_________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _____________ to ____________
Commission File Number 0-1125
MADISON GAS AND ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
WISCONSIN 39-0444025
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
133 South Blair Street
Post Office Box 1231
Madison, Wisconsin 53701-1231
(Address of principal executive offices, including zip code)
(608) 252-7923
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Securities registered pursuant to Section 12(g) of the Act:
Common, Par Value $8 Per Share
(Title of Class)
<PAGE>
Indicate by check mark whether the Registrant (1) has 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) has 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 Registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. Yes X No
State the aggregate market value of the voting stock held by
nonaffiliates of the Registrant: $343,033,984 based on a closing
bid price of $32 on March 1, 1995 (the record date for the Annual
Meeting of Shareholders).
The number of shares outstanding of each of the issuer's classes
of common stock, as of the close of the period covered by this
report, was 10,719,812 of Common Stock, Par Value $8 Per Share.
List hereunder the following documents if incorporated by
reference and the part of the Form 10-K (e.g., Part I, Part II,
etc.) into which the document is incorporated: (1) Any annual
report to security holders; (2) Any proxy or information
statement; and (3) Any prospectus filed pursuant to Rule 424(b)
or (c) under the Securities Act of 1933.
- 1994 Annual Report to Shareholders (Parts I, II, and IV)
- Definitive Proxy Statement filed on March 21, 1995
(Parts I and III)
<PAGE>
PART I
Item 1. Business.
General Description of Business
The registrant, Madison Gas and Electric Company (the Company), a Wisconsin
corporation organized as such in 1896, is a public utility engaged in the
generation and transmission of electric energy and in its distribution in
Madison and its environs (250 square miles) and in the purchase,
transportation, and distribution of natural gas in Columbia, Crawford, Dane,
Iowa, Juneau, Monroe, and Vernon counties, Wisconsin (1,325 square miles).
See Exhibit No. 21 herein for a description of the Company's wholly owned
subsidiaries.
The Company is subject to regulation by the Public Service Commission of
Wisconsin (PSCW) as to rates, accounts, issuance of securities, plant and
transmission line siting, and in other respects. The Federal Energy
Regulatory Commission (FERC) has jurisdiction, under the Federal Power Act,
over certain accounting practices of the Company and in certain other
respects. The Nuclear Regulatory Commission has jurisdiction over the
operation of the Kewaunee Nuclear Power Plant (Kewaunee). The Company has a
17.8 percent ownership interest in Kewaunee. The other owners are Wisconsin
Public Service Corporation (WPSC), which operates Kewaunee, and Wisconsin
Power and Light Company (WPL).
The Company is also subject to regulation with regard to air quality, water
quality, and solid waste (see I-5 and I-6) and may be subject to regulation
with regard to other environmental matters by various federal, state, and
local authorities including the Wisconsin Department of Natural Resources
(DNR), which has jurisdiction over air and water quality, solid and hazardous
waste standards, and regulates the electric generating operations of the
Company with respect to pollution and environmental control matters. The
Company has met the requirements of current environmental regulations.
Unknown additional expenditures may be required for pollution control
equipment and for the modification of existing plants to comply with future
unknown environmental regulations.
For example, the emerging issue of global warming could result in significant
compliance cost for carbon dioxide emission controls. Except as set forth
below, the amounts of such expenditures and the period of time over which they
may be required to be made are not known. The Company is unable to predict
whether compliance with future pollution control regulations would involve
curtailments of operations or reductions in generating capacity or efficiency
of present generating facilities or delays in the construction and operation
of future generating facilities.
Under both the National Environmental Policy Act and the Wisconsin
Environmental Policy Act, the Company must obtain the necessary authorizations
or permits from regulatory agencies for any new projects or other major
actions significantly affecting the quality of the human environment after all
aspects of the proposed project or action are subjected to a complete
environmental review and a detailed environmental impact statement is issued.
<PAGE>
Electric Operations
At December 31, 1994, the Company supplied electric service to 118,693
customers, of whom 106,087 were located in the cities of Fitchburg, Madison,
Middleton, and Monona, and 12,606 in adjacent areas. Of the total number of
customers, 103,083 were residential and 15,474 were commercial. For 1994,
residential and commercial electric service revenues comprised 35 percent and
53 percent, respectively, of total electric revenues. The remaining electric
revenues during 1994 were from industrial sales (6 percent), sales to public
authorities including the University of Wisconsin (5 percent), and sales to
other utilities (less than 1 percent). The electric operations accounted for
60 percent of the total revenues of the Company.
See Item 2 for a description of the Company's electric utility plant.
The Company is a member of Mid-America Interconnected Network, Inc. (MAIN), a
regional reliability group. Membership in this group permits better
utilization of reserve generating capacity and coordination of long-range
system planning and day-to-day operations. MAIN seeks to maintain adequate
planning generation reserve margins as a group in the range of 15 to
22 percent.
The electric utility industry faces increasing competitive issues. The PSCW
appointed an advisory committee in February 1995 to recommend how the electric
utility industry should be changed in Wisconsin to best bring competitive
benefits to customers. This committee will evaluate the best ways for
customers to receive generation, transmission, distribution, and other energy
services in the future. The PSCW will finalize recommendations by December
1995. Issues that require changes in Wisconsin law will be turned over to the
state Legislature for debate in 1996.
Fuel supply and generation
The Company estimates that its net kilowatt-hour requirements for 1995 will be
provided approximately from the following sources: 67 percent from fossil-
fueled steam plants, 24 percent from a nuclear-fueled steam plant, 8 percent
from low-cost power purchases, and 1 percent from a combination of natural
gas- and oil-fired combustion turbines.
The Company has a 22 percent ownership interest in the Columbia Energy Center
(Columbia). The other owners are WPL, which operates Columbia, and WPSC. The
first (Columbia I) and second (Columbia II) units at Columbia were placed in
commercial operation in 1975 and 1978, respectively. The Columbia co-owners'
coal inventory supply for Columbia I and Columbia II was 34 days on
December 31, 1994. The co-owners' goal is to maintain a 40-day inventory.
Columbia, with two 527-megawatt units, uses coal from the Wyoming-Montana coal
fields. One hundred (100) percent of the low-sulfur coal supply for these
units comes from the Powder River Basin sources in Montana and Wyoming.
About 200 megawatts of the Company's electric generating capacity is provided
by the Blount Generating Station (Blount) (see I-9). The Company is able to
burn a variety of coals and natural gas at Blount.
The Kewaunee plant began commercial operation in 1974. The Kewaunee
capability factor was 86.6 percent in 1994, compared to a projected industry
average of 73.7 percent.
<PAGE>
The operating company for Kewaunee is a member of the Institute of Nuclear
Power Operations (INPO), an organization of nuclear utilities that promotes
excellence in all aspects of nuclear plant operations. INPO manages the
accreditation process for industry training programs, which includes periodic
accreditation of those training programs by an independent organization, the
National Nuclear Accrediting Board (NNAB). All ten accredited training
programs at Kewaunee are currently in good standing with the NNAB.
The steam generator tubes at Kewaunee are susceptible to corrosion
characteristics seen throughout the nuclear industry. Annual inspections are
performed to identify degraded tubes. Degraded tubes are either repaired by
sleeving or are removed from service by plugging. The steam generators were
designed with approximately a 15 percent heat transfer margin, meaning that
full power should be sustainable with the equivalent of 15 percent of the
steam generator tubes plugged. Tube plugging and the build up of deposits on
the tubes affect the heat transfer capability of the steam generators to the
point where eventually full power operation is affected. The result will be a
gradual decrease in the capacity of the plant. The plant's capacity could be
reduced by as much as 20 percent by the year 2013 when the current operating
license expires. Currently, the equivalent of approximately 12 percent of the
tubes in the steam generators are plugged with no loss of capacity. The
co-owners recently completed studies evaluating the economics of replacing the
two steam generators at Kewaunee. The studies resulted in the conclusion that
the most prudent course of action is to continue operation of the existing
steam generators. The co-owners continue to evaluate appropriate repair
strategies, including replacement, as well as continued operation of the steam
generators without replacement. They also continue to fund the development of
welded repair technology for steam generator tubes.
The co-owners continue to evaluate and implement initiatives to improve the
performance of Kewaunee, which already performs at above-average levels for
the industry. These initiatives include conversion from a 12-month to an
18-month operating cycle beginning in the spring of 1995 and numerous other
cost-reduction measures. These initiatives have resulted in approximately a
25 percent reduction in Kewaunee operating and maintenance costs since 1991.
Physical decommissioning of Kewaunee is expected to occur during the period
2014 through 2021, with additional expenditures being incurred during the
period 2022 through 2050 related to the storage of spent nuclear fuel at the
site. In July 1994, the PSCW issued an order covering all utilities that have
nuclear generation. The order standardizes cost escalation assumptions used
in determining decommissioning liabilities. Based upon this new methodology
and considering other assumption changes, Kewaunee decommissioning costs are
estimated to be $357 million in current dollars. The Company's share of
Kewaunee decommissioning costs are estimated to be $57 million in 1992
dollars. Decommissioning costs (net of trust fund income) recovered through
rates are $3.1 million annually starting in January 1995. Wisconsin utilities
operating nuclear generating plants are required by the PSCW to establish
external trust funds to provide for the decommissioning of such plants. The
estimated fair value of the investments in the funds established by the
Company at December 31, 1994, totaled $27 million.
<PAGE>
The supply of nuclear fuel for Kewaunee requires the purchase of uranium
concentrates, the conversion of uranium concentrates to uranium hexafluoride,
enrichment of the uranium hexafluoride, and fabrication of the enriched
uranium into usable fuel assemblies. After a region (approximately one-third
of the nuclear fuel assemblies in the reactor) of spent fuel is removed from
the reactor, it is placed in temporary storage for cooling in a spent fuel
pool at the plant site. Permanent storage is addressed below. There are
presently no operating facilities in the United States reprocessing commercial
nuclear fuel. A discussion of the nuclear fuel supply for Kewaunee follows:
- Requirements for uranium are met through spot or contract purchases. An
inventory policy to take advantage of economical spot market purchases of
uranium could result in inventories sufficient for three reactor reloads of
fuel.
- Uranium hexafluoride from inventory and from spot market purchases was used
to satisfy converted material requirements in 1994. The co-owners intend
to purchase future conversion services on the spot market.
- In 1994, enriched uranium was procured from COGEMA, Inc., pursuant to a
contract executed in 1983 and last amended in 1993. Enrichment services
were purchased from the Enrichment Corporation under the terms of the
utility services contract which is in effect for the life of Kewaunee. The
co-owners are committed to take 70 percent of its annual enrichment
requirements in 1995 and in alternate years thereafter from the Enrichment
Corporation.
- Fuel fabrication requirements through June 15, 1995, are covered by
contract. The co-owners are finalizing a contract for fuel fabrication
extending through 2001.
- Beyond the stated periods set forth above, additional contracts for uranium
concentrates, conversion to uranium hexafluoride, fabrication, and spent
fuel storage will have to be procured. The co-owners anticipate the prices
for the foregoing will increase.
Pursuant to the Nuclear Waste Policy Act of 1982, the Department of Energy
(DOE) has entered into a contract with the Kewaunee co-owners to accept,
transport, and dispose of spent nuclear fuel beginning no later than
January 31, 1998. It is likely that the DOE will delay the acceptance of
spent nuclear fuel beyond 1998. A fee to offset the costs of the DOE's
disposal for all spent fuel used since April 7, 1983, has been assessed by the
DOE at one mill per net kilowatt-hour of electricity generated by Kewaunee.
An additional one-time fee was paid to the DOE for the disposal of spent
nuclear fuel used to generate electricity prior to April 7, 1983.
The National Energy Policy Act of 1992 provides that both the federal
government and the nuclear utilities fund the decontamination and
decommissioning of the three gaseous diffusion plants in the United States.
Utility contributions will be collected through a special assessment based on
a utility's percentage of uranium enrichment services purchased through the
date of enactment compared to total enrichment sales by the DOE. The
co-owners of Kewaunee are required to pay approximately $19.2 million in
current dollars over a period of 15 years. At December 31, 1994, the
remaining liability was $15.4 million of which the Company's share is
$2.7 million. The payments are subject to adjustment for inflation.
<PAGE>
Spent fuel is currently stored at Kewaunee. The existing capacity of the
spent fuel storage facility will enable storage of the projected quantities of
spent fuel through April 2001. The co-owners are currently evaluating options
for the storage of additional quantities beyond 2001. Several technologies
are available. An investment of $2.5 million in the early 2000s could provide
additional storage sufficient to meet spent fuel storage needs until the
expiration of the current operating license in 2013.
The Low-Level Radioactive Waste Policy Act of 1980 specifies that states may
enter into compacts to provide for regional low-level waste disposal
facilities. Wisconsin is a member of the Midwest Low Level Radioactive Waste
Compact. The state of Ohio has been selected as the host state for the
Midwest Compact and is proceeding with the preliminary phases of site
selection. In June 1994, the Barnwell, South Carolina, disposal facility,
which had been accepting Kewaunee low-level radioactive waste materials,
discontinued taking waste materials from outside its region. The co-owners
expect to have sufficient storage space of its own to satisfy low-level
radioactive waste disposal needs until the Ohio facility accepts low-level
radioactive waste materials.
Air quality
Phase 2 of the Federal Clean Air Act amendments of 1990 sets stringent SO2 and
nitrogen oxide emission limitations which may result in increased capital and
operating and maintenance expenditures. Phase 2 emission compliance
strategies could include the following: fuel switching, emission trading,
purchased power agreements, new emission control devices, or installation of
new fuel-burning technologies and clean-coal technologies. Phase 2 emission
compliance strategies and their costs are currently being evaluated. The
Company has prevailed in legal proceedings in the United States Court of
Appeals for the 7th Circuit against the Environmental Protection Agency (EPA)
to require the EPA to award the Company bonus credits for SO2 emissions under
the Clean Air Act. The Court of Appeals ordered the EPA to review its
disallowance of bonus credits. If the Company prevails, it will receive
additional SO2 credits worth between $3 million and $6 million depending on
the market price for SO2 credits beginning in 2000.
There is a Wisconsin acid rain law which imposes limitations of SO2 emissions
on the major utilities. Blount and the Company's share of Columbia are
required to meet a combined SO2 emission rate of 1.20 pounds of SO2
per million Btu. No capital costs are required to meet this standard.
The area surrounding Blount has been declared a nonattainment area for
secondary ambient particulate standards by the DNR. The DNR's plan for
particulate emissions in secondary nonattainment areas may someday require
installation of fugitive dust-control facilities for coal- and ash-unloading
operations at Blount.
The federal Clean Air Act amendments of 1990 require certain studies be
performed concerning hazardous air emissions from electric utilities.
Regulation of power plants for these emissions may occur as a result of these
studies. The DNR hazardous air emission regulations currently exempt
fossil-fuel combustion.
The Company believes all of its plants to be in full compliance with present
air pollution control regulations.
<PAGE>
Water quality
The Company is subject to water quality regulation by the DNR. These
regulations include both categorical-effluent discharge standards and general
water quality standards. The regulations limit discharges from the Company's
plants into Lake Michigan and other Wisconsin waters.
The categorical-effluent discharge standards require each discharger to use
effluent treatment processes equivalent to categorical "best practicable" or
"best available" technologies under compliance schedules established pursuant
to the Federal Water Pollution Control Act. The DNR has published categorical
regulations for chemical discharges from steam electric generating plants.
The DNR's water toxics regulations could impose additional discharge
limitations on a number of previously unregulated substances. The Company is
in compliance with applicable standards.
Solid waste
From 1980 to 1984, the Company disposed of a fly-ash sludge at the Refuse
Hideaway Landfill in Middleton, Wisconsin. In October 1992, the EPA placed
the Refuse Hideaway Landfill on the national priorities Superfund list of
sites requiring clean up under the Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA). The scope of liability under CERCLA
is very broad.
Although the Company is listed as a potentially responsible party on the DNR's
roster of generators for the Refuse Hideaway Landfill and received a general
notice of potential liability from the EPA in February 1993, in the opinion of
management and legal counsel, the resolution of this matter will not result in
any materially adverse effect on the operations or financial position of the
Company.
From 1855 through the 1950s, the Company and its predecessors operated a
manufactured gas plant at the present site of Blount. The plant used coal and
oil to produce a low-Btu gas used primarily for residential cooking and
heating. Wastes from the gas manufacturing process included light oils and
tars. These materials were either recycled into the gas manufacturing process
or sold for other uses such as asphalt manufacturing. The residual tars and
oils from the operation of the plant may have impacted the site near the gas
holders. The Company has been monitoring the groundwater and soils in
cooperation with the DNR for several years. In the opinion of management and
legal counsel, the resolution of this matter will not result in any materially
adverse effect on the operations or financial position of the Company.
The City of Madison has identified the Company as one of many possible
potential responsible parties for the remediation of the Demetral Landfill.
Waste materials disposed of at the site by the Company consisted of fly ash
and bottom ash from the combustion of coal to generate electricity. The
Company and many others used the landfill in the early 1950s. The Company has
the potential to incur liability costs associated with its use of this
landfill. In the opinion of management and legal counsel, the resolution of
this matter will not result in any materially adverse effect on the operations
or financial position of the Company.
<PAGE>
Gas Operations
On December 31, 1994, the Company supplied natural gas service to 100,128
customers in the cities of Elroy, Madison, Middleton, Monona, Fitchburg, Lodi,
Verona, and Viroqua; 21 villages; and all or parts of 37 townships. Revenues
received from residential and commercial customers accounted for 54 and
35 percent, respectively, of the total gas revenues for 1994. The gas
operations accounted for 39 percent of the total revenues of the Company.
Revenues from transportation service accounted for 1.0 percent of the total
gas revenues for 1994. Sales and revenues from best-efforts rate schedules
accounted for 9 and 6 percent of total retail sales and revenues,
respectively.
The Company has the ability to peak shave through use of a propane-air gas
manufacturing plant for which it had on hand adequate fuel supplies for its
peak-shaving requirements during the 1994 to 1995 heating season. In
addition, the Company can curtail gas deliveries to its interruptible
customers. Approximately 16 percent of gas sold in 1994 was sold to
interruptible customers.
