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, 1995
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) 252-7000
(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: $426,112,527 based on a closing
bid price of $26.50 on March 1, 1996 (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 16,079,718 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.
- - 1995 Annual Report to Shareholders (Parts I, II, and IV)
- - Definitive Proxy Statement filed on March 26, 1996
(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). Exhibit No. 21 herein provides a description of the
Company's wholly owned subsidiaries.
The Company also owns two gas marketing companies, Great Lakes
Energy Corp. (GLENCO) and American Energy Management, Inc. (AEM),
created to take advantage of the opportunities made available by
Federal Energy Regulatory Commission (FERC) Order 636.
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 (NRC) 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.
<PAGE>
For example, the ongoing 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, 1995, the Company supplied electric service to
119,886 customers, of whom 107,093 were located in the cities of
Fitchburg, Madison, Middleton, and Monona, and 12,793 in adjacent
areas. Of the total number of customers, 104,092 were residential
and 15,654 were commercial. For 1995, residential and commercial
electric service revenues comprised 36 percent and 48 percent,
respectively, of total electric revenues. The remaining electric
revenues during 1995 were from industrial sales (7 percent),
sales to public authorities including the University of Wisconsin
(9 percent), and sales to other utilities (less than 1 percent).
The electric operations accounted for 62 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 PSCW voted in December 1995 to carefully pursue the
restructuring of the electric utility industry in Wisconsin. This
approach is largely consistent with a plan developed and
supported by the Company. The process will include a report by
the Commissioners to the legislature, a draft work plan, and a
series of dockets and proceedings over the next three to seven
years to implement the work plan. (See Item 7, page II-7,
Regulatory and Accounting Issues for further discussion.)
Fuel supply and generation
The Company estimates that its net kilowatt-hour requirements for
1996 will be provided from the following sources: 68 percent
from fossil-fueled steam plants, 24 percent from a nuclear-fueled
steam plant, 7 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 40 days
on December 31, 1995. 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 Powder River
Basin sources in Montana and Wyoming.
<PAGE>
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 83.1 percent in 1995, compared to
a projected industry average of 84.5 percent.
The steam generator tubes at Kewaunee are susceptible to
corrosion characteristics seen throughout the nuclear industry.
During the first quarter of 1995, Kewaunee was shut down for
scheduled maintenance and refueling. Inspection of the steam
generators revealed increased levels of tube degradation. Prior
to the shutdown, the equivalent of approximately 12 percent of
the tubes in the steam generators were plugged with no loss of
capacity. When the plant was returned to service in May 1995,
approximately 21 percent of the tubes were plugged.
As a result of the need to keep Kewaunee cost-competitive and to
address the repair or replacement of the steam generators, the
co-owners of Kewaunee have been and are continuing to evaluate
various alternatives to deal with the potential future loss of
capacity resulting from the continuing degradation of the steam
generator tubes. As part of this evaluation, the following
actions are being taken:
- - A request has been submitted to the Nuclear Regulatory
Commission (NRC) to redefine the pressure boundary point of
the repaired steam generator tubes (sleeved tubes), which
have been removed from service by plugging, in order to
allow the return of many of the sleeved tubes to service. If
the request is granted, and even if additional degraded
tubes would be discovered during the next planned shutdown
in the fall of 1996, Kewaunee should be able to return to
near-full capacity at that time.
- - A request will be submitted to the NRC to allow the co-
owners to pursue welded repair technologies to repair
existing sleeved tubes in an effort to return plugged tubes
to service. Although welded tube repair technologies exist,
such technologies have not yet been approved by the NRC.
- - Continuing evaluations are being performed with respect to
the economics of replacing the steam generators. Replacement
of steam generators is estimated to cost approximately
$100 million (the Company's share is 17.8 percent),
exclusive of additional purchase power costs associated with
an extended shutdown.
- - The Company has requested the PSCW to accelerate the
collection of funds through rates for decommissioning and
the recovery of the existing net plant.
<PAGE>
The co-owners continue to evaluate the potential financial and
regulatory implications of a change in ownership (which would
likely require as a condition precedent authority to replace the
steam generator) or early shutdown of Kewaunee. The Company
believes that the best near-term economic alternative for the
owners of Kewaunee is to continue to pursue tube recovery and
repair processes. The Company will reassess its views of
available alternatives based on the condition of steam generator
tubes during the fall 1996 refueling outage. On December 31,
1995, the net book value of the Company's share of Kewaunee was
$23.6 million.
Operating and maintenance costs at Kewaunee have been reduced
more than 25 percent over the last three years. Continued
reduction of costs, while not sacrificing safety, is planned to
keep Kewaunee cost-competitive. The NRC continues to rate
Kewaunee superior (Category 1) in all areas: maintenance,
operations, engineering, and plant support.
If Kewaunee remains in operation until expiration of the
operating license, physical decommissioning is expected to occur
during the period 2014 to 2021 with additional expenditures being
incurred during the period 2022 to 2050 related to the storage of
spent nuclear fuel at the site. In July of 1994, the PSCW issued
an order covering all Wisconsin utilities with nuclear
generation. The order standardizes cost escalation assumptions
used in determining decommissioning liabilities. Based on this
methodology and considering other assumption changes, Kewaunee
decommissioning costs are estimated to be $376 million in current
dollars and $1.9 billion in year-of-expenditure dollars. The
Company's share of Kewaunee decommissioning costs is estimated to
be $67 million in current dollars and $339 million in year-of-
expenditure dollars. These costs are recovered currently in
customer rates and deposited in external trusts. As of
December 31, 1995, the Company's external trusts totaled
$37 million (fair market value).
<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 of spent fuel (approximately one-third of the
nuclear fuel assemblies in the reactor) is removed from the
reactor, it is placed in temporary storage in a spent fuel pool
at the plant site. Permanent storage is addressed below. There
are presently no operating facilities in the United States that
are 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, which takes advantage of
economical spot market purchases of uranium, results in
inventories sufficient for up to two reactor reloads of
fuel, excluding in-process uranium.
- - Uranium hexafluoride from inventory and from spot market
purchases was used to satisfy converted material
requirements in 1995. The co-owners intend to purchase
future conversion services on the spot market unless they
can negotiate economical long-term contracts with primary
suppliers.
- - In 1995, enrichment services were not required. However,
future services will be procured from COGEMA, Inc., pursuant
to a contract executed in 1983 and last amended in 1995.
Enrichment services are also purchased from the United
States Enrichment Corporation (USEC) 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 1997 and in alternate
years thereafter from USEC.
- - Fuel fabrication services through March 15, 2001, are
covered by contract with Siemens Power Corporation.
- - Beyond the stated periods set forth above, additional
contracts for uranium concentrates, conversion to uranium
hexafluoride, enrichment, fabrication, and spent fuel
storage will have to be procured. The co-owners anticipate
the prices for the foregoing will modestly increase.
<PAGE>
Pursuant to the Nuclear Waste Policy Act of 1982 (Nuclear Policy
Act), the U.S. Department of Energy (DOE) entered into a contract
with the 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 not accept spent nuclear fuel before the
year 2015. 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
and sold 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. 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 evaluating
options for the storage of additional quantities beyond 2001.
