prior to the
adoption of SFAS 143, Alliant Energy recorded $284.4 million ($121.2 million at IP&L
and $163.2 million at WP&L) of legal AROs in Cost of removal obligations
on the Consolidated Balance Sheet.

(19) CONDENSED CONSOLIDATING
FINANCIAL STATEMENTSAlliant Energy has fully and
unconditionally guaranteed the payment of principal and interest on various debt
securities issued by Resources and, as a result, is required to present condensed
consolidating financial statements. No Alliant Energy subsidiaries are guarantors of
Resources debt securities. Alliant Energys condensed consolidating financial
statements are as follows:

85

Alliant Energy
Corporation Condensed Consolidating Statements of Income for the Years Ended December 31,
2003 and 2002

|                                                                  | Alliant Energy |           | Other Alliant |               | Consolidated
|----------------------------------------------------------------- | -------------- | --------- | ------------- | ------------- | ------------
|                                                                  | Parent         |           | Energy        | Consolidating | Alliant     
|                                                                  | Company        | Resources | Subsidiaries  | Adjustments   | Energy      
|                                                                 
|Year Ended December 31, 2003                                      | (in thousands)
|Operating revenues:                                              
|Domestic utility:                                                
|Electric                                                          |                | $-        |               | $-            |             
|Gas                                                               |                | -         |               | -             |             
|Other                                                             |                | -         |               | -             |             
|Non-regulated                                                     |                | -         |               | 545,925       |             
|                                                                 
|                                                                  |                | -         |               | 545,925       |             
|                                                                 
|Operating expenses:                                               |               
|Domestic utility:                                                 |               
|Electric production fuel and purchased power                      |                | -         |               | -             |             
|Cost of gas sold                                                  |                | -         |               | -             |             
|Other operation and maintenance                                   |                | -         |               | -             |             
|Non-regulated operation and maintenance                           |                | 2,685     |               | 498,158       |             
|Depreciation and amortization                                     |                | 38        |               | 36,739        |             
|Taxes other than income taxes                                     |                | 9         |               | 6,502         |             
|                                                                 
|                                                                  |                | 2,732     |               | 541,399       |             
|                                                                 
|Operating income (loss)                                           |                | (2,732    | )             | 4,526         |             
|                                                                 
|Interest expense and other:                                       |               
|Interest expense                                                  |                | 9,115     |               | 98,338        |             
|Loss on early extinguishment of debt                              |                | 1,633     |               | 15,231        |             
|Equity (income) loss from unconsolidated investments              |                | -         |               | 1,790         |             
|Allowance for funds used during construction                      |                | -         |               | -             |             
|Preferred dividend requirements of subsidiaries                   |                | -         |               | -             |             
|Miscellaneous, net                                                |                | (198,601  | )             | (18,279       | )           
|                                                                 
|                                                                  |                | (187,853  | )             | 97,080        |             
|                                                                 
|Income (loss) from continuing operations before income taxes      |                | 185,121   |               | (92,554       | )           
|                                                                 
|Income tax expense (benefit)                                      |                | 1,578     |               | (66,877       | )           
|                                                                 
|Income (loss) from continuing operations                          |                | 183,543   |               | (25,677       | )           
|                                                                 
|Income from discontinued operations, net of tax                   |                | -         |               | 29,825        |             
|                                                                 
|Income before cumulative effect of changes in                     |               
|accounting principles                                             |                | 183,543   |               | 4,148         |             
|                                                                 
|Cumulative effect of changes in accounting principles, net of tax |                | -         |               | (5,983        | )           
|                                                                 
|Net income (loss)                                                 |                | $183,543  |               | ($1,835       | )           
|                                                                 
|                                                                 
|Year Ended December 31, 2002                                      |               
|Operating revenues:                                               |               
|Domestic utility:                                                 |               
|Electric                                                          |                | $-        |               | $-            |             
|Gas                                                               |                | -         |               | -             |             
|Other                                                             |                | -         |               | -             |             
|Non-regulated                                                     |                | -         |               | 261,349       |             
|                                                                 
|                                                                  |                | -         |               | 261,349       |             
|                                                                 
|Operating expenses:                                               |               
|Domestic utility:                                                 |               
|Electric production fuel and purchased power                      |                | -         |               | -             |             
|Cost of gas sold                                                  |                | -         |               | -             |             
|Other operation and maintenance                                   |                | -         |               | -             |             
|Non-regulated operation and maintenance                           |                | 2,116     |               | 229,571       |             
|Depreciation and amortization                                     |                | 7         |               | 27,214        |             
|Taxes other than income taxes                                     |                | -         |               | 6,146         |             
|                                                                 
|                                                                  |                | 2,123     |               | 262,931       |             
|                                                                 
|Operating income (loss)                                           |                | (2,123    | )             | (1,582        | )           
|                                                                 
|Interest expense and other:                                       |               
|Interest expense                                                  |                | 5,640     |               | 76,475        |             
|Equity (income) loss from unconsolidated investments              |                | (941      | )             | 31,337        |             
|Allowance for funds used during construction                      |                | -         |               | -             |             
|Preferred dividend requirements of subsidiaries                   |                | -         |               | -             |             
|Impairment of available-for-sale securities of McLeodUSA Inc.     |                | -         |               | 27,218        |             
|Miscellaneous, net                                                |                | (109,236  | )             | 3,567         |             
|                                                                 
|                                                                  |                | (104,537  | )             | 138,597       |             
|                                                                 
|Income (loss) from continuing operations before income taxes      |                | 102,414   |               | (140,179      | )           
|                                                                 
|Income tax expense (benefit)                                      |                | (4,467    | )             | (60,149       | )           
|                                                                 
|Income (loss) from continuing operations                          |                | 106,881   |               | (80,030       | )           
|                                                                 
|Income from discontinued operations, net of tax                   |                | -         |               | 19,425        |             
|                                                                 
|Net income (loss)                                                 |                | $106,881  |               | ($60,605      | )           
|                                                                 

86

Alliant Energy
Corporation Condensed Consolidating Statement of Income for the Year Ended December 31,
2001

|                                                                  | Alliant Energy |           | Other Alliant |               | Consolidated
|----------------------------------------------------------------- | -------------- | --------- | ------------- | ------------- | ------------
|                                                                  | Parent         |           | Energy        | Consolidating | Alliant     
|                                                                  | Company        | Resources | Subsidiaries  | Adjustments   | Energy      
|                                                                 
|                                                                  | (in thousands)
|Operating revenues:                                              
|Domestic utility:                                                
|Electric                                                          |                | $-        |               | $-            |             
|Gas                                                               |                | -         |               | -             |             
|Other                                                             |                | -         |               | -             |             
|Non-regulated                                                     |                | -         |               | 293,440       |             
|                                                                 
|                                                                  |                | -         |               | 293,440       |             
|                                                                 
|Operating expenses:                                               |               
|Domestic utility:                                                 |               
|Electric production fuel and purchased power                      |                | -         |               | -             |             
|Cost of gas sold                                                  |                | -         |               | -             |             
|Other operation and maintenance                                   |                | -         |               | -             |             
|Non-regulated operation and maintenance                           |                | 3,609     |               | 262,618       |             
|Depreciation and amortization                                     |                | -         |               | 24,786        |             
|Taxes other than income taxes                                     |                | -         |               | 6,849         |             
|                                                                 
|                                                                  |                | 3,609     |               | 294,253       |             
|                                                                 
|Operating income (loss)                                           |                | (3,609    | )             | (813          | )           
|                                                                 
|Interest expense and other:                                       |               
|Interest expense                                                  |                | 14,281    |               | 64,091        |             
|Equity (income) loss from unconsolidated investments              |                | (7,237    | )             | 4,138         |             
|Allowance for funds used during construction                      |                | -         |               | -             |             
|Preferred dividend requirements of subsidiaries                   |                | -         |               | -             |             
|Miscellaneous, net                                                |                | (177,151  | )             | 10,247        |             
|                                                                 
|                                                                  |                | (170,107  | )             | 78,476        |             
|                                                                 
|Income (loss) from continuing operations before income taxes      |                | 166,498   |               | (79,289       | )           
|                                                                 
|Income tax expense (benefit)                                      |                | (5,864    | )             | (36,517       | )           
|                                                                 
|Income (loss) from continuing operations                          |                | 172,362   |               | (42,772       | )           
|                                                                 
|Income from discontinued operations, net of tax                   |                | -         |               | 57,071        |             
|                                                                 
|Income before cumulative effect of a change in                    |               
|accounting principle                                              |                | 172,362   |               | 14,299        |             
|                                                                 
|Cumulative effect of a change in accounting principle, net of tax |                | -         |               | (12,868       | )           
|                                                                 
|Net income                                                        |                | $172,362  |               | $1,431        |             
|                                                                 

Alliant Energy
Corporation Condensed Consolidating Balance Sheet as of December 31, 2003

|                                               | Alliant Energy |            | Other          |               | Consolidated
|---------------------------------------------- | -------------- | ---------- | -------------- | ------------- | ------------
|                                               | Parent         |            | Alliant Energy | Consolidating | Alliant     
|                                               | Company        | Resources  | Subsidiaries   | Adjustments   | Energy      
|                                              
|                                               | (in thousands)
|ASSETS                                        
|Property, plant and equipment:                
|Domestic utility:                             
|Electric plant in service                      |                | $-         |                | $-            |             
|Other plant in service                         |                | -          |                | -             |             
|Accumulated depreciation                       |                | -          |                | -             |             
|Construction work in progress:                 |               
|Emery generating facility                      |                | -          |                | -             |             
|Other                                          |                | -          |                | -             |             
|Other, net                                     |                | -          |                | -             |             
|                                              
|Total domestic utility                         |                | -          |                | -             |             
|                                              
|Non-regulated and other, net:                  |               
|Non-regulated Generation                       |                | -          |                | 204,480       |             
|Other                                          |                | -          |                | 313,118       |             
|                                              
|Total non-regulated and other                  |                | -          |                | 517,598       |             
|                                              
|                                               |                | -          |                | 517,598       |             
|                                              
|Current assets:                                |               
|Cash and temporary cash investments            |                | 35,776     |                | 144,361       |             
|Accounts receivable, net                       |                | 6,581      |                | 90,442        |             
|Income tax refunds receivable                  |                | 9,127      |                | 7,122         |             
|Gas stored underground, at average cost        |                | -          |                | 41,666        |             
|Regulatory assets                              |                | -          |                | -             |             
|Other                                          |                | 4,456      |                | 49,432        |             
|                                              
|                                               |                | 55,940     |                | 333,023       |             
|                                              
|Investments:                                   |               
|Consolidated subsidiaries                      |                | 2,324,030  |                | -             |             
|Investments in unconsolidated foreign entities |                | -          |                | 481,525       |             
|Other                                          |                | 12,422     |                | 86,440        |             
|                                              
|                                               |                | 2,336,452  |                | 567,965       |             
|                                              
|Deferred charges and other                     |                | 4,146      |                | 174,614       |             
|                                              
|Total assets                                   |                | $2,396,538 |                | $1,593,200    |             
|                                              

87

Alliant Energy
Corporation Condensed Consolidating Balance Sheet (Continued) as of December 31, 2003

|                                                  | Alliant Energy |            | Other Alliant |               | Consolidated
|------------------------------------------------- | -------------- | ---------- | ------------- | ------------- | ------------
|                                                  | Parent         |            | Energy        | Consolidating | Alliant     
|                                                  | Company        | Resources  | Subsidiaries  | Adjustments   | Energy      
|                                                 
|CAPITALIZATION AND LIABILITIES                    | (in thousands)
|Capitalization:                                  
|Common stock and additional paid-in capital       |                | $1,644,682 |               | $232,743      |             
|Retained earnings                                 |                | 840,417    |               | 113,004       |             
|Accumulated other comprehensive loss              |                | (106,415   | )             | (69,102       | )           
|Shares in deferred compensation trust             |                | (7,370     | )             | -             |             
|                                                 
|Total common equity                               |                | 2,371,314  |               | 276,645       |             
|                                                 
|Cumulative preferred stock of subsidiaries, net   |                | -          |               | -             |             
|Long-term debt, net (excluding current portion)   |                | -          |               | 874,079       |             
|                                                 
|                                                  |                | 2,371,314  |               | 1,150,724     |             
|                                                 
|Current liabilities:                              |               
|Current maturities and sinking funds              |                | -          |               | 7,281         |             
|Commercial paper                                  |                | -          |               | -             |             
|Other short-term borrowings                       |                | -          |               | 21,833        |             
|Accrued interest                                  |                | 2,499      |               | 18,077        |             
|Accrued taxes                                     |                | 5,549      |               | 46,421        |             
|Other                                             |                | 14,001     |               | 124,456       |             
|                                                 
|                                                  |                | 22,049     |               | 218,068       |             
|                                                 
|Other long-term liabilities and deferred credits: |               
|Regulatory liabilities                            |                | -          |               | -             |             
|Asset retirement obligations                      |                | -          |               | -             |             
|Other                                             |                | 3,175      |               | 171,866       |             
|                                                 
|                                                  |                | 3,175      |               | 171,866       |             
|                                                 
|                                                 
|Minority interest                                 |                | -          |               | 52,542        |             
|                                                 
|Total capitalization and liabilities              |                | $2,396,538 |               | $1,593,200    |             
|                                                 

Alliant Energy
Corporation Condensed Consolidating Balance Sheet as of December 31, 2002

|                                               | Alliant Energy |            | Other          |               | Consolidated
|---------------------------------------------- | -------------- | ---------- | -------------- | ------------- | ------------
|                                               | Parent         |            | Alliant Energy | Consolidating | Alliant     
|                                               | Company        | Resources  | Subsidiaries   | Adjustments   | Energy      
|                                              
|ASSETS                                         | (in thousands)
|Property, plant and equipment:                
|Domestic utility:                             
|Electric plant in service                      |                | $-         |                | $-            |             
|Other plant in service                         |                | -          |                | -             |             
|Accumulated depreciation                       |                | -          |                | -             |             
|Construction work in progress:                 |               
|Emery generating facility                      |                | -          |                | -             |             
|Other                                          |                | -          |                | -             |             
|Other, net                                     |                | -          |                | -             |             
|                                              
|Total domestic utility                         |                | -          |                | -             |             
|                                              
|Non-regulated and other, net:                  |               
|Non-regulated Generation                       |                | -          |                | 156,699       |             
|Other                                          |                | -          |                | 299,355       |             
|                                              
|Total non-regulated and other                  |                | -          |                | 456,054       |             
|                                              
|                                               |                | -          |                | 456,054       |             
|                                              
|Current assets:                                |               
|Cash and temporary cash investments            |                | 4          |                | 47,236        |             
|Accounts receivable, net                       |                | 9,034      |                | 78,590        |             
|Income tax refunds receivable                  |                | 18,175     |                | 72,882        |             
|Gas stored underground, at average cost        |                | -          |                | 26,668        |             
|Regulatory assets                              |                | -          |                | -             |             
|Assets of discontinued operations              |                | -          |                | 969,291       |             
|Other                                          |                | 245,423    |                | 54,444        |             
|                                              
|                                               |                | 272,636    |                | 1,249,111     |             
|                                              
|Investments:                                   |               
|Consolidated subsidiaries                      |                | 1,817,341  |                | -             |             
|Investments in unconsolidated foreign entities |                | -          |                | 373,816       |             
|Other                                          |                | 11,660     |                | 56,357        |             
|                                              
|                                               |                | 1,829,001  |                | 430,173       |             
|                                              
|Deferred charges and other                     |                | -          |                | 127,834       |             
|                                              
|Total assets                                   |                | $2,101,637 |                | $2,263,172    |             
|                                              

88

Alliant Energy
Corporation Condensed Consolidating Balance Sheet (Continued) as of December 31, 2002

|                                                  | Alliant Energy |            | Other Alliant |               | Consolidated
|------------------------------------------------- | -------------- | ---------- | ------------- | ------------- | ------------
|                                                  | Parent         |            | Energy        | Consolidating | Alliant     
|                                                  | Company        | Resources  | Subsidiaries  | Adjustments   | Energy      
|                                                 
|CAPITALIZATION AND LIABILITIES                    | (in thousands)
|Capitalization:                                  
|Common stock and additional paid-in capital       |                | $1,294,842 |               | $232,743      |             
|Retained earnings                                 |                | 758,187    |               | 114,838       |             
|Accumulated other comprehensive loss              |                | (209,943   | )             | (166,947      | )           
|Shares in deferred compensation trust             |                | (6,896     | )             | -             |             
|                                                 
|Total common equity                               |                | 1,836,190  |               | 180,634       |             
|                                                 
|Cumulative preferred stock of subsidiaries, net   |                | -          |               | -             |             
|Long-term debt, net (excluding current portion)   |                | 24,000     |               | 1,290,205     |             
|                                                 
|                                                  |                | 1,860,190  |               | 1,470,839     |             
|                                                 
|Current liabilities:                              |               
|Current maturities and sinking funds              |                | -          |               | 41,511        |             
|Commercial paper                                  |                | 135,500    |               | -             |             
|Other short-term borrowings                       |                | 85,000     |               | 194,482       |             
|Accrued interest                                  |                | 2,496      |               | 8,726         |             
|Accrued taxes                                     |                | 9,743      |               | 13,655        |             
|Liabilities of discontinued operations            |                | -          |               | 138,251       |             
|Other                                             |                | 5,457      |               | 168,206       |             
|                                                 
|                                                  |                | 238,196    |               | 564,831       |             
|                                                 
|Other long-term liabilities and deferred credits: |               
|Regulatory liabilities                            |                | -          |               | -             |             
|Cost of removal obligations                       |                | -          |               | -             |             
|Other                                             |                | 3,251      |               | 184,077       |             
|                                                 
|                                                  |                | 3,251      |               | 184,077       |             
|                                                 
|                                                 
|Minority interest                                 |                | -          |               | 43,425        |             
|                                                 
|Total capitalization and liabilities              |                | $2,101,637 |               | $2,263,172    |             
|                                                 

