SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: SEPTEMBER 30, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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 (IRS Employer
of incorporation or Identification No.)
organization)
133 South Blair Street, Madison, Wisconsin 53701-1231
(Address of principal executive offices and zip code)
(608) 252-7000
(Registrant's telephone number including area code)
Common Stock outstanding at November 10, 1995: 10,719,812 shares
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, and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Madison Gas and Electric Company and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED INCOME
(Thousands of Dollars)
(Unaudited)
<CAPTION>
Three Months Nine Months
Ended Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
STATEMENTS OF INCOME
Operating Revenues
Electric . . . . . . . . . . . .$47,316 $43,577 $117,908 $115,273
Gas . . . . . . . . . . . . . . 7,407 8,615 59,787 69,424
Total Operating Revenues . . . 54,723 52,192 177,695 184,697
Operating Expenses
Fuel for electric generation . . 8,509 6,770 21,549 21,009
Purchased power . . . . . . . . 2,526 4,126 6,169 7,922
Natural gas purchased . . . . . 3,220 4,669 35,716 44,219
Other operations . . . . . . . . 14,764 13,702 44,725 42,842
Maintenance . . . . . . . . . . 2,402 2,419 8,919 8,881
Depreciation and amortization . 6,206 5,610 18,656 16,818
Other general taxes . . . . . . 2,149 2,114 6,495 6,533
Income tax items . . . . . . . . 4,933 3,995 10,554 11,164
Total Operating Expenses . . . 44,709 43,405 152,783 159,388
Net Operating Income . . . . . . . 10,014 8,787 24,912 25,309
AFUDC - equity funds . . . . . . . 10 36 46 91
Other income, net . . . . . . . . . 297 423 2,523 1,519
Income before interest expense . . 10,321 9,246 27,481 26,919
Interest Expense
Interest on long-term debt . . . 2,593 2,645 7,774 7,897
Other interest . . . . . . . . . 208 157 797 302
AFUDC - borrowed funds . . . . . (5) (21) (24) (51)
Net Interest Expense . . . . . 2,796 2,781 8,547 8,148
Net Income . . . . . . . . . . . . 7,525 6,465 18,934 18,771
Preferred stock dividends . . . . . - 117 64 356
Earnings on common stock . . . . . $7,525 $6,348 $18,870 $18,415
Earnings per share of common stock
(Note 3) . . . . . . . . . . . . $0.70 $0.59 $1.76 $1.72
STATEMENTS OF RETAINED INCOME
Balance - beginning of period . . .$78,628 $74,964 $77,358 $72,865
Earnings on common stock . . . . . 7,525 6,348 18,870 18,415
Cash dividends on common stock
(Note 3) . . . . . . . . . . . . . (5,093) (5,039) (15,168) (15,007)
Balance - end of period . . . . . .$81,060 $76,273 $81,060 $76,273
<FN>
The accompanying notes are an integral part of the above statements.
/TABLE
<PAGE>
<TABLE>
Madison Gas and Electric Company and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOW
(Thousands of Dollars)
(Unaudited)
<CAPTION>
Three Months Nine Months
Ended Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Operating Activities
Net income . . . . . . . . . . . . $7,525 $6,465 $18,934 $18,771
Items not affecting working
capital:
Depreciation and amortization . 6,206 5,610 18,656 16,818
Deferred income taxes . . . . . (323) (86) (563) 825
Amortization of nuclear fuel . . 797 858 1,927 1,953
Amortization of investment tax
credits . . . . . . . . . . . . (192) (194) (581) (581)
AFUDC - equity funds . . . . . . (10) (36) (46) (91)
Other . . . . . . . . . . . . . 157 (82) 1,061 155
Net funds provided from
Operations . . . . . . . . . 14,160 12,535 39,388 37,850
Changes in working capital,
excluding cash equivalents, sinking
funds, maturities, and interim
loans:
(Increase)/decrease in current
assets . . . . . . . . . . . . . (4,667) (724) 9,985 290
Increase/(decrease) in current
liabilities . . . . . . . . . . 1,428 476 (1,610) (2,474)
Other noncurrent items, net . . . (2,092) (2,571) (2,073) 244
Cash provided by Operating
Activities . . . . . . . . . . . 8,829 9,716 45,690 35,910
Financing Activities
Cash dividends on common and
preferred stock . . . . . . . . . (5,093) (5,156) (15,232) (15,363)