Several technologies are available. An investment of
approximately $2.5 million in the early 2000s could provide
additional storage sufficient to meet spent fuel storage needs
until expiration of the current operating license in 2013.
The Nuclear Policy Act 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, 1995,
the remaining liability was $14.4 million of which the Company's
share is $2.6 million. The payments are subject to adjustment for
inflation.
In 1995, Yankee Atomic Electric Company (Yankee Atomic) received
a United States Court of Federal Claims decision that Yankee
Atomic was entitled to a refund of $3 million paid to the Uranium
Enrichment Decontamination and Decommissioning Fund. The court
ruled that by entering into contracts with utilities, the
government agreed to charge certain prices for uranium enrichment
services that could not be legislatively changed after
performance and payment were completed. The Yankee Atomic
decision addresses only a refund to Yankee Atomic. Based on the
Yankee Atomic decision, the co-owners of Kewaunee are
investigating options and actions available.
Utility customers of the USEC have challenged the pricing of
enrichment services by the USEC subsequent to the Energy Policy
Act of 1992. The position of the utilities is that the charges by
the USEC are higher than the terms of the contracts originally
entered into with the DOE. The co-owners are investigating the
situation to determine actions available.<PAGE>
The Low-Level Radio-
active 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 July
1995, the Barnwell, South Carolina, disposal facility again began
to accept low-level radioactive waste materials from outside its
region.
Air quality
Phase II 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.
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.
<PAGE>
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, 1995, the Company supplied natural gas service to
102,589 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 58 and 36 percent,
respectively, of the total gas revenues for 1995. The gas
operations accounted for 38 percent of the total revenues of the
Company. Revenues from transportation service accounted for
2 percent of the total gas revenues for 1995. Sales and revenues
from best-efforts rate schedules accounted for 7 and 4 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 1995 to 1996 heating season. In addition, the Company can
curtail gas deliveries to its interruptible customers.
Approximately 11 percent of gas sold in 1995 was sold to
interruptible customers.
Gas supply
The Company has physical interconnections with both ANR Pipeline
Company (ANR) and Northern Natural Gas Company (NNG). The
Company's primary service territory, which includes Madison and
the surrounding area, receives deliveries at four ANR gate
stations and one NNG gate station. The Company also receives
deliveries at NNG gate stations located in the communities of
Viroqua, Elroy, and Crawford County. Interconnections with two
major pipelines provide 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.
<PAGE>
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 beginning in November 1995 and continuing
through March 1996 was much colder than normal. The colder-than-
normal weather, along with an extended extreme cold weather
period in late January and early February, resulted in
significant industry-wide reductions of storage inventory levels,
which were already historically low going into the heating
season. The low storage levels and limited transportation
capacity availability forced gas prices to rise to new levels.
The Company's customers were not heavily impacted, however,
because low-cost supplies injected into storage during the summer
were withdrawn in the winter to meet customer demand.
Regarding transportation of supply, the Company has firm
transportation service on ANR for a maximum daily quantity of
33,618 dekatherms. The Company's NNG maximum daily quantity for
firm transportation service is 48,719 dekatherms. The Company
also holds 2,389 dekatherms of firm transportation service into
Viroqua's NNG gate station, and firm transportation service of
1,500 dekatherms into Crawford County's NNG gate station.
General
The Company's business is seasonal to the same extent as other
upper Midwest electric and natural gas utilities.
The Company had 706 permanent employees at December 31, 1995.
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, 1995:
Commercial Net No. of
Plants Operation Fuel Capability Units
Date (Megawatt)
Steam Plants
Columbia 1975 & 1978 Low-sulfur
coal 231(1,2) 2
Kewaunee 1974 Nuclear 92(1,3) 1
Blount 1957 & 1961 Coal/gas
(Madison) 103 2
1938 & 1942 Gas/coal 40 2
1949 Gas 23 1
1964-1968 Gas/oil 35 4
Combustion 1964-1973 Gas/oil
Turbines 90 5
Total 614
1 Base load generation
2 Company's 22 percent share of two 525-mw units located near
Portage, Wisconsin
3 Company's 17.8 percent share of 525-mw unit located near
Kewaunee, Wisconsin
Major electric transmission and distribution lines and
substations in service at December 31, 1995, 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 1,021 715
under
Substations Installed Capacity (kVA)
Transmission (22) 4,132,350
Distribution (33) 361,700
Gas facilities include 1,829 miles of distribution mains and one
propane air plant capable of producing a maximum daily capacity
of 9,000 dekatherms of natural gas equivalent.
<PAGE>
Item 3. Legal Proceedings.
The Company filed a suit January 3, 1996, in Dane County Circuit
Court charging WPL with violations of Wisconsin laws and rules in
attempting to provide electric service to the new Ho Chunk bingo
parlor on the southeast side of Madison. The Company also filed a
complaint against WPL at the PSCW for illegally duplicating
electric facilities in the same area.
The Company claims that WPL intentionally misrepresented the
Company's cost for electric service to the Ho Chunk Nation,
falsely advertised its services to induce the Ho Chunk Nation to
enter into a contract with WPL, and improperly interfered with
the Company's legal rights to serve that facility.
The Company seeks treble damages for intentional illegal
activities and misrepresentation and also seeks orders
prohibiting WPL from serving the bingo parlor and other customers
on the southeast side of Madison. The Company had already
installed substantial electric facilities near the bingo parlor
and has provided electric service to other customers in this area
since 1963. The Ho Chunk Nation also requested and received
electric service from the Company when construction started in
June 1995.
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 Stock Market (Nasdaq) under the symbol MDSN.
The approximate number of stockholders of record on February 1,
1996, was 15,895. 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 The Nasdaq Stock Market
and the dividends paid per common share for each quarter for the
past two fiscal years are shown below:
Common Stock Price Dividends Per
Range Share
1995 1995
High Low
First quarter $21 7/8 $20 5/8 $0.313
Second quarter $21 7/8 $20 1/2 $0.313
Third quarter $22 5/8 $20 3/8 $0.317
Fourth quarter $23 3/8 $21 7/8 $0.317
Common Stock Price Dividends Per
Range Share
1994 1994
High Low
First quarter $22 7/8 $20 5/8 $0.310
Second quarter $22 1/2 $21 1/8 $0.310
Third quarter $23 3/8 $21 1/8 $0.313
Fourth quarter $22 1/2 $21 1/8 $0.313
*Dividends and price per common share for the quarterly periods
have been restated to reflect the Company's three-for-two stock split.
<PAGE>
<TABLE>
Item 6. Selected Financial Data.