Alliant Energy
Corporation Condensed Consolidating Statement of Cash Flows for the Year Ended December
31, 2003

|                                                                 | Alliant Energy |           | Other Alliant |               | Consolidated
|---------------------------------------------------------------- | -------------- | --------- | ------------- | ------------- | ------------
|                                                                 | Parent         |           | Energy        | Consolidating | Alliant     
|                                                                 | Company        | Resources | Subsidiaries  | Adjustments   | Energy      
|                                                                
|                                                                 | (in thousands)
|                                                                
|Net cash flows from (used for) operating activities              |                | $199,469  |               | ($58,253      | )           
|                                                                
|Cash flows from (used for) financing activities:                 |               
|Common stock dividends                                           |                | (101,313  | )             | -             |             
|Proceeds from issuance of common stock                           |                | 345,606   |               | -             |             
|Proceeds from issuance of preferred stock of subsidiary          |                | -         |               | -             |             
|Proceeds from issuance of other long-term debt                   |                | -         |               | 63,623        |             
|Reductions in other long-term debt                               |                | (24,000   | )             | (77,253       | )           
|Net change in commercial paper and other short-term borrowings   |                | 23,020    |               | (172,649      | )           
|Other                                                            |                | (3,395    | )             | (16,363       | )           
|                                                                
|Net cash flows from (used for) financing activities              |                | 239,918   |               | (202,642      | )           
|                                                                
|Cash flows from (used for) investing activities:                 |               
|Construction and acquisition expenditures:                       |               
|Domestic utility business                                        |                | -         |               | -             |             
|Non-regulated businesses                                         |                | -         |               | (248,517      | )           
|Corporate Services and other                                     |                | (50       | )             | -             |             
|Proceeds from asset sales                                        |                | -         |               | 610,171       |             
|Other                                                            |                | (403,565  | )             | (3,634        | )           
|                                                                
|Net cash flows from (used for) investing activities              |                | (403,615  | )             | 358,020       |             
|                                                                
|Net increase in cash and temporary cash investments              |                | 35,772    |               | 97,125        |             
|                                                                
|Cash and temporary cash investments at beginning of period       |                | 4         |               | 47,236        |             
|                                                                
|Cash and temporary cash investments at end of period             |                | $35,776   |               | $144,361      |             
|                                                                
|Supplemental cash flows information:                             |               
|Cash paid (refunded) during the period for:                      |               
|Interest                                                         |                | $9,112    |               | $85,421       |             
|                                                                
|Income taxes, net of refunds                                     |                | ($27,291  | )             | ($86,638      | )           
|                                                                
|Noncash investing and financing activities:                      |               
|Debt repaid directly by buyer in the sale of Australian business |                | $ -       |               | $127,595      |             
|                                                                
|Debt assumed by buyer of affordable housing business             |                | $ -       |               | $87,986       |             
|                                                                
|Capital lease obligations incurred                               |                | $ -       |               | $ -           |             
|                                                                

89

Alliant Energy
Corporation Condensed Consolidating Statements of Cash Flows for the Years Ended December
31, 2002 and 2001

|                                                               | Alliant Energy |           | Other Alliant |               | Consolidated
|-------------------------------------------------------------- | -------------- | --------- | ------------- | ------------- | ------------
|                                                               | Parent         |           | Energy        | Consolidating | Alliant     
|                                                               | Company        | Resources | Subsidiaries  | Adjustments   | Energy      
|                                                              
|Year Ended December 31, 2002                                   | (in thousands)
|                                                              
|Net cash flows from operating activities                       |                | $107,594  |               | $100,414      |             
|                                                              
|Cash flows from (used for) financing activities:               |               
|Common stock dividends                                         |                | (180,987  | )             | -             |             
|Proceeds from issuance of common stock                         |                | 56,066    |               | -             |             
|Proceeds from issuance of preferred stock of subsidiary        |                | -         |               | -             |             
|Redemption of preferred stock of subsidiary                    |                | -         |               | -             |             
|Net change in Resources' credit facility                       |                | -         |               | (383,610      | )           
|Proceeds from issuance of other long-term debt                 |                | -         |               | 300,023       |             
|Reductions in other long-term debt                             |                | -         |               | (20,258       | )           
|Net change in commercial paper and other short-term borrowings |                | 76,106    |               | 153,795       |             
|Other                                                          |                | 1,417     |               | 21,707        |             
|                                                              
|Net cash flows from (used for) financing activities            |                | (47,398   | )             | 71,657        |             
|                                                              
|Cash flows used for investing activities:                      |               
|Construction and acquisition expenditures:                     |               
|Domestic utility business                                      |                | -         |               | -             |             
|Non-regulated businesses                                       |                | -         |               | (218,242      | )           
|Corporate Services and other                                   |                | (50       | )             | -             |             
|Proceeds from asset sales                                      |                | 19,349    |               | 8,294         |             
|Other                                                          |                | (85,872   | )             | 24,876        |             
|                                                              
|Net cash flows used for investing activities                   |                | (66,573   | )             | (185,072      | )           
|                                                              
|Net increase (decrease) in cash and temporary cash investments |                | (6,377    | )             | (13,001       | )           
|                                                              
|Cash and temporary cash investments at beginning of period     |                | 6,381     |               | 60,237        |             
|                                                              
|Cash and temporary cash investments at end of period           |                | $4        |               | $47,236       |             
|                                                              
|Supplemental cash flows information:                           |               
|Cash paid (refunded) during the period for:                    |               
|Interest                                                       |                | $5,244    |               | $74,922       |             
|                                                              
|Income taxes, net of refunds                                   |                | ($2,183   | )             | ($44,743      | )           
|                                                              
|Noncash investing and financing activities:                    |               
|Capital lease obligations incurred                             |                | $-        |               | $-            |             
|                                                              
|Year Ended December 31, 2001                                   |               
|                                                              
|Net cash flows from (used for) operating activities            |                | $155,559  |               | ($2,855       | )           
|                                                              
|Cash flows from (used for) financing activities:               |               
|Common stock dividends                                         |                | (158,231  | )             | -             |             
|Proceeds from issuance of common stock                         |                | 288,553   |               | -             |             
|Net change in Resources' credit facility                       |                | -         |               | 63,110        |             
|Proceeds from issuance of other long-term debt                 |                | -         |               | 313,530       |             
|Reductions in other long-term debt                             |                | -         |               | (9,249        | )           
|Net change in commercial paper and other short-term borrowings |                | (265,496  | )             | (54,953       | )           
|Other                                                          |                | 46,777    |               | (79,118       | )           
|                                                              
|Net cash flows from (used for) financing activities            |                | (88,397   | )             | 233,320       |             
|                                                              
|Cash flows used for investing activities:                      |               
|Construction and acquisition expenditures:                     |               
|Domestic utility business                                      |                | -         |               | -             |             
|Non-regulated businesses                                       |                | -         |               | (332,183      | )           
|Corporate Services                                             |                | -         |               | -             |             
|Proceeds from asset sales                                      |                | -         |               | 32,117        |             
|Other                                                          |                | (61,355   | )             | 4,553         |             
|                                                              
|Net cash flows used for investing activities                   |                | (61,355   | )             | (295,513      | )           
|                                                              
|Net increase (decrease) in cash and temporary cash investments |                | 5,807     |               | (65,048       | )           
|                                                              
|Cash and temporary cash investments at beginning of period     |                | 574       |               | 125,285       |             
|                                                              
|Cash and temporary cash investments at end of period           |                | $6,381    |               | $60,237       |             
|                                                              
|Supplemental cash flows information:                           |               
|Cash paid (refunded) during the period for:                    |               
|Interest                                                       |                | $12,461   |               | $60,767       |             
|                                                              
|Income taxes, net of refunds                                   |                | ($10,258  | )             | ($32,015      | )           
|                                                              
|Noncash investing and financing activities:                    |               
|Capital lease obligations incurred and other                   |                | $-        |               | $-            |             
|                                                              

90

# INDEPENDENT AUDITORS REPORT

To the Board of Directors and Shareowners of Interstate
 Power and Light Company:

We have audited the accompanying
consolidated balance sheets and statements of capitalization of Interstate Power and
Light Company and subsidiaries (the "Company") as of December 31, 2003 and 2002, and the
related consolidated statements of income, cash flows and changes in common equity for
each of the three years in the period ended December 31, 2003.  Our audits also included
the financial statement schedule listed in Item 15(a)(2).  These financial statements and
the financial statement schedule are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements and financial
statement schedule based on our audits.

We conducted our audits in
accordance with auditing standards generally accepted in the United States of America.
 Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement.  An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated
financial statements present fairly, in all material respects, the financial position of
the Company as of December 31, 2003 and 2002, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 2003, in
conformity with accounting principles generally accepted in the United States of America.
 Also, in our opinion, such financial statement schedule, when considered in relation to
the basic consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.

As discussed in Note 18 to the
consolidated financial statements, on January 1, 2003, the Company adopted Statement of
Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations."

/s/ DELOITTE & TOUCHE LLP

Milwaukee, Wisconsin  March 3, 2004

91

INTERSTATE POWER AND LIGHT COMPANY CONSOLIDATED
 STATEMENTS OF INCOME

|                                             | Year Ended December 31,
|-------------------------------------------- | -----------------------
|                                             | 2003                   
|                                            
|                                             | (in thousands)         
|Operating revenues:                          |                        
|Electric utility                             |                        
|Gas utility                                  |                        
|Steam and other                              |                        
|                                            
|                                             |                        
|                                            
|                                            
|Operating expenses:                          |                        
|Electric production fuel and purchased power |                        
|Cost of gas sold                             |                        
|Other operation and maintenance              |                        
|Depreciation and amortization                |                        
|Taxes other than income taxes                |                        
|                                            
|                                             |                        
|                                            
|                                            
|Operating income                             |                        
|                                            
|                                            
|Interest expense and other:                  |                        
|Interest expense                             |                        
|Allowance for funds used during construction |                        
|Interest income and other                    |                        
|                                            
|                                             |                        
|                                            
|                                            
|Income before income taxes                   |                        
|                                            
|                                            
|Income taxes                                 |                        
|                                            
|                                            
|Net income                                   |                        
|                                            
|                                            
|Preferred dividend requirements              |                        
|                                            
|                                            
|Earnings available for common stock          |                        
|                                            
|                                            

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

92

INTERSTATE POWER AND
LIGHT COMPANY                                               CONSOLIDATED BALANCE SHEETS

|                                                                  | December 31,  
|----------------------------------------------------------------- | --------------
|ASSETS                                                            | 2003          
|                                                                 
|                                                                  | (in thousands)
|Property, plant and equipment:                                   
|Electric plant in service                                         |               
|Gas plant in service                                              |               
|Steam plant in service                                            |               
|Other plant in service                                            |               
|Accumulated depreciation                                          |               
|                                                                 
|Net plant                                                         |               
|Construction work in progress:                                    |               
|Emery generating facility                                         |               
|Other                                                             |               
|Other, less accumulated depreciation of $2,941 and $2,712         |               
|                                                                 
|                                                                  |               
|                                                                 
|                                                                 
|Current assets:                                                   |               
|Cash and temporary cash investments                               |               
|Accounts receivable:                                              |               
|Customer, less allowance for doubtful accounts of $1,262 and $894 |               
|Associated companies                                              |               
|Other, less allowance for doubtful accounts of $145 and $388      |               
|Income tax refunds receivable                                     |               
|Accumulated deferred income taxes                                 |               
|Production fuel, at average cost                                  |               
|Materials and supplies, at average cost                           |               
|Gas stored underground, at average cost                           |               
|Regulatory assets                                                 |               
|Prepayments and other                                             |               
|                                                                 
|                                                                  |               
|                                                                 
|                                                                 
|Investments:                                                      |               
|Nuclear decommissioning trust funds                               |               
|Other                                                             |               
|                                                                 
|                                                                  |               
|                                                                 
|                                                                 
|Other assets:                                                     |               
|Regulatory assets                                                 |               
|Deferred charges and other                                        |               
|                                                                 
|                                                                  |               
|                                                                 
|                                                                 
|Total assets                                                      |               
|                                                                 
|                                                                 

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

93

INTERSTATE POWER AND
LIGHT COMPANY                                         CONSOLIDATED BALANCE SHEETS
(Continued)

|                                                                | December 31,                        
|--------------------------------------------------------------- | ------------------------------------
|CAPITALIZATION AND LIABILITIES                                  | 2003                                
|                                                               
|                                                                | (in thousands, except share amounts)
|Capitalization (See Consolidated Statements of Capitalization):
|Common stock - $2.50 par value - authorized 24,000,000 shares; 
|13,370,788 shares outstanding                                   |                                     
|Additional paid-in capital                                      |                                     
|Retained earnings                                               |                                     
|Accumulated other comprehensive loss                            |                                     
|                                                               
|Total common equity                                             |                                     
|                                                               
|Cumulative preferred stock                                      |                                     
|Long-term debt (excluding current portion)                      |                                     
|                                                               
|                                                                |                                     
|                                                               
|                                                               
|Current liabilities:                                            |                                     
|Current maturities and sinking funds                            |                                     
|Commercial paper                                                |                                     
|Accounts payable                                                |                                     
|Accounts payable to associated companies                        |                                     
|Accrued interest                                                |                                     
|Accrued taxes                                                   |                                     
|Accumulated refueling outage provision                          |                                     
|Other                                                           |                                     
|                                                               
|                                                                |                                     
|                                                               
|                                                               
|Other long-term liabilities and deferred credits:               |                                     
|Accumulated deferred income taxes                               |                                     
|Accumulated deferred investment tax credits                     |                                     
|Regulatory liabilities                                          |                                     
|Asset retirement obligations                                    |                                     
|Pension and other benefit obligations                           |                                     
|Cost of removal obligations                                     |                                     
|Other                                                           |                                     
|                                                               
|                                                                |                                     
|                                                               
|                                                               
|Commitments and contingencies (Note 11)                         |                                     
|                                                               
|Total capitalization and liabilities                            |                                     
|                                                               
|                                                               

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

94

INTERSTATE POWER AND
LIGHT COMPANY                                                     CONSOLIDATED STATEMENTS
OF CASH FLOWS

|                                                               | Year Ended December 31,
|-------------------------------------------------------------- | -----------------------
|                                                               | 2003                   
|                                                              
|                                                               | (in thousands)         
|Cash flows from operating activities:                         
|Net income                                                     |                        
|Adjustments to reconcile net income to net cash                |                        
|flows from operating activities:                               |                        
|Depreciation and amortization                                  |                        
|Amortization of leased nuclear fuel                            |                        
|Amortization of deferred energy efficiency expenditures        |                        
|Deferred tax expense (benefits) and investment tax credits     |                        
|Refueling outage provision                                     |                        
|Other                                                          |                        
|Other changes in assets and liabilities:                       |                        
|Accounts receivable                                            |                        
|Sale of accounts receivable                                    |                        
|Income tax refunds receivable                                  |                        
|Accounts payable                                               |                        
|Adjustment clause balances                                     |                        
|Manufactured gas plants insurance refunds                      |                        
|Other                                                          |                        
|                                                              
|Net cash flows from operating activities                       |                        
|                                                              
|                                                              
|Cash flows from (used for) financing activities:               |                        
|Common stock dividends                                         |                        
|Preferred stock dividends                                      |                        
|Capital contribution from parent                               |                        
|Proceeds from issuance of preferred stock                      |                        
|Redemption of preferred stock                                  |                        
|Proceeds from issuance of long-term debt                       |                        
|Reductions in long-term debt                                   |                        
|Net change in short-term borrowings                            |                        
|Principal payments under capital lease obligations             |                        
|Other                                                          |                        
|                                                              
|Net cash flows from (used for) financing activities            |                        
|                                                              
|                                                              
|Cash flows used for investing activities:                      |                        
|Utility construction expenditures                              |                        
|Nuclear decommissioning trust funds                            |                        
|Other                                                          |                        
|                                                              
|Net cash flows used for investing activities                   |                        
|                                                              
|                                                              
|Net increase (decrease) in cash and temporary cash investments |                        
|                                                              
|                                                              
|Cash and temporary cash investments at beginning of period     |                        
|                                                              
|                                                              
|Cash and temporary cash investments at end of period           |                        
|                                                              
|                                                              
|Supplemental cash flows information:                           |                        
|Cash paid during the period for:                               |                        
|Interest                                                       |                        
|                                                              
|Income taxes, net of refunds                                   |                        
|                                                              
|Noncash investing and financing activities:                    |                        
|Capital lease obligations incurred and other                   |                        
|                                                              
|                                                              

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

95

INTERSTATE POWER AND
LIGHT COMPANY                                                   CONSOLIDATED STATEMENTS
OF CAPITALIZATION

|                                                                             | December 31,                        
|---------------------------------------------------------------------------- | ------------------------------------
|                                                                             | 2003                                
|                                                                            
|                                                                             | (in thousands, except share amounts)
|                                                                            
|Common equity (See Consolidated Balance Sheets)                              |                                     
|                                                                            
|                                                                            
|Cumulative preferred stock:                                                  |                                     
|Cumulative, liquidation preference $25 per share, not mandatorily redeemable
|- authorized 16,000,000 shares:                                              |                                     
|8.375% series, 6,000,000 shares outstanding                                  |                                     
|7.10% series, 1,600,000 shares outstanding                                   |                                     
|                                                                            
|                                                                             |                                     
|Less: discount                                                               |                                     
|                                                                            
|                                                                             |                                     
|                                                                            
|                                                                            
|Long-term debt:                                                              |                                     
|Collateral Trust Bonds:                                                      |                                     
|7.25% series, due 2006                                                       |                                     
|6-7/8% series, due 2007                                                      |                                     
|6% series, due 2008                                                          |                                     
|7% series, due 2023                                                          |                                     
|5.5% series, due 2023                                                        |                                     
|                                                                            
|                                                                             |                                     
|First Mortgage Bonds:                                                        |                                     
|8% series, due 2007                                                          |                                     
|7-5/8% series, retired in 2003                                               |                                     
|7-1/4% series, retired in 2003                                               |                                     
|8-5/8% series, retired in 2003                                               |                                     
|                                                                            
|                                                                             |                                     
|Pollution Control Revenue Bonds:                                             |                                     
|2.50%, due 2005                                                              |                                     
|3.60%, due 2008                                                              |                                     
|6.25%, due 2009                                                              |                                     
|6.30%, due 2010                                                              |                                     
|Variable rate (2.4% at Dec. 31, 2003), due 2010, partially retired in 2003   |                                     
|Variable/fixed rate series 1999 (4.05% to 4.20% through 2004),              
|due 2010 to 2013                                                             |                                     
|6.35%, due 2012                                                              |                                     
|Variable/fixed rate series 1998 (3.6% through 2008), due 2023                |                                     
|5.75%, retired in 2003                                                       |                                     
|                                                                            
|                                                                             |                                     
|                                                                            
|Senior debentures, 6-5/8%, due 2009                                          |                                     
|Senior debentures, 6-3/4%, due 2011                                          |                                     
|Senior debentures, 5.875%, due 2018                                          |                                     
|Senior debentures, 6.45%, due 2033                                           |                                     
|Subordinated deferrable interest debentures, 7-7/8%, retired in 2003         |                                     
|                                                                            
|                                                                             |                                     
|                                                                            
|Less:                                                                        |                                     
|Current maturities                                                           |                                     
|Unamortized debt discount, net                                               |                                     
|                                                                            
|                                                                             |                                     
|                                                                            
|                                                                            
|Total capitalization                                                         |                                     
|                                                                            
|                                                                            