Gas supply
The Company has physical interconnections with both ANR Pipeline Company (ANR)
and Northern Natural Gas Company (NNG). Deliveries are received at four gate
stations on ANR and at one gate station from NNG. Interconnections with two
major pipelines provide for competition in interstate pipeline service and a
more reliable and economical supply mix including gas from Canada and the
United States Mid-continent and Gulf/Offshore regions.
A total of 5,576,600 dekatherms can be injected into ANR's storage fields from
April 1 through October 31. These gas supplies are then available for
withdrawal during the subsequent heating season of November 1 through
March 31. ANR's storage fields are located in Michigan. Use of storage
provides the Company with the ability to purchase gas supplies during the
summer season when prices are normally lowest and withdraw these supplies
during the winter season when gas prices are typically higher. Storage allows
the Company greater ability to meet daily load fluctuations.
During the winter months, when the demand of its customers is highest, the
Company is primarily concerned with meeting its obligation to its firm
customers. Long-term firm supply contracts, supplies in storage injected
during the summer, and firm supplies purchased for the winter period are
utilized to meet customer demand. These gas supplies are contracted for prior
to the heating season so price levels can be locked in to assure reliability
of supply and stability in pricing.
The heating season starting November 1994 through March 1995 was unseasonably
warm. This created a surplus of gas impacting the marketplace which decreased
the price of natural gas supplies overall. This resulted in savings to the
Company's customers. During the summer when customer demand and supply cost
is typically the lowest, long-term firm supply contracts and spot market
purchases are utilized to meet customer demand.
<PAGE>
Regarding transportation of supply, the Company has firm transportation
service on ANR for a maximum daily quantity of 55,367 dekatherms. The
Company's NNG maximum daily quantity for firm transportation service is
48,719 dekatherms during the winter and 34,024 dekatherms during the summer.
The Company also holds 2,389 dekatherms of firm transportation service into
Viroqua's NNG gate station and 1,500 dekatherms of firm transportation service
into its new service territory in Crawford County.
General
The Company's business is seasonal to the same extent as other upper Midwest
electric and natural gas utilities.
The Company had 683 permanent employees at December 31, 1994.
Information regarding Company executive officers is included under Item 10 of
this report, page III-1, which information is incorporated herein by
reference.
<PAGE>
Item 2. Properties.
The following table presents the generating capability in service at
December 31, 1994:
Commercial Net Capability No. of
Plants Operation Date Fuel (Megawatt ) Units
Steam Plants
Columbia 1975 & 1978 Low-Sulfur Coal 231(1)(2) 2
Kewaunee 1974 Nuclear 94(1)(3) 1
Blount 1957 & 1961 Coal/Gas 99 2
(Madison) 1938 & 1942 Gas/Coal 38 2
1949 Coal/Gas 22 1
1964 - 1968 Gas/Oil 34 4
Combustion
Turbines 1964 - 1973 Gas/Oil 90 5
Total 608
(1) Base load generation.
(2) Company's 22% share of two 525-mw units located near Portage, Wis.
(3) Company's 17.8% share of 525-mw unit located near Kewaunee, Wis.
Major electric transmission and distribution lines and substations in service
at December 31, 1994, are as follows:
Miles
Lines Overhead Lines Underground Lines
Transmission:
345 kV 124 -
138 kV 96 3
69 kV 66 18
Distribution:
13.8 kV and under 1,076 636
Substations Installed Capacity (KVA)
Transmission (22) 4,132,350
Distribution (33) 361,700
Gas facilities include 1,750 miles of distribution mains and one propane air
plant capable of producing a maximum daily capacity of 9,000 dekatherms of
natural gas equivalent.
Item 3. Legal Proceedings.
None.
Item 4. Results of Votes of Security Holders.
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year.
<PAGE>
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder
Matters.
The principal market in which the common stock of the Company is traded is the
NASDAQ National Market System (NASDAQ) under the symbol MDSN. The approximate
number of stockholders of record on February 1, 1995, was 16,238. The
Company's transfer agent and registrar is Harris Trust and Savings Bank,
Chicago, Illinois. The high and low sales prices for the common stock on
NASDAQ and the dividends paid per common share for each quarter for the past
two fiscal years are shown below:
Common Stock Price Range Dividends Per Share
1994 1994
High Low
First quarter ........ $34 1/4 $31 $0.465
Second quarter ....... $33 3/4 $31 3/4 $0.465
Third quarter ........ $35 $31 3/4 $0.47
Fourth quarter ....... $33 3/4 $31 3/4 $0.47
Common Stock Price Range Dividends Per Share
1993 1993
High Low
First quarter ........ $35 1/2 $30 1/4 $0.455
Second quarter ....... $35 1/4 $32 3/4 $0.455
Third quarter ........ $36 3/4 $32 3/4 $0.465
Fourth quarter ....... $36 1/2 $32 3/4 $0.465
<PAGE>
Item 6. Selected Financial Data.
<TABLE>
<CAPTION>
For the years ended December 31, 1994 1993 1992 1991 1990
(In thousands of dollars, except
per-share amounts)
<S> <C> <C> <C> <C> <C>
Summary of Operations
Operating Revenues:
Electric .......................... $149,665 $147,201 $142,646 $146,378 $140,493
Gas ............................... 95,307 96,932 85,356 85,822 80,075
Total ............................ 244,972 244,133 228,002 232,200 220,568
Operating Expenses .................. 187,469 187,717 172,049 173,419 165,988
Other General Taxes ................. 8,619 8,222 8,107 7,872 7,574
Income Tax Items .................... 14,822 13,964 12,784 14,535 12,208
Net Operating Income ............. 34,062 34,230 35,062 36,374 34,798
Other Income (including allowance for
funds used during construction) ... 2,146 2,118 2,210 1,242 1,512
Income Before Interest Expense ... 36,208 36,348 37,272 37,616 36,310
Interest Expense .................... 11,197 11,673 13,465 12,736 14,281
Net Income ....................... 25,011 24,675 23,807 24,880 22,029
Preferred Dividends ................. 471 489 506 524 541
Earnings on Common Stock ......... $ 24,540 $ 24,186 $ 23,301 $ 24,356 $ 21,488
Average Shares Outstanding <F1>...... 10,720 10,704 10,697 10,696 10,530
Earnings Per Share <F1>............ $2.29 $2.26 $2.18 $2.28 $2.04
Dividends Paid Per Share <F1>...... $1.87 $1.84 $1.79 $1.75 $1.72
Ratio of Earnings to Fixed
Charges <F2>..................... 4.49 4.15 3.60 3.88 3.24
At December 31,
Assets
Electric ............................ $323,870 $328,048 $325,510 $330,136 $331,609
Gas ................................. 118,210 114,626 106,837 104,381 104,270
Assets not allocated ................ 45,679 22,690 20,390 20,548 14,455
Total ............................. $487,759 $465,364 $452,737 $455,065 $450,334
Capitalization
Common Shareholders' Equity ......... $189,489 $184,995 $180,367 $176,213 $170,168
Redeemable Preferred Stock .......... 5,100 5,400 5,600 5,800 6,000
Long-term Debt ...................... 130,800 120,396 122,363 124,859 135,813
Short-term Debt ..................... 28,600 23,500 17,000 5,600 2,100
Total Capitalization .............. $353,989 $334,291 $325,330 $312,472 $314,081
<FN>
<F1> Average shares outstanding and per share amounts have been restated to reflect a
three-for-two stock split effective January 2, 1992.
<F2> For the purpose of computing the ratio of earnings to fixed charges, earnings have been
calculated by adding to income before interest expense, current and deferred federal and
state income taxes, investment tax credits deferred and restored charged (credited) to
operations, and the estimated interest component of rentals. Fixed charges represent
interest expense, amortization of debt discount, premium and expense, and the estimated
interest component of rentals.
</TABLE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
Earnings overview
In 1994, earnings per share of Madison Gas and Electric Company's (the
Company) common stock were $2.29, an increase of 1.3 percent compared to the
$2.26 earned in 1993. The colder weather conditions during the first quarter
of 1994 contributed to increases in natural gas deliveries. Gas and electric
sales were positively impacted by an increase in customer base. Other factors
that led to improved earnings were holding operating expenses to 1993 levels
and a reduction in interest costs from 1993.
Electric sales and revenues
Electric retail sales for 1994 increased 4.0 percent from 1993. The electric
sales breakdown by customer class is shown in the table below. The increase
in electric sales for 1994 over 1993 is attributable to a 1.4 percent increase
in electric retail customers. Also, the addition of a large, base-load
industrial customer helped increase sales. As a result, revenues increased
1.7 percent in 1994 as compared to 1993. Electric base rates were reduced in
June 1993 by 2.9 percent on an annual basis.
In 1993, electric retail sales increased 5.2 percent from 1992, due in part to
warmer weather experienced in the third quarter of 1993. Total electric
revenues increased 3.2 percent in 1993 versus 1992, which reflects the June
1993 rate decrease.
Gas sales and revenues
Gas delivered to the customers for 1994 increased 6.3 percent from 1993. The
breakdown of gas deliveries by customer class is shown in the table below.
The extremely cold first quarter of 1994 helped bolster gas deliveries. The
average temperature for the first quarter of 1994 was 5 degrees (Fahrenheit)
colder than the first quarter of 1993, and 4 degrees colder than normal. Also
contributing to the increase in gas deliveries is the increase in the gas
customer base, due in part to the Company's expansion of its gas service
territory in western Wisconsin. The customer base increased 3.1 percent in
1994 when compared to 1993. Gas base rates were reduced in June 1993 by
1.6 percent on an annual basis.
In 1993, both gas deliveries and revenues increased from 1992 due to cooler
weather conditions, a shift in a major customer from transportation rates
(which is not counted as a system sale) to system rates, and an increase in
customers as a result of the acquisition of two gas utilities in western
Wisconsin.
1994 1994
Electric Sales Gas Deliveries
Residential.......... 26.6% 40.7%
Commercial........... 56.7% 35.6%
Industrial........... 8.7% 3.9%
Other................ 8.0% 9.0%
Transport............ - 10.8%
Total............... 100.0% 100.0%
<PAGE>
Electric fuel and natural gas costs
The Company relied more on its generating units and purchased less energy in
1994 versus 1993 due to lower fuel costs. This resulted in an increase of
13.2 percent in fuel used for 1994 when compared to 1993 and a decrease in
purchased energy of 10.5 percent for the same period (see net generation table
below). During June 1994, the Company set a record for peak demand at
551 megawatts for one hour.
Natural gas costs decreased 4.5 percent in 1994 as compared to 1993. The
decrease is mainly attributed to lower natural gas costs per therm in the
fourth quarter of 1994, resulting from the unseasonably warm weather
experienced. A shift in a major customer from system service to
transportation service, which is only recorded on a margin basis, also
contributed to the decrease in natural gas costs.
1994 1994
Net Generation Distribution of Revenues
Coal.............. 55.6% O&M Expenses................. 28%
Nuclear........... 26.2% Purchased Gas................ 24%
Purchased Power... 16.4% Fuel - Electric Generation
Gas............... 1.6% and Purchased Power......... 15%
Other............. 0.2% Taxes and Other.............. 10%
Total............ 100.0% Net Income................... 10%
Depreciation................. 9%
Interest..................... 4%
Total....................... 100%
Other items
Operations and maintenance expenses for 1994, in aggregate, remained at the
same approximate level as last year, while depreciation expense increased
2.7 percent in 1994 from 1993. The increase in depreciation expense is mainly
due to additional plant-in-service.
Income taxes charged to operations increased 6.1 percent in 1994 from 1993
because of higher taxable income combined with decreased income statement
benefits from amortization of excess deferred taxes, previously collected from
customers, at tax rates higher than the current statutory rate (35 percent).
Interest on long-term debt decreased 5.7 percent in 1994 from 1993, which is
attributable to the Company's repurchase of its 8 percent, 1999 series, First
Mortgage Bonds in October 1993. Other interest increased in 1994 when
compared to 1993 due to a higher level of commercial paper outstanding
throughout 1994 (see Notes 1i and 2c).
Electric and gas operations outlook
Over the next five-year period ending December 31, 1999, the Company
anticipates electric sales to grow at a compound annual rate of approximately
1.5 percent assuming moderate growth in the service territory and normal
weather. The Company is in a favorable position for a deregulated market
because of its competitive electric rates and its low percentage of industrial
customers.
<PAGE>
Natural gas deliveries are estimated to grow at a compound annual rate of
2.0 percent, subject to variables such as weather and the economy. The
Company will continue efforts to expand its gas service territory and its
unregulated gas marketing activities.
Liquidity and Capital Resources
Capital resources
The Company's liquidity is primarily affected by the requirements of its
ongoing construction program. During 1994, all of the Company's construction
and nuclear fuel expenditures were provided for by internally generated cash.
A portion of the electric construction program during 1994 was satisfied
through construction fund draw-downs. For the five-year period ending
December 31, 1999, the Company estimates that internally generated cash will
provide, on average, over 100 percent of the utilities plant and nuclear fuel
expenditures.
Capital requirements
In 1994, capital expenditures increased approximately $3 million as compared
to 1993. This is due in part to the significant increased capital
expenditures for the new gas service territories in western Wisconsin. It is
anticipated that 1995 construction and nuclear fuel expenditures will be
$25 million, and the expenditures for the years 1996 through 1999 are expected
to remain at similar levels. Through these expenditures, the Company will
have efficient, up-to-date facilities for providing reliable service to
customers and for meeting their future energy needs.
The Company has been able to delay building any new generating facilities
through efficient Demand-Side Management Programs and aggressively pursuing
purchase power contracts to meet future energy demands. The Company
negotiated a purchased power agreement with Dairyland Power Cooperative that
provides for the purchase of 40 megawatts of electric capacity during the
years 1996 to 2000.
Expenditures for construction and nuclear fuel estimated for 1995, actual for
1994, and the average for the three-year period 1991 to 1993 are shown below:
For the years ended December 31:
(Thousands of dollars) 1995 Annual Average
Estimated 1994 1991 - 1993
Electric
Production................ $ 3,446 13.8% $ 1,777 6.7% $ 3,018 15.1%
Transmission.............. 1,078 4.3 2,045 7.7 1,726 8.7
Distribution and General.. 9,284 37.1 8,680 32.9 7,316 36.7
Nuclear Fuel.............. 3,616 14.5 3,427 13.0 2,550 12.8
Total Electric......... 17,424 69.7 15,929 60.3 14,610 73.3
Gas........................ 4,382 17.5 9,072 34.3 3,737 18.7
Common..................... 3,194 12.8 1,428 5.4 1,602 8.0
Total.................. $25,000 100.0% $26,429 100.0% $19,949 100.0%
<PAGE>
Inflation
The current financial statements report operating results in terms of
historical cost. Even though the statements provide a reasonable, objective,
quantifiable statement of financial results, they do not evaluate the impact
of inflation. For ratemaking purposes, projected normal operating costs
include impacts of inflation which are recoverable in revenues. However,
electric and gas utilities, in general, are adversely impacted by inflation
because depreciation of utility plant is limited to the recovery of historical
costs. Thus, cash flows from the recovery of existing utility plant may, to a
certain extent, not be adequate to provide replacement of plant investment.
Environmental and legislative issues
The Federal Clean Air Act as amended in 1990 will have a major impact on many
electric utilities. However, the Company does not anticipate that Phase I of
the Act, effective in 1995, will have any major impact on operations. The
Company is also confident that if capital investments are required at some
future date, the Company will receive timely recovery of such costs. The
Company believes that fuel switching will be the effective strategy to follow
to meet Phase II of the Act.
In 1992, the National Energy Policy Act (Act) was enacted. Generally, the Act
promotes energy efficiency, a clean environment, and increased competition in
the electric generation and bulk transmission areas. The Company is actively
engaged in each of these areas. Wisconsin is a world leader in promoting
energy efficiency, adherence to strict environmental principles, and
competition for both generation and transmission. The utilities industry is
expected to see changes through increased competition. New regulations have
encouraged competition and are leading the way toward a deregulated market.
This competition could have a significant impact on the Company. The Company
is positioning itself to succeed in such an environment.
On April 8, 1992, the FERC issued Order 636. Order 636 requires all companies
with natural gas pipelines to separate natural gas sales service from
transmission service. It also requires these pipelines to offer flexibility
to parties contracting for service.
Following the issuance of Order 636, ANR Pipeline Company (ANR) and Northern
Natural Gas Company (NNG), the Company's pipeline suppliers, made filings at
FERC to comply with Order 636. The Company played an active role negotiating
with both pipelines to achieve the greatest benefit for its customers.
Effective November 1, 1993, ANR and NNG's services that comply with Order 636
went into effect. The services that the Company has contracted for have met
the needs of its customers reliably and economically.
Capitalization matters
At December 31, 1994, bank lines of credit available to the Company were
$32 million. The bank lines are generally used to support commercial paper
issued, which represents a primary source of short-term financing. The
Company's dealer-issued commercial paper carries the highest ratings assigned
by Moody's Investors Service and Standard & Poor's Corporation.
The Company's existing bonds are rated AA by Standard & Poor's and Aa2 by
Moody's Investors Service.
<PAGE>
Capitalization ratios are shown in the Summary of Selected Financial and
Operating Data on page 29. Under the Company's Automatic Dividend
Reinvestment and Stock Purchase Plan, in 1993 and 1994 the Company has
purchased all of its shares of common stock on the open market. The Company
anticipates it will be able to meet its construction requirements, reduce
short-term debt, and meet sinking fund debt requirements with internally
generated funds and construction fund draw-downs over the next three years.
Acquisition of American Energy Management, Inc.
On January 3, 1995, the Company purchased American Energy Management, Inc.
(AEM), a national energy marketing firm that provides gas marketing, energy
management, energy auditing, and conservation services to customers in ten
states. AEM, a subsidiary of Great Lakes Energy Corp. (GLENCO), serves mostly
small- to medium-sized companies. GLENCO, a wholly-owned subsidiary of the
Company, markets excess gas supplies and pipeline capacity to commercial and
industrial customers.
<PAGE>
Item 8. Financial Statements and Supplementary Data.