<CAPTION>
For the years ended
December 31,
(In thousands of 1995 1994 1993 1992 1991
dollars, except
per-share amounts)
<S> <C> <C> <C> <C> <C>
Summary of Operations
Operating Revenues:
Electric $153,554 $149,665 $147,201 $142,646 $146,378
Gas 95,036 95,307 96,932 85,356 85,822
Total 248,590 244,972 244,133 228,002 232,200
Operating expenses 191,725 187,469 187,717 172,049 173,419
Other general taxes 8,709 8,619 8,222 8,107 7,872
Income tax items 14,285 14,822 13,964 12,784 14,535
Net operating income 33,871 34,062 34,230 35,062 36,374
Other Income (including
allowance for funds
used during construction) 1,635 2,146 2,118 2,210 1,242
Income before
interest expense 35,506 36,208 36,348 37,272 37,616
Interest expense 11,536 11,197 11,673 13,465 12,736
Net income 23,970 25,011 24,675 23,807 24,880
Preferred dividends 64 471 489 506 524
Earnings on common stock $23,906 $24,540 $24,186 $23,301 $24,356
Average shares
outstanding <FN1> 16,080 16,080 16,055 16,046 16,046
Earnings per share <FN1> $1.49 $1.53 $1.51 $1.45 $1.52
Dividends paid per share <FN1> $1.260 $1.247 $1.227 $1.193 $1.167
Ratio of earnings to
fixed charges <FN2> 4.23 4.49 4.15 3.60 3.88
At December 31, Assets
Electric $327,053 $323,870 $328,048 $325,510 $330,136
Gas 119,968 118,210 114,626 106,837 104,381
Assets not allocated 46,855 45,679 22,690 20,390 20,548
Total $493,876 $487,759 $465,364 $452,737 $455,065
Capitalization
Common shareholders' equity $193,137 $189,489 $184,995 $180,367 $176,213
Redeemable preferred stock - 5,100 5,400 5,600 5,800
Long-term debt 129,048 130,800 120,396 122,363 124,859
Short-term debt 20,500 28,600 23,500 17,000 5,600
Total Capitalization $342,685 $353,989 $334,291 $325,330 $312,472
<FN>
<FN1> Average shares outstanding and per-share amounts have
been restated to reflect a three-for-two stock split
effective February 20, 1996.
<FN2> 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
Earnings per share of Madison Gas and Electric Company's (the
Company) common stock decreased to $1.49 in 1995, a decrease of
2.6 percent compared to the $1.53 earned in 1994. Factors that
led to slightly lower earnings were industry restructuring costs
and costs associated with various regulatory filings in relation
to the proposed utility mergers within the state of Wisconsin.
Also, the Public Service Commission of Wisconsin (PSCW)
authorized a slightly lower return on common stock equity
effective January 1, 1995.
Electric Sales and Revenues
Electric retail sales for 1995 increased approximately 7 percent
from 1994. Electric retail sales were impacted by the
significantly warmer summer which resulted in an increased use of
electricity. The electric sales breakdown by customer class is
shown in the table below:
Electric Sales
Megawatt Hours 1995 1994 % Change
Residential 735,442 679,211 8.3
Commercial 1,347,947 1,448,474 (6.9)
Industrial 292,649 221,384 32.2
Other 320,869 169,755 89.0
Total Retail 2,696,907 2,518,824 7.1
Resale - Utilities 26,344 34,990 (24.7)
Total Sales 2,723,251 2,553,814 6.6
As a result of the increase in electric sales, electric revenues
increased $3.9 million or 2.6 percent in 1995 compared to 1994.
The increase in electric revenues reflects a 3.3 percent
reduction to electric rates effective January 1, 1995. The
Company's electric margin (revenues less fuel and purchased
power) increased $4 million or 3.5 percent during 1995 compared
with 1994. The primary factors for the increased margin are the
hot and humid weather conditions in July and August which
contributed to higher sales, along with positive economic
conditions that contributed to increased customer growth.
Electric retail sales for 1994 increased 4.0 percent from 1993.
The increase in electric sales for 1994 over 1993 was
attributable to a 1.4 percent increase in the electric customer
base. Also, the addition of a large, baseload industrial customer
resulted in increased sales. Electric revenues increased
1.7 percent in 1994 compared to 1993. Electric rates were reduced
in June 1993 by 2.9 percent on an annual basis.
<PAGE>
Gas Sales and Revenues
Total gas therms delivered by the Company increased 6.3 percent
in 1995 compared to 1994, largely reflecting the colder weather
experienced during the fourth quarter of 1995. Gas therms
delivered during the fourth quarter of 1995 increased
approximately 25 percent over the same 1994 period. The table
below shows total gas deliveries by customer class:
Therms Delivered
Thousands 1995 1994 % Change
Residential 89,099 84,326 5.7
Commercial and Industrial 94,729 100,441 (5.7)
Total Retail System 183,828 184,767 (0.5)
Transport 36,502 22,463 62.5
Total Gas Deliveries 220,330 207,230 6.3
Despite the increase in gas delivered in 1995, gas revenues
remained constant when compared to 1994. Gas margin (revenues
less natural gas purchased) increased by $1.9 million or over
5 percent in 1995 compared to 1994. A shift in a number of
customers from retail system rates to transportation rates (see
table) is the main reason gas revenues did not increase in
proportion to gas deliveries. Gas transport customers' revenue is
recorded on a margin basis (revenue less cost of gas), whereas
retail system customers' revenue is recorded on a total revenue
basis.
Gas delivered to customers in 1994 increased 6.3 percent from
1993. The extremely cold first quarter of 1994 along with the
increase in customer base, due in part to the Company's expansion
of its gas service territory in western Wisconsin, were the main
factors that attributed to the increased gas deliveries. Gas
revenues decreased $1.6 million or approximately 2 percent in
1994 compared to 1993. This was the result of lower unit gas
costs. Lower gas costs are passed on to customers in the form of
lower rates through the purchased gas adjustment clause (PGAC),
thus lowering natural gas revenues on a one-for-one basis.
Electric Fuel and Natural Gas Costs
Electric fuel costs and purchased power costs remained constant
in 1995 compared to 1994, despite the hot and humid weather
experienced in July and August. During July 1995, the Company set
a record for peak demand at 598 megawatts for one hour. The
Company relied more on its generating plants and purchased less
energy in 1995 versus 1994, due to lower unit fuel costs of
Company owned generation.
Natural gas costs decreased $2.2 million or approximately
4 percent during 1995 compared to 1994. This was due to a shift
in customers from retail system rates to transport rates and a
decrease in the cost per therm of approximately 3 percent from
the previous year.
<PAGE>
Other Operating Expenses
Other operations increased $4.7 million or 8 percent during 1995
compared to 1994. This is due to an increase in industry
restructuring costs and costs associated with participation in
proposed utility merger filings. Another contributing factor was
increased costs associated with postretirement benefits other
than pensions. Depreciation expenses increased $2.4 million or
11 percent in 1995 when compared to 1994. This is primarily due
to an increase in nuclear decommissioning costs recorded as
depreciation expense that has been included in rates. Other
interest increased in 1995 when compared to 1994 and 1993 due to
a higher level of commercial paper outstanding during 1995
because of the redemption of the Series E, Preferred Stock, in
February 1995. Income taxes charged to operations decreased
3.6 percent in 1995 from 1994, reflecting the reduction in net
operating income before income taxes for 1995 relative to 1994.