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

96

INTERSTATE POWER AND LIGHT COMPANY CONSOLIDATED
 STATEMENTS OF CHANGES IN COMMON EQUITY

|                                                | Accumulated    |        
|----------------------------------------------- | -------------- | -------
|                                                | Additional     |        
|                                                | Common         | Paid-In
|                                                | Stock          | Capital
|                                               
|                                                | (in thousands)
|2001:                                          
|Beginning balance (a)                           |                | $33,427
|Earnings available for common stock             |                |        
|Reclassification adjustment for losses included |               
|in earnings available for common stock          |               
|related to derivatives qualified as hedges,     |               
|net of tax of ($12)                             |                |        
|Minimum pension liability adjustment, net of    |               
|tax of ($1,469)                                 |                |        
|                                               
|Total comprehensive income                      |                |        
|Common stock dividends                          |                |        
|Amortization of preferred stock issuance        |               
|costs and other                                 |                |        
|                                               
|Ending balance                                  |                | 33,427 
|2002:                                           |               
|Earnings available for common stock             |                |        
|Minimum pension liability adjustment, net of    |               
|tax of ($11,844)                                |                |        
|                                               
|Total comprehensive income                      |                |        
|Common stock dividends                          |                |        
|Capital contribution from parent                |                |        
|Redemption of preferred stock                   |                |        
|Amortization of preferred stock issuance        |               
|costs and other                                 |                |        
|                                               
|Ending balance                                  |                | 33,427 
|2003:                                           |               
|Earnings available for common stock             |                |        
|Minimum pension liability adjustment, net of    |               
|tax of $1,262                                   |                |        
|                                               
|Total comprehensive income                      |                |        
|Common stock dividends                          |                |        
|Capital contribution from parent                |                |        
|Preferred stock issuance costs                  |                |        
|                                               
|Ending balance                                  |                | $33,427
|                                               
|                                               

|(a) |  | Accumulated other comprehensive loss at January 1, 2001 consisted entirely of net unrealized losses on qualifying derivatives.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------

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

97

INTERSTATE POWER AND LIGHT COMPANY NOTES TO
 CONSOLIDATED FINANCIAL STATEMENTS

Except as modified below, the Alliant Energy Notes
 to Consolidated Financial Statements are incorporated by reference insofar as they relate to IP&L
 and incorporate the disclosures relating to IP&L contained in the following notes of the Alliant
 Energy Notes to Consolidated Financial Statements:

|Summary of Significant Accounting Policies | Note 1(a) 3rd and 4th paragraphs, 1(b) to 1(d), 1(f) to 1(j), 1(l), 1(n), 1(o)
|------------------------------------------ | ------------------------------------------------------------------------------
|Leases                                     | Note 3                                                                        
|Sales of Accounts Receivable               | Note 4                                                                        
|Benefit Plans                              | Note 6(a) 1st, 2nd, 7th, 9th through 11th, and 13th paragraphs                
|Common and Preferred Stock                 | Note 7                                                                        
|Debt                                       | Note 8(a) and 8(b) 1st and 2nd paragraphs                                     
|Investments                                | Note 9 1st paragraph                                                          
|Derivative Financial Instruments           | Note 10(a) 1st and 3rd paragraphs, "Other Derivatives Not Designated in       
|                                           | Hedge Relationships" 1st and 4th paragraphs; 10(b)                            
|Commitments and Contingencies              | Note 11(b) 1st paragraph, 11(c), 11(e) "MGP Sites" and "NEPA," 11(f),11(g)    
|Jointly-Owned Electric Utility Plant       | Note 12                                                                       
|Asset Retirement Obligations               | Note 18                                                                       

The notes that follow herein set forth additional specific
 information for IP&L and are numbered to be consistent with the Alliant Energy Notes to Consolidated
 Financial Statements.

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(a)     General  The consolidated
 financial statements include the accounts of IP&L and its consolidated subsidiaries. IP&L is
 a direct subsidiary of Alliant Energy and is engaged principally in the generation, transmission, distribution
 and sale of electric energy; the purchase, distribution, transportation and sale of natural gas; and
 the provision of steam and various other energy-related services including construction management services
 for wind farms. IP&Ls primary service territories are Iowa, Minnesota and Illinois.

The merger of IPC with and into IESU was approved by
 their respective shareowners in April 2001 and by the SEC in October 2001. The merger was effective
 Jan. 1, 2002 and IESU changed its name to IP&L. IPC and IESU were both wholly-owned operating subsidiaries
 of Alliant Energy. As such, the transaction was accounted for as a common control merger. The consolidated
 financial statements and notes to consolidated financial statements illustrate the impact of the merger
 as if it had occurred as of Jan. 1, 2001.

(c)     Regulatory Assets
 and Liabilities  At Dec. 31, 2003 and 2002, regulatory assets and liabilities were comprised of
 the following items (in millions):

|                                | Regulatory Assets | Regulatory Liabilities
|------------------------------- | ----------------- | ----------------------
|                               
|                                | 2003              | 2002                  
|                               
|Tax-related                     |                   | $163                  
|Environmental-related           |                   | 42                    
|Asset retirement obligations    |                   | 20                    
|Energy efficiency program costs |                   | 13                    
|Cost of removal obligations     |                   | --                    
|Other                           |                   | 40                    
|                               
|                                |                   | $280                  
|                               

(3) LEASESIP&Ls operating lease rental expenses for 2003, 2002 and 2001 were
 $9.9 million, $12.4 million and $11.7 million, respectively. The synthetic leases relate to the financing
 of utility railcars. These leases do not meet the consolidation requirements per FIN 46 and were not
 included on IP&Ls Consolidated Balance Sheets. IP&L has guaranteed the residual value of its
 synthetic leases totaling $7 million in the aggregate. The guarantees extend through the maturity of
 each respective underlying lease with remaining terms up to six years. Residual value guarantees have
 been included in the future minimum lease payments noted in the following table (in millions):

98

|                 | Present     
|---------------- | ------------
|                 | Less:       
|                 | amount      
|                 | representing
|                 | 2004        
|                
|Operating leases | $8.8        
|Synthetic leases | 0.4         
|Capital leases   | 16.9        

(4) UTILITY ACCOUNTS RECEIVABLE 
 At Dec. 31, 2003 and 2002, IP&L had sold $126 million
 and $86 million of receivables, respectively. In 2003, 2002 and 2001, IP&L received $1.0 billion,
 $1.1 billion and $1.1 billion, respectively, in aggregate proceeds from the sale of accounts receivable.
 IP&L paid fees associated with these sales of $1.4 million, $2.0 million and $3.9 million in 2003,
 2002 and 2001, respectively.

(5) INCOME TAXESThe components of income taxes for IP&L were as follows (in millions):

|                                                 | 2003 | 2002 | 2001
|------------------------------------------------ | ---- | ---- | ----
|                                                
|Current tax expense:                             |      |      |     
|Federal                                          |      | $31  | .6  
|State                                            |      | 5    | .1  
|Deferred tax expense (benefit):                  |     
|Federal                                          |      | 32   | .5  
|State                                            |      | 6    | .2  
|Research and development tax credits             |      | (0   | .4) 
|Amortization of investment tax credits and other |      | (3   | .7) 
|                                                
|                                                 |      | $71  | .3  
|                                                

Alliant Energy files a consolidated federal income
 tax return. Under the terms of an agreement between Alliant Energy and its subsidiaries, the subsidiaries
 calculate their respective federal income tax provisions and make payments to or receive payments from
 Alliant Energy as if they were separate taxable entities.

IP&L realized net benefits of $8.5 million, $2.4
 million and $3.9 million related to state apportionment and allocation of parent tax benefits in 2003,
 2002 and 2001, respectively.

The overall effective income tax rates shown in the
 following table were computed by dividing total income tax expense by income before income taxes.

|                                                      | 2003 | 2002 | 2001
|----------------------------------------------------- | ---- | ---- | ----
|                                                     
|Statutory federal income tax rate                     |      | 35   | .0% 
|Effect of rate making on property related differences |      | 6    | .3  
|State income taxes, net of federal tax benefits       |      | 3    | .6  
|Adjustment of prior period taxes                      |      | 0    | .6  
|Amortization of investment tax credits                |      | (2   | .1) 
|Other items, net                                      |      | (2   | .0) 
|                                                     
|Overall effective income tax rate                     |      | 41   | .4% 
|                                                     

99

The accumulated deferred income tax (assets) and liabilities
 included on the Consolidated Balance Sheets at Dec. 31 arise from the following temporary differences
 (in millions):

|                 | 2003       | 2002        
|---------------- | ---------- | ------------
|                
|                 | Deferred   | Deferred Tax
|                 | Tax Assets | Liabilities 
|                
|Property related |            | ($10        
|Other            |            | (108        
|                
|Total            |            | ($118       
|                

|                                                   | 2003 | 2002 |   
|-------------------------------------------------- | ---- | ---- | --
|                                                  
|Current assets - Accumulated deferred income taxes |      | $--  |   
|Current liabilities - Other                        |      | 2    | .4
|Other long-term liabilities and deferred credits - |     
|Accumulated deferred income taxes                  |      | 351  | .9
|                                                  
|Total deferred tax liabilities                     |      | $354 | .3
|                                                  

(6) BENEFIT PLANS(a)     Pension Plans and Other Postretirement
 Benefits  Substantially all of IP&Ls employees are covered by several non-contributory defined
 benefit pension plans. The weighted average assumptions at the measurement date of Sept. 30 for IP&Ls
 qualified pension benefits and other postretirement benefits were equal to the assumptions used for
 Alliant Energys pension benefits and other postretirement benefits, respectively, except for the rate
 of compensation increase. IP&Ls rate of compensation increase for its qualified pension benefits
 were 3.5% for 2003, 2002 and 2001.

The components of IP&Ls qualified pension benefits
 and other postretirement benefits costs were as follows (in millions):

|                               | Qualified Pension Benefits | Other Postretirement Benefits
|------------------------------ | -------------------------- | -----------------------------
|                              
|                               | 2003                       | 2002                         
|                              
|Service cost                   |                            | $5                           
|Interest cost                  |                            | 12                           
|Expected return on plan assets |                            | (11                          
|Amortization of:               |                           
|Transition obligation (asset)  |                            | (0                           
|Prior service cost             |                            | 1                            
|Actuarial loss (gain)          |                            | 1                            
|                              
|                               |                            | $8                           
|                              

The pension benefits costs shown previously (and in
 the following tables) represent only the pension benefits costs for bargaining unit employees of IP&L
 covered under the bargaining unit pension plans that are sponsored by IP&L. The benefit obligations
 and assets associated with IP&Ls non-bargaining employees who are participants in other Alliant
 Energy plans are reported in Alliant Energys Consolidated Financial Statements and are not reported
 previously. The pension benefits costs for IP&Ls non-bargaining employees who are now participants
 in other Alliant Energy plans was $4.4 million, $2.7 million and $1.2 million for 2003, 2002 and 2001,
 respectively. In addition, Corporate Services provides services to IP&L. The allocated pension benefits
 costs associated with these services was$3.2 million, $2.7 million and $2.1 million for 2003,
 2002 and 2001, respectively. The other postretirement benefits costs shown previously for each period
 (and in the following tables) represent the other postretirement benefits costs for all IP&L employees.
 The allocated other postretirement benefits costs associated with Corporate Services for IP&L was
 $1.5 million, $0.9 million and $0.5 million for 2003, 2002 and 2001, respectively.

The assumed medical trend rates are critical assumptions
 in determining the service and interest cost and accumulated postretirement benefit obligation related
 to postretirement benefits costs. A 1% change in the medical trend rates for 2003, holding all other
 assumptions constant, would have the following effects (in millions):

|                                                        | 1% Increase | 1% Decrease
|------------------------------------------------------- | ----------- | -----------
|                                                       
|Effect on total of service and interest cost components |             | $1         
|Effect on postretirement benefit obligation             |             | $13        

100

A reconciliation of the funded status of IP&Ls
 plans to the amounts recognized on IP&Ls Consolidated Balance Sheets at Dec. 31 was as follows
 (in millions):

|                                                      | Qualified Pension Benefits | Other Postretirement Benefits
|----------------------------------------------------- | -------------------------- | -----------------------------
|                                                     
|                                                      | 2003                       | 2002                         
|                                                     
|Change in projected benefit obligation:               |                            |                              
|Net projected benefit obligation at beginning of year |                            | $180                         
|Service cost                                          |                            | 5                            
|Interest cost                                         |                            | 12                           
|Plan participants' contributions                      |                            | --                           
|Plan amendments                                       |                            | --                           
|Actuarial loss                                        |                            | 19                           
|Gross benefits paid                                   |                            | (7                           
|                                                     
|Net projected benefit obligation at end of year       |                            | 209                          
|                                                     
|Change in plan assets:                                |                           
|Fair value of plan assets at beginning of year        |                            | 131                          
|Actual return on plan assets                          |                            | 25                           
|Employer contributions                                |                            | 4                            
|Plan participants' contributions                      |                            | --                           
|Gross benefits paid                                   |                            | (7                           
|                                                     
|Fair value of plan assets at end of year              |                            | 153                          
|                                                     
|Funded status at end of year                          |                            | (56                          
|Unrecognized net actuarial loss                       |                            | 47                           
|Unrecognized prior service cost                       |                            | 9                            
|Unrecognized net transition obligation (asset)        |                            | (0                           
|                                                     
|Net amount recognized at end of year                  |                            | $0                           
|                                                     
|Amounts recognized on the Consolidated                |                           
|Balance Sheets consist of:                            |                           
|Prepaid benefit cost                                  |                            | $0                           
|Accrued benefit cost                                  |                            | --                           
|Additional minimum liability                          |                            | (22                          
|Intangible asset                                      |                            | 9                            
|Accumulated other comprehensive loss                  |                            | 13                           
|                                                     
|Net amount recognized at measurement date             |                            | 0                            
|                                                     
|Contributions paid after 9/30 and prior to 12/31      |                            | --                           
|                                                     
|Net amount recognized at 12/31                        |                            | $0                           
|                                                     

In addition to the additional minimum liability in
 the previous table, Corporate Services allocated an additional minimum liability at Dec. 31, 2003 and
 2002 of $20.1 million and $24.0 million, respectively. Included in the following table are IP&Ls accumulated
 benefit obligations, aggregate amounts applicable to qualified pension and other postretirement
 benefits with accumulated benefit obligations in excess of plan assets, as well as qualified pension
 plans with projected benefit obligations in excess of plan assets as of the measurement date of Sept.
 30 (in millions):

|                                                     | Qualified Pension Benefits | Other Postretirement Benefits
|---------------------------------------------------- | -------------------------- | -----------------------------
|                                                    
|                                                     | 2003                       | 2002                         
|                                                    
|Accumulated benefit obligation                       |                            | $175                         
|Plans with accumulated benefit obligations in excess |                           
|of plan assets:                                      |                           
|Accumulated benefit obligation                       |                            | 175                          
|Fair value of plan assets                            |                            | 153                          
|Plans with projected benefit obligations in excess   |                           
|of plan assets:                                      |                           
|Projected benefit obligations                        |                            | 209                          
|Fair value of plan assets                            |                            | 153                          

101

Postretirement benefit plans are funded via specific
 assets within certain retirement plans (401(h) assets) as well as
 VEBA trusts. The asset allocation of the 401(h) assets mirror the qualified pension plan assets and
 the asset allocation of the VEBA trusts are reflected in the following table under Other Postretirement
 Plans. The asset allocation for IP&Ls qualified pension and other postretirement benefit plans
 at Sept. 30, 2003 and 2002, and the qualified pension plan target allocation for 2003 were as follows:

|                  | Qualified Pension Plans | Other Postretirement Plans
|----------------- | ----------------------- | --------------------------
|                 
|                  | Target                  | Percentage of Plan        
|                  | Allocation              | Assets at Sept. 30        
|                 
|Asset Category    | 2003                    | 2003                      
|                 
|Equity securities |                         | 50-65%                    
|Debt securities   |                         | 25-40%                    
|Other             |                         | 0-5%                      
|                 
|                  |                         |                           
|                 

IP&L estimates that funding for the qualified pension
 and postretirement benefit plans for 2004 will be approximately $18 million and $11 million, respectively.

Alliant Energy sponsors several non-qualified pension
 plans that cover certain current and former key employees. The pension expense allocated to IP&L
 for these plans was $3.1 million, $2.7 million and $2.1 million in 2003, 2002 and 2001, respectively.
 IP&L has various life insurance policies that cover certain key employees and directors. At Dec.
 31, 2003 and 2002, the cash surrender value of these investments was $10 million and $9 million, respectively.
 A significant number of IP&L employees also participate in defined contribution pension plans (401(k)
 and Employee Stock Ownership plans). IP&Ls contributions to the plans, which are based on the participants
 level of contribution, were $2.0 million, $2.0 million and $2.3 million in 2003, 2002 and 2001, respectively.

(7) COMMON AND PREFERRED
 STOCK (b)     Preferred Stock  The carrying value of IP&Ls cumulative preferred stock
 at Dec. 31, 2003 and 2002 was $184 million and $145 million, respectively. The fair market value, based
 upon the market yield of similar securities and quoted market prices, at Dec. 31, 2003 and 2002 was
 $233 million and $150 million, respectively.

(8) DEBT (a)    
 Short-Term Debt  Information regarding IP&Ls short-term debt was as follows (dollars in
 millions):

|                                          | 2003 | 2002
|----------------------------------------- | ---- | ----
|                                         
|At Dec. 31:                               |      |     
|Commercial paper outstanding              |      | $107
|Discount rates on commercial paper        |      | 1   
|For the year ended:                       |     
|Average amount of short-term debt         |     
|(based on daily outstanding balances)     |      | $60 
|Average interest rates on short-term debt |      | 1   

(b)     Long-Term Debt 
 IP&Ls debt maturities for 2004 to 2008 are $0, $3 million, $60 million, $80 million and $52 million,
 respectively. The carrying value of IP&Ls long-term debt (including current maturities) at Dec.
 31, 2003 and 2002 was $838 million and $832 million, respectively. The fair market value, based upon
 the market yield of similar securities and quoted market prices, at Dec. 31, 2003 and 2002 was $904
 million and $920 million, respectively.

102

(9) INVESTMENTS AND ESTIMATED FAIR VALUE OF FINANCIAL
 INSTRUMENTSInformation relating to
 various investments held by IP&L at Dec. 31 that are marked-to-market as a result of SFAS 115 was
 as follows (in millions):

|                                     | 2003      | 2002      
|------------------------------------ | --------- | ----------
|                                    
|                                     | Carrying/ | Unrealized
|                                     | Fair      | Gains,    
|                                     | Value     | Net of Tax
|                                    
|Available-for-sale securities:       |           |           
|Nuclear decommissioning trust funds: |          
|Debt securities                      |           | $78       
|Equity securities                    |           | 70        
|                                    
|Total                                |           | $148      
|                                    

Nuclear Decommissioning Trust Funds  At Dec.
 31, 2003, $34 million, $28 million and $16 million of the debt securities mature in 2004-2010, 2011-2020
 and 2021-2035, respectively. The funds realized gains (losses) from the sales of securities of $0.2
 million, $0.1 million and ($0.1) million in 2003, 2002 and 2001, respectively (cost of the investments
 based on specific identification was $51.7 million, $18.9 million and $22.4 million and proceeds from
 the sales were $51.9 million, $19.0 million and $22.3 million, respectively).