Index of Consolidated Financial Statements, Footnotes, and Supplementary Data
- Responsibility for Financial Statements . . . . . . . . . . . . . . . F-1
- Report of Independent Accountants . . . . . . . . . . . . . . . . . . F-2
- Report of Independent Public Accountants . . . . . . . . . . . . . . . F-2a
- Consolidated Statements of Income and Retained Income . . . . . . . . F-3
- Consolidated Statements of Cash Flow . . . . . . . . . . . . . . . . . F-4
- Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . F-5
- Consolidated Statements of Capitalization . . . . . . . . . . . . . . F-6
- Notes to Consolidated Financial Statements . . . . . . . . . . . F-7 - F-15
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
<PAGE>
Responsibility for Financial Statements
The management of Madison Gas and Electric Company is responsible for the
preparation and presentation of the financial information in this Annual
Report. The following financial statements have been prepared in accordance
with generally accepted accounting principles consistently applied and reflect
management's best estimates and informed judgments as required.
To fulfill these responsibilities, management has developed and maintains a
comprehensive system of internal operating, accounting, and financial
controls. These controls provide reasonable assurance that the Company's
assets are safeguarded, transactions are properly recorded, and the resulting
financial statements are reliable. An internal audit function assists
management in monitoring the effectiveness of the controls.
The Report of Independent Accountants on the financial statements by Coopers &
Lybrand L.L.P. appears on page F-2. The responsibility of the independent
accountants is limited to the audit of the financial statements presented and
the expression of an opinion as to their fairness.
The Board of Directors maintains oversight of the Company's financial
situation through its monthly review of operations and financial condition and
its selection of the independent accountants. The Audit Committee, comprised
of all Board members who are not employees or officers of the Company, also
meets periodically with the independent accountants and the Company's internal
audit staff who have complete access to and meet with the Audit Committee,
without management representatives present, to review accounting, auditing,
and financial matters. Pertinent items discussed at the meetings are reviewed
with the full Board of Directors.
/s/ David C. Mebane
David C. Mebane
Chairman, President and
Chief Executive Officer
/s/ Joseph T. Krzos
Joseph T. Krzos
Vice President - Finance
<PAGE>
Report of Independent Accountants
To the Shareholders and Board of Directors,
Madison Gas and Electric Company:
We have audited the accompanying consolidated balance sheets and statements of
capitalization of MADISON GAS AND ELECTRIC COMPANY and subsidiaries as of
December 31, 1994 and 1993, and the related consolidated statements of income
and retained income and cash flows for the years ended December 31, 1994 and
1993. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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, the financial statements referred to above present fairly, in
all material respects, the financial position of Madison Gas and Electric
Company and subsidiaries as of December 31, 1994 and 1993, and the
consolidated results of their operations and their cash flows for the years
ended December 31, 1994 and 1993, in conformity with generally accepted
accounting principles.
Milwaukee, Wisconsin
February 10, 1995 COOPERS & LYBRAND L.L.P.
<PAGE>
Report of Independent Public Accountants
To the Shareholders and Board of Directors,
Madison Gas and Electric Company:
We have audited the accompanying consolidated balance sheet and statement of
capitalization (not presented herein) of MADISON GAS AND ELECTRIC COMPANY (a
Wisconsin Corporation) and subsidiaries as of December 31, 1992, and the
related consolidated statements of income, retained income, and cash flows for
the year ended December 31, 1992. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. 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, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Madison Gas and
Electric Company and subsidiaries as of December 31, 1992, and the
consolidated results of their operations and their cash flows for the year
ended December 31, 1992, in conformity with generally accepted accounting
principles.
Chicago, Illinois
February 12, 1993 ARTHUR ANDERSEN LLP
<PAGE>
Consolidated Statements of Income and Retained Income
<TABLE>
<CAPTION>
For the years ended December 31 1994 1993 1992
(Thousands of dollars, except per-share amounts)
<S> <C> <C> <C>
Statements of Income
Operating Revenues (Notes 1b and 3)
Electric........................................ $149,665 $147,201 $142,646
Gas............................................. 95,307 96,932 85,356
Total Operating Revenues.................... 244,972 244,133 228,002
Operating Expenses
Fuel used for electric generation (Note 1d)..... 26,167 23,125 26,062
Purchased power................................. 10,015 11,190 6,378
Natural gas purchased........................... 59,693 62,479 53,169
Other operations................................ 56,795 56,103 52,469
Maintenance..................................... 12,416 13,029 12,544
Depreciation and amortization (Note 1g)......... 22,383 21,791 21,427
Other general taxes............................. 8,619 8,222 8,107
Income taxes (Note 1h).......................... 14,822 13,964 12,784
Total Operating Expenses.................... 210,910 209,903 192,940
Net Operating Income.............................. 34,062 34,230 35,062
Allowance for funds used during construction -
equity funds (Note 1c)........................ 132 81 42
Other income, net............................... 1,939 1,988 2,139
Income Before Interest Expense.............. 36,133 36,299 37,243
Interest Expense
Interest on long-term debt...................... 10,558 11,195 13,249
Other interest (Note 2c)........................ 639 478 216
Allowance for funds used during construction -
borrowed funds (Note 1c)...................... (75) (49) (29)
Net Interest Expense........................ 11,122 11,624 13,436
Net Income........................................ 25,011 24,675 23,807
Preferred stock dividend requirements............. 471 489 506
Earnings on Common Stock.......................... $ 24,540 $ 24,186 $ 23,301
Earnings Per Share of Common Stock
(Average shares outstanding--10,719,812,
10,703,558, and 10,697,218, respectively)......... $2.29 $2.26 $2.18
STATEMENTS OF RETAINED INCOME
Balance--Beginning of Year........................ $72,865 $68,380 $64,226
Add - Net income.................................. 25,011 24,675 23,807
Deduct - Cash dividends on common stock........... (20,046) (19,701) (19,147)
- Preferred stock dividend................. (471) (489) (506)
Balance--End of Year.............................. $77,359 $72,865 $68,380
<FN>
The accompanying notes are an integral part of the above statements.
</TABLE>
<PAGE>
Consolidated Statements of Cash Flow
<TABLE>
<CAPTION>
For the years ended December 31 1994 1993 1992
(Thousands of dollars)
<S> <C> <C> <C>
Operating Activities
Net income....................................... $25,011 $24,675 $23,807
Income items not affecting working capital
Depreciation and amortization.................. 22,383 21,791 21,427
Deferred income taxes.......................... 2,428 3,255 2,563
Amortization of nuclear fuel................... 2,803 2,486 2,997
Amortization of investment tax credits......... (783) (803) (759)
Allowance for funds used during construction -
equity funds................................. (132) (81) (42)
Other.......................................... 994 (462) 303
Net Funds Provided from Operations........... 52,704 50,861 50,296
Changes in working capital, excluding cash
equivalents, sinking funds, maturities, and
interim loans -
(Increase)/decrease in current assets.......... (10,789) (4,647) 3,380
Decrease in current liabilities................ (2,127) (2,941) (2,738)
Other noncurrent items, net...................... 1,171 (1,878) (11,358)
Cash Provided by Operating Activities........ 40,959 41,395 39,580
Financing Activities
Common stock issued.............................. - 143 -
Cash dividends on common and preferred stock..... (20,517) (20,190) (19,653)
Sale of First Mortgage Bonds..................... - 25,000 59,300
Maturities/redemptions of First Mortgage Bonds... - (33,788) (74,464)
Other decreases in First Mortgage Bonds.......... (58) (122) (858)
Decrease in preferred stock...................... (200) (200) (200)
Decrease in bond construction funds, net......... 10,892 6,943 3,526
Increase in interim loans........................ 5,100 6,500 11,400
Cash Used for Financing Activities............ (4,783) (15,714) (20,949)
Investing Activities
Additions to utility plant and nuclear fuel...... (26,429) (23,648) (16,364)
Allowance for funds used during construction -
borrowed funds............................... (75) (49) (29)
Increase in decommissioning fund................. (2,316) (2,399) (2,273)
Cash Used for Investing Activities............ (28,820) (26,096) (18,666)
Change in Cash and Cash Equivalents (Note 6)....... 7,356 (415) (35)
Beginning of period.............................. 4,178 4,593 4,628
Cash and cash equivalents - end of period
(Note 1f)........................................ $11,534 $ 4,178 $ 4,593
<FN>
The accompanying notes are an integral part of the above statements.
</TABLE>
<PAGE>
Consolidated Balance Sheets
<TABLE>
<CAPTION>
At December 31 1994 1993
(Thousands of dollars)
<S> <C> <C>
Assets
Utility Plant, at original cost (Note 1c)
In service--Electric (Note 1e).......................... $479,346 $466,984
--Gas......................................... 167,710 158,458
Gross Plant in Service.............................. 647,056 625,442
Less--Accumulated provision for depreciation (Note 1g).. (323,511) (302,904)
Net Plant in Service................................ 323,545 322,538
Construction work in progress........................... 11,920 12,251
Nuclear decommissioning fund (Note 1g).................. 27,815 25,499
Nuclear fuel, net (Note 1d)............................. 8,386 8,305
Total Utility Plant................................. 371,666 368,593
Other Property and Investments............................ 9,843 9,822
Current Assets
Cash and cash equivalents (Note 1f)..................... 11,534 4,178
Accounts receivable, less reserves of $921 and $973,
respectively (Note 1i)................................ 25,998 10,593
Unbilled revenue (Note 1b).............................. 10,411 11,458
Materials and supplies, at average cost................. 6,424 7,254
Fossil fuel, at average cost............................ 2,130 3,333
Stored natural gas, at average cost..................... 8,551 10,562
Prepaid taxes........................................... 5,838 5,693
Other prepayments....................................... 1,456 1,126
Total Current Assets................................. 72,342 54,197
Deferred Charges.......................................... 33,908 32,752
Total Assets........................................ $487,759 $465,364
Capitalization and Liabilities
Capitalization (see statement) (Note 2)................... $325,389 $310,791
Current Liabilities
Long-term debt sinking fund requirements (Note 2b)...... 430 -
Preferred stock sinking fund requirements............... 200 100
Interim loans - commercial paper outstanding (Note 2c).. 28,600 23,500
Accounts payable........................................ 18,360 17,890
Accrued taxes........................................... 1,143 2,056
Accrued interest........................................ 2,803 2,810
Other................................................... 4,327 5,998
Total Current Liabilities............................ 55,863 52,354
Other Credits
Accumulated deferred income taxes (Note 1h)............. 56,595 54,167
Regulatory liability (Note 1h).......................... 25,204 25,264
Investment tax credit deferred (Note 1h)................ 12,998 13,781
Other................................................... 11,710 9,007
Total Other Credits.................................. 106,507 102,219
Commitments (Note 4)...................................... - -
Total Capitalization and Liabilities................ $487,759 $465,364
<FN>
The accompanying notes are an integral part of the above balance sheets.
</TABLE>
<PAGE>
Consolidated Statements of Capitalization
<TABLE>
<CAPTION>
At December 31 1994 1993
(Thousands of Dollars)
<S> <C> <C>
Common Shareholders' Equity
Common stock--Par value $8 per share
Authorized: 28,000,000 shares
Outstanding: 10,719,812 shares........................... $ 85,758 $ 85,758
Amount received in excess of par value...................... 26,372 26,372
Retained income............................................. 77,359 72,865
Total Common Shareholders' Equity....................... 189,489 184,995
Redeemable Preferred Stock, cumulative, $25 par value,
authorized 1,191,000 and 1,199,000 shares,
respectively (Note 2a)
Series E, 8.70%, 212,000 and 220,000 shares
outstanding, respectively, less current sinking
fund requirements of $200 and $100, respectively.......... 5,100 5,400
First Mortgage Bonds
5.45%, 1996 Series.......................................... 7,920 8,000
7 3/4%, 2001 Series......................................... 11,478 11,482
6 1/2%, 2006 Series,
Pollution Control Revenue Bonds,
principal amount $8,780, less construction fund of
$1,618 and $1,556, respectively........................... 7,162 7,224
8.50%, 2022 Series.......................................... 40,000 40,000
6.75%, 2027A Series,
Industrial Development Revenue Bonds,
principal amount $28,000, less construction
fund of $6,472 and $17,426, respectively.................. 21,528 10,574
6.70%, 2027B Series,
Industrial Development Revenue Bonds...................... 19,300 19,300
7.70%, 2028 Series.......................................... 25,000 25,000
First Mortgage Bonds Outstanding.......................... 132,388 121,580
Unamortized discount and premium on bonds, net.............. (1,158) (1,184)
Long-term debt sinking fund requirement (Note 2b)........... (430) -
Total First Mortgage Bonds.............................. 130,800 120,396
Total Capitalization..................................... $325,389 $310,791
<FN>
The accompanying notes are an integral part of the above statements.
</TABLE>
<PAGE>
Notes to Consolidated Financial Statements
December 31, 1994, 1993, and 1992
1. Summary of Significant Accounting Policies
The consolidated financial statements reflect the application of certain
accounting policies described in this note. Certain reclassifications, not
affecting income, have been made to amounts reported in prior years to conform
with presentations used in 1994.
a. Basis of consolidation
The financial statements include the accounts of Madison Gas and Electric
Company and its subsidiaries (the Company). All significant intercompany
accounts and transactions have been eliminated in consolidation.
b. Revenue recognition
The Company records unbilled revenue on the basis of service rendered.
Gas revenues are subject to adjustment clauses related to periodic changes in
the cost of gas.
c. Utility plant
Utility plant is stated at the original cost of construction, which
includes indirect costs consisting of payroll taxes, pensions, post retirement
benefits, other fringe benefits, administrative and general costs, and an
allowance for funds used during construction (AFUDC).
AFUDC represents the approximate cost of debt and equity capital devoted
to plant under construction. The Company presently capitalizes AFUDC at a
rate of 10.62 percent on 50 percent of construction work in progress. The
AFUDC rate approximates the Company's cost of capital. The portion of the
allowance applicable to borrowed funds is presented in the Consolidated
Statements of Income as a reduction of interest expense, while the portion of
the allowance applicable to equity funds is presented as other income.
Although the allowance does not represent current cash income, it is recovered
under the ratemaking process over the service lives of the related properties.
Substantially, all of the Company's utility plant is subject to a first
mortgage lien.
d. Nuclear fuel
The cost of nuclear fuel used for electric generation is being amortized
to fuel expense and recovered in rates based on the quantity of heat produced
for the generation of electric energy by the Kewaunee. Such cost includes a
provision for estimated future disposal costs of spent nuclear fuel. The
Company currently pays disposal fees to the Department of Energy based on net
nuclear generation. The Company has recovered through rates and satisfied its
known fuel disposal liability for past nuclear generation.
<PAGE>
The National Energy Policy Act enacted in 1992 contains a provision for
all utilities that have used federal enrichment facilities to pay a special
assessment for decontamination and decommissioning for these facilities. This
special assessment will be based on past enrichment, and the Company has
accrued and deferred an estimate of $2.7 million for the Company's portion of
the special assessment. The Company believes all costs will be recovered in
future rates.
e. Joint plant ownership
The Company and two other Wisconsin investor-owned utilities jointly own
two electric generating facilities, which account for 54 percent (325 mw) of
the Company's net generating capability. Power from the facilities is shared
in proportion to the companies' ownership interests. The Company's interests
are 22 percent (232 mw) of the coal-fired Columbia Energy Center (Columbia)
and 17.8 percent (93 mw) of Kewaunee. Each owner provides its own financing
and reflects its respective portion of facilities and operating costs in its
financial statements. The Company's portions of these facilities, included in
its gross utility plant in service, and the related accumulated depreciation
reserves at December 31, were as follows:
Columbia Kewaunee
(Thousands of dollars) 1994 1993 1994 1993
Utility plant.............. $ 85,092 $ 84,620 $ 57,534 $ 56,872
Accumulated depreciation... (44,238) (41,550) (32,793) (31,405)
Net Plant............... $ 40,854 $ 43,070 $ 24,741 $ 25,467
f. Cash and cash equivalents
The Company considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents. The carrying amount
approximates fair value because of the short maturity of these items.
g. Depreciation
Provisions at composite straight-line depreciation rates, excluding
decommissioning costs as discussed as follows, approximate the following
percentages of the cost of depreciable property: electric, 3.3 percent in
1994, 3.5 percent in 1993, and 3.3 percent in 1992; gas, 3.5 percent in 1994
through 1992, respectively. Depreciation rates are approved by the PSCW and
are generally based on the estimated economic lives of property.
External trust funds have been established for costs associated with the
future decommissioning of Kewaunee. It is estimated that the Company's share
of decommissioning, which includes the cost of decontamination, dismantling,
and site restoration, will be $57 million (1992 dollars) based on a
site-specific study completed in 1992. Decommissioning costs (net of trust
fund income), recovered through rates, are $3.1 million annually starting in
January 1995. The Company's costs accrued to date, which are recorded in
accumulated depreciation, are $28 million.
<PAGE>
h. Income taxes
The Company has adopted Statement of Financial Accounting Standard
No. 109 (SFAS 109), "Accounting for Income Taxes," effective January 1, 1993.
This statement replaced the deferred method of income tax accounting with the
liability method. The liability method requires the recognition of deferred
tax assets and liabilities for the expected tax consequences of temporary
differences between the tax basis of assets and liabilities and their reported
amounts. The statement was adopted prospectively and the cumulative effect of
implementation on 1993 net income was insignificant. The principal effects on
the Company's 1993 financial statements of adoption were a decrease in
accumulated deferred income taxes and the establishment of a corresponding
regulatory liability in the amount of $25,264,000.
In 1993, accumulated deferred income taxes were increased by
approximately $2.6 million as the result of the increase in the federal
statutory income tax rate from 34 to 35 percent effective January 1, 1993.
Investment tax credits from regulated operations are amortized over the
service lives of the property to which they relate.