Electric and Gas Operations Outlook
The Company anticipates electric sales to grow at a compound
annual rate of approximately 1.5 percent to 2.0 percent over the
next five-year period ending December 31, 2000. The service
territory appears well insulated against industry or economic
downturns. The Company's competitive position in a deregulated
market remains favorable because of its low generation costs,
competitive rates, and low percentage of industrial customers.
Natural gas deliveries are estimated to grow at a compound annual
rate of 2.0 percent.
The Company will continue efforts to expand its unregulated gas
marketing activities and its gas service territory. The Company's
unregulated gas marketing subsidiaries provide gas supply and
marketing services to customers traditionally served by regulated
utilities. These companies can be impacted by volatility in
natural gas supply prices because they do not have a recovery
mechanism, such as a PGAC. In January and February 1996,
extremely cold weather caused natural gas supply prices to rise
rapidly. While results were negatively impacted during this
period, it is not expected to have a material effect on the
Company.
<PAGE>
Liquidity and Capital Resources
Capital Requirements and Investing Activities
The Company's liquidity is primarily affected by the requirement
of its ongoing construction program. In 1995, capital
expenditures decreased approximately $7.3 million or 27 percent,
as compared to 1994, due in part to management's efforts to
control capital spending. Also, significant capital expenditures
were required by the Company when it expanded its gas service
territory into two new areas in 1994. It is anticipated that
capital expenditures will be in the range of $24 million to
$25 million for the years 1996 through 2000. For the five-year
period ending December 31, 2000, the Company estimates that
internally generated cash will provide, on average, more than
100 percent of the utility plant and nuclear fuel expenditures.
Expenditures for construction and nuclear fuel estimated for
1996, actual for 1995, and the average for the three-year period
1992 to 1994 are shown below:
<PAGE>
Expenditures for Construction and Nuclear Fuel
(Thousands of Dollars)
For the years Annual
ended 1996 1995 Average
December 31: Estimated 1992 to 1994
Electric
Production $ 1,498 6.2% $ 2,485 13.0% $ 2,522 11.3%
Transmission 1,456 5.9 357 1.9 1,261 5.7
Distribution and
General 8,382 34.2 9,157 47.8 8,146 36.8
Nuclear Fuel 5,099 20.8 526 2.7 2,803 12.7
Total Electric 16,435 67.1 12,525 65.4 14,732 66.5
Gas 4,800 19.6 4,220 22.0 5,663 25.6
Common 3,265 13.3 2,417 12.6 1,751 7.9
TOTAL $24,500 100.0% $19,162 100.0% $22,146 100.0%
On January 3, 1995, the Company purchased American Energy
Management, Inc. (AEM). AEM is a national energy marketing firm
that provides gas marketing, energy management, energy auditing,
and conservation services to customers in 12 states.
Cash Provided by Operating and Financing Activities
Cash provided by operating activities increased $9.9 million or
24 percent, due in large part to an increase in current
liabilities for natural gas purchases associated with higher gas
sales for the Company and its subsidiaries.
In February 1995, the Company redeemed all of its outstanding
8.70%, Series E, Preferred Stock.
The Company redeemed its 7-3/4%, 2001 Series, First Mortgage Bonds
on November 22, 1995, and replaced them with a long-term debt
obligation at a fixed rate of 6.01%. On November 1, 1995, the
Company used the balance from its Pollution Control Bond Fund to
redeem a portion of its 6-1/2%, 2006 Series, Pollution Control
Revenue Bonds.
As of December 15, 1995, the Company has completed the drawdown
of its Industrial Development Revenue Bond - Construction Fund.
Capitalization Matters
At December 31, 1995, bank lines of credit available to the
Company were $40 million which includes $5 million for Great
Lakes Energy Corp. (GLENCO), a wholly owned subsidiary of the
Company, and AEM, a subsidiary of GLENCO. 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>
In 1995, the Company revised its Automatic Dividend Reinvestment
and Stock Purchase Plan to the Investors Plus Plan (the Plan).
The Plan now allows interested investors to make purchases of the
Company's stock directly through the Plan. The Plan has a minimum
initial investment and increased its maximum quarterly
contributions.
The Company anticipates it will be able to meet its construction
requirements and sinking fund debt requirements with internally
generated funds over the next three years.
Kewaunee Nuclear Plant
The Kewaunee Nuclear Power Plant (Kewaunee) is operated by
Wisconsin Public Service Corporation (WPSC). The Company has a
17.8 percent ownership interest in Kewaunee which it owns jointly
with two other utilities. Kewaunee is operating with a license
that expires in 2013.
Operating and maintenance costs at Kewaunee have been reduced
more than 25 percent over the last three years. Continued
reduction of costs, while not sacrificing safety and reliability,
is planned to keep Kewaunee costs competitive in the near future.
The Nuclear Regulatory Commission (NRC) recently rated Kewaunee
superior (Category 1) in all areas: maintenance, operations,
engineering, and plant support.
The steam generator tubes at Kewaunee are susceptible to
corrosion characteristics seen throughout the nuclear industry.
The owners of Kewaunee are continuing to evaluate various
economic alternatives to deal with the potential future loss of
capacity resulting from the continuing degradation of the steam
generator tubes. These alternatives range from
repairing/replacing the existing steam generators to early plant
closure with replacement power options. Replacement of steam
generators is estimated to cost $100 million (the Company's share
would be 17.8%), excluding additional purchased power costs
associated with an extended shutdown.
The Company is evaluating the need to accelerate the collection
of funds through rates for decommissioning and the recovery of
the existing net plant.
<PAGE>
Regulatory and Accounting Issues
The Public Service Commission of Wisconsin (PSCW) voted in
December 1995 to carefully pursue the restructuring of the
electric utility industry in Wisconsin. This approach is largely
consistent with a plan developed and supported by the Company.
The process will include a report by the Commissioners to the
legislature, a draft work plan, and a series of dockets and
proceedings over the next three to seven years to implement the
work plan. The restructuring could affect the eligibility of the
Company to continue applying Statement of Financial Accounting
Standard No. 71 (SFAS 71), "Accounting for the Effects of Certain
Types of Regulation." Continued accounting under SFAS 71 would
require that the Company's regulated operations meet the
following criteria: rates for regulated services/products are
subject to approval by an independent third-party regulator; the
regulated rates are designed to recover the Company's costs of
providing regulated services/products; and the regulated rates
set can be charged to and recovered from its customers.
<PAGE>
Although the Company believes it will continue to meet the
SFAS 71 criteria in the future, it cannot predict what outcome
future PSCW actions will have on its ability to continue to do
so. The PSCW has stated they will develop, if necessary, a
program allowing appropriate recovery for commitments made
under prior regulatory structures. The Company believes local
distribution services will continue to be regulated by the PSCW.
The Statement of Financial Accounting Standard No. 121
(SFAS 121), "Accounting for the
Impairment of Long Lived Assets and for Long Lived Assets to be
Disposed Of," is effective for fiscal years beginning on or after
December 15, 1995. SFAS 121 requires that long-lived assets be
reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be
recoverable. SFAS 121 also amends SFAS 71 to require the write-
off of a regulatory asset if it is no longer probable that future
revenues will recover the asset. The adoption of SFAS 121 will
not have a material impact on the Company's financial position or
results of operations. However, the Company cannot predict what
effect a competitive marketplace or future regulatory actions
will have on the outcome of the application of SFAS 121.