(11) COMMITMENTS AND CONTINGENCIES
 (a)     Construction and Acquisition Expenditures  Certain commitments have been made in connection
 with 2004 capital expenditures. During 2004, total construction and acquisition expenditures are estimated
 to be approximately $332 million (unaudited).

(b)     Purchase Obligations
 Based on the System Coordination and Operating Agreement, Alliant Energy annually allocates purchased-power
 contracts to IP&L and WP&L. Such process considers factors such as resource mix, load growth
 and resource availability. However, for 2004, system-wide purchased-power contracts of $4.4 million
 (0.2 million MWh) have not yet been directly assigned to IP&L and WP&L since the specific needs
 of each utility are not yet known. Refer to Note 20 for additional information. Coal contract
 quantities are directly assigned to specific plants at IP&L and WP&L based on various factors
 including projected heat input requirements, combustion compatibility and efficiency. However, for 2004
 to 2008, system-wide coal contracts of $78.7 million (10.7 million tons), $55.1 million (7.6 million
 tons), $34.0 million (5.4 million tons), $12.5 million (2.1 million tons) and $6.4 million (1.0 million
 tons), respectively, have not yet been directly assigned to IP&L and WP&L since the specific
 needs of each utility are not yet known. At Dec. 31, 2003, IP&Ls minimum commitments were as follows
 (dollars and Dths in millions; MWhs and tons in thousands):

|           | Purchased-power | Coal | Natural gas
|---------- | --------------- | ---- | -----------
|          
|           | Dollars         | MWhs | Dollars    
|          
|2004       |                 | $8   | .9         
|2005       |                 | 2    | .3         
|2006       |                 | 2    | .3         
|2007       |                 | 0    | .1         
|2008       |                 | 0    | .1         
|Thereafter |                 | 0    | .2         

Also, at Dec. 31, 2003, IP&Ls other purchase obligations,
 which represent individual commitments incurred during the normal course of business which exceeded
 $1 million at Dec. 31, 2003, were $8.3 million for 2004. This excludes lease obligations which are included
 in Note 3.

(e)     Environmental Liabilities
 IP&L had recorded the following environmental liabilities, and regulatory assets associated
 with certain of these liabilities, at Dec. 31 (in millions):

|          | Environmental Liabilities | Regulatory Assets
|--------- | ------------------------- | -----------------
|         
|          | 2003                      | 2002             
|         
|MGP sites |                           | $40              
|NEPA      |                           | 3                
|Other     |                           | 0                
|         
|          |                           | $43              
|         

103

MGP Sites  Management currently estimates
 the range of remaining costs to be incurred for the investigation, remediation and monitoring of all
 IP&Ls sites to be $29 million to $54 million.

(13) SEGMENTS OF BUSINESSIP&L is a domestic utility, serving customers in Iowa, Minnesota
 and Illinois, and includes three segments: a) electric operations; b) gas operations; and c) other, which
 includes the operations of the steam business, various other energy-related products and services
 including construction management services for wind farms and the unallocated portions of the utility
 business. Various line items in the following tables are not allocated to the electric and gas segments
 for management reporting purposes and therefore are included in Total. Intersegment revenues were
 not material to IP&Ls operations and there was no single customer whose revenues were 10% or more
 of IP&Ls consolidated revenues. Certain financial information relating to IP&Ls significant
 business segments was as follows (in millions):

|                                          | Electric | Gas    | Other | Total
|----------------------------------------- | -------- | ------ | ----- | -----
|                                         
|2003                                      |          |        |       |      
|Operating revenues                        |          | $1,007 | .0    | $294 
|Depreciation and amortization             |          | 149    | .6    | 11   
|Operating income                          |          | 202    | .3    | 16   
|Interest expense, net of AFUDC            |          |        |       |      
|Miscellaneous, net                        |          |        |       |      
|Income tax expense                        |          |        |       |      
|Net income                                |          |        |       |      
|Preferred dividends                       |          |        |       |      
|Earnings available for common stock       |          |        |       |      
|Total assets                              |          | 3,053  | .6    | 365  
|Construction and acquisition expenditures |          | 516    | .5    | 19   
|                                         
|2002                                     
|Operating revenues                        |          | $964   | .9    | $214 
|Depreciation and amortization             |          | 133    | .3    | 10   
|Operating income                          |          | 185    | .1    | 14   
|Interest expense, net of AFUDC            |          |        |       |      
|Miscellaneous, net                        |          |        |       |      
|Income tax expense                        |          |        |       |      
|Net income                                |          |        |       |      
|Preferred dividends                       |          |        |       |      
|Earnings available for common stock       |          |        |       |      
|Total assets                              |          | 2,633  | .7    | 344  
|Construction and acquisition expenditures |          | 226    | .8    | 17   
|                                         
|2001                                     
|Operating revenues                        |          | $1,003 | .1    | $281 
|Depreciation and amortization             |          | 134    | .1    | 12   
|Operating income                          |          | 184    | .5    | 8    
|Interest expense, net of AFUDC            |          |        |       |      
|Miscellaneous, net                        |          |        |       |      
|Income tax expense                        |          |        |       |      
|Net income                                |          |        |       |      
|Preferred dividends                       |          |        |       |      
|Earnings available for common stock       |          |        |       |      
|Total assets                              |          | 2,372  | .8    | 307  
|Construction and acquisition expenditures |          | 170    | .8    | 20   
|                                         

104

(15) SELECTED CONSOLIDATED
 QUARTERLY FINANCIAL DATA (UNAUDITED)Summation of the individual quarters may not equal annual totals
 due to rounding.

|                                    | 2003          | 2002   
|----------------------------------- | ------------- | -------
|                                   
|                                    | March 31      | June 30
|                                   
|                                    | (in millions)
|                                   
|Operating revenues                  |               | $377   
|Operating income                    |               | 54     
|Net income                          |               | 25     
|Earnings available for common stock |               | 21     

(20) RELATED PARTIESIP&L and WP&L have entered into a System Coordination
 and Operating Agreement. The agreement, which has been approved by FERC, provides a contractual basis
 for coordinated planning, construction, operation and maintenance of the interconnected electric generation
 and transmission (IP&L only) systems of IP&L and WP&L. In addition, the agreement allows
 the interconnected system to be operated as a single entity with off-system capacity sales and purchases
 made to market excess system capability or to meet system capability deficiencies. Such sales and purchases
 are allocated among IP&L and WP&L based on procedures included in the agreement. The sales amounts
 allocated to IP&L were $34.9 million, $27.3 million and $40.6 million for 2003, 2002 and 2001, respectively.
 The purchases allocated to IP&L were $156.9 million, $138.8 million and $183.1 million for 2003,
 2002 and 2001, respectively. The procedures were approved by both FERC and all state regulatory bodies
 having jurisdiction over these sales. Under the agreement, IP&L and WP&L are fully reimbursed
 for any generation expense incurred to support the sale to an affiliate or to a non-affiliate. Any margins
 on sales to non-affiliates are distributed to IP&L and WP&L in proportion to each utilitys
 share of electric production at the time of the sale.

Pursuant to a service agreement approved by the SEC
 under PUHCA, IP&L receives various administrative and general services from an affiliate, Corporate
 Services. These services are billed to IP&L at cost based on payroll and other expenses incurred
 by Corporate Services for the benefit of IP&L. These costs totaled $186.8 million, $182.1 million
 and $149.5 million for 2003, 2002 and 2001, respectively, and consisted primarily of employee compensation,
 benefits and fees associated with various professional services. At Dec. 31, 2003 and 2002, IP&L
 had a net intercompany payable to Corporate Services of $43.9 million and $39.1 million, respectively.

105

# INDEPENDENT AUDITORS REPORT

To the Board of Directors and Shareowners of Wisconsin
 Power and Light Company:

We have audited the accompanying
consolidated balance sheets and statements of capitalization of Wisconsin Power and Light
Company and subsidiaries (the "Company") as of December 31, 2003 and 2002, and the
related consolidated statements of income, cash flows and changes in common equity for
each of the three years in the period ended December 31, 2003.  Our audits also included
the financial statement schedule listed in Item 15(a)(2).  These financial statements and
the financial statement schedule are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements and financial
statement schedule based on our audits.

We conducted our audits in
accordance with auditing standards generally accepted in the United States of America.
 Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement.  An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated
financial statements present fairly, in all material respects, the financial position of
the Company as of December 31, 2003 and 2002, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 2003, in
conformity with accounting principles generally accepted in the United States of America.
 Also, in our opinion, such financial statement schedule, when considered in relation to
the basic consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.

As discussed in Note 18 to the
consolidated financial statements, on January 1, 2003, the Company adopted Statement of
Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations."

/s/ DELOITTE & TOUCHE LLP

Milwaukee, Wisconsin  March 3, 2004

106

WISCONSIN POWER AND LIGHT COMPANY CONSOLIDATED
 STATEMENTS OF INCOME

|                                              | Year Ended December 31,
|--------------------------------------------- | -----------------------
|                                              | 2003                   
|                                             
|                                              | (in thousands)         
|Operating revenues:                          
|Electric utility                              |                        
|Gas utility                                   |                        
|Other                                         |                        
|                                             
|                                              |                        
|                                             
|                                             
|Operating expenses:                           |                        
|Electric production fuel and purchased power  |                        
|Cost of gas sold                              |                        
|Other operation and maintenance               |                        
|Depreciation and amortization                 |                        
|Taxes other than income taxes                 |                        
|                                             
|                                              |                        
|                                             
|                                             
|Operating income                              |                        
|                                             
|                                             
|Interest expense and other:                   |                        
|Interest expense                              |                        
|Equity income from unconsolidated investments |                        
|Allowance for funds used during construction  |                        
|Interest income and other                     |                        
|                                             
|                                              |                        
|                                             
|                                             
|Income before income taxes                    |                        
|                                             
|                                             
|Income taxes                                  |                        
|                                             
|                                             
|Net income                                    |                        
|                                             
|                                             
|Preferred dividend requirements               |                        
|                                             
|                                             
|Earnings available for common stock           |                        
|                                             
|                                             

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

107

WISCONSIN POWER AND
LIGHT COMPANY                                               CONSOLIDATED BALANCE SHEETS

|                                                                    | December 31,  
|------------------------------------------------------------------- | --------------
|ASSETS                                                              | 2003          
|                                                                   
|                                                                    | (in thousands)
|Property, plant and equipment:                                     
|Electric plant in service                                           |               
|Gas plant in service                                                |               
|Other plant in service                                              |               
|Accumulated depreciation                                            |               
|                                                                   
|Net plant                                                           |               
|Construction work in progress                                       |               
|Other, less accumulated depreciaton of $301 and $240                |               
|                                                                   
|                                                                    |               
|                                                                   
|                                                                   
|Current assets:                                                     |               
|Cash and temporary cash investments                                 |               
|Accounts receivable:                                                |               
|Customer, less allowance for doubtful accounts of $2,662 and $1,770 |               
|Associated companies                                                |               
|Other, less allowance for doubtful accounts of $422 and $458        |               
|Income tax refunds receivable                                       |               
|Accumulated deferred income taxes                                   |               
|Production fuel, at average cost                                    |               
|Materials and supplies, at average cost                             |               
|Gas stored underground, at average cost                             |               
|Regulatory assets                                                   |               
|Prepaid gross receipts tax                                          |               
|Other                                                               |               
|                                                                   
|                                                                    |               
|                                                                   
|                                                                   
|Investments:                                                        |               
|Nuclear decommissioning trust funds                                 |               
|Investment in ATC and other                                         |               
|                                                                   
|                                                                    |               
|                                                                   
|                                                                   
|Other assets:                                                       |               
|Regulatory assets                                                   |               
|Deferred charges and other                                          |               
|                                                                   
|                                                                    |               
|                                                                   
|                                                                   
|Total assets                                                        |               
|                                                                   
|                                                                   

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

108

WISCONSIN POWER AND
LIGHT COMPANY                                         CONSOLIDATED BALANCE SHEETS
(Continued)

|                                                                | December 31,                        
|--------------------------------------------------------------- | ------------------------------------
|CAPITALIZATION AND LIABILITIES                                  | 2003                                
|                                                               
|                                                                | (in thousands, except share amounts)
|Capitalization (See Consolidated Statements of Capitalization):
|Common stock - $5 par value - authorized 18,000,000 shares;    
|13,236,601 shares outstanding                                   |                                     
|Additional paid-in capital                                      |                                     
|Retained earnings                                               |                                     
|Accumulated other comprehensive loss                            |                                     
|                                                               
|Total common equity                                             |                                     
|                                                               
|Cumulative preferred stock                                      |                                     
|Long-term debt (excluding current portion)                      |                                     
|                                                               
|                                                                |                                     
|                                                               
|                                                               
|Current liabilities:                                            |                                     
|Current maturities                                              |                                     
|Variable rate demand bonds                                      |                                     
|Commercial paper                                                |                                     
|Accounts payable                                                |                                     
|Accounts payable to associated companies                        |                                     
|Accrued taxes                                                   |                                     
|Regulatory liabilities                                          |                                     
|Other                                                           |                                     
|                                                               
|                                                                |                                     
|                                                               
|                                                               
|Other long-term liabilities and deferred credits:               |                                     
|Accumulated deferred income taxes                               |                                     
|Accumulated deferred investment tax credits                     |                                     
|Regulatory liabilities                                          |                                     
|Asset retirement obligations                                    |                                     
|Pension and other benefit obligations                           |                                     
|Customer advances                                               |                                     
|Cost of removal obligations                                     |                                     
|Other                                                           |                                     
|                                                               
|                                                                |                                     
|                                                               
|                                                               
|Commitments and contingencies (Note 11)                         |                                     
|                                                               
|Total capitalization and liabilities                            |                                     
|                                                               
|                                                               

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

109

WISCONSIN POWER AND
LIGHT COMPANY                                                      CONSOLIDATED
STATEMENTS OF CASH FLOWS

|                                                               | Year Ended December 31,
|-------------------------------------------------------------- | -----------------------
|                                                               | 2003                   
|                                                              
|                                                               | (in thousands)         
|Cash flows from operating activities:                         
|Net income                                                     |                        
|Adjustments to reconcile net income to net cash                |                        
|flows from operating activities:                               |                        
|Depreciation and amortization                                  |                        
|Amortization of nuclear fuel                                   |                        
|Amortization of deferred energy efficiency expenditures        |                        
|Deferred tax expense (benefit) and investment tax credits      |                        
|Equity income from unconsolidated investments, net             |                        
|Distributions from equity method investments                   |                        
|Other                                                          |                        
|Other changes in assets and liabilities:                       |                        
|Accounts receivable                                            |                        
|Sale of accounts receivable                                    |                        
|Income tax refunds receivable                                  |                        
|Accounts payable                                               |                        
|Accrued taxes                                                  |                        
|Other                                                          |                        
|                                                              
|Net cash flows from operating activities                       |                        
|                                                              
|                                                              
|Cash flows used for financing activities:                      |                        
|Common stock dividends                                         |                        
|Preferred stock dividends                                      |                        
|Capital contribution from parent                               |                        
|Reductions in long-term debt                                   |                        
|Net change in short-term borrowings                            |                        
|Other                                                          |                        
|                                                              
|Net cash flows used for financing activities                   |                        
|                                                              
|                                                              
|Cash flows used for investing activities:                      |                        
|Utility construction expenditures                              |                        
|Nuclear decommissioning trust funds                            |                        
|Proceeds from asset sales                                      |                        
|Other                                                          |                        
|                                                              
|Net cash flows used for investing activities                   |                        
|                                                              
|                                                              
|Net increase (decrease) in cash and temporary cash investments |                        
|                                                              
|                                                              
|Cash and temporary cash investments at beginning of period     |                        
|                                                              
|                                                              
|Cash and temporary cash investments at end of period           |                        
|                                                              
|                                                              
|Supplemental cash flows information:                           |                        
|Cash paid during the period for:                               |                        
|Interest                                                       |                        
|                                                              
|Income taxes, net of refunds                                   |                        
|                                                              
|                                                              

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

110

WISCONSIN POWER AND
LIGHT COMPANY                            CONSOLIDATED STATEMENTS OF CAPITALIZATION

|                                                                       | December 31,                        
|---------------------------------------------------------------------- | ------------------------------------
|                                                                       | 2003                                
|                                                                      
|                                                                       | (in thousands, except share amounts)
|                                                                      
|Common equity (See Consolidated Balance Sheets)                        |                                     
|                                                                      
|                                                                      
|Cumulative preferred stock:                                            |                                     
|Cumulative, without par value, not mandatorily redeemable - authorized
|3,750,000 shares, maximum aggregate stated value $150,000,000:         |                                     
|$100 stated value - 4.50% series, 99,970 shares outstanding            |                                     
|$100 stated value - 4.80% series, 74,912 shares outstanding            |                                     
|$100 stated value - 4.96% series, 64,979 shares outstanding            |                                     
|$100 stated value - 4.40% series, 29,957 shares outstanding            |                                     
|$100 stated value - 4.76% series, 29,947 shares outstanding            |                                     
|$100 stated value - 6.20% series, 150,000 shares outstanding           |                                     
|$25 stated value - 6.50% series, 599,460 shares outstanding            |                                     
|                                                                      
|                                                                       |                                     
|                                                                      
|                                                                      
|Long-term debt:                                                        |                                     
|First Mortgage Bonds:                                                  |                                     
|1992 Series X, 7.75%, due 2004                                         |                                     
|1992 Series Y, 7.6%, due 2005                                          |                                     
|1991 Series B, variable rate (1.73% at Dec. 31, 2003), due 2005        |                                     
|1984 Series A, variable rate (1.37% at Dec. 31, 2003), due 2014        |                                     
|1988 Series A, variable rate (1.29% at Dec. 31, 2003), due 2015        |                                     
|1991 Series A, variable rate (1.73% at Dec. 31, 2003), due 2015        |                                     
|1992 Series W, 8.6%, retired in 2003                                   |                                     
|                                                                      
|                                                                       |                                     
|Debentures, 7%, due 2007                                               |                                     
|Debentures, 5.7%, due 2008                                             |                                     
|Debentures, 7-5/8%, due 2010                                           |                                     
|                                                                      
|                                                                       |                                     
|                                                                      
|Less:                                                                  |                                     
|Current maturities                                                     |                                     
|Variable rate demand bonds                                             |                                     
|Unamortized debt discount, net                                         |                                     
|                                                                      
|                                                                       |                                     
|                                                                      
|                                                                      
|Total capitalization                                                   |                                     
|                                                                      
|                                                                      