Other increases/(decreases) in
First Mortgage Bonds . . . . . . . 9 7 (233) (64)
Decrease in preferred stock . . . - (200) (5,300) (200)
Decrease in bond - construction
funds . . . . . . . . . . . . . . 1,976 3,141 5,469 7,940
Decrease in interim loans . . . . (1,250) (500) (17,350) (10,000)
Cash used for Financing
Activities . . . . . . . . . . . (4,358) (2,708) (32,646) (17,687)
Investing Activities
Acquisition of a nonregulated
subsidiary . . . . . . . . . . . . - - (8,036) -
Additions to utility plant and
nuclear fuel . . . . . . . . . . . (4,997) (8,261) (13,083) (16,757)
AFUDC - borrowed funds . . . . . . (5) (21) (24) (51)
Increase in decommissioning fund . (1,135) (668) (3,117) (1,925)
Cash used for Investing
Activities . . . . . . . . . . . (6,137) (8,950) (24,260) (18,733)
Change in Cash and Cash Equivalents
(Note 5) . . . . . . . . . . . . . . (1,666) (1,942) (11,216) (510)
Cash and cash equivalents at
beginning of period . . . . . . . 1,984 2,823 11,534 1,391
Cash and cash equivalents at end of
period . . . . . . . . . . . . . . $318 $881 $318 $881
<FN>
The accompanying notes are an integral part of the above statements.
/TABLE
<PAGE>
<TABLE>
Madison Gas and Electric Company and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
(Unaudited)
<CAPTION>
Sept. 30 Dec. 31
1995 1994
<S> <C> <C>
ASSETS
Utility Plant (at original cost), In Service
Electric . . . . . . . . . . . . . . . . . . . . . $488,081 $479,346
Gas . . . . . . . . . . . . . . . . . . . . . . . 172,763 167,710
Gross plant in service . . . . . . . . . . . . . 660,844 647,056
Less accumulated provision for depreciation . . . (340,708) (323,511)
Net plant in service . . . . . . . . . . . . . . 320,136 323,545
Construction work in progress . . . . . . . . . . 9,240 11,920
Nuclear decommissioning fund (Note 2) . . . . . . 30,932 27,815
Nuclear fuel, net . . . . . . . . . . . . . . . . 6,618 8,386
Total Utility Plant . . . . . . . . . . . . . . 366,926 371,666
Other property and investments . . . . . . . . . . . 18,899 9,843
Current Assets
Cash and cash equivalents . . . . . . . . . . . . 318 11,534
Accounts receivable, less reserves of $1,160 and
$921, respectively . . . . . . . . . . . . . . . . 22,734 25,998
Unbilled revenue . . . . . . . . . . . . . . . . . 5,644 10,411
Materials and supplies, at average cost . . . . . 6,229 6,424
Fossil fuel, at average cost . . . . . . . . . . . 2,300 2,130
Stored natural gas, at average cost . . . . . . . 8,514 8,551
Prepaid taxes . . . . . . . . . . . . . . . . . . 4,345 5,838
Other prepayments . . . . . . . . . . . . . . . . 1,057 1,456
Total Current Assets . . . . . . . . . . . . . . 51,141 72,342
Deferred charges . . . . . . . . . . . . . . . . . . 36,167 33,908
Total Assets . . . . . . . . . . . . . . . . $473,133 $487,759
CAPITALIZATION AND LIABILITIES
Capitalization (see statement) . . . . . . . . . . . $321,621 $325,389
Current Liabilities
Preferred stock sinking fund requirements . . . . - 200
Long-term debt sinking fund requirements . . . . . 195 430
Maturity of 5.45%, 1996 series . . . . . . . . . . 7,840 -
Interim loans - commercial paper outstanding . . . 11,250 28,600
Accounts payable . . . . . . . . . . . . . . . . . 12,291 18,360
Accrued taxes . . . . . . . . . . . . . . . . . . 527 1,143
Accrued interest . . . . . . . . . . . . . . . . . 3,989 2,803
Other . . . . . . . . . . . . . . . . . . . . . . 8,210 4,327
Total Current Liabilities . . . . . . . . . . . 44,302 55,863
Other Credits
Accumulated deferred income taxes . . . . . . . . 55,673 56,595
Regulatory liability . . . . . . . . . . . . . . . 25,563 25,204
Investment tax credit - deferred . . . . . . . . . 12,423 12,998
Other . . . . . . . . . . . . . . . . . . . . . . 13,551 11,710
Total Other Credits . . . . . . . . . . . . . . 107,210 106,507
Commitments . . . . . . . . . . . . . . . . . . . . . - -
Total Capitalization and Liabilities . . . . $473,133 $487,759
<FN>
The accompanying notes are an integral part of the above balance sheets.