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 the 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 Issues
Phase II 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 II emission compliance strategies for the
Company 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 II emission compliance strategies
and their costs are currently being evaluated. The Company
expects no major capital expenditures as a result of Phase II.
<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
- - Consolidated Statements of Income and Retained Income F-3
- - Consolidated Statements of Cash Flows F-4
- - Consolidated Balance Sheets F-5
- - Consolidated Statements of Capitalization F-6
- - Notes to Consolidated Financial Statements F-7 - F-18
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
<PAGE>
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>
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, 1995 and 1994, and the
related consolidated statements of income and retained income and
cash flows for the years ended December 31, 1995, 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 audit.
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, 1995 and 1994, and the consolidated results of their
operations and their cash flows for the years ended December 31,
1995, 1994, and 1993, in conformity with generally accepted
accounting principles.
Milwaukee, Wisconsin
February 9, 1996
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED INCOME
<CAPTION>
For the years ended December 31 1995 1994 1993
(Thousands of dollars, except per-share amounts)
<S> <C> <C> <C>
STATEMENTS OF INCOME
Operating Revenues
Electric $153,554 $149,665 $147,201
Gas 95,036 95,307 96,932
Total Operating Revenues 248,590 244,972 244,133
Operating Expenses
Fuel used for electric generation 28,017 26,167 23,125
Purchased power 8,048 10,015 11,190
Natural gas purchased 57,488 59,693 62,479
Other operations 61,499 56,795 56,103
Maintenance 11,858 12,416 13,029
Depreciation and amortization 24,815 22,383 21,791
Other general taxes 8,709 8,619 8,222
Income taxes 14,285 14,822 13,964
Total Operating Expenses 214,719 210,910 209,903
Net Operating Income 33,871 34,062 34,230
Allowance for funds used during construction -
equity funds 57 132 81
Other income, net 1,549 1,939 1,988
Income Before Interest Expense 35,477 36,133 36,299
Interest Expense
Interest on long-term debt 10,331 10,558 11,195
Other interest 1,205 639 478
Allowance for funds used during construction -
borrowed funds (29) (75) (49)
Net Interest Expense 11,507 11,122 11,624
Net Income 23,970 25,011 24,675
Preferred stock dividend requirement 64 471 489
Earnings on Common Stock $ 23,906 $ 24,540 $ 24,186
Earnings Per Share of Common Stock
(Average shares outstanding 16,079,718,
16,079,718, and 16,055,337, respectively)
(Note 2a) $1.49 $1.53 $1.51
STATEMENTS OF RETAINED INCOME
Balance Beginning of Year $60,851 $56,357 $51,872
Add - Net income 23,970 25,011 24,675
Deduct - Cash dividends on common stock (20,258) (20,046) (19,701)
- Preferred stock dividend (64) (471) (489)
Balance End of Year $64,499 $60,851 $56,357
<FN>
The accompanying notes are an integral part of the above
statements.
/TABLE
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
For the years ended December 31 1995 1994 1993
<S> <C> <C> <C>
(Thousands of dollars)
Operating Activities
Net income $23,970 $25,011 $24,675
Income items not affecting working capital
Depreciation and amortization 24,815 22,383 21,791
Deferred income taxes (2,442) 2,428 3,255
Amortization of nuclear fuel 2,740 2,803 2,486
Amortization of investment tax credits (768) (783) (803)
Allowance for funds used during construction -
equity funds (57) (132) (81)
Other 1,729 994 (462)
Net Funds Provided from Operations 49,987 52,704 50,861
Changes in working capital, excluding cash
equivalents, sinking funds, maturities, and
interim loans -
Increase in current assets (12,168) (10,789) (4,647)
Increase/(decrease) in current liabilities 11,287 (2,127) (2,941)
Other noncurrent items, net 1,716 1,171 (1,878)
Cash Provided by Operating Activities 50,822 40,959 41,395
Financing Activities
Common stock issued - - 143
Cash dividends on common and preferred stock (20,322) (20,517) (20,190)
Sale of First Mortgage Bonds - - 25,000
Maturities/redemptions of First Mortgage Bonds (5,423) - (33,788)
Maturity of 5.45%, 1996 Series (7,840) - -
Increase in other long-term debt 11,000 - -
Other decreases in First Mortgage Bonds (199) (58) (122)
Decrease in preferred stock (5,300) (200) (200)
Decrease in bond construction funds, net 8,090 10,892 6,943
(Decrease)/increase in interim loans (8,100) 5,100 6,500
Cash Used for Financing Activities (28,094) (4,783) (15,714)
Investing Activities
Acquisition in nonregulated subsidiary (8,036) - -
Additions to utility plant and nuclear fuel (19,162) (26,429) (23,648)
Allowance for funds used during construction -
borrowed funds (29) (75) (49)
Increase in decommissioning fund (4,191) (2,316) (2,399)
Cash Used for Investing Activities (31,418) (28,820) (26,096)
Change in Cash and Cash Equivalents (8,690) 7,356 (415)
Beginning of period 11,534 4,178 4,593
Cash and cash equivalents - end of period $ 2,844 $11,534 $4,178
<FN>
The accompanying notes are an integral part of the above
statements.
/TABLE
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
At December 31 1995 1994
(Thousands of dollars)
<S> <C> <C>
ASSETS
Utility Plant, at original cost
In service Electric $489,399 $479,346
Gas 173,890 167,710
Gross Plant in Service 663,289 647,056
Less Accumulated provision for depreciation (348,254) (323,511)
Net Plant in Service 315,035 323,545
Construction work in progress 9,061 11,920
Nuclear decommissioning fund 36,965 27,815
Nuclear fuel, net 6,172 8,386
Total Utility Plant 367,233 371,666
Other Property and Investments 17,176 9,843
Current Assets
Cash and cash equivalents 2,844 11,534
Accounts receivable, less reserves of $1,379 and
$921, respectively 36,817 25,998
Unbilled revenue 13,529 10,411
Materials and supplies, at average cost 5,987 6,424
Fossil fuel, at average cost 2,986 2,130
Stored natural gas, at average cost 6,203 8,551
Prepaid taxes 5,846 5,838
Other prepayments 1,608 1,456
Total Current Assets 75,820 72,342
Deferred Charges (Note 7) 33,647 33,908
Total Assets $493,876 $487,759
CAPITALIZATION AND LIABILITIES
Capitalization (see statement) $322,185 $325,389
Current Liabilities
Long-term debt sinking fund requirements 200 430
Preferred stock sinking fund requirements - 200
Maturity of 5.45%, 1996 Series 7,840 -
Interim loans - commercial paper outstanding 20,500 28,600
Accounts payable 25,928 18,360
Accrued taxes 1,500 1,143
Accrued interest 2,359 2,803
Other 7,903 4,327
Total Current Liabilities 66,230 55,863
Other Credits
Accumulated deferred income taxes 54,153 56,595
Regulatory liability (Note 1f) 25,177 25,204
Investment tax credit deferred 12,231 12,998
Other (Note 7) 13,900 11,710
Total Other Credits 105,461 106,507
Commitments - -
Total Capitalization and Liabilities $493,876 $487,759
<FN>
The accompanying notes are an integral part of the above balance
sheets.