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

111

WISCONSIN POWER AND LIGHT COMPANY CONSOLIDATED
 STATEMENTS OF CHANGES IN COMMON EQUITY

|                                                | Accumulated    |        
|----------------------------------------------- | -------------- | -------
|                                                | Additional     |        
|                                                | Common         | Paid-In
|                                                | Stock          | Capital
|                                               
|                                                | (in thousands)
|2001:                                          
|Beginning balance (a)                           |                | $66,183
|Earnings available for common stock             |                |        
|Minimum pension liability adjustment,           |               
|net of tax of ($9,552)                          |                |        
|                                               
|Unrealized holding gains on derivatives,        |               
|net of tax of $3,932                            |                |        
|Less: reclassification adjustment for losses    |               
|included in earnings available for common       |               
|stock, net of tax of ($1,676)                   |                |        
|                                               
|Net unrealized gains on qualifying derivatives  |                |        
|                                               
|Total comprehensive income                      |                |        
|Common stock dividends                          |                |        
|Capital contribution from parent                |                |        
|Stock options exercised                         |                |        
|                                               
|Ending balance                                  |                | 66,183 
|2002:                                           |               
|Earnings available for common stock             |                |        
|Minimum pension liability adjustment,           |               
|net of tax of ($6,823)                          |                |        
|                                               
|Unrealized holding losses on derivatives,       |               
|net of tax of ($92)                             |                |        
|Less: reclassification adjustment for gains     |               
|included in earnings available for common       |               
|stock, net of tax of $2,432                     |                |        
|                                               
|Net unrealized losses on qualifying derivatives |                |        
|                                               
|Total comprehensive income                      |                |        
|Common stock dividends                          |                |        
|Capital contribution from parent                |                |        
|                                               
|Ending balance                                  |                | 66,183 
|2003:                                           |               
|Earnings available for common stock             |                |        
|Minimum pension liability adjustment,           |               
|net of tax of $2,809                            |                |        
|                                               
|Unrealized holding losses on derivatives,       |               
|net of tax of ($3,543)                          |                |        
|Less: reclassification adjustment for losses    |               
|included in earnings available for common       |               
|stock, net of tax of ($3,752)                   |                |        
|                                               
|Net unrealized losses on qualifying derivatives |                |        
|                                               
|Total comprehensive income                      |                |        
|Common stock dividends                          |                |        
|Capital contribution from parent                |                |        
|                                               
|Ending balance                                  |                | $66,183
|                                               
|                                               

|(a) |  | Accumulated other comprehensive loss at January 1, 2001 consisted entirely of net unrealized losses on qualifying derivatives.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------

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

112

WISCONSIN POWER AND LIGHT COMPANY NOTES TO CONSOLIDATED
 FINANCIAL STATEMENTS

Except as modified below, the Alliant Energy Notes
 to Consolidated Financial Statements are incorporated by reference insofar as they relate to WP&L
 and incorporate the disclosures relating to WP&L contained in the following notes of the Alliant
 Energy Notes to Consolidated Financial Statements:

|Summary of Significant Accounting Policies  | Note 1(a) 3rd and 4th paragraphs, 1(b) to 1(d), 1(f) to 1(j), 1(l), 1(n), 1(o)
|------------------------------------------- | ------------------------------------------------------------------------------
|Domestic Utility Rate Matters               | Note 2                                                                        
|Leases                                      | Note 3                                                                        
|Sales of Accounts Receivable                | Note 4                                                                        
|Benefit Plans                               | Note 6(a) 1st, 2nd, 7th, 9th through 11th, and 13th paragraphs                
|Common Stock                                | Note 7(a)                                                                     
|Debt                                        | Note 8(a) and 8(b) 1st paragraph                                              
|Investments                                 | Note 9 1st paragraph, "Investment in ATC"                                     
|Derivative Financial Instruments            | Note 10(a) 1st and 3rd paragraphs, "Cash Flow Hedging Instruments" 1st        
|                                            | paragraph, "Other Derivatives Not Designated in Hedge Relationships" 1st      
|                                            | and 4th paragraphs; 10(b); 10(c)                                              
|Commitments and Contingencies               | Note 11(b) 1st paragraph, 11(c), 11(e) "MGP Sites" and "NEPA," 11(f), 11(g)   
|Jointly-Owned Electric Utility Plant        | Note 12                                                                       
|Pending Sale of WP&L's Interest in Kewaunee | Note 17                                                                       
|Asset Retirement Obligations                | Note 18                                                                       

The notes that follow herein set forth additional specific
 information for WP&L and are numbered to be consistent with the Alliant Energy Notes to Consolidated
 Financial Statements.

(1) SUMMARY OF SIGNIFICANT
 ACCOUNTING POLICIES (a)     General  The consolidated financial statements
 include the accounts of WP&L and its principal consolidated subsidiaries WPL Transco LLC and South
 Beloit. WP&L is a direct subsidiary of Alliant Energy and is engaged principally in the generation,
 distribution and sale of electric energy; the purchase, distribution, transportation and sale of natural
 gas; and the provision of water and various other energy-related services including construction management
 services for wind farms. Nearly all of WP&Ls retail customers are located in south and central
 Wisconsin.

(c)     Regulatory Assets and
 Liabilities At Dec. 31, 2003 and 2002, regulatory assets and liabilities were comprised of the
 following items (in millions):

|                                | Regulatory Assets | Regulatory Liabilities
|------------------------------- | ----------------- | ----------------------
|                               
|                                | 2003              | 2002                  
|                               
|Tax-related                     |                   | $23                   
|Energy efficiency program costs |                   | 22                    
|Environmental-related           |                   | 16                    
|Asset retirement obligations    |                   | 8                     
|Cost of removal obligations     |                   | --                    
|Other                           |                   | 49                    
|                               
|                                |                   | $120                  
|                               

(3) LEASESWP&Ls operating lease rental expenses, which include certain purchased-power
 agreements, for 2003, 2002 and 2001 were $25.9 million, $24.5 million and $23.4 million, respectively.
 The synthetic leases relate to the financing of utility railcars and a utility radio dispatch system.
 These leases do not meet the consolidation requirements per FIN 46 and were not included on WP&Ls
 Consolidated Balance Sheets. WP&L has guaranteed the residual value of its synthetic leases totaling
 $13 million in the aggregate. The guarantees extend through the maturity of each respective underlying
 lease with remaining terms up to 12 years. Residual value guarantees have been included in the future
 minimum lease payments noted in the following table (in millions):

113

|                                   | 2004 | 2005 | 2006 | 2007 | 2008 | Thereafter | Total
|---------------------------------- | ---- | ---- | ---- | ---- | ---- | ---------- | -----
|                                  
|Certain purchased-power agreements |      | $52  | .6   | $69  | .5   | $70        | .9   
|Synthetic leases                   |      | 7    | .9   | 7    | .9   | 7          | .8   
|Other                              |      | 2    | .1   | 1    | .7   | 1          | .3   
|                                  
|                                   |      | $62  | .6   | $79  | .1   | $80        | .0   
|                                  

(4) UTILITY ACCOUNTS RECEIVABLE
 At Dec. 31, 2003 and 2002, WP&L had sold $50 million
 and $116 million of receivables, respectively. In 2003, 2002 and 2001, WP&L received $0.8 billion,
 $1.2 billion and $1.1 billion, respectively, in aggregate proceeds from the sale of accounts receivable.
 WP&L paid fees associated with these sales of $1.2 million, $2.2 million and $4.0 million in 2003,
 2002 and 2001, respectively.

(5) INCOME TAXESThe components of income taxes for WP&L were as follows (in millions):

|                                       | 2003 | 2002 | 2001
|-------------------------------------- | ---- | ---- | ----
|                                      
|Current tax expense:                   |      |      |     
|Federal                                |      | $29  | .0  
|State                                  |      | 15   | .7  
|Deferred tax expense (benefit):        |     
|Federal                                |      | 22   | .8  
|State                                  |      | 0    | .6  
|Amortization of investment tax credits |      | (1   | .6) 
|Research and development tax credits   |      | (0   | .7) 
|                                      
|                                       |      | $65  | .8  
|                                      

Alliant Energy files a consolidated federal income
 tax return. Under the terms of an agreement between Alliant Energy and its subsidiaries, the subsidiaries
 calculate their respective federal income tax provisions and make payments to or receive payments from
 Alliant Energy as if they were separate taxable entities.

WP&L realized net benefits of $2.9 million, $0
 and $0 related to state apportionment and allocation of parent tax benefits in 2003, 2002 and 2001,
 respectively.

The overall effective income tax rates shown in the
 following table were computed by dividing total income tax expense by income before income taxes.

|                                            | 2003 | 2002 | 2001
|------------------------------------------- | ---- | ---- | ----
|                                           
|Statutory federal income tax rate           |      | 35   | .0% 
|State income taxes, net of federal benefits |      | 5    | .8  
|Research and development tax credits        |      | (0   | .3) 
|Amortization of excess deferred taxes       |      | (0   | .5) 
|Adjustment of prior period taxes            |      | (0   | .8) 
|Amortization of investment tax credits      |      | (0   | .9) 
|Other items, net                            |      | (1   | .9) 
|                                           
|Overall effective income tax rate           |      | 36   | .4% 
|                                           

114

The accumulated deferred income tax (assets) and liabilities
 included on the Consolidated Balance Sheets at Dec. 31 arise from the following temporary differences
 (in millions):

|                          | 2003       | 2002        
|------------------------- | ---------- | ------------
|                         
|                          | Deferred   | Deferred Tax
|                          | Tax Assets | Liabilities 
|                         
|Property related          |            | ($14        
|Minimum pension liability |            | (13         
|Decommissioning           |            | (22         
|Other                     |            | (6          
|                         
|Total                     |            | ($56        
|                         

|                                                   | 2003 | 2002
|-------------------------------------------------- | ---- | ----
|                                                   |      |     
|Current assets - Accumulated deferred income taxes |      | ($6 
|Other long-term liabilities and deferred credits - |     
|Accumulated deferred income taxes                  |      | 213 
|                                                   |      |     
|Total deferred tax (assets) and liabilities        |      | $207
|                                                   |      |     

(6) BENEFIT PLANS(a)     Pension Plans and Other Postretirement
 Benefits  Substantially all of WP&Ls employees are covered by several non-contributory defined
 benefit pension plans. The weighted average assumptions at the measurement date of Sept. 30 for WP&Ls
 qualified pension benefits and other postretirement benefits were equal to the assumptions used for
 Alliant Energys pension benefits and other postretirement benefits, respectively, except for the rate
 of compensation increase. WP&Ls rate of compensation increase for its qualified pension benefits
 and its other postretirement benefits were 3.5% for 2003, 2002 and 2001.

The components of WP&Ls qualified pension benefits
 and other postretirement benefits costs were as follows (in millions):

|                               | Qualified Pension Benefits | Other Postretirement Benefits
|------------------------------ | -------------------------- | -----------------------------
|                              
|                               | 2003                       | 2002                         
|                              
|Service cost                   |                            | $4                           
|Interest cost                  |                            | 10                           
|Expected return on plan assets |                            | (13                          
|Amortization of:               |                           
|Transition obligation (asset)  |                            | --                           
|Prior service cost             |                            | 0                            
|Actuarial loss (gain)          |                            | 3                            
|                              
|                               |                            | $5                           
|                              

The pension benefits costs shown previously (and in
 the following tables) represent only the pension benefits costs for bargaining unit employees of WP&L
 covered under the bargaining unit pension plan that is sponsored by WP&L. The benefit obligations
 and assets associated with WP&Ls non-bargaining employees who are participants in other Alliant
 Energy plans are reported in Alliant Energys Consolidated Financial Statements and are not reported
 previously. The pension benefits (income) costs for WP&Ls non-bargaining employees who are now
 participants in other Alliant Energy plans was $1.9 million, $0.3 million and ($1.5) million for 2003,
 2002 and 2001, respectively. In addition, Corporate Services provides services to WP&L. The allocated
 pension benefits costs associated with these services was $2.0 million, $1.7 million and $1.3 million
 for 2003, 2002 and 2001, respectively. The other postretirement benefits costs shown previously for
 each period (and in the following tables) represent the other postretirement benefits costs for all
 WP&L employees. The allocated other postretirement benefits costs associated with Corporate Services
 for WP&L was $0.9 million, $0.5 million and $0.3 million for 2003, 2002 and 2001, respectively.

The assumed medical trend rates are critical assumptions
 in determining the service and interest cost and accumulated postretirement benefit obligation related
 to postretirement benefits costs. A 1% change in the medical trend rates for 2003, holding all other
 assumptions constant, would have the following effects (in millions):

|                                                        | 1% Increase | 1% Decrease
|------------------------------------------------------- | ----------- | -----------
|                                                       
|Effect on total of service and interest cost components |             | $0         
|Effect on postretirement benefit obligation             |             | $9         

115

A reconciliation of the funded status of WP&Ls
 plans to the amounts recognized on WP&Ls Consolidated Balance Sheets at Dec. 31 was as follows
 (in millions):

|                                                      | Qualified Pension Benefits | Other Postretirement Benefits
|----------------------------------------------------- | -------------------------- | -----------------------------
|                                                     
|                                                      | 2003                       | 2002                         
|                                                     
|Change in projected benefit obligation:               |                            |                              
|Net projected benefit obligation at beginning of year |                            | $156                         
|Service cost                                          |                            | 4                            
|Interest cost                                         |                            | 10                           
|Plan participants' contributions                      |                            | --                           
|Actuarial loss                                        |                            | 17                           
|Gross benefits paid                                   |                            | (7                           
|                                                     
|Net projected benefit obligation at end of year       |                            | 181                          
|                                                     
|Change in plan assets:                                |                           
|Fair value of plan assets at beginning of year        |                            | 153                          
|Actual return on plan assets                          |                            | 28                           
|Employer contributions                                |                            | --                           
|Plan participants' contributions                      |                            | --                           
|Gross benefits paid                                   |                            | (7                           
|                                                     
|Fair value of plan assets at end of year              |                            | 175                          
|                                                     
|Funded status at end of year                          |                            | (6                           
|Unrecognized net actuarial loss                       |                            | 62                           
|Unrecognized prior service cost                       |                            | 3                            
|Unrecognized net transition obligation                |                            | --                           
|                                                     
|Net amount recognized at end of year                  |                            | $59                          
|                                                     
|Amounts recognized on the Consolidated                |                           
|Balance Sheets consist of:                            |                           
|Prepaid benefit cost                                  |                            | $59                          
|Accrued benefit cost                                  |                            | --                           
|                                                     
|Net amount recognized at measurement date             |                            | 59                           
|                                                     
|Contributions paid after 9/30 and prior to 12/31      |                            | --                           
|                                                     
|Net amount recognized at 12/31                        |                            | $59                          
|                                                     

At Dec. 31, 2003 and 2002, Corporate Services allocated
 an additional minimum liability of $34.2 million and $41.3 million, respectively. Included in the following
 table are WP&Ls accumulated benefit obligations, amounts applicable to qualified pension and
 other postretirement benefits with accumulated benefit obligations in excess of plan assets, as well
 as qualified pension plans with projected benefit obligations in excess of plan assets as of the measurement
 date of Sept. 30 (in millions):

|                                                     | Qualified Pension Benefits | Other Postretirement Benefits
|---------------------------------------------------- | -------------------------- | -----------------------------
|                                                    
|                                                     | 2003                       | 2002                         
|                                                    
|Accumulated benefit obligation                       |                            | $165                         
|Plans with accumulated benefit obligations in excess |                           
|of plan assets:                                      |                           
|Accumulated benefit obligation                       |                            | --                           
|Fair value of plan assets                            |                            | --                           
|Plans with projected benefit obligations in excess   |                           
|of plan assets:                                      |                           
|Projected benefit obligations                        |                            | 181                          
|Fair value of plan assets                            |                            | 175                          

Postretirement benefit plans are funded via specific
 assets within certain retirement plans (401(h) assets) as well as a
 VEBA trust. The asset allocation of the 401(h) assets mirror the qualified pension plan
 assets and the asset allocation of the VEBA trust are reflected in the following table under Other
 Postretirement Plans. The asset allocation for WP&Ls qualified pension and other postretirement
 benefit plans at Sept. 30, 2003 and 2002, and the qualified pension plan target allocation for 2003
 were as follows:

116

|                  | Qualified Pension Plans | Other Postretirement Plans
|----------------- | ----------------------- | --------------------------
|                 
|                  | Target                  | Percentage of Plan        
|                  | Allocation              | Assets at Sept. 30        
|                 
|Asset Category    | 2003                    | 2003                      
|                 
|Equity securities |                         | 50-65%                    
|Debt securities   |                         | 25-40%                    
|Other             |                         | 0-5%                      
|                 
|                  |                         |                           
|                 

WP&L estimates that funding for the qualified pension
 and postretirement benefit plans for 2004 will be $0 and approximately $4 million, respectively.

Alliant Energy sponsors several non-qualified pension
 plans that cover certain current and former key employees. The pension expense allocated to WP&L
 for these plans was $1.7 million, $1.5 million and $1.0 million in 2003, 2002 and 2001, respectively.
 WP&L has various life insurance policies that cover certain key employees and directors. At Dec.
 31, 2003 and 2002, the cash surrender value of these investments was $11 million and $10 million, respectively.
 A significant number of WP&L employees also participate in defined contribution pension plans (401(k)
 plans). WP&Ls contributions to the plans, which are based on the participants level of contribution,
 were $2.1 million, $2.2 million and $2.1 million in 2003, 2002 and 2001, respectively.

(7) COMMON AND PREFERRED
 STOCK (b)     Preferred Stock  The carrying value of WP&Ls cumulative preferred stock at both
 Dec. 31, 2003 and 2002 was $60 million. The fair market value, based upon the market yield of similar
 securities and quoted market prices, at Dec. 31, 2003 and 2002 was $53 million and $48 million, respectively.

(8) DEBT (a)Short-Term
 Debt Information regarding WP&Ls short-term debt was as follows (dollars in millions):

|                                          | 2003 | 2002
|----------------------------------------- | ---- | ----
|                                         
|At Dec. 31:                               |      |     
|Commercial paper outstanding              |      | $-- 
|Discount rates on commercial paper        |      | N/A 
|For the year ended:                       |     
|Average amount of short-term debt         |     
|(based on daily outstanding balances)     |      | $29 
|Average interest rates on short-term debt |      | 1   

(b)     Long-Term Debt 
 WP&Ls debt maturities for 2004 to 2008 are $62 million, $88 million, $0, $105 million, and $60
 million, respectively. The carrying value of WP&Ls long-term debt (including current maturities
 and variable rate demand bonds) at Dec. 31, 2003 and 2002 was $454 million and $523 million, respectively.
 The fair market value, based upon the market yield of similar securities and quoted market prices, at
 Dec. 31, 2003 and 2002 was $494 million and $574 million, respectively.