/TABLE
<PAGE>
<TABLE>
Madison Gas and Electric Company and Subsidiaries
CONSOLIDATED STATEMENTS OF CAPITALIZATION
(Thousands of Dollars)
(Unaudited)
<CAPTION>
Sept. 30 Dec. 31
1995 1994
<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 . . . . . . . . . . . . . . . . . 81,060 77,359
Total Common Shareholders' Equity . . . . . . . 193,190 189,489
Redeemable Preferred Stock cumulative, $25 par value,
authorized 1,175,000 shares (Note 4a)
Series E, 8.70%, 0 and 212,000 shares outstanding,
respectively, less current sinking fund
requirements of $0 and $200, respectively . . . . . - 5,100
First Mortgage Bonds
5.45%, 1996 series (Note 4b) . . . . . . . . . . . 7,840 7,920
7 3/4%, 2001 series (Note 4c) . . . . . . . . . . 11,302 11,478
6 1/2%, 2006 series:
Pollution Control Revenue Bonds,
principal amount $8,775 and $8,780 respectively,
less pollution control
fund of $1,687 and $1,618, respectively . . . . 7,088 7,162
8.50%, 2022 series . . . . . . . . . . . . . . . . 40,000 40,000
6.75%, 2027A series:
Industrial Development Revenue Bonds,
principal amount $28,000, less construction fund
of $934 and $6,472, respectively . . . . . . . . 27,066 21,528
6.70%, 2027B series:
Industrial Development Revenue Bonds . . . . . . 19,300 19,300
7.70%, 2028 series . . . . . . . . . . . . . . . . 25,000 25,000
First Mortgage Bonds Outstanding . . . . . . . . 137,596 132,388
Unamortized discount and premium on bonds, net . . (1,130) (1,158)
Long-term debt sinking fund requirements . . . . . (195) (430)
Maturity of 5.45%, 1996 series . . . . . . . . . . (7,840) -
Total First Mortgage Bonds . . . . . . . . . . . 128,431 130,800
Total Capitalization . . . . . . . . . . . . $321,621 $325,389
<FN>
The accompanying notes are an integral part of the above statements.
</TABLE>
<PAGE>
Notes to Consolidated Financial Statements (Unaudited)
September 30, 1995
The consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Company
believes that the disclosures made are adequate to make the
information presented not misleading. In the opinion of Company
management, all adjustments (consisting of only normal recurring
adjustments) necessary to fairly present results have been made.
It is suggested that these consolidated financial statements be
read in conjunction with the financial statements and the notes
thereto set forth on pages 20 through 25 of the Company's 1994
Annual Report to Shareholders and in the Company's 1994 Annual
Report on Form 10-K.
1. Summary of Significant Accounting Policies
The accounting and financial policies relative to the
following items have been described in the "Notes to
Consolidated Financial Statements" in the Company's 1994
Annual Report to Shareholders and have been omitted herein
because they have not changed materially through the date of
this report.
a. Basis of consolidation
b. Revenue recognition
c. Utility plant
d. Nuclear fuel
e. Joint plant ownership
f. Cash and cash equivalents
g. Depreciation
h. Income taxes
i. Accounts receivable
j. Pension plans
k. Postretirement benefits other than pensions
l. Fair value of financial instruments
m. Capitalization matters: common stock, notes payable to
banks, commercial paper, and lines of credit
n. Rate matters
o. Commitments
p. Segments of business
2. Nuclear Decommissioning
Nuclear decommissioning costs are accrued over the estimated
service life of the Kewaunee Nuclear Power Plant (Kewaunee),
which is through the year 2013. These costs are currently
recovered from customers in rates and are deposited in
external trusts. For 1995, the decommissioning costs recovered
in rates will be $3.1 million. These trusts are shown on the
balance sheet in the utility plant section, and as of
September 30, 1995, these trusts totaled $30.9 million.