Total income taxes in the Consolidated Statements of Income are as
follows:
(Thousands of dollars) 1994 1993 1992
Income taxes charged to operations............ $14,822 $13,964 $12,784
Income taxes charged to other income.......... 612 491 602
Total income taxes............................ $15,434 $14,455 $13,386
Total income taxes consist of the following provision (benefit) components for
the years ended December 31:
(Thousands of dollars) 1994 1993 1992
Currently payable
Federal..................................... $10,985 $ 9,485 $ 9,126
State....................................... 2,804 2,518 2,456
Net deferred
Federal..................................... 1,756 2,432 1,826
State....................................... 672 823 737
Amortized investment tax credits.............. (783) (803) (759)
Total income taxes............................ $15,434 $14,455 $13,386
The differences between the federal statutory income tax rate and the
Company's effective rate are as follows:
1994 1993 1992
Statutory federal income tax rate............. 35.0% 35.0% 34.0%
Restoration of investment tax credit.......... (1.9) (2.1) (2.0)
State income taxes, net of federal benefit.... 5.6 6.3 6.3
Amortization of excess deferred taxes......... (1.1) (1.3) (1.2)
Other, individually insignificant............. 0.6 (1.0) (1.1)
Effective income tax rate..................... 38.2% 36.9% 36.0%
<PAGE>
The significant components of deferred tax liabilities (assets) that appear on
the Consolidated Balance Sheets as of December 31, 1994 and 1993, are as
follows:
(Thousands of dollars) 1994 1993
Property-related.............................. $ 60,295 $ 58,914
Energy conservation expenses.................. 6,168 5,262
Automated mapping and facilities management
system...................................... 860 1,262
Bond transactions............................. 2,131 1,027
Nuclear fuel.................................. 412 958
Other, individually insignificant............. 25 305
Gross deferred income tax liabilities.... $ 69,891 $ 67,728
Allowance for bad debts....................... (370) (393)
Deferred compensation......................... (1,061) (1,030)
Vacation pay.................................. (772) (718)
Stored natural gas............................ (977) (1,280)
Deferred tax regulatory account............... (10,116) (10,140)
Gross deferred income tax assets......... (13,296) (13,561)
Accumulated deferred income taxes........ $ 56,595 $ 54,167
Valuation allowances for deferred tax assets as of December 31, 1994 and 1993,
were deemed unnecessary. Deferred income tax expense for 1992 results
principally from property-related timing differences due to different
depreciation methods and lives used for income tax and financial reporting
purposes.
i. Accounts receivable
On June 30, 1994, the Company bought back $15 million of its accounts
receivable from a wholly owned subsidiary of The First National Bank of
Chicago. The Company sold $15 million of its accounts receivable in December
1990. The Company used short-term borrowings for the buy-back of its
receivables.
j. Pension plans
The Company maintains two defined benefit plans for its employees. The
pension benefit formula used in the determination of pension costs is based
upon the average compensation earned during the last five years of employment
for the salaried plan and career earnings for the nonsalaried plan subject to
a monthly maximum.
The Company's funding policy is to make such contributions as are
necessary to finance the benefits provided under the plans. The Company's
contributions meet the funding standards set forth in the Employee Retirement
Income Security Act of 1974. Ratemaking practice has historically allowed the
accrued pension funding amount in rates.
<PAGE>
The Company has recorded 1994 pension costs equal to the funding amount.
The funding amounts were $1,094,000 in 1994, $1,075,000 in 1993, and $988,000
in 1992. Of these amounts, $810,000, $861,000, and $805,000 were charged to
operating expenses for the years 1994 through 1992, respectively. The plans'
assets consist primarily of pooled funds invested with the Prudential Asset
Management Group.
The funded status of the plans at December 31 is as follows:
(Thousands of dollars) 1994 1993
Fair value of plan assets.................. $41,230 $41,905
Actuarial present value of benefits
rendered to date - Accumulated benefits
based on compensation to date, including
vested benefits of $36,066 and
$36,332, respectively.................... 36,895 37,376
Additional benefits based on estimated
future salary levels..................... 7,010 7,693
Projected benefit obligation............... $43,905 $45,069
Plan assets less than projected benefit
obligation............................... (2,675) (3,164)
Unrecognized net asset at date of
initial application...................... (40) (79)
Unrecognized net (gain)/loss............... (156) 295
Unrecognized prior service cost............ 1,256 1,340
Net liability.............................. $(1,615) $(1,608)
Components of net pension costs for the years ended December 31 are:
(Thousands of dollars) 1994 1993 1992
Service costs (benefits earned during the
period)................................... $ 1,462 $ 1,596 $ 1,381
Interest costs on projected benefit
obligation................................ 3,462 3,196 2,867
Actual loss/(return) on plan assets......... 412 (3,663) (2,933)
Net amortization and deferral............... (4,056) 347 (168)
Regulatory effect based on funding.......... (186) (401) (159)
Net pension costs........................... $ 1,094 $ 1,075 $ 988
The net pension costs at December 31, 1994 through 1992, respectively,
were based on an assumed long-term rate of return on plan assets of
9.0 percent. The weighted average discount rate was 8.25 percent in 1994 and
7.50 percent for 1993 and 1992, while the assumed rate of increase in future
compensation levels is 5 percent for 1994 through 1992, respectively.
In addition to the noted plans, the Company also maintains two defined
contribution 401(k) benefit plans for its employees. The Company's costs of
the 401(k) plan for the years 1994, 1993, and 1992 were $199,000, $186,000,
and $180,000, respectively.
<PAGE>
k. Postretirement benefits other than pensions
The Company adopted SFAS 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions," effective January 1, 1993. This statement
requires that postretirement benefits be accrued over the period in which
employees provide services to the Company. The Company provides health care
and life insurance benefits for its retired employees and substantially all of
the Company's employees may become eligible for these benefits upon
retirement. Prior to adoption of SFAS 106, the Company recognized the costs
of these benefits by expensing the benefits as paid.
The Company has elected to recognize the cost of its transition
obligation (the accumulated postretirement benefit obligation as of January 1,
1993) by amortizing it on a straight-line basis over 20 years. The Company's
SFAS 106 obligation and costs are based on a discount rate of 8.25 percent in
1994 and 7.50 percent in 1993. The assumed rate of increase in health care
costs (health care cost trend rate) is 13 percent in 1994 and 1993, decreasing
gradually to 5 percent in 2003, and remaining constant thereafter. Increasing
the health care cost trend rates of future years by one percentage point would
increase the accumulated postretirement benefit obligation by $1.8 million and
would increase annual aggregate service and interest costs by $262,000.
The PSCW ruled that Wisconsin utilities are required to implement
SFAS 106 for ratemaking purposes. The Company is phasing-in, over a four-year
period, the effect of implementing SFAS 106, which resulted in a regulatory
asset of $497,000 at December 31, 1994, and $382,000 at December 31, 1993.
The Company's policy is to fund the SFAS 106 obligation through
tax-advantaged vehicles. The plan's assets consist primarily of funds on
reserve with an insurance company.
The funded status of the plans at December 31 is as follows:
(Thousands of dollars) 1994 1993
Accumulated postretirement benefit
obligation (APBO):
Retirees...................................... $ (4,064) $ (3,208)
Fully eligible active plan participants....... (1,399) (1,287)
Other active plan participants................ (6,562) (6,047)
Total...................................... (12,025) (10,542)
Plan assets at fair value....................... 1,465 1,338
APBO in excess of plan assets................... (10,560) (9,204)
Unrecognized transition obligation.............. 7,813 8,248
Unrecognized loss/(gain)........................ 605 (86)
Accrued postretirement benefit liability... $ (2,142) $ (1,042)
<PAGE>
Components of net periodic benefit costs for the years ended December 31 are
as follows:
(Thousands of dollars) 1994 1993
Service cost.................................... $ 402 $ 413
Interest cost on APBO........................... 772 747
Actual return on plan assets.................... (91) (131)
Amortization of transition obligation over
20 years....................................... 434 434
Net amortization and deferral................... (7) 56
Regulatory effect based on phase-in............. (497) (382)
Net periodic benefit cost....................... $1,013 $1,137
l. Fair value of financial instruments
At December 31, 1994, the carrying amount of cash and cash equivalents
approximates fair value. The estimated fair market value of the Nuclear
Decommissioning Fund is $28 million, and the estimated fair market value of
the Company's First Mortgage Bonds, based on quoted market prices at
December 31, is as follows:
(Thousands of dollars) 1994 1993
Carrying amount (includes sinking funds)... $132,388 $121,580
Fair market value ......................... $124,677 $133,592
2. Capitalization Matters
a. Redeemable preferred stock
The Company repurchased all 212,000 shares outstanding of its Series E,
8.70%, preferred stock on February 21, 1995. The total amount of
approximately $5.5 million was financed with short-term borrowings.
b. First mortgage bonds
The annual sinking fund requirements of the outstanding first mortgage
bonds is $430,000 in 1995 and $350,000 in 1996 through 1999. In addition,
approximately $8 million will be required in 1996, to retire at maturity, the
5.45%, 1996 Series, First Mortgage Bonds.
c. Notes payable to banks, commercial paper, and lines of credit
For short-term borrowings, the Company generally issues commercial paper
(issued at the prevailing discount rate at the time of issuance) which is
supported by unused bank lines of credit. Through negotiations with several
banks, the Company has $32 million in bank lines of credit.
<PAGE>
Information concerning short-term borrowings at December 31 is set forth
below:
(Thousands of dollars) 1994 1993 1992
Available lines of credit................. $32,000 $25,000 $20,000
Commercial paper outstanding.............. $28,600 $23,500 $17,000
Weighted average interest rate............ 6.06% 3.45% 3.94%
During the year:
Maximum short-term borrowings............. $29,500 $26,000 $17,500
Average short-term borrowings............. $16,549 $14,056 $ 3,448
Weighted average interest rate............ 4.57% 3.31% 3.70%
3. Rate Matters
In September 1994, the Company reduced electric rates by $0.9 million on
an annual basis due to lower fuel costs. In December 1994, the PSCW issued
its rate order that further reduced electric rates by $4.2 million and froze
gas rates for the test period ending December 31, 1995. These rates will
remain in place until the next test year, which is scheduled to begin
January 1, 1997. The current rates are based on a return on common equity of
11.7 percent.
4. Commitments
Utility plant construction expenditures for 1995, including the Company's
proportional share of jointly owned electric power production facilities and
purchases of fuel for Kewaunee, are estimated to be $25 million, and
substantial commitments have been incurred in connection with such
expenditures. Significant commitments have also been made for fuel for
Columbia.
<PAGE>
5. Segments of Business
The table below presents information pertaining to the Company's segments
of business.
Information regarding the distribution of net assets between electric and
gas for the years ended December 31 is set forth on page II-2.
(Thousands of dollars) 1994 1993 1992
Electric Operations
Total revenues............................ $149,665 $147,201 $142,646
Operation and maintenance expenses........ 87,748 86,060 82,439
Depreciation and amortization............. 17,337 16,948 16,573
Other general taxes....................... 6,907 6,651 6,614
Pre-tax Operating Income................ 37,673 37,542 37,020
Income taxes.............................. 11,717 11,104 9,988
Net Operating Income...................... $ 25,956 $ 26,438 $ 27,032
Construction and Nuclear Fuel
Expenditures (Electric).................. $ 16,804 $ 18,064 $ 12,548
Gas Operations
Operating revenues........................ $ 95,307 $ 96,932 $ 85,356
Revenues from sales to electric utility... 1,671 2,861 860
Total Revenues.......................... 96,978 99,793 86,216
Operation and maintenance expenses........ 79,009 82,727 69,043
Depreciation and amortization............. 5,046 4,843 4,854
Other general taxes....................... 1,712 1,571 1,493
Pre-tax Operating Income................. 11,211 10,652 10,826
Income taxes.............................. 3,105 2,860 2,796
Net Operating Income...................... $ 8,106 $ 7,792 $ 8,030
Construction Expenditures (Gas)........... $ 9,625 $ 5,584 $ 3,816
6. Supplemental Cash Flow Information
For purposes of the Consolidated Statements of Cash Flows, the Company
considers cash equivalents to be those investments that are highly liquid with
maturity dates of less than three months.
Cash payments for interest and income taxes for the years ended
December 31 were as follows:
(Thousands of dollars) 1994 1993 1992
Interest paid, net of amounts capitalized... $11,235 $11,704 $13,103
Income taxes paid........................... $13,602 $10,954 $12,968
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
Information concerning the Directors of the Company is contained in the
definitive proxy statement under the section "Election of Directors" filed on
March 21, 1995, with the Securities and Exchange Commission, which is
incorporated herein by reference.
Executive Officers of the Registrant (elected annually by Directors)
Service
Eff. Years as
Executive Title Date Officer
David C. Mebane Chairman, President and CEO 05/09/94 14
Age: 61 President CEO and COO 01/01/94
President and COO 10/01/91
Senior V.P. and General Counsel 01/01/88
Vice President and General Counsel 04/17/85
Robert E. Domek Senior V.P. - Human Resources 05/03/93 6
Age: 64 Vice President - Human Resources 12/01/91
Asst. V.P. - Human Resources 10/01/89
Director - Personnel 01/01/69
Burnett F. Adams V.P. - Procurement & Div. Oper. 06/01/94 2
Age: 42 Asst. V.P. - Procurement & Div. Oper. 05/03/93
Exec. Dir. - Materials and Fuel 12/01/91
Director - Gas Rates and Supply 07/01/88
Joseph T. Krzos Vice President - Finance 12/01/92 9
Age: 50 Asst. V.P. - Accounting and Control 12/01/91
Treasurer 05/01/88
Assistant Treasurer 06/01/86
Richard H. Thies V.P. - Gas Systems Operation 07/01/86 9
Age: 53
Mark C. Williamson Vice President - Energy Services 05/03/93 3
Age: 41 Asst. V.P. - Energy Services 06/01/92
Exec. Director - Electric Supply 12/01/91
Corporate Attorney 12/01/89
Senior Staff Attorney 12/01/87
Gary J. Wolter V.P. - Administration and Secretary 12/01/91 4
Age: 40 Secretary and Corporate Attorney 12/01/89
Corporate Attorney 02/13/84
Terry A. Hanson Treasurer 12/01/91 4
Age: 43 Manager - Internal Audit 09/01/84
James C. Boll Asst. V.P. - Law and Corp. Comm. 05/03/93 2
Age: 59 Exec. Dir. - Law and Corp. Comm. 01/13/92
Dir. - Public Affairs and Risk Mgmt. 06/01/91
Director - Risk Management 03/05/90
<PAGE>
Deborah L. Burgess Asst. V.P. - Gas Rates and Supply 11/01/94 1
Age: 35 Director - Gas Rates and Supply 04/01/93
Manager - Gas Rates and Supply 03/01/92
Gas Supply Coordinator -
Gas Rates and Supply 07/18/88
Lynn K. Hobbie Asst. V.P. - Marketing 11/01/94 1
Age: 36 Senior Director - Marketing 07/01/93
Director - Market Planning
and Programs 11/01/92
Manager - Customer Planning
and Research 02/01/92
Supervisor - Marketing Planning
and Evaluation 06/01/90
Supervisor - Program Planning
and Evaluation 03/01/90
Thomas R. Krull Asst. V.P. - Elec. Trans. & Dist. 05/03/93 2
Age: 44 Exec. Dir. - Elec. Trans. & Dist. 12/01/91
Director - Elec. Trans. & Dist. 09/01/89
Asst. Dir. - Elec. Trans. & Dist. 04/01/89
Manager - Elec. Trans. & Dist. 07/01/85
Item 11. Executive Compensation.
See Item 12 below.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The required information for Items 11 and 12 is included in the Company's
definitive proxy statement under the section "Executive Compensation," not
including "Report on Executive Compensation" and "Company Performance," and
under the section "Beneficial Ownership of Common Stock by Directors and
Executive Officers" filed with the Securities and Exchange Commission on
March 21, 1995, which is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
None.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
1a. Financial Statements (consolidated, as of December 31, 1994 and 1993, and
for each of the three years in the period ended December 31, 1994).
Included in Part II, Item 8, of this report:
Report of Independent Accountants
Statements of Income and Retained Income
Statements of Cash Flows
Balance Sheets
Statements of Capitalization
Notes to Consolidated Financial Statements
b. Financial Statement Schedules.
None.
<PAGE>
2. All exhibits including those incorporated by reference.
Exhibits (an asterisk (*) indicates a management contract or compensatory
plan or arrangement):
No. Description of Document
3.(i) Articles of Incorporation as in effect at December 16, 1994.
3.(ii) By-Laws as in effect at January 1, 1991. (Incorporated by
reference to Exhibit 3B with 1991 10-K in File No. 0-1125.)
4A Indenture of Mortgage and Deed of Trust between the Company and
Firstar Trust Company, as Trustee, dated as of January 1, 1946,
and filed as Exhibit 7-D to SEC File No. 0-1125 and the following
indentures supplemental thereto are incorporated herein by
reference:
Supplemental Dated Exhibit SEC
Indenture as of No. File No.
Fifth 06/01/66 4-B-6 2-25244
Seventh 01/15/71 2.08 2-38980
Tenth1 11/01/76 2.03 2-60227
Fourteenth 04/01/92 4C 0-1125 (1992 10-K)
Fifteenth 04/01/92 4D 0-1125 (1992 10-K)
Sixteenth 10/01/92 4E 0-1125 (1992 10-K)
Seventeenth 02/01/93 4F 0-1125 (1992 10-K)
10A Copy of Joint Power Supply Agreement with Wisconsin Power and
Light Company and Wisconsin Public Service Corporation dated
February 2, 1967. (Incorporated by reference to Exhibit 4.09 in
File No. 2-27308.)
10B Copy of Joint Power Supply Agreement (Exclusive of Exhibits) with
Wisconsin Power and Light Company and Wisconsin Public Service
Corporation dated July 26, 1973, amending Exhibit 5.04.
(Incorporated by reference to Exhibit 5.04A in File No. 2-48781.)
10D Copy of revised Agreement for Construction and Operation of
Columbia Generating Plant with Wisconsin Power and Light Company
and Wisconsin Public Service Corporation dated July 26, 1973.
(Incorporated by reference to Exhibit 5.07 in File No. 2-48781.)
10F* Form of Severance Agreement with certain key employees amended in
1994.
12 Statement regarding computation of ratios (page II-2).
21 Subsidiaries of the Registrant.
23.1 Consent of Independent Accountants.
23.2 Consent of Independent Public Accountants.
27 Appendix E to Item 601(c) of Regulation S-K: Public Utilities
Companies Financial Data Schedule UT.
3. Reports on Form 8-K - No Current Report on Form 8-K was filed for the
quarter ended December 31, 1994.
<PAGE>
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.
MADISON GAS AND ELECTRIC COMPANY
(Registrant)
Date March 21, 1995 By /s/ David C. Mebane
David C. Mebane
Chairman, President and
Chief Executive Officer
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 March 21, 1995.