(9) INVESTMENTS AND ESTIMATED FAIR VALUE OF FINANCIAL
 INSTRUMENTSInformation relating to
 various investments held by WP&L at Dec. 31 that are marked-to-market as a result of SFAS 115 was
 as follows (in millions):

|                                     | 2003      | 2002      
|------------------------------------ | --------- | ----------
|                                    
|                                     | Carrying/ | Unrealized
|                                     | Fair      | Gains,    
|                                     | Value     | Net of Tax
|                                    
|Available-for-sale securities:       |           |           
|Nuclear decommissioning trust funds: |          
|Debt securities                      |           | $137      
|Equity securities                    |           | 97        
|                                    
|Total                                |           | $234      
|                                    

117

Nuclear Decommissioning Trust Funds  At Dec.
 31, 2003, $76 million, $37 million and $24 million of the debt securities mature in 2004-2010, 2011-2020
 and 2021-2040, respectively. The funds realized gains (losses) from the sales of securities of ($6.2)
 million, $10.3 million and $2.1 million in 2003, 2002 and 2001, respectively (cost of the investments
 based on specific identification was $333.9 million, $92.2 million and $147.4 million and proceeds from
 the sales were $327.7 million, $102.5 million and $149.5 million, respectively). In January 2004, WP&L
 liquidated all of the qualified decommissioning assets into money market funds as a result of the pending
 Kewaunee sale.

Unconsolidated Equity Investments Summary
 financial information from the financial statements of WP&Ls unconsolidated equity investments
 in ATC, WRPC and Alliant Energy SPE LLC is as follows (in millions):

|                        | 2003 | 2002 | 2001
|----------------------- | ---- | ---- | ----
|                       
|Operating revenues      |      | $232 | .3  
|Operating income        |      | 87   | .7  
|Net income              |      | 72   | .1  
|As of Dec. 31:          |     
|Current assets          |      | 41   | .5  
|Non-current assets      |      | 947  | .2  
|Current liabilities     |      | 67   | .9  
|Non-current liabilities |      | 14   | .6  

(11) COMMITMENTS AND CONTINGENCIES
 (a)     Construction and Acquisition Expenditures  Certain commitments have been made in connection
 with 2004 capital expenditures. During 2004, total construction and acquisition expenditures are estimated
 to be approximately $228 million (unaudited).

(b)     Purchase Obligations
  Based on the System Coordination and Operating Agreement, Alliant Energy annually allocates purchased-power
 contracts to IP&L and WP&L. Such process considers factors such as resource mix, load growth
 and resource availability. However, for 2004, system-wide purchased-power contracts of $4.4 million
 (0.2 million MWh) have not yet been directly assigned to IP&L and WP&L since the specific needs
 of each utility are not yet known. Refer to Note 20 for additional information. Coal contract quantities
 are directly assigned to specific plants at IP&L and WP&L based on various factors including
 projected heat input requirements, combustion compatibility and efficiency. However, for 2004 to 2008,
 system-wide coal contracts of $78.7 million (10.7 million tons), $55.1 million (7.6 million tons), $34.0
 million (5.4 million tons), $12.5 million (2.1 million tons) and $6.4 million (1.0 million tons), respectively,
 have not yet been directly assigned to IP&L and WP&L since the specific needs of each utility
 are not yet known. At Dec. 31, 2003, WP&Ls minimum commitments were as follows (dollars and Dths
 in millions; MWhs and tons in thousands):

|           | Purchased-power | Coal | Natural gas
|---------- | --------------- | ---- | -----------
|          
|           | Dollars         | MWhs | Dollars    
|          
|2004       |                 | $25  | .1         
|2005       |                 | --   |            
|2006       |                 | --   |            
|2007       |                 | --   |            
|2008       |                 | --   |            
|Thereafter |                 | --   |            

Also, at Dec. 31, 2003, WP&Ls other purchase obligations,
 which represent individual commitments incurred during the normal course of business which exceeded
 $1 million at Dec. 31, 2003, were $6.0 million for 2004. This excludes lease obligations which are included
 in Note 3.

(e)     Environmental Liabilities
  WP&L had recorded the following environmental liabilities, and regulatory assets associated
 with certain of these liabilities, at Dec. 31 (in millions):

|          | Environmental Liabilities | Regulatory Assets
|--------- | ------------------------- | -----------------
|         
|          | 2003                      | 2002             
|         
|MGP sites |                           | $5               
|NEPA      |                           | 2                
|Other     |                           | --               
|         
|          |                           | $7               
|         

118

MGP Sites  Management currently estimates
 the range of remaining costs to be incurred for the investigation, remediation and monitoring of all
 WP&Ls sites to be $5 million to $7 million.

(13) SEGMENTS OF BUSINESSWP&L is a domestic utility, serving customers in Wisconsin and Illinois,
 and includes three segments: a) electric operations; b) gas operations; and c) other, which includes the
 water business, various other energy-related products and services including construction management
 services for wind farms and the unallocated portions of the utility business. Various line items in
 the following tables are not allocated to the electric and gas segments for management reporting purposes
 and therefore are included in Total. In 2003, 2002 and 2001, gas revenues included $45 million, $22
 million and $21 million, respectively, for sales to the electric segment. All other intersegment revenues
 were not material to WP&Ls operations and there was no single customer whose revenues were 10%
 or more of WP&Ls consolidated revenues. Certain financial information relating to WP&Ls significant
 business segments was as follows (in millions):

|                                              | Electric | Gas   | Other | Total
|--------------------------------------------- | -------- | ----- | ----- | -----
|                                             
|2003                                          |          |       |       |      
|Operating revenues                            |          | $910  | .1    | $272 
|Depreciation and amortization                 |          | 89    | .2    | 14   
|Operating income                              |          | 163   | .8    | 25   
|Interest expense, net of AFUDC                |          |       |       |      
|Equity income from unconsolidated investments |          |       |       |      
|Miscellaneous, net                            |          |       |       |      
|Income tax expense                            |          |       |       |      
|Net income                                    |          |       |       |      
|Preferred dividends                           |          |       |       |      
|Earnings available for common stock           |          |       |       |      
|Total assets                                  |          | 1,950 | .5    | 306  
|Investments in equity method subsidiaries     |          | 133   | .3    | --   
|Construction and acquisition expenditures     |          | 133   | .0    | 17   
|                                             
|2002                                         
|Operating revenues                            |          | $787  | .7    | $179 
|Depreciation and amortization                 |          | 91    | .7    | 15   
|Operating income (loss)                       |          | 135   | .1    | 12   
|Interest expense, net of AFUDC                |          |       |       |      
|Equity income from unconsolidated investments |          |       |       |      
|Miscellaneous, net                            |          |       |       |      
|Income tax expense                            |          |       |       |      
|Net income                                    |          |       |       |      
|Preferred dividends                           |          |       |       |      
|Earnings available for common stock           |          |       |       |      
|Total assets                                  |          | 1,834 | .7    | 298  
|Investments in equity method subsidiaries     |          | 121   | .7    | --   
|Construction and acquisition expenditures     |          | 144   | .6    | 10   
|                                             
|2001                                         
|Operating revenues                            |          | $753  | .5    | $206 
|Depreciation and amortization                 |          | 104   | .0    | 15   
|Operating income                              |          | 129   | .1    | 2    
|Interest expense, net of AFUDC                |          |       |       |      
|Equity income from unconsolidated investments |          |       |       |      
|Miscellaneous, net                            |          |       |       |      
|Income tax expense                            |          |       |       |      
|Net income                                    |          |       |       |      
|Preferred dividends                           |          |       |       |      
|Earnings available for common stock           |          |       |       |      
|Total assets                                  |          | 1,638 | .8    | 249  
|Investments in equity method subsidiaries     |          | 117   | .3    | --   
|Construction and acquisition expenditures     |          | 127   | .9    | 16   
|                                             

119

(15) SELECTED CONSOLIDATED
 QUARTERLY FINANCIAL DATA (UNAUDITED)  Summation of the individual quarters may not equal annual totals
 due to rounding.

|                                    | 2003          | 2002   
|----------------------------------- | ------------- | -------
|                                   
|                                    | March 31      | June 30
|                                   
|                                    | (in millions)
|                                   
|Operating revenues                  |               | $346   
|Operating income                    |               | 18     
|Net income                          |               | 10     
|Earnings available for common stock |               | 9      

(20) RELATED PARTIESIP&L and WP&L have entered into a System Coordination
 and Operating Agreement. The agreement, which has been approved by FERC, provides a contractual basis
 for coordinated planning, construction, operation and maintenance of the interconnected electric generation
 and transmission (IP&L only) systems of IP&L and WP&L. In addition, the agreement allows
 the interconnected system to be operated as a single entity with off-system capacity sales and purchases
 made to market excess system capability or to meet system capability deficiencies. Such sales and purchases
 are allocated among IP&L and WP&L based on procedures included in the agreement. The sales amounts
 allocated to WP&L were $42.1 million, $26.9 million and $32.1 million for 2003, 2002 and 2001, respectively.
 The purchases allocated to WP&L were $229.4 million, $205.8 million and $209.2 million for 2003,
 2002 and 2001, respectively. The procedures were approved by both FERC and all state regulatory bodies
 having jurisdiction over these sales. Under the agreement, IP&L and WP&L are fully reimbursed
 for any generation expense incurred to support the sale to an affiliate or to a non-affiliate. Any margins
 on sales to non-affiliates are distributed to IP&L and WP&L in proportion to each utilitys
 share of electric production at the time of the sale.

Pursuant to a service agreement approved by the SEC
 under PUHCA, WP&L receives various administrative and general services from an affiliate, Corporate
 Services. These services are billed to WP&L at cost based on payroll and other expenses incurred
 by Corporate Services for the benefit of WP&L. These costs totaled $125.1 million, $117.7 million
 and $107.0 million for 2003, 2002 and 2001, respectively, and consisted primarily of employee compensation,
 benefits and fees associated with various professional services. At Dec. 31, 2003 and 2002, WP&L
 had a net intercompany payable to Corporate Services of $36.4 million and $31.1 million, respectively.

120

|ITEM 9. |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
 ON ACCOUNTING ANDFINANCIAL DISCLOSURE
|------- |  | ------------------------------------------------------------------------------------

None.

|ITEM 9A. |  | CONTROLS AND PROCEDURES
|-------- |  | -----------------------

Alliant Energys, IP&Ls and WP&Ls management
 evaluated, with the participation of each of Alliant Energys, IP&Ls and WP&Ls Chief Executive
 Officer (CEO), Chief Financial Officer (CFO) and Disclosure Committee, the effectiveness of the design
 and operation of Alliant Energys, IP&Ls and WP&Ls disclosure controls and procedures as of
 the end of the year ended Dec. 31, 2003 pursuant to the requirements of the Securities Exchange Act
 of 1934, as amended. Based on their evaluation, the CEO and the
 CFO concluded that Alliant Energys, IP&Ls and WP&Ls disclosure controls and procedures
 were effective as of the end of the year ended Dec. 31, 2003.

There was no change in Alliant Energys, IP&Ls
 and WP&Ls internal control over financial reporting that occurred during the quarter ended Dec. 31,
 2003 that has materially affected, or is reasonably likely to materially affect, Alliant Energys, IP&Ls
 or WP&Ls internal control over financial reporting.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE
OFFICERS OF THE REGISTRANTS

ALLIANT ENERGYThe information required by Item 10 relating to
 directors and nominees for election of directors at the 2004 Annual Meeting of Shareowners is incorporated
 herein by reference to the relevant information under the caption Election of Directors in Alliant
 Energys Proxy Statement for the 2004 Annual Meeting of Shareowners (the 2004 Alliant Energy Proxy Statement),
 which will be filed with the SEC within 120 days after the end of Alliant Energys fiscal year. The
 information required by Item 10 relating to the timely filing of reports under Section 16 of the Securities
 Exchange Act of 1934 is incorporated herein by reference to the relevant information under the caption
 Section 16(a) Beneficial Ownership Reporting Compliance in the 2004 Alliant Energy Proxy Statement.
 Information regarding executive officers of Alliant Energy may be found in Part I of this report under
 the caption Executive Officers of the Registrants. The information required by Item 10 relating to
 the audit committee financial experts is incorporated herein by reference to the relevant information
 under the caption Meetings and Committees of the Board in the 2004 Alliant Energy Proxy Statement.

Alliant Energy has adopted a Code of Ethics that applies
 to all employees, including the CEO, Chief Operating Officer (COO), CFO and Chief Accounting Officer
 (CAO), as well as its Board of Directors. Alliant Energy makes its code of ethics available free of
 charge on its website at www.alliantenergy.com/investors at the Corporate Governance link, and
 any such Code of Ethics is available in print to any shareowner who requests it from Alliant Energys
 Corporate Secretary. Alliant Energy intends to satisfy the disclosure requirements under Item 10 of
 Form 8-K regarding amendments to, or waivers from, the Code of Ethics by posting such information on
 its website at www.alliantenergy.com/investors at the Corporate Governance link. Alliant Energy
 is not including the information contained on its website as a part of, or incorporating it by reference
 into, this Annual Report on Form 10-K.

Alliant Energy makes its Corporate Governance Principles
 and the written charters of the Audit Committee, Compensation and Personnel Committee and Nominating
 and Governance Committee of Alliant Energys Board of Directors available, free of charge, on its website
 at www.alliantenergy.com/investors and such information is available in print to any shareowner
 who requests it from Alliant Energys Corporate Secretary. Alliant Energy is not including the information
 contained on its website as a part of, or incorporating it by reference into, this Annual Report on
 Form 10-K.

IP&LIP&Ls directors are identical to those of Alliant
 Energy. The information required by Item 10 relating to directors and nominees for election of
 directors at the 2004 Annual Meeting of Shareowners is incorporated herein by reference to the relevant
 information included under the caption Election of Directors in the 2004 Alliant Energy Proxy Statement,
 which will be filed with the SEC within 120 days after the end of IP&Ls fiscal year. The information
 required by Item 10 relating to the timely filing of reports under Section 16 of the Securities Exchange
 Act of 1934 is incorporated herein by reference to the relevant information under the caption Section
 16(a) Beneficial Ownership Reporting Compliance in the 2004 Alliant Energy Proxy Statement. Information
 regarding executive officers of IP&L may be found in Part I of this report under the caption Executive
 Officers of the Registrants. The information required by Item 10 relating to the audit committee financial
 expert is incorporated herein by reference to the relevant information under the caption Meetings and
 Committees of the Board in the 2004 Alliant Energy Proxy Statement.

121

All IP&L employees, including the CEO, COO, CFO
 and CAO, as well as IP&Ls Board of Directors are subject to the Alliant Energy Code of Ethics,
 which is available free of charge on Alliant Energys website at www.alliantenergy.com/investors.
 IP&L intends to satisfy the disclosure requirements under Item 10 of Form 8-K regarding amendments
 to, or waivers from, the Code of Ethics by posting such information on Alliant Energys website at www.alliantenergy.com/investors
 at the Corporate Governance link. IP&L is not including the information contained on Alliant Energys
 website as a part of, or incorporating it by reference into, this Annual Report on Form 10-K.

WP<he information required by Item 10 relating to
 directors and nominees for election of directors at the 2004 Annual Meeting of Shareowners is incorporated
 herein by reference to the relevant information under the caption Election of Directors in WP&Ls
 Proxy Statement for the 2004 Annual Meeting of Shareowners (the 2004 WP&L Proxy Statement), which
 will be filed with the SEC within 120 days after the end of WP&Ls fiscal year. The information
 required by Item 10 relating to the timely filing of reports under Section 16 of the Securities Exchange
 Act of 1934 is incorporated herein by reference to the relevant information under the caption Section
 16(a) Beneficial Ownership Reporting Compliance in the 2004 WP&L Proxy Statement. Information regarding
 executive officers of WP&L may be found in Part I of this report under the caption Executive Officers
 of the Registrants. The information required by Item 10 relating to the audit committee financial expert
 is incorporated herein by reference to the relevant information under the caption Meetings and Committees
 of the Board in the 2004 WP&L Proxy Statement.

All WP&L employees, including the CEO, COO, CFO
 and CAO, as well as WP&Ls Board of Directors are subject to the Alliant Energy Code of Ethics,
 which is available free of charge on Alliant Energys website at www.alliantenergy.com/investors.
 WP&L intends to satisfy the disclosure requirements under Item 10 of Form 8-K regarding amendments
 to, or waivers from, the Code of Ethics by posting such information on Alliant Energys website at www.alliantenergy.com/investors
 at the Corporate Governance link. WP&L is not including the information contained on Alliant Energys
 website as a part of, or incorporating it by reference into, this Annual Report on Form 10-K.

# ITEM 11. EXECUTIVE COMPENSATION

ALLIANT ENERGYThe information required by Item 11 is incorporated
 herein by reference to the relevant information under the captions Compensation of Directors, Compensation
 of Executive Officers, Stock Options, Long-Term Incentive Awards, Certain Agreements and Retirement
 and Employee Benefit Plans in the 2004 Alliant Energy Proxy Statement, which will be filed with the
 SEC within 120 days after the end of Alliant Energys fiscal year.

IP<he directors and executive officers for IP&L for
 which compensation information must be included are the same as for WP&L. Therefore, the information
 required by Item 11 is incorporated herein by reference to the relevant information under the captions
 Compensation of Directors, Compensation of Executive Officers, Stock Options, Long-Term Incentive
 Awards, Certain Agreements and Retirement and Employee Benefit Plans in the 2004 WP&L Proxy
 Statement, which will be filed with the SEC within 120 days after the end of IP&Ls fiscal year.

WP<he information required by Item 11 is incorporated
 herein by reference to the relevant information under the captions Compensation of Directors, Compensation
 of Executive Officers, Stock Options, Long-Term Incentive Awards, Certain Agreements and Retirement
 and Employee Benefit Plans in the 2004 WP&L Proxy Statement, which will be filed with the SEC within
 120 days after the end of WP&Ls fiscal year.