<PAGE>
Notes to Consolidated Financial Statements (continued)
Decommissioning costs are recovered through depreciation
expense, exclusive of earnings on the trusts. Net earnings on
the trusts are included in other income. The long-term,
after-tax earnings assumption on these trusts is 6.2 percent.
As of September 30, 1995, the accumulated provision for
depreciation included accumulated provisions for
decommissioning totaling $30.9 million.
The Company's share of Kewaunee decommissioning costs is
estimated to be $66.1 million in current dollars based on a
site-specific study performed in 1992 using immediate
dismantlement as the method of decommissioning.
Decommissioning costs are assumed to inflate at an average
rate of 6.1 percent. Physical decommissioning 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.
3. Per-Share Amounts
Earnings per share of common stock are computed on the basis
of the weighted average of the daily number of shares
outstanding. For the three months and for the nine months
ended September 30, 1995 and 1994, there were 10,719,812
shares.
Dividends declared and paid per share of common stock for the
periods ended September 30, 1995 and 1994, were, respectively,
for the three months $0.475 and $0.47; for the nine months,
$1.415 and $1.40
4. Capitalization Matters
a. Redeemable preferred stock.
On February 21, 1995, the Company retired 16,000 Series E
shares for $400,000 in satisfying its annual sinking fund
retirement obligation. The Company repurchased all
remaining shares outstanding of its Series E, 8.70%,
preferred stock on the same day. 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 are $430,000 in 1995. As of
September 30, 1995, $195,000 is still needed to satisfy the
1995 requirements.
The 5.45%, First Mortgage Bonds, 1996 series will be
maturing on June 1, 1996, requiring $7.8 million to retire
this series of bonds.
c. Subsequent Event.
On November 22, 1995, the Company will redeem the
outstanding $11.3 million, 7 3/4%, 2001 series, First
Mortgage Bonds and replace these bonds with commercial
paper. The Company has entered into an agreement with a
commercial bank to fix the interest rate payable by the
Company for a five-year period.
<PAGE>
Notes to Consolidated Financial Statements (continued)
5. Supplemental Cash Flow Information
For purposes of the Consolidated Statements of Cash Flow, 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, net of amounts capitalized, and
income taxes were as follows:
Three Months Nine Months
Ended Ended
September 30, September 30,
(Thousands of dollars) 1995 1994 1995 1994
Interest, net of amounts
capitalized $1,601 $1,589 $7,481 $6,920
Income taxes paid $4,515 $3,301 $13,495 $9,302
6. Acquisition of Nonregulated Subsidiary
In January 1995 the Company purchased certain assets of
American Energy Management, Inc. (AEM), a national energy
marketing firm that provides gas marketing, energy management,
energy auditing, and conservation services to customers in
twelve states. The acquisition has been accounted for as a
purchase, and the results of AEM have been included in the
accompanying consolidated financial statements since the date
of acquisition. Pro forma results are not presented because
the amounts do not significantly differ from historical
results.
The costs of the acquisition have been allocated on the basis
of the estimated fair market value of the assets acquired and
the liabilities assumed. The resulting goodwill is being
amortized over 25 years. Additionally, the former owner has an
option to purchase 20 percent of AEM at any time prior to the
year 2000.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
The Company's internally generated funds were greater than the
funds used for construction and nuclear fuel expenditures during
all of the periods ended September 30, 1995. It is anticipated
that 1995 construction and nuclear fuel expenditures will be
between $22 million and $25 million. The Company also expects to
capitalize about $2 million to $3 million of spending on
conservation programs with internally generated funds.
Approximately $6 million of the Company's electric construction
program during this period has been met with construction fund
draw-downs.
During the first quarter of 1995, the Company purchased all of
its outstanding 8.70%, Series E, preferred stock and acquired AEM
with internally generated cash.