/TABLE
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CAPITALIZATION
<CAPTION>
At December 31 1995 1994
(Thousands of Dollars)
<S> <C> <C>
Common Shareholders' Equity (Note 2a)
Common stock Par value $8 per share
Authorized: 28,000,000 shares
Outstanding: 16,079,718 shares $128,638 $128,638
Retained income 64,499 60,851
Total Common Shareholders' Equity 193,137 189,489
Redeemable Preferred Stock, cumulative, $25 par value,
authorized 1,175,000 and 1,191,000 shares,
respectively
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 7,840 7,920
7 3/4%, 2001 Series - 11,478
6 1/2%, 2006 Series, Pollution Control Revenue
Bonds, principal amounts of $7,075 and $8,780,
respectively, less construction fund of $0
and $1,618, respectively 7,075 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 $0 and $6,472, respectively 28,000 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 127,215 132,388
Unamortized discount and premium on bonds, net (1,127) (1,158)
Long-term debt sinking fund requirement (200) (430)
Maturity of 5.45%, 1996 Series (7,840) -
Total First Mortgage Bonds 118,048 130,800
Other Long-Term Debt
6.01%, interest rate SWAP agreement 11,000 -
Total Capitalization $322,185 $325,389
<FN>
The accompanying notes are an integral part of the above
statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995, 1994, and 1993
1. Summary of Significant Accounting Policies
a. General
Madison Gas and Electric Company (the Company) is an investor-
owned public utility headquartered in Madison, Wisconsin. The
Company generates, transmits, and distributes electricity to
about 120,000 customers in a 250-square-mile area of Dane County.
The Company also transports and distributes natural gas to nearly
103,000 customers in 1,325 square miles of service territories in
seven counties. The Company has served the Madison area since
1896. Two of the Company's subsidiaries, American Energy
Management, Inc. (AEM) and Great Lakes Energy Corp. (GLENCO),
market nonregulated energy services to national, regional, and
local accounts in 12 states. Services include purchase and
transportation of natural gas and other fuels for commercial,
industrial, and governmental customers.
The consolidated financial statements reflect the application of
certain accounting policies described in this note. The financial
statements include the accounts of the Company and its
subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation. The Company
records unbilled revenue on the basis of service rendered. Gas
revenues are subject to an adjustment clause related to periodic
changes in the cost of gas.
Preparation of the consolidated financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the dates of the
financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could
differ from those estimates.
b. Utility plant
Utility plant is stated at the original cost of construction,
which includes indirect costs consisting of payroll taxes,
pensions, postretirement benefits, other fringe benefits,
administrative and general costs, and an allowance for funds used
during construction (AFUDC).
<PAGE>
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.
c. 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 Nuclear Plant (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.
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 $2.6 million for the Company's portion of
the special assessment. The Company believes all costs will be
recovered in future rates.
d. 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 1995 1994 1995 1994
dollars)
Utility plant $85,075 $85,092 $57,853 $57,534
Accumulated
depreciation (44,366) (44,238) (34,263) (32,793)
Net Plant $40,709 $40,854 $23,590 $24,741
<PAGE>
e. Depreciation
Provisions at composite straight-line depreciation rates,
excluding decommissioning costs discussed as follows, approximate
the following percentages of the cost of depreciable property:
electric, 3.3 percent in 1995 and 1994 and 3.5 percent in 1993;
gas, 3.5 percent in 1995 through 1993. Depreciation rates are
approved by the Public Service Commission of Wisconsin (PSCW) and
are generally based on the estimated economic lives of property.
Nuclear decommissioning costs are accrued over the estimated
service life of 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 were $3.1 million.
Decommissioning costs are recovered through depreciation expense,
excluding 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 December 31,
1995, the decommissioning trusts, totaling $37 million (fair
market value), are shown on the balance sheet in the utility
plant section, and offset by an equal amount under accumulated
provision for depreciation (Note i).
The Company's share of Kewaunee decommissioning costs is
estimated to be $66.9 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 plant site.
f. Income taxes
The Company 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.
<PAGE>
Excess accumulated deferred income taxes, resulting chiefly from
taxes provided at rates higher than current rates, have been
recorded as a net regulatory liability ($25,177,000 and
$25,204,000 at December 31, 1995 and 1994, respectively),
refundable through future rates.
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) 1995 1994 1993
Income taxes charged to
operations $14,285 $14,822 $13,964
Income taxes charged to other
income 786 612 491
Total income taxes $15,071 $15,434 $14,455
Total income taxes consist of the following provision (benefit)
components for the years ended December 31:
(Thousands of dollars) 1995 1994 1993
Currently payable
Federal $14,602 $10,985 $ 9,485
State 3,679 2,804 2,518
Net deferred
Federal (2,217) 1,756 2,432
State (225) 672 823
Amortized investment tax credits (768) (783) (803)
Total income taxes $15,071 $15,434 $14,455
The differences between the federal statutory income tax rate and
the Company's effective rate are as follows:
1995 1994 1993
Statutory federal income tax rate 35.0% 35.0% 35.0%
Restoration of investment tax
credit (2.0) (1.9) (2.1)
State income taxes, net of
federal benefit 5.8 5.6 6.3
Amortization of excess deferred
taxes (1.6) (1.1) (1.3)
Other, individually insignificant 1.4 0.6 (1.0)
Effective income tax rate 38.6% 38.2% 36.9%
<PAGE>
The significant components of deferred tax liabilities (assets)
that appear on the Consolidated Balance Sheets as of December 31,
1995 and 1994, are as follows:
(Thousands of dollars) 1995 1994
Property-related $59,069 $60,295
Energy conservation expenses 5,601 6,168
Automated mapping and facilities
management system 482 860
Bond transactions 2,145 2,131
Nuclear fuel 698 412
Other, individually insignificant 307 411
Gross deferred income tax liabilities 68,302 70,277
Allowance for bad debts (553) (370)
Deferred compensation (1,201) (1,061)
Vacation pay (849) (772)
Stored natural gas (473) (977)
Accrued expenses, not deductible (968) (386)
Deferred tax regulatory account (10,105) (10,116)
Gross deferred income tax assets (14,149) (13,682)
Accumulated deferred income taxes $54,153 $56,595
Valuation allowances for deferred tax assets as of December 31,
1995 and 1994, were deemed unnecessary.
g. 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 on 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.
Effective January 1, 1995, the Company began recovering pension
costs in customer rates under Statement of Financial Accounting
Standards No. 87, "Employers' Accounting for Pensions" (SFAS 87).