122

# ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

ALLIANT ENERGYInformation regarding Alliant Energys equity compensation
 plans as of Dec. 31, 2003 was as follows:

|                              |                      |                   | (c)                      
|----------------------------- | -------------------- | ----------------- | -------------------------
|                              | (a)                  | (b)               | Number of securities     
|                              | Number of securities | Weighted-average  | remaining available for  
|                              | to be issued upon    | exercise price of | future issuance under    
|                              | exercise of          | outstanding       | equity compensation plans
|                              | outstanding options, | options, warrants | (excluding securities    
|Plan Category                 | warrants and rights  | and rights        | reflected in column (a)) 
|                             
|Equity compensation plans    
|approved by shareowners       | 4,958,100            | (1)               | $26.09                   
|Equity compensation plans not
|approved by shareowners       | N/A                  | (3)               | N/A                      
|                             
|Total                         | 4,958,100            |                   | $26.09                   
|                             

|(1) | Represents performance shares and options to purchase
 shares of Alliant Energy common stock granted under the Alliant Energy LTEIP and EIP. The performance
 shares are paid out in shares of Alliant Energy common stock or a combination of cash and stock and
 are modified by a performance multiplier, which ranges from zero to two, based on the performance criteria.
 The performance shares included in column (a) of the table reflect an assumed payout at a performance
 multiplier of two.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | All of the available shares under the LTEIP and EIP
 may be issued upon the exercise of stock options or may be issued as awards in the form of stock appreciation
 rights, restricted stock, restricted stock units, performance shares or performance units. Excludes
 1,745 shares of restricted common stock previously issued and outstanding for which the restrictions
 have not lapsed.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | As of Dec. 31, 2003, there were 264,673 shares of Alliant
 Energy common stock outstanding under the Alliant Energy Key Employee Deferred Compensation Plan (KEDCP)
 and the Alliant Energy Deferred Compensation Plan for Directors (DDCP) described below.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | There is no limit on the number of shares of Alliant
 Energy common stock that may be issued under the KEDCP and the DDCP.
|--- | --------------------------------------------------------------------------------------------------------------------------

Deferred Compensation Plans  Alliant Energy
 maintains an unfunded KEDCP under which participants may defer up to 100% of base salary, incentive
 compensation and eligible supplemental executive retirement plan payments. Participants who have made
 the maximum allowed contribution to the Alliant Energy 401(k) Savings Plan may receive an additional
 credit to the deferred compensation plan. Alliant Energy also maintains an unfunded DDCP under which
 directors may elect to defer all or part of their retainer fee. Key employees and directors may elect
 to have their deferrals credited to an interest account or a company stock account, which are held in
 grantor trusts. Payments from the company stock account will be made in shares of Alliant Energy common
 stock.

The remainder of the information required by Item 12
 is incorporated herein by reference to the relevant information under the caption Ownership of Voting
 Securities in the 2004 Alliant Energy Proxy Statement, which will be filed with the SEC within 120
 days after the end of Alliant Energys fiscal year.

IP<o IP&Ls knowledge, no shareowner beneficially
 owned 5% or more of IP&Ls 8.375% or 7.10% Cumulative Preferred Stock as of Dec. 31, 2003. None
 of the directors or executive officers of IP&L own any shares of IP&Ls 8.375% or 7.10% Cumulative
 Preferred Stock.

WP<he information required by Item 12 is incorporated
 herein by reference to the relevant information under the caption Ownership of Voting Securities in
 the 2004 WP&L Proxy Statement, which will be filed with the SEC within 120 days after the end of
 WP&Ls fiscal year.

123

# ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.

ITEM 14. PRINCIPAL ACCOUNTANT
FEES AND SERVICES



ALLIANT ENERGY The information
required by Item 14 is incorporated herein by reference to the relevant information under
the caption "Report of the Audit Committee" in the 2004 Alliant Energy Proxy Statement,
which will be filed with the SEC within 120 days after the end of Alliant Energy's fiscal
year.

IP&L The principal accountant fees
and services paid by Alliant Energy include those paid on behalf of IP&L and certain
other Alliant Energy subsidiaries. The information required by Item 14 is incorporated
herein by reference to the relevant information under the caption "Report of the Audit
Committee" in the 2004 Alliant Energy Proxy Statement, which will be filed with the SEC
within 120 days after the end of IP&L's fiscal year.

WP&L The information required by Item 14
is incorporated herein by reference to the relevant information under the caption "Report
of the Audit Committee" in the 2004 WP&L Proxy Statement, which will be filed with the
SEC within 120 days after the end of WP&L's fiscal year.

PART IV

# ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

|(a) (1) |  | Consolidated Financial Statements - Refer to "Index to Financial Statements" in
Item 8 Financial Statements and              Supplementary Data.
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------

|(a) (2) |  | Financial Statement Schedules - Schedule II.  Valuation and Qualifying Accounts
and Reserves
|------- |  | --------------------------------------------------------------------------------------------

| | NOTE:
All other schedules are omitted because they are not applicable or not required, or
because that required information is      shown either in the consolidated financial
statements or in the notes thereto.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(a) (3) |  | Exhibits Required by Securities and Exchange Commission Regulation S-K - The
following Exhibits are filed herewith or incorporated herein by reference.
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------

|3.1 |  | Restated
Articles of Incorporation of Alliant Energy, as amended (incorporated by reference to
Exhibit                 3.2 to Alliant Energy's Form 10-Q for the quarter ended June 30,
1999)
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.2 |  | Bylaws
of Alliant Energy, as amended, effective as of Jan. 30, 2001 (incorporated by reference
to                 Exhibit 3.2 to Alliant Energy's Form 10-K for the year 2000)
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.3 |  | Restated
Articles of Incorporation of WP&L, as amended (incorporated by reference to Exhibit 3.1
to                 WP&L's Form 10-Q for the quarter ended June 30, 1994)
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.4 |  | Bylaws
of WP&L, as amended, effective as of Jan. 30, 2001 (incorporated by reference to Exhibit
3.4 to                 WP&L's Form 10-K for the year 2000)
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------

|3.5 |  | Restated
Articles of Incorporation of IP&L
|--- |  | ------------------------------------------

|3.6 |  | Bylaws
of IP&L, as amended, effective as of Jan. 30, 2001 (incorporated by reference to Exhibit
3.6 to                 IP&L's Form 10-K for the year 2000)
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------

|4.1 |  | Rights
Agreement, dated Jan. 20, 1999, between Alliant Energy and Wells Fargo Bank Minnesota,
N.A.,                 successor (incorporated by reference to Exhibit 4.1 to Alliant
Energy's Registration Statement on Form                 8-A, dated Jan. 20, 1999)
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

124

|4.2 |  | Indenture
of Mortgage or Deed of Trust dated Aug. 1, 1941, between WP&L and U.S. Bank National
                Association (U.S. Bank) and Robert T. Jones, successor, as Trustees,
filed as Exhibit 7(a) in File                 No. 2-6409, and the indentures supplemental
thereto dated, respectively, Jan. 1, 1948, Sept. 1, 1948,                 June 1, 1950,
April 1, 1951, April 1, 1952, Sept. 1, 1953, Oct. 1, 1954, March 1, 1959, May 1, 1962,
                Aug. 1, 1968, June 1, 1969, Oct. 1, 1970, July 1, 1971, April 1, 1974,
Dec. 1, 1975, May 1, 1976,                 May 15, 1978, Aug. 1, 1980, Jan. 15, 1981, Aug. 1,
1984, Jan. 15, 1986, June 1, 1986, Aug. 1, 1988,                 Dec. 1, 1990, Sept. 1,
1991, Oct. 1, 1991, March 1, 1992, May 1, 1992, June 1, 1992 and July 1, 1992
                (Second Amended Exhibit 7(b) in File No. 2-7361; Amended Exhibit 7(c) in
File No. 2-7628; Amended                 Exhibit 7.02 in File No. 2-8462; Amended Exhibit 7.02
in File No. 2-8882; Second Amendment Exhibit 4.03                 in File No. 2-9526;
Amended Exhibit 4.03 in File No. 2-10406; Amended Exhibit 2.02 in File No. 2-11130;
                Amended Exhibit 2.02 in File No. 2-14816; Amended Exhibit 2.02 in File No. 2-20372;
Amended                 Exhibit 2.02 in File No. 2-29738; Amended Exhibit 2.02 in File No. 2-32947;
Amended Exhibit 2.02 in                 File No. 2-38304; Amended Exhibit 2.02 in File No. 2-40802;
Amended Exhibit 2.02 in File No. 2-50308;                 Exhibit 2.01(a) in File No. 2-57775;
Amended Exhibit 2.02 in File No. 2-56036; Amended Exhibit 2.02 in                 File No. 2-61439;
Exhibit 4.02 in File No. 2-70534; Amended Exhibit 4.03 in File No. 2-70534;
                Exhibit 4.02 in File No. 33-2579; Amended Exhibit 4.03 in File No. 33-2579;
Amended Exhibit 4.02 in                 File No. 33-4961; Exhibit 4.24 in File No.
33-45726, Exhibit 4.25 in File No. 33-45726, Exhibit 4.26 in                 File No. 33-45726,
Exhibit 4.27 in File No. 33-45726, Exhibit 4.1 to WP&L's Form 8-K dated March 9,
                1992, Exhibit 4.1 to WP&L's Form 8-K dated May 12, 1992, Exhibit 4.1 to WP&L's Form 8-K
dated June 29,                 1992 and Exhibit 4.1 to WP&L's Form 8-K dated July 20,
1992)
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.3 |  | Indenture,
dated as of June 20, 1997, between WP&L and U.S. Bank, as Trustee, relating to debt
                securities (incorporated by reference to Exhibit 4.33 to Amendment No. 2
to WP&L's Registration                 Statement on Form S-3 (Registration No. 33-60917))
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.4 |  | Officers' Certificate,
dated as of June 25, 1997, creating WP&L's 7% debentures due June 15, 2007
                (incorporated by reference to Exhibit 4 to WP&L's Form 8-K, dated June
25, 1997)
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.5 |  | Officers' Certificate,
dated as of Oct. 27, 1998, creating WP&L's 5.7% debentures due Oct. 15, 2008
                (incorporated by reference to Exhibit 4 to WP&L's Form 8-K, dated Oct.
27, 1998)
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.6 |  | Officers' Certificate,
dated as of March 1, 2000, creating WP&L's 7-5/8% debentures due March 1, 2010
                (incorporated by reference to Exhibit 4 to WP&L's Form 8-K, dated March
1, 2000)
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.7 |  | Indenture
of Mortgage and Deed of Trust, dated as of Sept. 1, 1993, between IP&L and J.P. Morgan
Trust                 Company, National Association (J.P. Morgan Trust) as successor in
interest to Bank One Trust Company,                 National Association (Bank One
Trust), successor, as Trustee (incorporated by reference to Exhibit 4(c)
                to IP&L's Form 10-Q for the quarter ended Sept. 30, 1993), and the
indentures supplemental thereto                 dated, respectively, Oct. 1, 1993, Nov.
1, 1993, March 1, 1995, Sept. 1, 1996 and April 1, 1997                 (Exhibit 4(d) in
IP&L's Form 10-Q dated Nov. 12, 1993, Exhibit 4(e) in IP&L's Form 10-Q dated Nov. 12,
                1993, Exhibit 4(b) in IP&L's Form 10-Q dated May 12, 1995, Exhibit
4(c)(i) in IP&L's Form 8-K dated                 Sept. 19, 1996 and Exhibit 4(a) in IP&L's Form
10-Q dated May 14, 1997)
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.8 |  | Indenture
(For Senior Unsecured Debt Securities), dated as of Aug. 1, 1997, between IP&L and J.P.
                Morgan Trust as successor in interest to Bank One Trust, successor, as
Trustee (incorporated by                 reference to Exhibit 4(j) to IP&L's Registration
Statement, File No. 333-32097)
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.9 |  | Officer's
Certificate, dated as of Aug. 4, 1997, creating IP&L's 6-5/8% Senior Debentures, Series
A,                 due 2009 (incorporated by reference to Exhibit 4.12 to IP&L's Form
10-K for the year 2000)
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.10 |  | Officers' Certificate,
dated as of March 6, 2001, creating IP&L's 6-3/4% Series B Senior Debentures due
                2011 (incorporated by reference to Exhibit 4 to IP&L's Form 8-K, dated
March 6, 2001)
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.11 |  | The
Original through the Nineteenth Supplemental Indentures of IP&L, successor, to JPMorgan
Chase Bank                 and James P. Freeman, successor, as Trustee, dated Jan. 1,
1948 securing First Mortgage Bonds                 (incorporated by reference to Exhibits
4(b) through 4(t) to IPC's Registration Statement No. 33-59352                 dated
March 11, 1993)
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.12 |  | Twentieth
Supplemental Indenture of IP&L, successor, to JPMorgan Chase Bank and James P. Freeman,
                successor, as Trustees, dated May 15, 1993 (incorporated by reference to
Exhibit 4(u) to IPC's                 Registration Statement No. 33-59352 dated March 11,
1993)
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

125

|4.13 |  | Twenty-First
Supplemental Indenture of IP&L, successor, to JPMorgan Chase Bank and James P. Freeman,
as                 Trustees, dated Dec. 31, 2001 (incorporated by reference to Exhibit
4.3 to IP&L's Form 8-K, dated Jan.                 1, 2002)
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.14 |  | Indenture,
dated as of Nov. 4, 1999, among Resources, Alliant Energy, as Guarantor, and U.S. Bank,
as                 Trustee (incorporated by reference to Exhibit 4.1 to Resources' and
Alliant Energy's Registration                 Statement on Form S-4 (Registration No.
333-92859)), and the indentures supplemental thereto dated,                 respectively,
Nov. 4, 1999, Feb. 1, 2000 and Nov. 15, 2001 (Exhibit 4.2 in Registration No. 333-92859,
                Exhibit 99.4 in Alliant Energy's Form 8-K dated Feb. 1, 2000 and Exhibit
4.4 in Resources' and Alliant                 Energy's Registration Statement on Form S-4
(Registration No. 333-75020))
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.14a |  | Fourth
Supplemental Indenture, dated as of Dec. 26, 2002, among Resources, Alliant Energy, as
                Guarantor, and U.S. Bank, as Trustee (incorporated by reference to
Exhibit 4.16a to Alliant Energy's                 Form 10-K for the year 2002)
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.15 |  | Indenture
(For Senior Unsecured Debt Securities), dated as of Aug. 20, 2003, between IP&L and J.P.
                Morgan Trust as successor in interest to Bank One Trust, as Trustee
(incorporated by reference to                 Exhibit 4.11 to IP&L's Registration
Statement on Form S-3 (Registration No. 333-108199))
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.16 |  | Officer's
Certificate, dated Sept. 10, 2003, creating IP&L's 5.875% Senior Debentures due 2018
                (incorporated by reference to Exhibit 4.1 to IP&L's Form 8-K, dated Sept.
10, 2003)
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.17 |  | Officer's
Certificate, dated Oct. 14, 2003, creating IP&L's 6.45% Senior Debentures due 2033
                (incorporated by reference to Exhibit 4.1 to IP&L's Form 8-K, dated Oct.
14, 2003)
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.1 |  | 364-Day
Credit Agreement, dated as of Sept. 30, 2003, among Alliant Energy, the Banks named
therein and                 Bank One, NA, as Administrative Agent and Letters of Credit
issuing bank (incorporated by reference to                 Exhibit 10.1 to Alliant Energy's
Form 10-Q for the quarter ended Sept. 30, 2003)
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.2 |  | 364-Day
Credit Agreement, dated as of Sept. 30, 2003, among IP&L, the Banks named therein and
Bank One,                 NA, as Administrative Agent and Letters of Credit issuing bank
(incorporated by reference to Exhibit                 10.2 to IP&L's Form 10-Q for the
quarter ended Sept. 30, 2003)
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.3 |  | 364-Day
Credit Agreement, dated as of Sept. 30, 2003, among WP&L, the Banks named therein and
Bank One,                 NA, as Administrative Agent and Letters of Credit issuing bank
(incorporated by reference to Exhibit                 10.3 to WP&L's Form 10-Q for the
quarter ended Sept. 30, 2003)
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.4 |  | Service
Agreement by and among WP&L, South Beloit, IP&L and Corporate Services (incorporated by
                reference to Exhibit 10.1 to Alliant Energy's Form 10-Q for the quarter
ended June 30, 1998)
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.5 |  | Service
Agreement by and among Resources and Corporate Services (incorporated by reference to
Exhibit                 10.2 to Alliant Energy's Form 10-Q for the quarter ended June 30,
1998)
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.6 |  | System
Coordination and Operating Agreement dated April 11, 1997, among IP&L, WP&L and Corporate
                Services (incorporated by reference to Exhibit 10.3 to Alliant Energy's
Form 10-Q for the quarter ended                 June 30, 1998)
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.7 |  | Joint
Power Supply Agreement among WPSC, WP&L, and MG&E, dated Feb. 2, 1967 (incorporated by
reference                 to Exhibit 4.09 of WPSC in File No. 2-27308)
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.7a |  | Amendment
No. 1 to Joint Power Supply Agreement dated Feb. 2, 1967 among WPSC, WP&L, and MG&E                (incorporated
by reference to Exhibit 10.1 to WP&L's Form 10-Q for the quarter ended Sept. 30, 2001)
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.8 |  | Joint
Power Supply Agreement among WPSC, WP&L, and MG&E, dated July 26, 1973 (incorporated by
reference                 to Exhibit 5.04A of WPSC in File No. 2-48781)
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.9 |  | Basic
Generating Agreement, Unit 4, Edgewater Generating Station, dated June 5, 1967, between WP&L and
                WPSC (incorporated by reference to Exhibit 4.10 of WPSC in File No.
2-27308)
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.10 |  | Agreement
for Construction and Operation of Edgewater 5 Generating Unit, dated Feb. 24, 1983,
between                 WP&L, WEPCO and WPSC (incorporated by reference to Exhibit 10C-1
to WPSC's Form 10-K for the year 1983                 (File No. 1-3016))
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