Bank lines of credit available to Madison Gas and Electric
Company (MGE) are currently $25 million. Great Lakes Energy Corp.
(GLENCO), a wholly owned subsidiary of MGE, and AEM, a subsidiary
of GLENCO, have established bank lines of credit up to
$5 million.
The Company's capitalization ratios were as follows:
Sept. 30, Dec. 31,
1995 1994
Common shareholders' equity . . 56.7% 53.4%
Redeemable preferred stock* . . - 1.5
Long-term debt* . . . . . . . . 40.0 37.0
Short-term debt . . . . . . . . 3.3 8.1
*Includes current maturities and current sinking fund
requirements.
The Company's bonds are currently rated Aa2 by Moody's Investors
Service, Inc., and AA by Standard & Poor's Corporation. The
Company's dealer-issued commercial paper carries the highest
ratings assigned by Moody's and Standard & Poor's.
Business Environment
On May 1, 1995, Northern States Power Company and Wisconsin
Energy Corporation announced a proposed merger. If approved, the
two companies would form a holding company called Primergy
Corporation, creating the tenth largest utility company in the
United States. The merger has been approved by the shareholders
of both companies. Various regulatory agency approval is required
including the Securities and Exchange Commission, the Nuclear
Regulatory Commission, the Federal Energy Regulatory Commission,
and state regulatory agencies. The Company is opposing approval
of the merger on the grounds that the merger would violate
antitrust laws and principles. The outcome of this proposed
merger and the impacts it may have on the Company are unknown at
this time.
Regulatory Environment
The Public Service Commission of Wisconsin (PSCW) has opened a
docket to examine the costs and benefits of changing electric
utility company structure and regulation. The Commissioner
chairing the advisory committee to study this issue and the
Wisconsin Assembly Utilities Committee agreed that the PSCW would
continue to study the matter but no legislation would be
considered during 1995 or 1996. It is unknown at this time what
<PAGE>
Management's Discussion and Analysis (continued)
impact (if any) this examination will have on the Company. The
PSCW has also opened a docket to examine what changes are needed
in the cost recovery mechanism for purchasing gas costs. It is
not known what changes (if any) will be made to the Purchased
Gas Adjustment Clause.
Results of Operations
Electric Sales and Revenues
The extremely hot weather experienced this summer contributed to
increased electric sales for the three and nine months ended
September 30, 1995, compared to the same periods last year (see
table below). Electric retail sales increased approximately
13 percent for the three months ended September 30, 1995,
compared to the same time period a year ago.
Cooling degree days (measured by the number of degrees the mean
daily temperature is above 65 degrees Fahrenheit) for the third
quarter of 1995 increased approximately 92 percent over last
year's third quarter, and approximately 70 percent over normal.
The average temperature for this year's third quarter was
70 degrees Fahrenheit, 3 degrees higher than the average
temperature for the third quarter of 1994.
<TABLE>
Electric Sales in Megawatt-Hours
<CAPTION>
Three Months Ended September 30 Nine Months Ended Sept. 30
1995 1994 % Change 1995 1994 % Change
<S> <C> <C> <C> <C> <C> <C>
Residential 227,414 179,750 26.52% 561,923 515,159 9.08%
Large commercial
and industrial* 258,855 283,081 (8.56) 712,285 746,505 (4.58)
Small commercial
and industrial 192,348 172,771 11.33 528,405 508,336 3.95
Other<FN1> 93,779 46,356 102.30 245,047 128,796 90.26
Total retail 772,396 681,958 13.26 2,047,660 1,898,796 7.84
Sales for resale 2,859 2,563 11.55 16,768 32,462 (48.35)
Total sales 775,255 684,521 13.26 2,064,428 1,931,258 6.90
<FN>
The significant increase in other electric sales is due to a shift in a
major customer from the large commercial and industrial class.
</TABLE>
The increase in electric sales for both the three- and nine-month
periods contributed to the increase in electric operating
revenues of $3.7 million or 8.6 percent for this year's third
quarter, and $2.6 million or 2.3 percent for the nine months
ended September 30, 1995, as compared to the same periods the
previous year. Electric rates were effectively reduced by
$5.1 million or 3.3 percent effective January 1, 1995.