Prior to this date, pension costs were recovered in rates as
funded. Of these funded pension costs, $810,000 and $861,000 were
charged to operating expenses in 1994 and 1993, respectively. The
plans' assets are in a master trust with a bank.
<PAGE>
The funded status of the plans at December 31 is as follows:
(Thousands of dollars) 1995 1994
Fair value of plan assets $50,152 $41,230
Actuarial present value of benefits
rendered to date - 45,574 36,895
Accumulated benefits based on
compensation to date, including
vested benefits of $44,554 and
$36,066, respectively
Additional benefits based on estimated
future salary levels 9,943 7,010
Projected benefit obligation $55,517 $43,905
Plan assets less than projected benefit
obligation (5,365) (2,675)
Unrecognized net asset at date of
initial application (1) (40)
Unrecognized net (gain)/loss 1,587 (156)
Unrecognized prior service cost 1,130 1,256
Net liability $(2,649) $(1,615)
Components of net pension costs for the years ended December 31
are:
(Thousands of dollars) 1995 1994 1993
Service costs (benefits earned
during the period) $1,416 $1,462 $1,596
Interest costs on projected
benefit obligation 3,724 3,462 3,196
Actual loss/(return) on plan
assets (10,033) 412 (3,663)
Net amortization and deferral 6,466 (4,056) 347
Regulatory effect based on
funding 0 (186) (401)
Net pension costs $1,573 $1,094 $1,075
The assumed rates for calculations used in the above tables were:
1995 1994 1993
Expected long-term rate of
return on plan assets 9.50% 9.00% 9.00%
Average rate of increase in
salaries 5.00% 5.00% 5.00%
Weighted average discount rate 7.25% 8.25% 7.50%
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 1995 through
1993 were $199,000, $199,000, and $186,000, respectively.
<PAGE>
h. Postretirement benefits other than pensions
The Company adopted Statement of Financial Accounting Standards
No. 106 (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.
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 7.25 percent in 1995, 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 12 percent in
1995 and 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 $1.9 million and would increase annual
aggregate service and interest costs by $283,000.
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 $402,000 at December 31, 1995,
and $497,000 at December 31, 1994.
The Company's policy is to fund the SFAS 106 obligation to the
yearly maximum through tax-advantaged vehicles. The plan's assets
are in trust or on reserve with an insurance company.
The funded status of the plan at December 31 is as follows:
(Thousands of dollars) 1995 1994
Accumulated postretirement benefit
obligation (APBO):
Retirees $(4,054) $(4,064)
Fully eligible active plan
participants (1,701) (1,399)
Other active plan participants (7,986) (6,562)
Total (13,741) (12,025)
Plan assets at fair value 2,666 1,465
APBO in excess of plan assets (11,075) (10,560)
Unrecognized transition obligation 7,379 7,813
Unrecognized prior service costs 2,166 -
Unrecognized loss/(gain) (1,129) 666
Accrued postretirement benefit
liability $(2,659) $(2,081)
<PAGE>
Components of net periodic benefit costs for the years ended
December 31 are as follows:
(Thousands of dollars) 1995 1994 1993
Service cost $ 429 $ 402 $ 413
Interest cost on APBO 989 772 747
Actual return on plan assets (177) (91) (131)
Amortization of transition
obligation over 20 years 434 434 434
Net amortization and deferral 172 (7) 56
Regulatory effect based on
phase in 95 (115) (382)
Net periodic benefit cost $1,942 $1,395 $1,137
i. Fair value of financial instruments
At December 15, 1995, the carrying amount of cash and cash
equivalents approximates fair value. The estimated fair market
value of the Nuclear Decommissioning Fund is $37 million, and the
estimated fair market value of the Company's First Mortgage
Bonds, and other long-term debt, based on quoted market prices at
December 31, is as follows:
(Thousands of dollars) 1995 1994
Carrying amount (includes sinking
funds) $138,215 $132,388
Fair market value $149,469 $124,677
<PAGE>
2. Capitalization Matters
a. Common stock - stock split
On December 15, 1995, the Board of Directors authorized a three-
for-two stock split effected in the form of a stock dividend. The
stock dividend was distributed on February 20, 1996, to
shareholders of record as of February 1, 1996. All current and
prior year per share amounts have been adjusted to reflect this
split.
To account for the three-for-two split, the number of common
shares outstanding was increased by 5,359,906 shares in 1995 and
1994. As a result, common stock par value was increased by
$42,879,248 for 1995 and 1994, with an offsetting decrease to
amounts received in excess of par value and retained earnings.
In December 1995, the Company amended, in its entirety, the
Automatic Dividend Reinvestment and Stock Purchase Plan with its
new Investors Plus Plan (the Plan). The Plan is designed to
provide investors with a convenient way to purchase shares of the
Company's common stock.
b. Redeemable preferred stock
The Company redeemed 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.
c. First mortgage bonds and other long-term debt
The annual sinking fund requirements of the outstanding first
mortgage bonds is $200,000 in 1996 through 2000. In addition,
approximately $8 million will be required in 1996, to retire at
maturity, the 5.45%, 1996 Series, First Mortgage Bonds.
On November 1, 1995, the Company used the balance from its
Pollution Control Bond Fund to redeem $1.7 million of its 6-1/2%,
2006 Series, Pollution Control Revenue Bonds. Also, on
November 22, 1995, the Company redeemed $11.5 million of the 7-3/4%,
2001 Series, First Mortgage Bonds. The Company used the proceeds
from an interest rate SWAP agreement with a commercial bank, in a
principal amount of $11.0 million to redeem the 2001 Series. The
SWAP agreement effectively changes the fixed rate from 7-3/4% to
6.01%. The agreement matures on November 10, 2000.
d. 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
$40 million in bank lines of credit, which includes $5 million
for GLENCO and AEM.
<PAGE>
Information concerning short-term borrowings at December 31 is
set forth below:
(Thousands of dollars) 1995 1994 1993
Available lines of credit
(MGE) $35,000 $32,000 $25,000
Available lines of credit
(GLENCO) $5,000 - -
Commercial paper outstanding $20,500 $28,600 $23,500
Weighted average interest
rate 5.86% 6.06% 3.45%
During the year:
Maximum short-term
borrowings $28,600 $29,500 $26,000
Average short-term
borrowings $16,091 $16,549 $14,056
Weighted average interest
rate 6.03% 4.57% 3.31%
3. Rate Matters
In December 1994, the PSCW issued its rate order that effectively
reduced electric rates by $5.1 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
July 1, 1997. The current rates are based on a return on common
stock equity of 11.7 percent.