126

|10.10a |  | Amendment
No. 1 to Agreement for Construction and Operation of Edgewater 5 Generating Unit, dated
Dec.                 1, 1988 (incorporated by reference to Exhibit 10C-2 to WPSC's Form
10-K for the year 1988 (File No.                 1-3016))
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.11 |  | Revised
Agreement for Construction and Operation of Columbia Generating Plant among WPSC, WP&L, and
                MG&E, dated July 26, 1973 (incorporated by reference to Exhibit 5.07 of
WPSC in File No. 2-48781)
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.12 |  | Operating
and Transmission Agreement between CIPCO and IP&L (incorporated by reference to Exhibit
10(q)                 to IP&L's Form 10-K for the year 1990)
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.13 |  | DAEC
Ownership Participation Agreement dated June 1, 1970 between CIPCO, Corn Belt Power
Cooperative                 and IP&L (incorporated by reference to Exhibit 5(kk) to IP&L's Registration
Statement, File No. 2-38674)
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.14 |  | DAEC
Operating Agreement dated June 1, 1970 between CIPCO, Corn Belt Power Cooperative and IP&L                (incorporated
by reference to Exhibit 5(ll) to IP&L's Registration Statement, File No. 2-38674)
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.15 |  | DAEC
Agreement for Transmission, Transformation, Switching, and Related Facilities dated June
1, 1970                 between CIPCO, Corn Belt Power Cooperative and IP&L (incorporated
by reference to Exhibit 5(mm) to                 IP&L's Registration Statement, File No.
2-38674)
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.16 |  | Basic
Generating Agreement dated April 16, 1975 between Iowa Public Service Company, Iowa Power
and                 Light Company, Iowa-Illinois Gas and Electric Company and IP&L for
the joint ownership of Ottumwa                 Generating Station-Unit 1 (OGS-1)
(incorporated by reference to Exhibit 1 to IP&L's Form 10-K for the                 year
1977)
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.16a |  | Addendum
Agreement to the Basic Generating Agreement for OGS-1 dated Dec. 7, 1977 between Iowa
Public                 Service Company, Iowa-Illinois Gas and Electric Company, Iowa
Power and Light Company and IP&L for the                 purchase of 15% ownership in
OGS-1 (incorporated by reference to Exhibit 3 to IP&L's Form 10-K for the
                year 1977)
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.17 |  | Asset
Contribution Agreement between ATC and WEPCO, WP&L, WPSC, MG&E, Edison Sault Electric
Company and                 South Beloit, dated as of Dec. 15, 2000 (incorporated by
reference to Exhibit 10.15 to Alliant Energy's                 Form 10-K for the year
2000)
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.17a |  | Addenda
to the Asset Contribution Agreement between ATC and WEPCO, WP&L, WPSC, MG&E, Edison Sault
                Electric Company and South Beloit, dated as of Dec. 15, 2000
(incorporated by reference to Exhibit                 10.15a to Alliant Energy's Form
10-K for the year 2000)
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.18 |  | Operating
Agreement of ATC, dated as of Jan. 1, 2001 (incorporated by reference to Exhibit 10.16 to
                Alliant Energy's Form 10-K for the year 2000)
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.19# |  | Alliant
Energy LTEIP, as amended (incorporated by reference to Exhibit 10.1 to Alliant Energy's
Form                 10-Q for the quarter ended June 30, 1999)
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.20# |  | Alliant
Energy EIP (incorporated by reference to Exhibit 4.2 to Alliant Energy's Registration
Statement                 on Form S-8 (Registration No. 333-88304))
|------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.21# |  | Alliant
Energy KEDCP (incorporated by reference to Exhibit 4.2 to Alliant Energy's Registration
                Statement on Form S-8 (Registration No. 333-51126)
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.22# |  | KEDCP
(incorporated by reference to Exhibit 10(n) to IES's Form 10-K for the year 1987)
|------ |  | ---------------------------------------------------------------------------------------

|10.22a# |  | Amendments
to Key Employee Deferred Compensation Agreement for Key Employees (incorporated by
reference                 to Exhibit 10(v) to IES's Form 10-Q for the quarter ended March
31, 1990)
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.23# |  | DDCP,
as amended and restated effective Jan. 1, 2000, amended Nov. 14, 2001 (incorporated by
reference                 to Exhibit 10.22 to Alliant Energy's Form 10-K for the year
2001)
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.24# |  | IP&L Irrevocable
Trust Agreement dated April 30, 1990 (incorporated by reference to Exhibit 99.f to
                IPC's Form 10-K for the year 1993)
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------

127

|10.25# |  | IP&L Irrevocable
Trust Agreement dated December 1997 (incorporated by reference to Exhibit 99.7 to
                IPC's Form 10-K for the year 1997)
|------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------

|10.26# |  | Alliant
Energy Grantor Trust for Deferred Compensation Agreements (Key Employees) (incorporated
by                 reference to Exhibit 4.4 to Alliant Energy's Registration Statement on
Form S-8 (Registration No.                 33-51126))
|------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.27# |  | Alliant
Energy Grantor Trust for Deferred Compensation Agreements (Directors) (incorporated by
                reference to Exhibit 4.3 to Alliant Energy's Registration Statement on
Form S-8 (Registration No.                 33-51126))
|------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.28# |  | Form
of Supplemental Retirement Agreement (SRA) (incorporated by reference to Exhibit 10.15 to
Alliant                 Energy's Form 10-Q for the quarter ended June 30, 1998)
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.29# |  | Supplemental
Retirement Plan (incorporated by reference to Exhibit 10(l) to IES's Form 10-K for the
                year 1987)
|------ |  | ------------------------------------------------------------------------------------------------------------------------------

|10.30# |  | Alliant
Energy Excess Plan (incorporated by reference to Exhibit 10.33 to Alliant Energy's Form
10-K                 for the year 2000)
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------------

|10.31# |  | SRA
by and between Alliant Energy and E.B. Davis, Jr., W.D. Harvey, J.E. Hoffman, E.G. Protsch, B.J. Swan and
P.J.                 Wegner (incorporated by reference to Exhibit 10.5 to Alliant Energy's
Form 10-Q for the quarter ended                 Sept. 30, 2003)
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.32# |  | SRA
by and between Alliant Energy and T.L. Hanson and J.E. Kratchmer (incorporated by
reference to                 Exhibit 10.7 to Alliant Energy's Form 10-Q for the quarter
ended Sept. 30, 2003)
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.33# |  | Key
Executive Employment and Severance Agreement (KEESA), dated March 29, 1999, by and
between Alliant                 Energy and Erroll B. Davis, Jr. (incorporated by
reference to Exhibit 10.2 to Alliant Energy's Form                 10-Q for the quarter
ended March 31, 1999)
|------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.34# |  | KEESA,
dated March 29, 1999, by and between Alliant Energy and each of J.E. Hoffman, W.D.
Harvey, E.G.                 Protsch, P.J. Wegner and B.J. Swan (incorporated by
reference to Exhibit 10.3 to Alliant Energy's Form                 10-Q for the quarter
ended March 31, 1999)
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.35# |  | KEESA,
dated March 29, 1999, by and between Alliant Energy and T.L. Aller; dated May 22, 2002,
by and                 between Alliant Energy and T.L. Hanson; dated April 11, 2003, by
and between Alliant Energy and J.E.                 Kratchmer (incorporated by reference
to Exhibit 10.4 to Alliant Energy's Form 10-Q for the quarter                 ended March
31, 1999)
|------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.36# |  | Employment
Agreement by and between Alliant Energy and Erroll B. Davis, Jr., amended and restated as
of                 March 29, 1999 (incorporated by reference to Exhibit 10.5 to Alliant
Energy's Form 10-Q for the quarter                 ended March 31, 1999)
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.37# |  | Executive
Tenure Compensation Plan as revised November 1992 (incorporated by reference to Exhibit
10A                 to Alliant Energy's Form 10-K for the year 1992)
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.37a# |  | Amendment
to Executive Tenure Compensation Plan adopted Feb. 23, 1998 (incorporated by reference to
                Exhibit 10.19a to Alliant Energy's Form 10-Q for the quarter ended June
30, 1998)
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.38# |  | Severance
Agreement by and between Alliant Energy and Thomas M. Walker, dated Nov. 14, 2003
|------ |  | -------------------------------------------------------------------------------------------

|21 |  | Subsidiaries
of Alliant Energy and WP&L
|-- |  | ---------------------------------------

|23.1 |  | Independent
Auditors' Consent for Alliant Energy
|---- |  | ------------------------------------------------

|23.2 |  | Independent
Auditors' Consent for IP&L
|---- |  | --------------------------------------

|31.1 |  | Certification
of the Chairman and CEO for Alliant Energy
|---- |  | --------------------------------------------------------

|31.2 |  | Certification
of the Senior Executive Vice President and CFO for Alliant
                Energy
|---- |  | -----------------------------------------------------------------------------------------------

|31.3 |  | Certification
of the Chairman and CEO for IP&L
|---- |  | ----------------------------------------------

|31.4 |  | Certification
of the CFO for IP&L
|---- |  | ---------------------------------

128

|31.5 |  | Certification
of the Chairman and CEO for WP&L
|---- |  | ----------------------------------------------

|31.6 |  | Certification
of the CFO for WP&L
|---- |  | ---------------------------------

|32.1 |  | Written
Statement of the CEO and CFO Pursuant to 18 U.S.C.§1350 for Alliant Energy
|---- |  | ----------------------------------------------------------------------------------

|32.2 |  | Written
Statement of the CEO and CFO Pursuant to 18 U.S.C.§1350 for IP&L
|---- |  | ------------------------------------------------------------------------

|32.3 |  | Written
Statement of the CEO and CFO Pursuant to 18 U.S.C.§1350 for WP&L
|---- |  | ------------------------------------------------------------------------

Pursuant to Item 601(b)(4)(iii) of Regulation S-K,
 the registrants agree to furnish to the SEC, upon request, any instrument defining the rights of holders
 of unregistered long-term debt not filed as an exhibit to this Form 10-K. No such instrument authorizes
 securities in excess of 10% of the total assets of Alliant Energy, WP&L or IP&L, as the case
 may be.

Documents incorporated by reference to filings made
 by Alliant Energy under the Securities Exchange Act of 1934, as amended, are under File No. 1-9894.
 Documents incorporated by reference to filings made by WP&L under the Securities Exchange Act of
 1934, as amended, are under File No. 0-337. Documents incorporated by reference to filings made by IES
 under the Securities Exchange Act of 1934, as amended, are under File No. 1-9187. Documents incorporated
 by reference to filings made by IP&L under the Securities Exchange Act of 1934, as amended, are
 under File No. 0-4117-1. Documents incorporated by reference to filings made by IPC under the Securities
 Exchange Act of 1934, as amended, are under File No. 1-3632.

#  A management contract or compensatory plan or arrangement.

(b)     Reports on Form 8-K

Alliant EnergyAlliant Energy filed a Current Report on Form 8-K,
 dated Oct. 30, 2003, reporting (under Items 7 and 12) that it issued a press release announcing its
 earnings for the quarter ended Sept. 30, 2003 and its earnings guidance for 2003.

IP&LIP&L filed a Current Report on Form 8-K, dated
 Oct. 14, 2003, reporting (under Items 5 and 7) that it agreed to sell $100 million aggregate principal
 amount of its 6.45% senior debentures due 2033 in a public offering.

WP&L  None.

129

SCHEDULE  II  VALUATION
AND QUALIFYING ACCOUNTS AND RESERVES

|                                                                                                               | Additions      |           
|-------------------------------------------------------------------------------------------------------------- | -------------- | ----------
|                                                                                                               |                |           
|                                                                                                               | Balance,       | Charged to
|Description                                                                                                    | Jan. 1         | Expense   
|                                                                                                              
|                                                                                                               | (in thousands)
|Valuation and Qualifying Accounts Which are Deducted in the Balance Sheet From the Assets to Which They Apply:
|Accumulated Provision for Uncollectible Accounts:                                                             
|Alliant Energy                                                                                                
|Year ended Dec. 31, 2003                                                                                       | $5,519         | $9,868    
|Year ended Dec. 31, 2002                                                                                       | 7,891          | 8,115     
|Year ended Dec. 31, 2001                                                                                       | 4,341          | 9,317     
|IP&L                                                                                                          
|Year ended Dec. 31, 2003                                                                                       | $1,282         | $4,500    
|Year ended Dec. 31, 2002                                                                                       | 1,883          | 3,115     
|Year ended Dec. 31, 2001                                                                                       | 1,316          | 7,206     
|WP&L                                                                                                          
|Year ended Dec. 31, 2003                                                                                       | $2,228         | $4,367    
|Year ended Dec. 31, 2002                                                                                       | 1,543          | 4,067     
|Year ended Dec. 31, 2001                                                                                       | 8              | 37        

| | Note:
 The above provisions relate to various customer, notes and other receivable balances
included in various line items on the respective Consolidated Balance Sheets.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Other Reserves:                                                                               
|----------------------------------------------------------------------------------------------
|Accumulated Provision for Nuclear Refueling Outage Provision and Other Miscellaneous Reserves:
|Alliant Energy                                                                                
|Year ended Dec. 31, 2003                                                                      
|Year ended Dec. 31, 2002 (3)                                                                  
|Year ended Dec. 31, 2001 (3)                                                                  
|IP&L                                                                                          
|Year ended Dec. 31, 2003                                                                      
|Year ended Dec. 31, 2002 (3)                                                                  
|Year ended Dec. 31, 2001 (3)                                                                  
|WP&L                                                                                          
|Year ended Dec. 31, 2003                                                                      
|Year ended Dec. 31, 2002                                                                      
|Year ended Dec. 31, 2001                                                                      

|(1) | Accumulated provision for uncollectible accounts: In
 accordance with its regulatory treatment, certain amounts provided by WP&L are recorded in regulatory
 assets.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Deductions are of the nature for which the reserves
 were created. In the case of the accumulated provision for uncollectible accounts, deductions from this
 reserve are reduced by recoveries of amounts previously written off.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | 2002 and 2001 amounts have been revised to include
 IP&Ls nuclear refueling outage provision.
|--- | ----------------------------------------------------------------------------------------------

130

SIGNATURES

Pursuant
 to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has
 duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on
 the 11th day of March 2004.

| | ALLIANT ENERGY CORPORATION 
| | ---------------------------
| |                            
| | By:/s/ Erroll B. Davis, Jr.
| |                            
| |                            

Pursuant
 to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
 following persons on behalf of the registrant and in the capacities indicated on the 11th
 day of March 2004.

|/s/ Erroll B. Davis, Jr.    | Chairman, Chief Executive Officer and Director (Principal Executive Officer)             
|--------------------------- | -----------------------------------------------------------------------------------------
|Erroll B. Davis, Jr.       
|                           
|/s/ Eliot G. Protsch        | Senior Executive Vice President and Chief Financial Officer (Principal Financial Officer)
|Eliot G. Protsch           
|                           
|/s/ John E. Kratchmer       | Vice President-Controller and Chief Accounting Officer (Principal Accounting Officer)    
|John E. Kratchmer          
|                           
|/s/ Alan B. Arends          | Director                                                                                 
|Alan B. Arends              |                                                                                          
|                           
|/s/ Michael L. Bennett      | Director                                                                                 
|Michael L. Bennett          |                                                                                          
|                           
|/s/ Jack B. Evans           | Director                                                                                 
|Jack B. Evans               |                                                                                          
|                           
|/s/ Katharine C. Lyall      | Director                                                                                 
|Katharine C. Lyall          |                                                                                          
|                           
|/s/ Singleton B. McAllister | Director                                                                                 
|Singleton B. McAllister     |                                                                                          
|                           
|/s/ Ann K. Newhall          | Director                                                                                 
|Ann K. Newhall             

131

SIGNATURES

Pursuant
 to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has
 duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on
 the 11th day of March 2004.

| | INTERSTATE POWER AND LIGHT COMPANY
| | ----------------------------------
| |                                   
| | By:/s/ Erroll B. Davis, Jr.       
| |                                   
| |                                   

Pursuant
 to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
 following persons on behalf of the registrant and in the capacities indicated on the 11th
 day of March 2004.

|/s/ Erroll B. Davis, Jr.    | Chairman, Chief Executive Officer and Director (Principal Executive Officer)         
|--------------------------- | -------------------------------------------------------------------------------------
|Erroll B. Davis, Jr.       
|                           
|/s/ Eliot G. Protsch        | Chief Financial Officer (Principal Financial Officer)                                
|Eliot G. Protsch           
|                           
|/s/ John E. Kratchmer       | Vice President-Controller and Chief Accounting Officer (Principal Accounting Officer)
|John E. Kratchmer          
|                           
|/s/ Alan B. Arends          | Director                                                                             
|Alan B. Arends              |                                                                                      
|                           
|/s/ Michael L. Bennett      | Director                                                                             
|Michael L. Bennett          |                                                                                      
|                           
|/s/ Jack B. Evans           | Director                                                                             
|Jack B. Evans               |                                                                                      
|                           
|/s/ Katharine C. Lyall      | Director                                                                             
|Katharine C. Lyall          |                                                                                      
|                           
|/s/ Singleton B. McAllister | Director                                                                             
|Singleton B. McAllister     |                                                                                      
|                           
|/s/ Ann K. Newhall          | Director                                                                             
|Ann K. Newhall             

132

SIGNATURES

Pursuant
 to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has
 duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on
 the 11th day of March 2004.

| | WISCONSIN POWER AND LIGHT COMPANY
| | ---------------------------------
| |                                  
| | By: /s/ Erroll B. Davis, Jr.     
| |                                  
| |                                  

Pursuant
 to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
 following persons on behalf of the registrant and in the capacities indicated on the 11th
 day of March 2004.

|/s/ Erroll B. Davis, Jr.    | Chairman, Chief Executive Officer and Director (Principal Executive Officer)         
|--------------------------- | -------------------------------------------------------------------------------------
|Erroll B. Davis, Jr.       
|                           
|/s/ Eliot G. Protsch        | Chief Financial Officer (Principal Financial Officer)                                
|Eliot G. Protsch           
|                           
|/s/ John E. Kratchmer       | Vice President-Controller and Chief Accounting Officer (Principal Accounting Officer)
|John E. Kratchmer          
|                           
|/s/ Alan B. Arends          | Director                                                                             
|Alan B. Arends              |                                                                                      
|                           
|/s/ Michael L. Bennett      | Director                                                                             
|Michael L. Bennett          |                                                                                      
|                           
|/s/ Jack B. Evans           | Director                                                                             
|Jack B. Evans               |                                                                                      
|                           
|/s/ Katharine C. Lyall      | Director                                                                             
|Katharine C. Lyall          |                                                                                      
|                           
|/s/ Singleton B. McAllister | Director                                                                             
|Singleton B. McAllister     |                                                                                      
|                           
|/s/ Ann K. Newhall          | Director                                                                             
|Ann K. Newhall             

133

ALLIANT ENERGY
CORPORATION  INTERSTATE POWER AND LIGHT COMPANY WISCONSIN POWER AND LIGHT COMPANY

Exhibit Index to Annual Report on Form 10-K  For the
 fiscal year ended Dec. 31, 2003

|Exhibit |                                                                                            
|------- | -------------------------------------------------------------------------------------------
|Number  | Description                                                                                
|       
|3.5     | Restated Articles of Incorporation of IP&L                                                 
|       
|10.38   | Severance Agreement by and between Alliant Energy and Thomas M. Walker, dated Nov. 14, 2003
|       
|21      | Subsidiaries of Alliant Energy                                                             
|       
|23.1    | Independent Auditors' Consent for Alliant Energy                                           
|       
|23.2    | Independent Auditors' Consent for IP&L                                                     
|       
|31.1    | Certification of the Chairman and CEO for Alliant Energy                                   
|       
|31.2    | Certification of the Senior Executive Vice President and CFO for Alliant Energy            
|       
|31.3    | Certification of the Chairman and CEO for IP&L                                             
|       
|31.4    | Certification of the CFO for IP&L                                                          
|       
|31.5    | Certification of the Chairman and CEO for WP&L                                             
|       
|31.6    | Certification of the CFO for WP&L                                                          
|       
|32.1    | Written Statement of the CEO and CFO Pursuant to 18 U.S.C.ss.1350 for Alliant Energy       
|       
|32.2    | Written Statement of the CEO and CFO Pursuant to 18 U.S.C.ss.1350 for IP&L                 
|       
|32.3    | Written Statement of the CEO and CFO Pursuant to 18 U.S.C.ss.1350 for WP&L                 

134