<PAGE>
Management's Discussion and Analysis (continued)
Gas Sales and Revenues
For the nine months ended September 30, 1995, gas revenues
decreased about $10 million or 14 percent compared to the same
1994 period. The decrease in gas revenues can be attributed, in
part, to lower sales volumes due to the warm weather experienced
in the first quarter of this year as compared to the cold first
quarter in 1994. In addition, gas costs on a per-unit basis were
less this year compared to the previous year. The lower gas costs
are reflected in revenues by the Company's Purchased Gas
Adjustment Clause.
For the three months ended September 30, 1995, gas revenues
decreased about $1 million or 14 percent as compared to the same
period last year. The decrease for both the three- and nine-month
periods ended September 30, 1995, compared to last year, is also
attributable to a shift in customers from system rates to
transportation rates (see table). Transport customers' revenue is
recorded only as margin (revenue less cost of gas).
The following table illustrates gas deliveries as compared to the
previous year:
<TABLE>
Gas Deliveries in Thousands of Therms
<CAPTION>
Three Months Ended September 30 Nine Months Ended September 30
1995 1994 % Change 1995 1994 % Change
<S> <C> <C> <C> <C> <C> <C>
Residential 5,702 5,608 1.68% 56,419 59,711 (5.52)%
Commercial and
Industrial 10,099 10,660 (5.26) 61,437 71,837 (14.48)
Total retail 15,801 16,268 (2.87) 117,856 131,554 (10.41)
Transport<FN1> 10,036 8,265 21.43 26,677 15,030 77.49
Total gas
deliveries 25,837 24,533 5.32 144,533 146,584 (1.40)
<FN>
The significant increase in transport is due to a shift in customers from
system rates to transportation rates.
</TABLE>
Electric Fuel and Natural Gas Costs
Fuel for electric generation increased approximately $2.0 million
or 26 percent for the third quarter of 1995 compared to last
year's third quarter. This was mainly attributable to the
significant increase in power demands due to the hot and humid
weather experienced during this time. Purchased power decreased
approximately $2 million or 40 percent for the three months ended
September 30, 1995, compared to the same period last year. The
Company was able to use lower cost fuel during this time period,
thus reducing the volume of purchased power needed. The volume of
purchased power for the third quarter of 1995 decreased by
approximately 65 gigawatt-hours or 43 percent.
Fuel costs and purchased power decreased approximately
$1.2 million or 4 percent for the nine-month period ended
September 30, 1995, when compared to the same period last year.
This was due to a decrease in fuel cost at the Company's Columbia
Energy Center along with a decrease in purchased power costs.
<PAGE>
Management's Discussion and Analysis (continued)
The extremely hot July and August caused power demands to
increase significantly. On July 13, 1995, the Company set a
record for peak demand of 598 megawatts for one hour, breaking
the previously set record of 570 megawatts for one hour set in
June 1995.
Natural gas costs for the nine-month period ended September 30,
1995, decreased $8.5 million or 19 percent compared to the same
nine-month period a year ago. This was due to the following
factors: a lower demand resulting from the warm weather
experienced in this year's first quarter compared to the cold
weather in the first quarter of 1994, a decrease in the cost per
therm of $0.03, and the shift in customers from system rates to
transport rates as described earlier.
Natural gas costs for the three months ended September 30, 1995,
versus the 1994 comparative period decreased $1.4 million or
31 percent. This is due to a decrease in the cost per therm of
approximately $0.08 or 29 percent and the shift in customers from
system rates to transport rates.
Other Operating Expenses
Depreciation expense for the three months and nine months ended
September 30, 1995, when compared to the same time periods in
1994, increased $0.6 million and $1.8 million or 11 percent,
respectively. This is attributable to an increase in
decommissioning costs recorded as depreciation expenses (see
Note 2).
Income taxes increased $1 million or 23 percent for the three
months ended September 30, 1995, compared to the same 1994
period. For the nine-month period ended September 30, 1995,
income taxes decreased $0.6 million or 5 percent compared to last
year. The increase in income taxes for the third quarter of this
year is due to an increase in pretax operating income. The
decrease for the nine months ended September 30, 1995, is due to
the decrease in pretax operating income for this period.