SIGNATURE TITLE
/s/ David C. Mebane Chairman, President and Chief
David C. Mebane Executive Officer and Director
(Principal Executive Officer)
/s/ Joseph T. Krzos Vice President - Finance
Joseph T. Krzos (Principal Financial Officer
and Principal Accounting
Officer)
/s/ Frank C. Vondrasek Vice Chairman and Director
Frank C. Vondrasek
/s/ Jean Manchester Biddick Director
Jean Manchester Biddick
/s/ Richard E. Blaney Director
Richard E. Blaney
/s/ Robert M. Bolz Director
Robert M. Bolz
/s/ Donald J. Helfrecht Director
Donald J. Helfrecht
/s/ Frederic E. Mohs Director
Frederic E. Mohs
/s/ Robert B. Rennebohm Director
Robert B. Rennebohm
Director
Phillip C. Stark
/s/ H. Lee Swanson Director
H. Lee Swanson
<PAGE>
Exhibit No. 3.(i)
RESTATED
ARTICLES OF INCORPORATION
OF
MADISON GAS AND ELECTRIC COMPANY
(Including all amendments made through December 16, 1994)
The following Restated Articles of Incorporation duly adopted pursuant to
the authority and provisions of the Wisconsin Business Corporation Law
supersede and take the place of the heretofore existing Articles of
Organization and amendments thereto:
Article First. The name of the corporation is MADISON GAS AND ELECTRIC
COMPANY.
Article Second. The purpose of the Company shall be to engage in any
lawful activity within the purposes for which corporations may be organized
under the Wisconsin Business Corporation Law, including but not by way of
limitation, the production, purchase, transmission, distribution and sale of
gas and electricity and any related products, by-products and merchandise,
either directly or indirectly, to or for the public, whether by itself or in
conjunction with others, and to transact any and all business incidental to
such purposes.
Article Third. A. Authorized Capital.
The authorized capital stock of the Company shall be Two Hundred Fifty-
Three Million Seven Hundred Seventy-Five Thousand Dollars ($253,775,000) and
shall consist of One Million One Hundred Ninety-One Thousand (1,191,000)
shares of Cumulative Preferred Stock, each of which said shares shall be $25
Par Value, and Twenty-Eight Million (28,000,000) shares of Common Stock, each
of which said shares shall be $8 Par Value.
B. Cumulative Preferred Stock.
(I) Series and Variations Between Series. The Cumulative Preferred Stock may
be divided into and issued in series. The Board of Directors is hereby
expressly vested with authority to divide such shares into series and cause
such shares to be issued from time to time in series, and, by resolution
adopted prior to the issue of shares of a particular series, to fix and
determine the following relative rights and preferences with respect to such
series, as to which matters the shares of a particular series may vary from
those of any or all other series:
(a) the distinctive serial designation of the shares of such series;
(b) the rate of dividend thereof;
(c) the amount payable upon the shares in event of voluntary or
involuntary liquidation (except as fixed in this Division B);
(d) the price or prices at and the terms and conditions on which shares
may be redeemed (except as fixed in this Division B);
<PAGE>
(e) sinking fund provisions for the redemption or purchase of such
shares; and
(f) the terms and conditions on which such shares may be converted if
the shares of any series are issued with the privilege of
conversion.
Except as the shares of a particular series may vary from those of any or all
other series in the foregoing respects, all of the shares of the Cumulative
Preferred Stock, regardless of series, shall in all respects be equal and
shall have the relative rights and preferences herein fixed.
(II) Dividends. (a) The holders of shares of Cumulative Preferred Stock of
each series shall be entitled to receive, as and when declared payable by the
Board of Directors from funds legally available for the payment thereof,
preferential dividends in lawful money of the United States of America at the
rate per annum fixed and determined as herein authorized for the shares of
such series, but no more, payable quarterly on dates to be established for all
series when established by the Board of Directors for the first series (the
quarterly dividend payment dates), in each year with respect to the quarterly
period ending on the day prior to each such respective dividend payment date.
Such dividends shall be cumulative with respect to each share from and
including the quarterly dividend payment date next preceding the date of issue
thereof unless (1) the date of issue be a quarterly dividend payment date, in
which case dividends shall be cumulative from and including the date of issue,
(2) issued during an interval between a record date for the payment of a
quarterly dividend on shares of such series and the payment date for such
dividend, in which case dividends shall be cumulative from and including such
payment date, or (3) the Board of Directors shall determine that the first
dividend with respect to shares of a particular series issued during an
interval between quarterly dividend payment dates shall be cumulative from and
including a date during such interval, in which event dividends shall be
cumulative from and including such date. No dividends shall be declared on
shares of Cumulative Preferred Stock of any series in respect of accumulations
for any quarterly dividend period or portion thereof unless dividends shall
likewise be or have been declared with respect to accumulations on all then
outstanding shares of Cumulative Preferred Stock of each other series for the
same period or portion thereof; and the ratios of the dividends declared to
dividends accumulated with respect to any quarterly dividend period on the
shares of each series outstanding shall be identical. Accumulations of
dividends shall not bear interest.
(b) So long as any shares of Cumulative Preferred Stock remain
outstanding, no dividend shall be paid or declared, or other distribution
made, on shares of junior stock, nor shall any shares of junior stock be
purchased, redeemed, retired or otherwise acquired for a consideration (1)
unless preferential dividends on outstanding shares of Cumulative Preferred
Stock for the current and all past quarterly dividend periods shall have been
paid, or declared and set apart for payment, provided, however, that the
restrictions of this subparagraph (1) shall not apply to the declaration and
payment of dividends on shares of junior stock if payable solely in shares of
junior stock, nor to the acquisition of any shares of junior stock through
application of proceeds of any shares of junior stock sold at or about the
time of such acquisition, nor shall such restrictions prevent the transfer of
any amount from surplus to stated capital; and (2) except to the extent of
earned surplus, provided, however, that the restriction in this
<PAGE>
subparagraph (2) shall not apply to any of the acts described in the proviso
set forth in subparagraph (1) above and shall not apply either to the
acquisition of any shares of junior stock issued after April 1, 1970, to the
extent of the proceeds received for the issue of such shares, or to the
payment of any dividend within 60 days after the date of declaration thereof,
if at said date of declaration said dividend conforms with the provisions of
this subparagraph (2).
(III) Liquidation Preferences. (a) In the event of voluntary dissolution or
liquidation of the Company, the holders of shares of Cumulative Preferred
Stock of each series outstanding shall be entitled to receive out of the
assets of the Company an amount per share equal to that which such holders
would have been entitled to receive had shares held by them been redeemed
(otherwise than through operation of a sinking fund) on the date fixed for
payment, but no more, unless shares are not so redeemable at such date, and
then an amount per share to be fixed in the resolution of the Board of
Directors establishing the series of which the shares are a part. In the
event of involuntary dissolution or liquidation of the Company, the holders of
shares of Cumulative Preferred Stock of each series outstanding shall be
entitled to receive out of the assets of the Company $25 per share, plus
preferential dividends at the rate fixed and determined for such series as
herein authorized, accrued and unpaid to the date fixed for payment, but no
more. Until payment to the holders of outstanding shares of Cumulative
Preferred Stock as aforesaid, or until moneys or other assets sufficient for
such payment shall have been set apart for payment by the Company, separate
and apart from its other funds and assets for the account of such holders, so
as to be and continue to be available for payment to such holders, no payment
or distribution shall be made to holders of shares of junior stock in
connection with or upon such dissolution or liquidation. If upon any such
dissolution or liquidation the assets of the Company available for payment and
distribution to shareholders are insufficient to make payment in full, as
hereinabove provided, to the holders of shares of Cumulative Preferred Stock,
payment shall be made to such holders ratably in accordance with the number of
shares held by them, respectively.
(b) Neither a consolidation nor merger of the Company with or into any
other corporation, nor a merger of any other corporation into the Company nor
the purchase or redemption of all or any part of the outstanding shares of any
class or classes of stock of the Company, nor the sale or transfer of the
property and business of the Company as or substantially as an entirety shall
be construed to be a dissolution or liquidation of the Company within the
meaning of the foregoing provisions.
(IV) Redemption. (a) Except for any series which may not at the time be
redeemable, the Company may, at its option expressed by vote of the Board of
Directors, at any time or from time to time redeem the whole or any part of
the Cumulative Preferred Stock, or of any series thereof, at the redemption
price or prices at the time in effect, any such redemption to be on such
redemption date and at such place in the City of Madison, State of Wisconsin,
City of Chicago, State of Illinois, or in the City, County and State of New
York, or any combination of the three, as shall be determined by vote of the
Board of Directors. Notice of any proposed redemption of shares of Cumulative
Preferred Stock stating the series to be redeemed, the certificates within
such series to be redeemed if less than all of the shares of such series are
to be redeemed, and the date and place of redemption, shall be given by the
Company by depositing a copy of such notice in the U.S. mails, not more than
<PAGE>
60 or less than 30 days prior to the redemption date, addressed to the holders
of record of shares of Cumulative Preferred Stock to be redeemed, at their
respective addresses then appearing on the books of the Company and such
notice shall be deemed delivered when so deposited; and by publishing such
notice at least once in each week for two successive weeks in a newspaper
customarily published at least on each business day, other than Saturdays,
Sundays and holidays, which is printed in the English language and published
and of general circulation in the Borough of Manhattan, City and State of New
York, and in such a newspaper so printed which is published and of general
circulation in the City of Chicago, State of Illinois. Publication of such
notice shall be commenced not more than 60 days, and shall be concluded not
less than 30 days, prior to the redemption date, but such notice need not
necessarily be published on the same day of each week or in the same
newspaper. If publication is made, unintentional omissions or errors in names
or addresses in the mailed notice shall not impair the validity of the notice.
In case less than all of the shares of any series are to be redeemed, the
shares so to be redeemed shall be determined by lot in such manner as may be
prescribed by the Board of Directors unless a method other than by lot is set
forth in the resolution of the Board of Directors establishing such series.
The certificates evidencing the shares to be so redeemed shall be specified by
number in the notice of such redemption and if less than all the shares
evidenced by any of the said certificates are to be redeemed, then the number
of shares to be redeemed shall be specified. On the redemption date the
Company shall, and at any time within 60 days prior to such redemption date
may, deposit in trust, for the account of the holders of shares of Cumulative
Preferred Stock to be redeemed, funds necessary for such redemption with a
bank or trust company in good standing, organized under the laws of the United
States of America or of the State of Wisconsin or of the State of New York or
of the State of Illinois, doing business in the Cities of Milwaukee or
Madison, the State of Wisconsin, or in the City, County and State of New York
or in the City of Chicago, the State of Illinois, and having combined capital,
surplus and undivided profit of at least $5,000,000, which shall be designated
in such notice of redemption.
(b) If notice of redemption shall have been duly given, or said bank or
trust company has been irrevocably authorized by the Company to give such
notice, and funds necessary for such redemption have been deposited, all as
aforesaid, then all shares of Cumulative Preferred Stock with respect to which
such deposit shall have been made shall forthwith, whether or not the date
fixed for such redemption shall have occurred or the certificates for such
shares shall have been surrendered for cancellation, be deemed no longer to be
outstanding for any purpose, and all rights with respect to such shares shall
thereupon cease and terminate, excepting only the right of the holders of the
certificates for such shares to receive, out of the funds so deposited in
trust, on the redemption date (unless an earlier date is fixed by the Board of
Directors), the redemption funds, without interest, to which they are
entitled, and the right to exercise any privilege of conversion not
theretofore expiring, the Company to be entitled to the return of any funds
deposited for redemption of shares converted pursuant to such privilege. At
the expiration of 6 years after the redemption date such trust shall
terminate. Any such moneys then remaining on deposit, together with any
interest thereon which may be allowed by the bank or trust company with which
the deposit shall have been made, shall be paid by it to the Company, free of
trust, and thereafter the holders of the certificates for such shares shall
have no claim against such bank or trust company but only claims as unsecured
<PAGE>
creditors against the Company for the amounts payable upon redemption thereof,
without interest. Interest, if any, allowed by the bank or trust company as
aforesaid shall belong to the Company.
(c) Subject to applicable law and this Article Third, the Company may
from time to time purchase or otherwise acquire outstanding shares of
Cumulative Preferred Stock at a price per share not exceeding the amount
(inclusive of any premium over par value and any accrued dividends) then
payable in the event of redemption thereof otherwise than through operation of
a sinking fund, if any.
(d) No shares of Cumulative Preferred Stock shall be purchased, redeemed
or otherwise acquired for a valuable consideration (1) in any case if all
dividends on the Cumulative Preferred Stock for all past quarter yearly
dividend periods shall not have been paid or declared and a sum sufficient for
the payment thereof set apart, or (2) at any time when the Company shall be in
default or deficient under any requirement of a sinking fund established with
respect to outstanding shares of any series of Cumulative Preferred Stock for
any period then elapsed, except for the purpose of wholly or partially
eliminating such default or deficiency.
(e) Subject to the provisions of this Article Third, any and all shares
of Cumulative Preferred Stock which at any time shall have been:
(1) Redeemed or otherwise retired by the Company, except in the
manner set forth in (2) below, shall assume the status of authorized but
unissued Cumulative Preferred Stock and may thereafter be reissued in the
same manner as other authorized but unissued Cumulative Preferred Stock.
(2) Redeemed or purchased through operation of any sinking fund
with respect thereto, or which shall have been converted into or
exchanged for shares of any other class or classes or other securities of
the Company pursuant to a right of conversion or exchange reserved in
such Cumulative Preferred Stock, shall be canceled and shall not be
reissued, and the Company shall, from time to time, take such corporate
action as may be appropriate or necessary to reduce the authorized number
of shares of Cumulative Preferred Stock accordingly.
(V) Voting Rights. The holders of Cumulative Preferred Stock shall have no
vote in the affairs of the corporation except as is provided below or at the
time may be mandatorily required by statute:
(a) So long as any shares of Cumulative Preferred Stock are outstanding,
the Company shall not, without the consent (given by vote in person or by
proxy at a meeting called for that purpose) of the holders of at least two-
thirds of the shares of Cumulative Preferred Stock then outstanding:
(1) Create or authorize any shares of senior stock, or create or
authorize any obligation or security convertible into any such shares; or
(2) Alter or change the relative rights or preferences of then
outstanding Cumulative Preferred Stock so as to affect the holders
thereof adversely, provided, however, if any such alteration or change
would adversely affect the holders of one or more, but not all, of the
series of Cumulative Preferred Stock at the time outstanding, only the
consent of holders of two-thirds of the shares of each series so affected
shall be required; or
<PAGE>
(3) Issue, sell or otherwise dispose of shares of Cumulative
Preferred Stock, or any shares of senior or parity stock, or securities
convertible into shares of Cumulative Preferred Stock or into shares of
senior or parity stock, other than in exchange for, or in connection with
the retirement (by redemption or otherwise) of, not less than a like
number of shares of Cumulative Preferred Stock or shares of senior or
parity stock, or securities convertible into not less than a like number
of such shares, as the case may be at the time outstanding, unless:
(i) Immediately after such proposed issue, sale or other
disposition, the aggregate of the capital of the Company
applicable to all shares of Common Stock then to be outstanding
(including premium on all shares of Common Stock) plus earned
surplus and capital surplus, shall be at least equal to the
involuntary liquidation preference of all shares of Cumulative
Preferred Stock and shares of senior or parity stock then to be
outstanding, provided that until such additional shares or
securities, as the case may be, or the equivalent thereof (in
terms of involuntary liquidating preference) in shares of
Cumulative Preferred Stock or senior or parity stock, shall
have been retired, earned surplus of the Company used to meet
the requirements of this clause in connection with the issuance
of additional shares of Cumulative Preferred Stock or shares of
senior or parity stock or securities convertible into either
thereof shall not, after the issue of such shares or
securities, be available for dividends or other distributions
on Common Stock (other than dividends payable in Common Stock),
except in an amount equal to the cash subsequently received by
the Company as a contribution to its Common Stock capital or as
consideration for the issuance of additional shares of Common
Stock; and
(ii) The gross income of the Company for a period of 12 consecutive
calendar months within the 15 calendar months immediately
preceding the issuance, sale or other disposition of such
shares, determined in accordance with such system of accounts
as may be prescribed by governmental authorities having
jurisdiction in the premises, or, in the absence thereof, in
accordance with sound accounting practice (but in any event
after deducting the amount for said period charged by the
Company on its books to depreciation expense and taxes) to be
available for the payment of interest, shall have been equal to
at least one and one-half times the sum of (x) the interest
charges for one year on all interest-bearing indebtedness of
the Company (plus all amortization of debt discount and
expense, and less all amortization of premium on debt,
applicable to the aforesaid 12 months' period) and (y) the
dividend requirements for one year on all outstanding
Cumulative Preferred Stock, and on all outstanding senior and
parity stock; and for the purpose of both such computations the
shares and any indebtedness then proposed to be issued shall be
included, and any indebtedness and shares then proposed to be
retired shall be excluded, and in determining such gross income
the Board of Directors shall make such adjustments, by way of
increase or decrease in such gross income, as shall in its
opinion be necessary to give effect, for the entire 12 months
<PAGE>
for which such gross income is determined, to any acquisition
or disposition of property, the income from which can be
separately ascertained,
in which event such consent shall not be required.
(b) So long as any Cumulative Preferred Stock is outstanding, the
Company shall not, without the consent (given by vote in person or by proxy at
a meeting called for that purpose) of the holders of at least a majority of
the shares of Cumulative Preferred Stock then outstanding:
(1) Merge or consolidate with or into any other corporation,
provided that this provision shall not apply to a purchase or other
acquisition by the Company of franchises or assets of another corporation
in any manner which does not involve a statutory merger or consolidation;
(2) Sell, lease, or exchange all or substantially all of its
property and assets, unless the fair value of the net assets of the
Company, after completion of such transaction, shall at least equal the
then involuntary liquidation value of the Cumulative Preferred Stock of
all series, and of all senior or parity stock, then outstanding.
(c) No consent hereinbefore provided for in this subdivision (V)(a) and
(b) shall be required in the case of the holders of any shares of Cumulative
Preferred Stock which are to be redeemed at or prior to the time when an
alteration or change is to take effect, or at or prior to the time of
authorization, issuance, sale or other disposition of any additional
Cumulative Preferred Stock or shares of senior or parity stock or convertible
securities, or a consolidation or merger is to take effect, as the case may
be.