4. Commitments
Utility plant construction expenditures for 1996, including the
Company's proportional share of jointly owned electric power
production facilities and purchases of fuel for Kewaunee, are
estimated to be $24 million to $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) 1995 1994 1993
Electric Operations
Total revenues $153,554 $149,665 $147,201
Operation and maintenance
expenses 89,994 87,748 86,060
Depreciation and amortization 19,503 17,337 16,948
Other general taxes 6,908 6,907 6,651
Pre-tax Operating Income 37,149 37,673 37,542
Income taxes 11,193 11,717 11,104
Net Operating Income $ 25,956 $ 25,956 $ 26,438
Construction and Nuclear
Fuel Expenditures
(Electric) $ 14,006 $ 16,804 $ 18,064
Gas Operations
Operating revenues $ 95,036 $ 95,307 $ 96,932
Revenues from sales to
electric utility 3,100 1,671 2,861
Total Revenues 98,136 96,978 99,793
Operation and maintenance
expenses 80,017 79,009 82,727
Depreciation and amortization 5,312 5,046 4,843
Other general taxes 1,801 1,712 1,571
Pre-tax Operating Income 11,006 11,211 10,652
Income taxes 3,091 3,105 2,860
Net Operating Income $ 7,915 $ 8,106 $ 7,792
Construction Expenditures
(Gas) $ 5,156 $ 9,625 $ 5,584
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.
<PAGE>
Cash payments for interest and income taxes for the years ended
December 31 were as follows:
(Thousands of Dollars) 1995 1994 1993
Interest paid, net of amounts
capitalized $11,894 $11,235 $11,704
Income taxes paid $18,016 $13,602 $10,954
7. Regulatory Assets and Liabilities
Pursuant to SFAS No. 71, "Accounting for the Effects of Certain
Types of Regulation" (SFAS 71), the Company capitalizes, as
deferred charges, incurred costs that are expected to be
recovered in future electric and natural gas rates. The Company
also records as other credits, obligations to customers to refund
previously collected revenue or to spend revenue collected from
customers on future costs.
The Company's regulatory assets and liabilities consisted of the
following as of December 31:
1995 1994
(Thousands of Dollars) Assets Liabilities Assets Liabilities
Demand-side management $14,169 $ 213 $15,369 $ -
Decommissioning &
decontamination 2,569 2,569 2,845 2,845
Unamortized debt
expense 5,448 - 6,283 -
Other 11,461 11,118 9,411 8,865
TOTAL $33,647 $13,900 $33,908 $11,710
<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 26, 1996, with the Securities and
Exchange Commission, which is incorporated herein by reference.
Executive Officers of the Registrant (elected annually by Directors)
Service
Years as
Eff. an
Executive Title Date Officer
David C. Mebane Chairman, President and 05/09/94 15
Age: 62 CEO
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 Executive Vice President 05/01/95 7
Age: 65 Senior V.P. - Human
Resources 05/03/93
Vice President - Human
Resources 12/01/91
Asst. V.P. - Human
Resources 10/01/89
Director - Personnel 01/01/69
Mark C. Williamson Senior V.P. - Energy
Age: 42 Services 05/01/95 4
Vice President - Energy
Services 05/03/93
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 Senior V.P. -
Age: 41 Administration and
Secretary 05/01/95 5
V.P. - Administration and
Secretary 12/01/91
Secretary and Corporate
Attorney 12/01/89
Corporate Attorney 02/13/84
<PAGE>
Service
Years as
Eff. an
Executive Title Date Officer
James C. Boll V.P. - Law and Corp.
Age: 60 Comm. 10/20/95 3
Asst. V.P. - Law and
Corp. Comm. 05/03/93
Exec. Dir. - Law and
Corp. Comm. 01/13/92
Dir. - Public Affairs and
Risk Mgmt. 06/01/91
Dir. - Risk Management 03/05/90
Joseph T. Krzos Vice President - Finance 12/01/92 10
Age: 51 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
Age: 54 Operation 07/01/86 10
Terry A. Hanson Treasurer 12/01/91 5
Age: 44 Manager - Internal Audit 09/01/84
<PAGE>
Service
Years as
Eff. an
Executive Title Date Officer
Deborah L. Burgess Asst. V.P. - Gas Rates
Age: 36 and Supply 11/01/94 2
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 2
Age: 37 Senior Director -
Marketing 07/01/93
Director - Market
Planning and Programs 11/01/92
Manager - Customer
Planning and Research 02/01/92
Supervisor - Mkt.
Planning & Eval. 06/01/90
Supervisor - Program
Planning and Eval. 03/01/90
Thomas R. Krull Asst. V.P. - Elec. Trans. 3
Age: 46 & Dist. 05/03/93
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
Carol A. Wiskowski Asst. V.P. - Admin. 17
Age: 56 and Assistant Secretary 05/01/92
Assistant Secretary 06/01/78
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 26,
1996, 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, 1995
and 1994, and for each of the three years in the period
ended December 31, 1995). Included in Part II, Item 8, of
this report:
Responsibility for Financial Statements
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 15,
1995.
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
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. (Incorporated by reference
to Exhibit 10F with 1994 10-K in File No. 0-1125.)
12 Statement regarding computation of ratios (page II-2).
21 Subsidiaries of the Registrant.
23 Consent of Independent 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, 1995.
<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 26, 1996
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 26, 1996.
Chairman, President and Chief
Executive Officer and Director
/s/ David C. Mebane (Principal Executive Officer)
David C. Mebane
Vice President - Finance
(Principal Financial Officer
and Principal Accounting
/s/ Joseph T. Krzos Officer)
Joseph T. Krzos
/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/ 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
RESTATED
ARTICLES OF INCORPORATION
OF
MADISON GAS AND ELECTRIC COMPANY
(Including all amendments made through December 15, 1995)
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 Three Hundred Seventy-Five Thousand
Dollars ($253,375,000) and shall consist of One Million One
Hundred Seventy-Five Thousand (1,175,000) 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;
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(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);
(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
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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 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
<PAGE>
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 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
<PAGE>
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 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.
<PAGE>
(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:
<PAGE>
(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
(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
<PAGE>
(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 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.
<PAGE>
(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 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.
<PAGE>
(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,
<PAGE>
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 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.
<PAGE>
(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 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.
<PAGE>
(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 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.
<PAGE>
(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).
(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.
<PAGE>
(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.
<PAGE>
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 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
<PAGE>
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.
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
<PAGE>
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.
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
<PAGE>
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.
MADISON GAS AND ELECTRIC COMPANY AND CONSOLIDATED SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
As of December 31, 1995, the Company owned 100 percent of the
voting securities of the following subsidiaries (all Wisconsin
corporations):
- - MAGAEL INC. - holds title to property acquired by the Company
for future utility plant expansion and nonutility property.
- - Central Wisconsin Development Corporation - assists new and
expanding businesses throughout Central Wisconsin by
participating in planning, financing, property acquisition,
joint ventures, and associated activities.
- - Great Lakes Energy Corp. - markets fuels and energy services
to commercial, industrial, and governmental customers in the
Upper Midwest.
- - Wisconsin Resources Corporation - Inactive.
- - North Central Technologies, Inc. - Inactive.
- - Mid America Technologies, Inc. - Inactive.
As of December 31, 1995, 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 December 31, 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 12 states.
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 9, 1996, on our audits of the consolidated
financial statements of Madison Gas and Electric Company as of
December 31, 1995, 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 25, 1996 COOPERS & LYBRAND L.L.P.
<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, 1995. Items 23 through 38 are
for the 12 months ended December 31, 1995.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
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0
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<EARNINGS-AVAILABLE-FOR-COMM> 23,906
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