Other Items
Other income increased $1 million for the nine months ended
September 30, 1995, compared to the same period last year due to
earnings realized from the Company's nonregulated business.
Other interest expense increased for both the three- and
nine-month periods ended September 30, 1995, when compared to the
same periods a year ago. This is due to higher levels of
short-term debt outstanding during 1995 periods than in 1994
because of the repurchase of the Series E preferred stock earlier
this year.
<PAGE>
PART II. OTHER INFORMATION
Item 6(a) Exhibits
Exh. No. Indenture of Mortgage and Deed of Trust Between the
4 Company and Firstar Trust Company, as Trustee (and
supplements). Reference was provided in the
Company's 1994 Annual Report on Form 10-K
(Commission File No. 0-1125).
Exh. No. Ratio of Earnings to Fixed Charges
12
Exh. No. Appendix E to Item 601(c) of Regulation S-K: Public
27 Utility Companies Financial Data Schedule UT
Exhibit Index
Exhibit Sequentially
No. Exhibit Numbered Page
4 Indenture of Mortgage and
Deed of Trust Between the
the Company and Firstar
Trust Company NA
12 Ratio of Earnings to Fixed
Charges 15
27 Regulation S-K: Financial Data
Schedule UT 16
Item 6(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter
for which this report is filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
MADISON GAS AND ELECTRIC COMPANY
(Registrant)
Date: November 10, 1995 /s/ David C. Mebane
David C. Mebane
Chairman, President and Chief
Executive Officer
(Duly Authorized Officer)
Date: November 10, 1995 /s/ Joseph T. Krzos
Joseph T. Krzos
Vice President - Finance
(Chief Financial and Accounting
Officer)
<PAGE>
Ratio of Earnings to Fixed Charges Exhibit 12
Nine Months
Ended
Sept. 30, 1995
(000s)
Earnings
Income before interest expense . . . . . $27,481
Add:
Income tax items . . . . . . . . . . . . 10,554
Income tax on other income . . . . . . . 1,129
Amortization of debt discount, premium
expense . . . . . . . . . . . . . . . . 190
AFUDC - borrowed funds . . . . . . . . . 24
Interest on rentals . . . . . . . . . . . 147
Total Earnings . . . . . . . . . . . . $39,525
Fixed Charges
Interest on long-term debt . . . . . . . 7,774
Other interest . . . . . . . . . . . . . 797
Amortization of debt discount, premium
expense . . . . . . . . . . . . . . . . 190
Interest on rentals . . . . . . . . . . . 147
Total Fixed Charges . . . . . . . . . . $8,908
Ratio of Earnings to Fixed Charges . . . 4.44x
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from SEC Form
10-Q. Items 1 through 22 are as of September 30, 1995. Items 23 through 38 are
for the nine months ended September 30, 1995.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 366,926
<OTHER-PROPERTY-AND-INVEST> 18,899
<TOTAL-CURRENT-ASSETS> 51,141
<TOTAL-DEFERRED-CHARGES> 36,167
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 473,133
<COMMON> 85,758
<CAPITAL-SURPLUS-PAID-IN> 26,372
<RETAINED-EARNINGS> 81,060
<TOTAL-COMMON-STOCKHOLDERS-EQ> 193,190
0
0
<LONG-TERM-DEBT-NET> 128,431
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 11,250
<LONG-TERM-DEBT-CURRENT-PORT> 8,035
0
<CAPITAL-LEASE-OBLIGATIONS> 0
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<OTHER-ITEMS-CAPITAL-AND-LIAB> 132,227
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<INCOME-TAX-EXPENSE> 10,554
<OTHER-OPERATING-EXPENSES> 142,229
<TOTAL-OPERATING-EXPENSES> 152,783
<OPERATING-INCOME-LOSS> 24,912
<OTHER-INCOME-NET> 2,569
<INCOME-BEFORE-INTEREST-EXPEN> 27,481
<TOTAL-INTEREST-EXPENSE> 8,547
<NET-INCOME> 18,934
64
<EARNINGS-AVAILABLE-FOR-COMM> 18,870
<COMMON-STOCK-DIVIDENDS> (15,168)
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 45,690
<EPS-PRIMARY> 1.76
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</TABLE>