(d) If at any time dividends on any of the outstanding shares of
Cumulative Preferred Stock shall be in default in an amount equivalent to four
or more full quarterly dividends, the holders of outstanding shares of
Cumulative Preferred Stock, voting separately as a class, shall be entitled to
elect either one-fourth or two (whichever shall be greater) of the Directors
of the Company (herein called Certain Directors), which right shall continue
in force and effect until all arrears of dividends on outstanding shares of
Cumulative Preferred Stock shall have been declared and paid or deposited in
trust with a bank or trust company having the qualification set forth in
subdivision (IV) of this Division B for payment on or before the next
succeeding dividends payment date, in which event, such right to elect Certain
Directors shall cease and terminate unless and until the equivalent of four or
more full quarterly dividends shall again be in default on outstanding shares
of Cumulative Preferred Stock. Such right to elect Certain Directors is
subject to the following terms and conditions:
(1) Such right to elect Certain Directors may be exercised at any
annual meeting of shareholders, or, within the limitations herein
provided, at a special meeting of shareholders held for such purpose.
Whenever such right to elect Certain Directors shall vest, on request
signed by any holder of record of shares of Cumulative Preferred Stock
then outstanding and delivered to the Company's principal office not less
than 120 days prior to the date of the annual meeting next following the
date when such right vests, the President or a Vice-President of the
Company shall call a special meeting of shareholders to be held within
<PAGE>
60 days after receipt of such request for the purpose of electing a new
Board of Directors of which holders of outstanding shares of Cumulative
Preferred Stock shall be entitled to elect Certain Directors and holders
of outstanding shares otherwise entitled to vote shall be entitled to
elect the remaining Directors, in each case to serve until the next
annual meeting of shareholders or until their successors shall be elected
and shall qualify.
(2) Whenever, under the terms hereof, holders of outstanding shares
of Cumulative Preferred Stock shall be divested of the right to elect
Certain Directors, upon request signed by any holder of record of shares
otherwise entitled to vote and delivered to the Company at its principal
office not less than 120 days prior to the date for the annual meeting
next following the date of such divesting, the President or a Vice-
President of the Company shall call a special meeting of the holders of
shares otherwise entitled to vote, to be held within 60 days after
receipt of such request for the purpose of electing a new Board of
Directors to serve until the next annual meeting or until their
respective successors shall be elected and shall qualify.
(3) If, while holders of outstanding shares of Cumulative Preferred
Stock are entitled to elect Certain Directors, the holders of shares
entitled as a class to elect Directors shall fail to elect the full
number of Directors which they are entitled to elect, either at an annual
meeting of shareholders or a special meeting thereof held as in this
subdivision (V) provided, or at an adjourned session of either thereof
held within a period of 90 days beginning with the date of such meeting,
then after the expiration of such period holders of outstanding shares of
Cumulative Preferred Stock and holders of outstanding shares otherwise
entitled to vote, voting as a single class, shall be entitled to elect
such number of Directors as shall not have been elected during such
period by holders of outstanding shares of the class or classes then
entitled to elect the same, to serve until the next annual meeting of
shareholders or until their successors shall be elected and shall
qualify. The term of office of all Directors in office immediately prior
to the date of such annual or special meeting shall terminate as and when
a full Board of Directors shall have been elected at such meeting or a
later meeting of shareholders for the election of Directors, or an
adjourned session of either thereof.
(4) At any annual or special meeting of the shareholders or
adjournment thereof, held for the purpose of electing Directors while the
holders of outstanding shares of Cumulative Preferred Stock shall be
entitled to elect Certain Directors, the presence in person or by proxy
of the holders of a majority of outstanding shares of Cumulative
Preferred Stock shall be necessary to constitute a quorum of Cumulative
Preferred Stock for the election by such class of members to the Board of
Directors and the presence in person or by proxy of the holders of a
majority of outstanding shares otherwise entitled to vote shall be
necessary to constitute a quorum of such shares for the election of
Directors which holders of such shares are then entitled to elect. In
case of a failure by the holders of any class or classes to elect, at
such meeting or an adjourned session held within said period of 90 days,
the number of Directors which they are entitled to elect at such meeting,
such meeting shall be deemed ipso facto to have been adjourned to
reconvene at 11:00 A.M., Local Time, on the fourth full business day next
<PAGE>
following the close of such 90-day period, at which time, or at a
subsequent adjourned session of such meeting, such number of Directors as
shall not have been elected during such period by holders of outstanding
shares of the class or classes then entitled to elect the same, may be
elected by holders of outstanding shares of Cumulative Preferred Stock
and holders of outstanding shares otherwise entitled to vote, voting as a
single class. Subject to the preceding provisions of this subdivision
(V), a majority of the holders of shares of any class or classes at the
time present in person or by proxy shall have power to adjourn such
meeting for the election of Directors by holders of shares of such class
or classes from time to time without notice other than announcement at
the meeting.
(5) While the holders of outstanding shares of Cumulative Preferred
Stock remain entitled to elect Certain Directors, any holder of record of
outstanding shares of Cumulative Preferred Stock shall have the right,
during regular business hours, in person or by a duly authorized
representative, to examine the Company's stock records of Cumulative
Preferred Stock for the purpose of communicating with other holders of
shares of such stock with respect to the exercise of such right of
election, and to make a list of such holders.
(e) Except as by statute at the time mandatorily provided, holders of
shares of Cumulative Preferred Stock shall not be entitled to receive notice
of any meeting of shareholders at which they are not entitled to vote or
consent.
(VI) (Vacant)
(VII) (Vacant)
(VIII) (Vacant)
(IX) (Vacant)
(X) Series E Cumulative Preferred Stock. (a) Establishment of Series and
Designation Thereof. There is established a series of Cumulative Preferred
Stock, the serial designation of the shares of which shall be, and the shares
of which shall be known as, Series E Cumulative Preferred Stock. Such series
shall be a closed series consisting of 300,000 shares of Cumulative Preferred
Stock.
(b) Rate of Dividend. The rate of preferred dividends on the shares of
Series E Cumulative Preferred Stock shall be $2.175 per share per annum, which
shall be cumulative from and including August 31, 1978, and shall be payable
in quarterly installments on February 1, May 1, August 1, and November 1 of
each year.
(c) Price at Which Redeemable. (1) The shares of Series E Cumulative
Preferred Stock shall be redeemable at the option of the Company at any time,
or from time to time, after the issue thereof, and prior to August 1, 1983, at
$27.00 per share; on or after August 1, 1983, but prior to August 1, 1988, at
$26.60 per share; on or after August 1, 1988, but prior to August 1, 1993, at
$26.20 per share; on or after August 1, 1993, but prior to August 1, 1998, at
$25.80 per share; on or after August 1, 1998, but prior to August 1, 2003, at
$25.40 per share; and on or after August 1, 2003, at $25.00 per share; plus,
in each case, an amount equivalent to preferential dividends at the rate
aforesaid accrued and unpaid to the date of redemption; provided, however, the
<PAGE>
shares of Series E Cumulative Preferred Stock shall not be redeemable at the
option of the Company prior to August 1, 1983, directly or indirectly, (i)
from or in anticipation of moneys borrowed by or for the account of the
Company, or (ii) from or in anticipation of the proceeds of the issuance of
any other shares of Cumulative Preferred Stock, or senior or parity stock (as
such terms are defined in Division E), if such borrowing has an effective
interest cost to the Company or such shares have an effective dividend cost to
the Company of less than 8.70% per annum, or if such borrowing or such shares
have, as of the date of the proposed redemption, a weighted average life less
than the remaining weighted average life of the Series E Cumulative Preferred
Stock. Weighted average life of any borrowing or preferred stock means as at
the time of the determination thereof the number of years obtained by dividing
the then remaining dollar-years of such borrowing by the principal amount of
such borrowing or the aggregate involuntary liquidation preference of the
shares of such preferred stock. The term "remaining dollar-years of any
borrowing or preferred stock" means the amount obtained by (1) multiplying the
amount of each then remaining sinking fund, serial maturity, or other required
repayment, redemption, or purchase, including repayment, redemption, or
purchase, at final maturity, by the number of years (calculated at the nearest
one-twelfth) which will elapse between the date of proposed redemption and the
date of that required repayment, redemption, or purchase, and (2) totaling all
the products obtained in (1). If the Company makes any redemption of shares
of Series E Cumulative Preferred Stock on or after August 1, 1983, but prior
to August 1, 1988, which if made prior to August 1, 1983, would have been
prohibited by the terms of this paragraph, then the redemption price shall be
$28.00 per share plus an amount equivalent to preferential dividends at the
rate aforesaid accrued and unpaid to the date of redemption. The shares of
Series E Cumulative Preferred Stock shall be redeemable for purposes of the
sinking fund hereinafter provided at the price of $25.00 per share plus an
amount equivalent to preferential dividends at the rate aforesaid accrued and
unpaid to the date of redemption.
(2) If the Company shall, at any time, redeem at its option less than
all of the then outstanding shares of Series E Cumulative Preferred Stock, it
shall redeem such shares as follows:
(i) From each purchaser on original issue, or any nominee of such
purchaser ("Original Purchaser"), a number of full shares of Series E
Cumulative Preferred Stock, which bears (as nearly as may be practicable)
the same ratio to the total number of such shares to be redeemed as (A)
the total number of shares of Series E Cumulative Preferred Stock held by
such Original Purchaser on the date on which notice of such redemption is
given bears to (B) the total number of such shares outstanding on such
date, including such shares held by the Company as treasury shares; and
(ii) From holders of shares of Series E Cumulative Preferred Stock
other than Original Purchasers and other than the Company, by redemption
by lot, a number of shares of Series E Cumulative Preferred Stock equal
to the total number of such shares to be redeemed, less the number of
such shares which the Company shall be required to redeem from Original
Purchasers in accordance with the provisions of the preceding
subparagraph (i).
(d) Sinking Fund. (1) Within each 12 months' period commencing with
the 12 months' period ending August 1, 1984, and ending with the 12 months'
period ending August 1, 1993, the Company shall acquire, subject to the
<PAGE>
restrictions contained in this Article Third, either by redemption thereof or
by purchase thereof, at a price not exceeding the optional redemption price
then in effect, and shall retire 4,000 shares of Series E Cumulative Preferred
Stock, or the number of shares of such series outstanding, whichever shall be
less; and in each of the 12 months' periods commencing with the 12-month
period ending August 1, 1994, and ending with the 12-month period ending
August 1, 1998, the Company shall similarly acquire 8,000 shares of Series E
Cumulative Preferred Stock; and in each of the 12 month-periods commencing
with the 12-month period ending August 1, 1999, and ending with the 12-month
period ending August 1, 2008, the Company shall similarly acquire 22,000
shares of Series E Cumulative Preferred Stock; provided, however, that the
obligation hereunder shall be cumulative so that if the Company shall be
prevented by the restrictions contained in this Article Third from acquiring
during any 12 months' period the number of shares of Series E Cumulative
Preferred Stock which, in the absence of such restrictions, it would be
required to acquire during such period, then, although the Company shall not
be deemed to have defaulted in the performance of the requirements of this
clause (d), it shall be and remain deficient in such performance, and such
deficiency shall be made good as soon as practicable.
(2) Such shares required to be acquired during each such 12 months'
period shall be acquired as follows:
(i) From each Original Purchaser, by redemption or by purchase, a
number of full shares of Series E Cumulative Preferred Stock which bears
(as nearly as may be practicable) the same ratio to the total number of
such shares required to be retired during such 12 months' period as (A)
the total number of shares of Series E Cumulative Preferred Stock held by
such Original Purchaser on the August 1 beginning such 12 months' period
bears to (B) the total number of such shares outstanding on such August
1, including such shares held by the Company as treasury shares;
provided, however, that the Company's unsatisfied obligation to acquire
shares during any such 12 months' period from any Original Purchaser
shall at no time during such period exceed the number of shares then held
by such Original Purchaser, and
(ii) From holders of shares of Series E Cumulative Preferred Stock
other than Original Purchasers and other than the Company, by redemption
by lot or by purchase, a number of shares of Series E Cumulative
Preferred Stock equal to the total number of such shares required to be
acquired during such 12 months' period less the number of shares which
the Company shall have acquired or shall be required to acquire during
such 12 months'period from Original Purchasers in accordance with the
provisions of the preceding subparagraph (i).
(3) During any 12-month period referred to in paragraph (1) of this
clause (d), the Company shall have the option to redeem at the sinking fund
redemption price up to that number of shares of Series E Cumulative Preferred
Stock which the Company is obligated to acquire during such 12-month period
pursuant to paragraph (1) of this clause (d). Such shares shall be redeemed
from the Original Purchasers and each other stockholder in accordance with the
provisions of paragraph (2) of this clause (d). Such option to redeem
additional shares of Series E Cumulative Preferred Stock shall not be
cumulative and shares so redeemed pursuant to this paragraph (3) shall not be
credited against the obligation of the Company to acquire shares of Series E
Cumulative Preferred Stock pursuant to paragraph (1) of this clause (d).
<PAGE>
(4) Any shares of Series E Cumulative Preferred Stock which shall be
redeemed by the Company at the optional redemption price then in effect or
purchased by the Company in any such 12 months' period at a price not
exceeding the optional redemption price, and which shall not be applied to
meet the Company's sinking fund obligation for such 12 months' period, may be
credited on the amounts required to be acquired in any one or more of the
following 12 months' periods which the Company may designate. The shares of
its Series E Cumulative Preferred Stock of the Company redeemed or purchased
and applied to meet its sinking fund obligations shall be canceled and shall
not be reissued.
(e) No Conversion Privilege. The shares of Series E Cumulative
Preferred Stock shall not be convertible into other shares or securities of
the Company.
C. Common Stock
(I) Dividends. Subject to the limitations in this Article Third set forth,
dividends may be paid on Common Stock out of any funds legally available for
the purpose, when and as declared by the Board of Directors.
(II) Liquidation Rights. In the event of any liquidation or dissolution of
the Company, after there shall have been paid to or set aside for the holders
of outstanding shares having superior liquidation preferences to Common Stock
the full preferential amounts to which they are respectively entitled, the
holders of outstanding shares of Common Stock shall be entitled to receive pro
rata, according to the number of shares held by each, the remaining assets of
the Company available for distribution.
(III) Voting Rights. Except as set forth in this Article Third or in Article
Eighth or as by statute otherwise mandatorily provided, the holders of the
Common Stock shall exclusively possess full voting powers for the election of
Directors and for all other purposes.
D. Preemptive Rights.
No holder of stock of this corporation of any class shall be entitled as
of right to subscribe for, purchase or receive any part of any new or
additional issue of stock of any class, whether now or hereafter authorized,
or of any bonds, debentures or other securities convertible into stock of any
class, and all such additional shares of stock, bonds, debentures or other
securities convertible into stock may be issued and disposed of by the Board
of Directors to such person or persons, and on such terms and for such
consideration (so far as may be permitted by law) as the Board of Directors in
their absolute discretion may deem advisable.
E. Certain Definitions.
In this Article Third, and in any resolution of the Board of Directors
adopted pursuant to this Article Third establishing a series of the Cumulative
Preferred Stock and fixing the designation, description and terms thereof, the
meanings below assigned shall control:
"Senior stock" shall mean shares of stock of any class ranking prior to
shares of Cumulative Preferred Stock as to dividends or upon dissolution or
liquidation;
<PAGE>
"Parity stock" shall mean shares of stock of any class ranking on a
parity with, but not prior to, shares of Cumulative Preferred Stock as to
dividends or upon dissolution or liquidation;
"Junior stock" shall mean shares of stock of any class ranking
subordinate to shares of Cumulative Preferred Stock as to dividends and upon
dissolution or liquidation; and
Preferential dividends accrued and unpaid on a share of Cumulative
Preferred Stock to any particular date shall mean an amount per share at the
annual dividend rate applicable to such share for the period beginning with
the date from and including which dividends on such share are cumulative and
concluding on the day prior to such particular date, less the aggregate of all
dividends paid with respect to such share during such period.
Article Fourth. The number of Directors constituting the Board of
Directors, the classification of such Directors, and their terms shall be
fixed by the Bylaws of the Company. There shall not be more than three
classes of Directors, nor shall the terms of any class of Directors be for
more than three years. In no event shall there be less than three Directors.
Article Fifth. The bylaws of the Company may be adopted either by the
shareholders or the Board of Directors, but no bylaw adopted by the
shareholders shall be amended or repealed by the Directors unless the bylaw
adopted by the shareholders confers such authority upon the Directors. Any
bylaw adopted by the Board of Directors shall be subject to amendment or
repeal by the shareholders as well as by the Directors.
Article Sixth. At the time of the adoption of these Restated Articles of
Incorporation, the name of the registered agent and the address of the
registered office of the Company are:
Agent: Gary J. Wolter
Office: Madison Gas and Electric Company
133 South Blair Street
(P.O. Box 1231)
Madison, Wisconsin 53701
Article Seventh. These articles may be amended by resolution setting
forth such amendment or amendments, adopted at any meeting of the shareholders
by a vote of at least two-thirds of all of the stock of the Company then
outstanding and then entitled to vote.
Article Eighth. A. Certain Definitions.
For purposes of this Article Eighth:
(I) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 under the Securities Exchange Act of
1934 as in effect on February 6, 1985 (the term "registrant" in Rule 12b-
2 meaning in this case the Company).
(II) A person shall be a "beneficial owner" of any shares of Voting
Stock (a) which such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly; (b) which such person or any
of its Affiliates or Associates has, directly or indirectly, (i) the
<PAGE>
right to acquire (whether such right is exercisable immediately or
subject only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise, or (ii) the right to
vote pursuant to any agreement, arrangement or understanding; or (c)
which are beneficially owned, directly or indirectly, by any other person
with which such person or any of its Affiliates or Associates has any
agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of Voting Stock. For the
purposes of determining whether a person is a Substantial Shareholder
pursuant to subdivision (V) of this division A, the number of shares of
Voting Stock deemed to be outstanding shall include shares deemed
beneficially owned by such person through application of this subdivision
(II) of division A, but shall not include any other shares of Voting
Stock that may be issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights, warrants or
options, or otherwise.
(III) "Person" shall mean any individual, firm, corporation or
other entity and shall include any group comprised of any person and any
other person with whom such person or any Affiliate or Associate of such
person has any agreement, arrangement or understanding, directly or
indirectly, for the purpose of acquiring, holding, voting or disposing of
shares of Voting Stock.
(IV) "Subsidiary" shall mean any corporation of which a majority of
each class of equity security is beneficially owned by the Company.
(V) "Substantial Shareholder" shall mean any person (other than the
Company or any Subsidiary and other than any profit-sharing, employee
stock ownership or other employee benefit plan of the Company or any
Subsidiary or any trustee of or fiduciary with respect to any such plan
when acting in such capacity) who (without giving effect to the
provisions of division B of this Article Eighth) is the beneficial owner
of shares of Voting Stock representing ten percent (10%) or more of the
votes entitled to be cast by the holders of all then outstanding shares
of Voting Stock.
(VI) "Voting Stock" shall mean the Common Stock of the Company and
any class or series of preferred or preference stock (other than the
Company's Cumulative Preferred Stock, authorized pursuant to division B
of Article Third) authorized and outstanding from time to time pursuant
to Article Third entitling the holder thereof to vote on the matter with
respect to which a determination is being made pursuant to this Article
Eighth; provided, however, that the shareholders or the Board of
Directors, as the case may be, may specify in the resolution authorizing
any such class or series of preferred or preference stock that the shares
of such class or series shall not constitute Voting Stock and that such
shares and the holders thereof shall be exempt from the provisions of
this Article Eighth.
<PAGE>
B. Limitation of Voting Rights.
Any provision of these Restated Articles of Incorporation to the contrary
notwithstanding, so long as any person is a Substantial Shareholder, the
shareholders of record of the shares of Voting Stock beneficially owned by
such Substantial Shareholder shall have limited voting rights on any matter
requiring their vote or consent, as follows:
(I) With respect to the shares of Voting Stock which would entitle
such shareholders of record in the aggregate to cast up to ten percent
(10%) of the total number of votes entitled to be cast by the holders of
all outstanding shares of Voting Stock, such shareholders of record shall
be entitled to cast the votes per share specified in or pursuant to
Article Third.
(II) With respect to the shares of Voting Stock which would entitle
such shareholders of record in the aggregate to cast in excess of ten
percent (10%) of the total number of votes entitled to be cast by the
holders of all outstanding shares of Voting Stock, such shareholders of
record shall be entitled to cast only one/one-hundredth (1/100th) of the
votes per share to which a holder of such shares would otherwise be
entitled to cast.
(III) Notwithstanding the foregoing, in the event that, after
giving effect to the provisions of subdivisions (I) and (II) of this
division B, the aggregate voting power of such shareholders of record
would still exceed fifteen percent (15%) of the votes entitled to be cast
by the holders of all outstanding shares of Voting Stock, the aggregate
voting power of such shareholders of record shall be further limited so
that such shareholders of record shall be entitled to cast only such
number of votes that would equal (after giving effect to the provisions
of this Article Eighth) fifteen percent (15%) of the number of votes
entitled to be cast by all holders of outstanding shares of Voting Stock.
(IV) The aggregate voting power of such shareholders of record, as
limited pursuant to the provisions of division B, subdivisions (II) and
(III) of this Article Eighth, for all shares of Voting Stock beneficially
owned by such Substantial Shareholder shall be allocated proportionately
among such shareholders of record. In this connection, each such
shareholder of record shall be entitled to cast in respect of his shares
of Voting Stock the number of votes equal to (a) the aggregate number of
votes entitled to be cast (after giving effect to the provisions in this
Article Eighth) in respect of the outstanding shares of Voting Stock
beneficially owned by the Substantial Shareholder, multiplied by (b) a
fraction the numerator of which is the number of votes which the shares
of Voting Stock owned by such shareholder of record would have entitled
such shareholder of record to cast were no effect given to the provision
of this Article Eighth, and the denominator of which is the total number
of votes which all shares of Voting Stock beneficially owned by the
Substantial Shareholder would have entitled their record holders to cast
were no effect given to the provisions of this Article Eighth.
<PAGE>
C. Quorum.
The presence, in person or by proxy, of the holders of record of shares
of Voting Stock entitling the holders thereof to cast a majority of the votes
(after giving effect, if required, to the provisions of this Article Eighth)
entitled to be cast by the holders of all outstanding shares of Voting Stock
entitled to vote shall constitute a quorum at all meetings of the
shareholders.
D. Factual Determinations.
(I) The Board of Directors shall have the power and duty to
determine for the purposes of this Article Eighth, on the basis of
information known to them after reasonable inquiry, (a) whether a person
is a Substantial Shareholder, (b) the number of shares of Voting Stock
beneficially owned by any person, (c) whether a person is an Affiliate or
an Associate of another, and (d) the persons who may be deemed to be the
record holders of shares of which a Substantial Shareholder is a
beneficial owner. Any such determination made in good faith shall be
binding and conclusive on all parties.
(II) The Board of Directors shall have the right to demand that any
person who is reasonably believed to be a Substantial Shareholder (or
holds of record shares of Voting Stock beneficially owned by a
Substantial Shareholder) supply the Company with complete information as
to (a) the record holder(s) of all shares beneficially owned by such
person who is reasonably believed to be a Substantial Shareholder, (b)
the number of shares of Voting Stock beneficially owned by such person
who is reasonably believed to be a Substantial Shareholder and held of
record by each such shareholder of record, and (c) any other factual
matter relating to the applicability or effect of this Article Eighth, as
may reasonably be requested of such person, and such person shall furnish
such information within ten (10) days after the receipt of such demand.
E. No Derogation of Fiduciary Obligations.
Nothing contained in this Article Eighth shall be construed to relieve
any Substantial Shareholder from any fiduciary obligation imposed by law.
F. Severability.
In the event that any provision or portion of a provision of this Article
Eighth is determined to be invalid, void, illegal or unenforceable, the
remainder of the provisions of this Article Eighth shall continue to be valid
and enforceable and shall in no way be affected, impaired or invalidated.
Exhibit No. 10F
FORM OF
SEVERANCE AGREEMENT
OF
MADISON GAS AND ELECTRIC COMPANY
THIS AGREEMENT is entered into as of the ___ day of __________, 1994
by and between Madison Gas and Electric Company, a Wisconsin corporation (the
"Company"), and _____________________________________ (the "Employee").
W I T N E S S E T H
WHEREAS, Employee currently serves as a key employee of the Company
and the services and knowledge of Employee are valuable to the Company in
connection with the management of the Company's business; and
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its
shareholders to secure Employee's continued services and to ensure Employee's
continued dedication and objectivity in the event of any threat or occurrence
of, or negotiation or other action that could lead to, or create the
possibility of, a Change in Control (as defined in Section 1) of the Company,
without concern as to whether Employee might be hindered or distracted by
personal uncertainties and risks created by any such possible Change in
Control, and to encourage Employee's full attention and dedication to the
Company, the Board has authorized the Company to enter into this Agreement.
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants and agreements herein contained, the Company and Employee
hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms
shall have the respective meanings set forth below:
(a) "Cause" means (1) a material breach by Employee of those duties
and responsibilities of Employee which do not differ in any material respect
from the duties and responsibilities of Employee during the 90-day period
immediately prior to a Change in Control (other than as a result of incapacity
due to physical or mental illness) which is demonstrably willful and
deliberate on Employee's part, committed in bad faith or without reasonable
belief that such breach is in the best interests of the Company, and is not
remedied in a reasonable period of time after receipt of written notice from
the Company specifying such breach or (2) the commission by Employee of a
felony involving moral turpitude.
(b) "Change in Control" means the occurrence of any of the
following events:
(1) the acquisition by any individual, entity or group (a "Person"),
including any "person" within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
of beneficial ownership within the meaning of Rule 13d-3 promulgated
under the Exchange Act, of 20% or more of either (i) the then outstanding
shares of common stock of the Company (the "Outstanding Company Common
Stock") or (ii) the combined voting power of the then outstanding
<PAGE>
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided,
however, that the following acquisitions shall not constitute a Change in
Control:
(A) any acquisition directly from the Company (excluding any
acquisition resulting from the exercise of a conversion or exchange
privilege in respect of outstanding convertible or exchangeable
securities),
(B) any acquisition by the Company,
(C) any acquisition by an employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company,
(D) any acquisition by any corporation pursuant to a
reorganization, merger or consolidation involving the Company, if,
immediately after such reorganization, merger or consolidation, each
of the Shareholder Continuity Condition (as defined below), the
Beneficial Ownership Condition (as defined below) and the Board of
Directors Continuity Condition (as defined below) shall be
satisfied;
and provided further that, for purposes of clause (B), if any Person
(other than the Company or any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by
the Company) shall become the beneficial owner of 20% or more of the
Outstanding Company Common Stock or 20% or more of the Outstanding
Company Voting Securities by reason of an acquisition by the Company and
such Person shall, after such acquisition by the Company, become the
beneficial owner of any additional shares of the Outstanding Company
Common Stock or any additional Outstanding Voting Securities and such
beneficial ownership is publicly announced, such additional beneficial
ownership shall constitute a Change in Control;
(2) individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of such Board; provided, however, that any individual who
becomes a director of the Company subsequent to the date hereof whose
election, or nomination for election by the Company's shareholders, was
approved by the vote of at least a majority of the directors then
comprising the Incumbent Board shall be deemed to have been a member of
the Incumbent Board; and provided further, that no individual who was
initially elected as a director of the Company as a result of an actual
or threatened election contest, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act, or any other actual or
threatened solicitation of proxies or consents by or on behalf of any
Person other than the Board shall be deemed to have been a member of the
Incumbent Board;
(3) the approval by the shareholders of the Company of a
reorganization, merger or consolidation unless, in any such case,
immediately after such reorganization, merger or consolidation each of
the Shareholder Continuity Condition, the Beneficial Ownership Condition
and the Board of Directors Continuity Condition shall be satisfied; or
<PAGE>
(4) approval by the shareholders of the Company of (i) a plan of
complete liquidation or dissolution of the Company or (ii) the sale or
other disposition of all or substantially all of the assets of the
Company other than to a corporation with respect to which, immediately
after such sale or other disposition each of, the Shareholder Continuity
Condition, the Beneficial Ownership Condition and the Board of Directors
Continuity Condition shall be satisfied.
For purposes of this Section 1 (b), the "Shareholder Continuity
Condition" shall be satisfied in connection with a transaction if at least 60%
of the then outstanding shares of common stock of the corporation resulting
from such transaction and at least 60% of the combined voting power of the
then outstanding securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly,
by all or substantially all of the individuals or entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock and
the Outstanding Company Voting Securities immediately prior to such
transaction and in substantially the same proportions relative to each other
as their ownership, immediately prior to such transaction, of the Outstanding
Company Common Stock and the Outstanding Company Voting Securities, as the
case may be.
For purposes of this Section 1 (b), the "Beneficial Ownership
Condition" shall be satisfied in connection with a transaction if no Person
(other than the Company, any employee benefit plan (or related trust)
sponsored or maintained by the Company or the corporation resulting from such
transaction (or any corporation controlled by the Company) and any Person
which beneficially owned, immediately prior to such transaction, directly or
indirectly, 20% or more of the Outstanding Company Common Stock or the
Outstanding Company Voting Securities, as the case may be) beneficially owns,
directly or indirectly, 20% or more of the then outstanding shares of common
stock of such corporation or 20% or more of the combined voting power of the
then outstanding securities of such corporation entitled to vote generally in
the election of directors.
For purposes of this Section 1(b), the "Board of Directors
Continuity Condition" shall be satisfied in connection with a transaction if
at least a majority of the members of the board of directors of the
corporation resulting from such transaction were members of the Incumbent
Board at the time of the execution of the initial agreement or action of the
Board providing for such transaction.
(c) "Date of Termination" means
(1) the effective date on which Employee's employment by the
Company terminates as specified in a prior written notice by the Company
or Employee, as the case may be, to the other, delivered pursuant to
Section 11 or
(2) if Employee's employment by the Company terminates by reason of
death, the date of death of Employee.
<PAGE>
(d) "Good Reason" means, without Employee's express written consent,
the occurrence of any of the following events after a Change in Control:
(1) any of (i) the assignment to Employee of any duties
inconsistent in any material respect with Employee's position(s), duties,
responsibilities or status with the Company immediately prior to such
Change in Control, (ii) a change in Employee's reporting
responsibilities, titles or offices with the Company as in effect
immediately prior to such Change in Control or (iii) any removal or
involuntary termination of Employee from the Company otherwise than as
expressly permitted by this Agreement or any failure to re-elect Employee
to any position with the Company held by Employee immediately prior to
such Change in Control;
(2) a reduction by the Company in Employee's rate of annual base
salary or the failure by the Company to increase such rate of base salary
each year after such Change in Control by an amount which at least
equals, on a percentage basis, the mean average percentage increase in
the rates of base salary for all officers (within the meaning of Rule
3b-2 promulgated under the Exchange Act) of the Company during the two
full fiscal years of the Company immediately preceding such Change in
Control;
(3) any requirement of the Company that Employee (i) be based
anywhere other than at the offices where the Employee is based at the
time of the Change in Control or (ii) travel on Company business to an
extent substantially more burdensome than the travel obligations of
Employee immediately prior to such Change in Control;
(4) the failure of the Company to:
(i) continue in effect any employee benefit plan or
compensation plan in which Employee is participating immediately
prior to such Change in Control, unless Employee is permitted to
participate in other plans providing Employee with substantially
comparable benefits, or the taking of any action by the Company
which would adversely affect Employee's participation in or
materially reduce Employee's benefits under any such plan,
(ii) provide Employee and Employee's dependents welfare
benefits (including, without limitation, medical, prescription,
dental, disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and programs)
in accordance with the most favorable plans, practices, programs and
policies of the Company and its affiliated companies in effect for
Employee immediately prior to such Change in Control or, if more
favorable to Employee, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its
affiliated companies,
(iii) provide fringe benefits in accordance with the most
favorable plans, practices, programs and policies of the Company and
its affiliated companies in effect for Employee immediately prior to
such Change in Control or, if more favorable to Employee, as in
effect generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies,
<PAGE>
(iv) provide an office or offices of a size and with
furnishings and other appointments, together with exclusive personal
secretarial and other assistance, at least equal to the most
favorable of the foregoing provided to Employee by the Company and
its affiliated companies immediately prior to such Change in Control
or, if more favorable to Employee, as provided generally at any time
thereafter with respect to other peer executives of the Company and
its affiliated companies,
(v) provide Employee with paid vacation in accordance with the
most favorable plans, policies, programs and practices of the
Company and its affiliated companies as in effect for Employee
immediately prior to such Change in Control or, if more favorable to
Employee, as in effect generally at any time thereafter with respect
to other peer executives of the Company and its affiliated
companies,
(vi) reimburse Employee promptly for all reasonable employment
expenses incurred by Employee in accordance with the most favorable
policies, practices and procedures of the Company and its affiliated
companies in effect for Employee immediately prior to such Change in
Control, or if more favorable to Employee, as in effect generally at
any time thereafter with respect to other peer executives of the
Company and its affiliated companies, or
(vii) pay Employee promptly Employee's base salary or bonus, if
any, in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for
Employee immediately prior to such Change in Control, or if more
favorable to Employee, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its
affiliated companies; or
(5) the failure of the Company to obtain the assumption agreement
from any successor as contemplated in Section 10(b).
For purposes of this Agreement, any good faith determination of Good
Reason made by Employee shall be conclusive; provided, however, that an
isolated, insubstantial and inadvertent action taken in good faith and which
is remedied by the Company promptly after receipt of notice thereof given by
Employee shall not constitute Good Reason.
(e) "Nonqualifying Termination" means a termination of Employee's
employment (1) by the Company for Cause, (2) by Employee for any reason other
than a Good Reason, (3) as a result of Employee's death or (4) by the Company
due to Employee's absence from Employee's duties with the Company on a full-
time basis for at least 180 consecutive days as a result of Employee's
incapacity due to physical or mental illness; provided, however, that a
termination of Employee's employment by Employee for any reason whatsoever
during the Window Period (as hereinafter defined) shall not constitute a
Nonqualifying Termination.
(f) "Termination Period" means the period of time beginning with a
Change in Control and ending on the earliest to occur of (1) Employee's 70th
birthday, (2) Employee's death, and (3) that date which is 24 months following
such Change in Control.
<PAGE>
(g) "Window Period" means the 30-day period commencing one year
after the date of a Change in Control.
2. Obligations of Employee. (a) Employee agrees that in the
event any person or group attempts a Change in Control, Employee shall not
voluntarily leave the employ of the Company without Good Reason (i) until such
attempted Change in Control terminates or (ii) if a Change in Control shall
occur, until 90 days following such Change in Control. For purposes of the
foregoing subsection (i), Good Reason shall be determined as if a Change in
Control had occurred when such attempted Change in Control became known to the
Board.
(b) Employee acknowledges and agrees that (i) all records and other
material not released to the general public and (ii) all trade secrets,
confidential and proprietary information, unpublished data and information, in
each case relating to the operations, services and business of the Company,
whether reduced to writing or not ("Confidential Material"), are confidential
and are the sole property of the Company. Employee agrees that Employee will
not disclose any Confidential Material to any person or entity, either during
or subsequent to Employee's employment by the Company, nor will Employee use
any Confidential Material, except in the regular course of Employee's
employment by the Company, without the Company's written consent. Employee
agrees not to make use of the Confidential Material, except on behalf of the
Company. Upon termination of Employee's employment, Employee agrees to
surrender all Confidential Material and any copies thereof as may be in
possession or under control of Employee.
3. Payments Upon Termination of Employment. (a) If during the
Termination Period the employment of Employee shall terminate, other than by
reason of a Nonqualifying Termination, then the Company shall pay to Employee
(or Employee's beneficiary or estate) within 30 days following the Date of
Termination, as compensation for services rendered to the Company:
(1) a cash amount equal to the sum of:
(i) Employee's full annual base salary from the Company and its
affiliated companies through the Date of Termination, to the extent not
theretofore paid,
(ii) Employee's annual bonus in an amount at least equal to the
highest annualized bonus paid or payable, including by reason of any
deferral, to Employee by the Company and its affiliated companies in
respect of any of the three fiscal years of the Company (or such portion
thereof during which Employee performed services for the Company if
Employee shall have been employed by the Company for less than such three
fiscal year period) immediately preceding the fiscal year in which the
Change in Control occurs, multiplied by a fraction, the numerator of
which is the number of days in the fiscal year in which the Date of
Termination occurs through the Date of Termination and the denominator of
which is 365 or 366, as applicable, and
(iii) any accrued vacation pay, to the extent not theretofore paid;
plus
<PAGE>
(2) a lump-sum cash amount in an amount equal to:
(i) three (3) times Employee's highest annual base salary from the
Company and its affiliated companies in effect during the 12-month period
prior to the Date of Termination (the "Highest Annual Base Salary"), plus
(ii) three (3) times Employee's highest annualized bonus, paid or
payable, including by reason of any deferral, to Employee by the Company
and its affiliated companies in respect of any of the five fiscal years
of the Company (or such portion thereof during which Employee performed
services for the Company if Employee shall have been employed by the
Company for less than such five fiscal year period) immediately preceding
the fiscal year in which the Change in Control occurs; provided, however,
that in the event there are fewer than 36 whole calendar months remaining
from the Date of Termination to the date of Employee's 70th birthday, the
amount calculated in accordance with this Section 3(a)(2) shall be
reduced by multiplying such amount by a fraction the numerator of which
is the number of calendar months, including a partial month (with a
partial month being expressed as a fraction the numerator of which is the
number of days remaining in such calendar month and the denominator of
which is the number of days in such calendar month), so remaining and the
denominator of which is 36.
(b) In addition to the payments to be made pursuant to paragraph
(a) of this Section 3: (1) For a period of three years commencing on the Date
of Termination, the Company shall continue to keep in full force and effect
all medical, accident, disability and life insurance plans with respect to
Employee and Employee's dependents with the same level of coverage, upon the
same terms and otherwise to the same extent as such plans shall have been in
effect immediately prior to the Date of Termination. Notwithstanding the
foregoing sentence, if any of the medical, accident, disability or life
insurance plans then in effect generally with respect to other peer executives
of the Company and its affiliated companies would be more favorable to
Employee, such plan coverage shall be substituted for the analogous plan
coverage provided to Employee immediately prior to the Date of Termination,
and the Company and Employee shall share the costs of such plan coverage in
the same proportion as such costs were shared immediately prior to the Date of
Termination.
The obligation of the Company to continue coverage of Employee and
Employee's dependents under such plans shall cease at such time as Employee
and Employee's dependents obtain comparable coverage under another plan,
including a plan maintained by a new employer. Execution of this Agreement by
Employee shall not be considered a waiver of any rights or entitlements
Employee and Employee's dependents may have under applicable law to
continuation of coverage under the group health plan maintained by the Company
or its affiliated companies.
(2) So long as Employee has children who would otherwise be
eligible for benefits under the Felber Scholarship Program, any successor
thereto or any program then in effect providing similar or more favorable
benefits to other peer executives of the Company and its affiliated Companies,
then such children shall be entitled to the most favorable of such benefits as
if Employee were still employed by the Company and its affiliated Companies or
as if Employee has retired from the Company, whichever assumption results in
the most favorable benefits being provided.
<PAGE>
(3) If Employee is at least 50 years old at the Date of
Termination, then Employee shall be eligible for retiree health benefits no
less favorable than the most favorable benefits provided under any of the
Madison Gas and Electric Company Health Benefit Plan, any successor thereto or
any program then in effect providing more favorable benefits to other peer
executives of the Company and its affiliated Companies.
(c) If during the Termination Period the employment of Employee
shall terminate by reason of a Nonqualifying Termination, then the Company
shall pay to Employee within 30 days following the Date of Termination, a cash
amount equal to the sum of (1) Employee's full annual base salary from the
Company through the Date of Termination, to the extent not theretofore paid
and (2) any accrued vacation pay, to the extent not theretofore paid.
4. Certain Additional Payments by the Company. (a) Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company or its affiliated
companies to or for the benefit of Employee (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 4) (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Code, or any interest or penalties are incurred by
Employee with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Company shall pay to Employee an additional payment (a
"Gross-Up Payment") in an amount such that after payment by Employee of all
taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-
Up Payment, Employee retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 4(c), all determinations
required to be made under this Section 4, including whether and when a Gross-
Up Payment is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be made by
the Company's public accounting firm (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Company and Employee
within 15 business days of the receipt of notice from Employee that there has
been a Payment, or such earlier time as is requested by the Company. In the
event that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the Change in Control, Employee shall
appoint another nationally recognized public accounting firm to make the
determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment,
as determined pursuant to this Section 4, shall be paid by the Company to
Employee within five days of the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise Tax is
payable by Employee, it shall furnish Employee with a written opinion that
failure to report the Excise Tax on Employee's applicable federal income tax
return would not result in the imposition of a negligence or similar penalty.
Any determination by the Accounting Firm shall be binding upon the Company and
Employee. As a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
<PAGE>
by the Company should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section 4(c) and Employee thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of
Employee.
(c) Employee shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than 10 business days after Employee is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. Employee
shall not pay such claim prior to the expiration of the 30-day period
following the date on which Employee gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies Employee in writing prior to the
expiration of such period that it desires to contest such claim, Employee
shall:
(1) give the Company any information reasonably requested by the
Company relating to such claim,
(2) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim
by an attorney reasonably selected by the Company,
(3) cooperate with the Company in good faith in order effectively
to contest such claim, and
(4) permit the Company to participate in any proceedings relating
to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Employee harmless, on an after-
tax basis, for any Excise Tax or income tax (including interest and penalties
with respect thereto) imposed as a result of such representation and payment
of costs and expenses. Without limitation on the foregoing provisions of this
Section 4(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
Employee to pay the tax claimed and sue for a refund or contest the claim in
any permissible manner, and Employee agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided further, that if the Company directs Employee to pay such
claim and sue for a refund, the Company shall advance the amount of such
payment to Employee on an interest-free basis and shall indemnify and hold
Employee harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such
advance; and provided further, that any extension of the statute of
<PAGE>
limitations relating to payment of taxes for the taxable year of Employee with
respect to which such contested amount is claimed to be due is limited solely
to such contested amount. Furthermore, the Company's control of the contest
shall be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and Employee shall be entitled to settle or contest, as the
case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.
(d) If, after the receipt by Employee of an amount advanced by the
Company pursuant to Section 4(c), Employee becomes entitled to receive, and
receives, any refund with respect to such claim, Employee shall (subject to
the Company's complying with the requirements of Section 4(c)) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by
Employee of an amount advanced by the Company pursuant to Section 4(c), a
determination is made that Employee shall not be entitled to any refund with
respect to such claim and the Company does not notify Employee in writing of
its intent to contest such denial of refund prior to the expiration of 30 days
after such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
5. Withholding Taxes. The Company may withhold from all payments
due to Employee (or Employee's beneficiary or estate) hereunder all taxes
which, by applicable federal, state, local or other law, the Company is
required to withhold therefrom.
6. Reimbursement of Expenses. If any contest or dispute shall
arise under this Agreement involving termination of Employee's employment with
the Company or involving the failure or refusal of the Company to perform
fully in accordance with the terms hereof, the Company shall reimburse
Employee, on a current basis, for all legal fees and expenses, if any,
incurred by Employee in connection with such contest or dispute, together with
interest at a rate equal to the rate of interest published in The Wall Street
Journal under the caption "Money Rates" as the prime rate, but in no event
higher than the maximum legal rate permissible under applicable law, such
interest to accrue from the date the Company receives Employee's statement for
such fees and expenses through the date of payment thereof; provided, however,
that in the event the resolution of any such contest or dispute includes a
finding denying, in total, Employee's claims in such contest or dispute,
Employee shall be required to reimburse the Company, over a period of 12
months from the date of such resolution, for all sums advanced to Employee
pursuant to this Section 6.
7. Operative Event. Notwithstanding any provision herein to the
contrary, no amounts shall be payable hereunder unless and until there is a
Change in Control at a time when Employee is employed by the Company.
8. Termination of Agreement. (a) This Agreement shall be
effective on the date hereof and shall continue as provided in paragraph (b)
of this Section 8; provided, however, that this Agreement shall terminate in
any event upon the first to occur of (i) Employee's 70th birthday, (ii)
Employee's death or (iii) termination of Employee's employment with the
Company prior to a Change in Control.
<PAGE>
(b) This Agreement shall continue in effect for three years from
the date hereof; provided, however, that commencing on the first anniversary
hereof, and each such anniversary thereafter, the term of this Agreement shall
automatically be extended for one additional year unless, not later than the
first anniversary hereof, and each such anniversary thereafter, as the case
may be, the Company or the Employee shall have given notice, in accordance
with Section 11, not to extend the term of this Agreement; provided, however,
that no such action shall be taken by the Company during any period of time
when the Board has knowledge that any person has taken steps reasonably
calculated to effect a Change in Control until, in the opinion of the Board,
such person has abandoned or terminated its efforts to effect a Change in
Control; provided further, that in no event shall this Agreement be terminated
in the event of a Change in Control; and provided further that in the event of
a Change in Control when there are less than twenty-four months remaining in
the term of this Agreement, the term of this Agreement shall be extended so
that this Agreement shall terminate twenty-four months after such Change in
Control.
9. Scope of Agreement. Nothing in this Agreement shall be deemed
to entitle Employee to continued employment with the Company or its
subsidiaries, and if Employee's employment with the Company shall terminate
prior to a Change in Control, then Employee shall have no further rights under
this Agreement; provided, however, that any termination of Employee's
employment following a Change in Control shall be subject to all of the
provisions of this Agreement.
10. Successors; Binding Agreement.
(a) This Agreement shall not be terminated by any merger or
consolidation of the Company whereby the Company is or is not the surviving or
resulting corporation or as a result of any transfer of all or substantially
all of the assets of the Company. In the event of any such merger,
consolidation or transfer of assets, the provisions of this Agreement shall be
binding upon the surviving or resulting corporation or the person or entity to
which such assets are transferred.
(b) The Company agrees that concurrently with any merger,
consolidation or transfer of assets referred to in paragraph (a) of this
Section 10, it will cause any successor or transferee unconditionally to
assume, by written instrument delivered to Employee (or Employee's beneficiary
or estate), all of the obligations of the Company hereunder. Failure of the
Company to obtain such assumption prior to the effectiveness of any such
merger, consolidation or transfer of assets shall be a breach of this
Agreement and shall entitle Employee to compensation and other benefits from
the Company in the same amount and on the same terms as Employee would be
entitled hereunder if Employee's employment were terminated following a Change
in Control other than by reason of a Nonqualifying Termination. For purposes
of implementing the foregoing, the date on which any such merger,
consolidation or transfer becomes effective shall be deemed the Date of
Termination.
(c) This Agreement shall inure to the benefit of and be enforceable
by Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Employee shall die
while any amounts would be payable to Employee hereunder had Employee
continued to live, all such amounts, unless otherwise provided herein, shall
<PAGE>
be paid in accordance with the terms of this Agreement to such person or
persons appointed in writing by Employee to receive such amounts or, if no
person is so appointed, to Employee's estate.
11. Notice. (a) For purposes of this Agreement, all notices and
other communications required or permitted hereunder shall be in writing and
shall be deemed to have been duly given when delivered or five days after
deposit in the United States mail, certified and return receipt requested,
postage prepaid, addressed (1) if to the Employee, to the Employee's address
of record with the Company, and if to the Company, to Madison Gas and Electric
Company, P. O. Box 1231, Madison, WI 53701-1231, attention Mr. Gary J.
Wolter, or (2) to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
(b) A written notice of Employee's Date of Termination by the
Company or Employee, as the case may be, to the other, shall:
(i) indicate the specific termination provision in this Agreement
relied upon,
(ii) to the extent applicable, set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of
Employee's employment under the provision so indicated and
(iii) specify the termination date (which date shall be not less
than 15 days after the giving of such notice).
The failure by Employee or the Company to set forth in such notice
any fact or circumstance which contributes to a showing of Good Reason or
Cause shall not waive any right of Employee or the Company hereunder or
preclude Employee or the Company from asserting such fact or circumstance in
enforcing Employee's or the Company's rights hereunder.
12. Full Settlement; Resolution of Disputes. (a) The Company's
obligation to make any payments provided for in this Agreement and otherwise
to perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against Employee or others. In no event shall Employee be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to Employee under any of the provisions of
this Agreement and, such amounts shall not be reduced whether or not Employee
obtains other employment.
(b) If there shall be any dispute between the Company and Employee
in the event of any termination of Employee's employment, then, unless and
until there is a final, nonappealable judgment by a court of competent
jurisdiction declaring that such termination was for Cause, that the
determination by Employee of the existence of Good Reason was not made in good
faith, or that the Company is not otherwise obligated to pay any amount or
provide any benefit to Employee and Employee's dependents or other
beneficiaries, as the case may be, under paragraphs (a) and (b) of Section 3,
the Company shall pay all amounts, and provide all benefits, to Employee and
Employee's dependents or other beneficiaries, as the case may be, that the
Company would be required to pay or provide pursuant to paragraphs (a) and (b)
of Section 3 as though such termination were by the Company without Cause or
<PAGE>
by Employee with Good Reason; provided, however, that the Company shall not be
required to pay any disputed amounts pursuant to this paragraph except upon
receipt of an undertaking by or on behalf of Employee to repay all such
amounts to which Employee is ultimately adjudged by such court not to be
entitled.
13. Employment with Subsidiaries. Employment with the Company for
purposes of this Agreement shall include employment with any corporation or
other entity in which the Company has a direct or indirect ownership interest
of 50% or more of the total combined voting power of the then outstanding
securities of such corporation or other entity entitled to vote generally in
the election of directors.
14. Governing Law; Validity. The interpretation, construction and
performance of this Agreement shall be governed by and construed and enforced
in accordance with the internal laws of the State of Wisconsin without regard
to the principle of conflicts of laws. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which other
provisions shall remain in full force and effect.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
16. Miscellaneous. No provision of this Agreement may be modified
or waived unless such modification or waiver is agreed to in writing and
signed by Employee and by a duly authorized officer of the Company. No waiver
by either party hereto at any time of any breach by the other party hereto of,
or compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. Failure by Employee or the Company to insist upon strict compliance
with any provision of this Agreement or to assert any right Employee or the
Company may have hereunder, including, without limitation, the right of
Employee to terminate employment for Good Reason, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement. The rights and benefits payable hereunder are in addition to any
rights of, or benefits payable to, Employee, Employee's estate or Employee's
beneficiaries under (i) the Income Continuation Agreement, if any, between the
Company and Employee, (ii) the Deferred Compensation Agreement between the
Company and Employee, if any, and (iii) any other employee benefit plan or
compensation program of the Company, excluding any other severance plan,
policy or arrangement of the Company. This Agreement supersedes, in its
entirety, any Severance Agreement previously entered into between Employee and
the Company.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by a duly authorized officer of the Company and Employee has executed
this Agreement as of the day and year first above written.
EMPLOYEE
By:___________________________
MADISON GAS AND ELECTRIC COMPANY
By:___________________________
Exhibit No. 21
MADISON GAS AND ELECTRIC COMPANY AND CONSOLIDATED SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
As of December 31, 1994, the Company owned 100 percent of the voting
securities of the following subsidiaries (all Wisconsin corporations):
- MG&E NUCLEAR FUEL INC. - holds title to Company's portion of the nuclear
fuel for Kewaunee.
- MAGAEL INC. - holds title to property acquired by the Company for future
utility plant expansion.
- MAGAEL Material Resources, Inc. - partner in uranium mining operation whose
purpose is to acquire uranium mining reserves and support related mining
and production operations to assure an adequate fuel supply for Kewaunee.
- Central Wisconsin Development Corporation - assists new and expanding
businesses throughout Central Wisconsin.
- Great Lakes Energy Corp. - markets natural gas supplies and pipeline
capacity to commercial and industrial customers outside of the Company's
territory.
- Wisconsin Resources Corporation - Inactive.
- North Central Technologies, Inc. - Inactive.
- Mid America Technologies, Inc. - Inactive.
As of December 31, 1994, the Company owned 50 percent of the voting securities
of the following subsidiary (a Wisconsin corporation):
- Superior Lamp Recycling, Inc. - recycles fluorescent lamps and retorts
spent mercury.
As of January 3, 1995, Great Lakes Energy Corp. owned 100 percent of the
voting securities of the following subsidiary (a Wisconsin corporation):
- American Energy Management, Inc. - a national energy marketing firm that
provides gas marketing, energy management, energy auditing, and
conservation services to customers in ten states.
Exhibit No. 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Madison Gas and Electric Company on Form S-3 (Registration No. 33-52491 and
Registration No. 33-24115) of our report dated February 10, 1995, on our
audits of the consolidated financial statements of Madison Gas and Electric
Company as of December 31, 1994 and 1993, and for the years then ended, which
reports are included or incorporated by reference in this annual report on
Form 10-K.
Milwaukee, Wisconsin
March 24, 1995 COOPERS & LYBRAND L.L.P.
Exhibit No. 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in Registration Statement No. 33-24115 on Form S-3 and Registration
Statement No. 33-52491 on Form S-3, of our report dated February 12, 1993,
covering the consolidated balance sheet and statement of capitalization of
Madison Gas and Electric Company and subsidiaries as of December 31, 1992, and
the related statements of income, retained income, and cash flows for the year
ended December 31, 1992, included in the Company's Form 10-K for the year
ended December 31, 1994 (Commission File No. 0-1125). It should be noted that
we have not audited any financial statements of the Company subsequent to the
date of our report.
Chicago, Illinois
March 24, 1995 ARTHUR ANDERSEN LLP
<TABLE> <S> <C>
<ARTICLE>UT
<LEGEND>
This schedule contains summary financial information extracted from
SEC Form 10-K. Items 1 through 22 are as of December 31, 1994.
Items 23 through 38 are for the 12 months ended December 31, 1994.
</LEGEND>
<MULTIPLIER> 1,000
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<FISCAL-YEAR-END> DEC-31-1994
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