05/14/96 11:52am
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: MARCH 31, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from: _________ to __________
Commission File Number 0-1125
MADISON GAS AND ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
Wisconsin 39-0444025
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
133 South Blair Street, Madison, Wisconsin 53701-1231
(Address of principal executive offices and zip code)
(608) 252-7000
(Registrant's telephone number including area code)
Common Stock Outstanding at May 14, 1996: 16,079,718 Shares
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months, and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
Madison Gas and Electric Company and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED INCOME
(Thousands of Dollars)
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
1996 1995
STATEMENTS OF INCOME
<S> <C> <C>
Operating Revenues:
Electric . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $36,078 $34,612
Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,977 39,840
Total Operating Revenues . . . . . . . . . . . . . . . . . . . . . . 80,055 74,452
Operating Expenses:
Fuel for electric generation . . . . . . . . . . . . . . . . . . . . . 6,559 6,017
Purchased power . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,892 1,862
Natural gas purchased . . . . . . . . . . . . . . . . . . . . . . . . 29,568 25,939
Other operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,068 14,911
Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,140 2,598
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . 6,197 6,244
Other general taxes . . . . . . . . . . . . . . . . . . . . . . . . . 2,245 2,216
Income tax items . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,642 4,536
Total Operating Expenses . . . . . . . . . . . . . . . . . . . . . . 68,311 64,323
Net Operating Income . . . . . . . . . . . . . . . . . . . . . . . . . . 11,744 10,129
Allowance for funds used during construction - equity funds . . . . . . . 10 22
Other income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,679) 1,441
Income before interest expense . . . . . . . . . . . . . . . . . . . . . 10,075 11,592
Interest expense:
Interest on long-term debt . . . . . . . . . . . . . . . . . . . . . . 2,516 2,589
Other interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198 387
Allowance for funds used during construction - borrowed funds . . . . (5) (11)
Net Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . 2,709 2,965
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,366 8,627
Preferred stock dividends . . . . . . . . . . . . . . . . . . . . . . . . - 64
Earnings on common stock . . . . . . . . . . . . . . . . . . . . . . . . $7,366 $8,563
Earnings per share of common stock (Note 3) . . . . . . . . . . . . . . . $0.46 $0.53
STATEMENTS OF RETAINED INCOME
Balance - beginning of period . . . . . . . . . . . . . . . . . . . . . . $64,499 $60,851
Earnings on common stock . . . . . . . . . . . . . . . . . . . . . . . . 7,366 8,563
Cash dividends on common stock (Note 3) . . . . . . . . . . . . . . . . . (5,092) (5,039)
Balance - end of period . . . . . . . . . . . . . . . . . . . . . . . . . $66,773 $64,375
<FN>
The accompanying notes are an integral part of the above statements.
/TABLE
<PAGE>
Madison Gas and Electric Company and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOW
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
<S> <C> <C>
Operating Activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,366 $ 8,627
Items not affecting working capital:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . 6,197 6,244
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . (1,027) (58)
Amortization of nuclear fuel . . . . . . . . . . . . . . . . . . . . 755 774
Amortization of investment tax credits . . . . . . . . . . . . . . . (188) (197)
Allowance for funds used during construction - equity funds . . . . (10) (22)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (975) 512
Net funds provided from operations . . . . . . . . . . . . . . . 12,118 15,880
Changes in working capital, excluding cash equivalents, sinking funds,
maturities, and interim loans:
Decrease in current assets . . . . . . . . . . . . . . . . . . . . . 4,340 6,535
Increase in current liabilities . . . . . . . . . . . . . . . . . . 11,162 2,945
Other noncurrent items, net . . . . . . . . . . . . . . . . . . . . . 3,181 2,285
Cash provided by Operating Activities . . . . . . . . . . . . . . . 30,801 27,645
Financing Activities:
Cash dividends on common and preferred stock . . . . . . . . . . . . . (5,092) (5,103)
Other increases/(decreases) in First Mortgage Bonds . . . . . . . . . 9 (171)
Decrease in preferred stock . . . . . . . . . . . . . . . . . . . . . - (5,300)
Decrease in bond construction funds, net . . . . . . . . . . . . . . . - 1,759
Decrease in interim loans . . . . . . . . . . . . . . . . . . . . . . (20,500) (13,600)
Cash used for Financing Activities . . . . . . . . . . . . . . . . . (25,583) (22,415)
Investing Activities:
Acquisition of nonregulated subsidiary . . . . . . . . . . . . . . . . - (8,036)
Additions to utility plant and nuclear fuel . . . . . . . . . . . . . (3,350) (4,093)
Allowance for funds used during construction - borrowed funds . . . . (5) (11)
Increase in nuclear decommissioning fund . . . . . . . . . . . . . . . (1,076) (893)
Cash used for Investing Activities . . . . . . . . . . . . . . . . . (4,431) (13,033)
Change in Cash and Cash Equivalents (Note 5) . . . . . . . . . . . . . . 787 (7,803)
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . 2,844 11,534
Cash and cash equivalents at end of period . . . . . . . . . . . . . $ 3,631 $ 3,731
<FN>
The accompanying notes are an integral part of the above statements.
/TABLE
<PAGE>
Madison Gas and Electric Company and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Mar. 31, Dec. 31,
1996 1995
ASSETS
<S> <C> <C>
Utility Plant, at original cost, in service:
Electric . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $490,941 $489,399
Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174,616 173,890
Gross plant in service . . . . . . . . . . . . . . . . . . . . . . . 665,557 663,289
Less accumulated provision for depreciation . . . . . . . . . . . . . (354,360) (348,254)
Net plant in service . . . . . . . . . . . . . . . . . . . . . . . . 311,197 315,035
Construction work in progress . . . . . . . . . . . . . . . . . . . . 8,929 9,061
Nuclear decommissioning fund (Note 2) . . . . . . . . . . . . . . . . 38,220 36,965
Nuclear fuel, net . . . . . . . . . . . . . . . . . . . . . . . . . . 5,968 6,172
Total Utility Plant . . . . . . . . . . . . . . . . . . . . . . . . 364,314 367,233
Other property and investments . . . . . . . . . . . . . . . . . . . . . 16,048 17,176
Current Assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . 3,631 2,844
Accounts receivable, less reserves of $1,260 and $1,379, respectively 44,880 36,817
Unbilled revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,050 13,529
Materials and supplies, at average cost . . . . . . . . . . . . . . . 6,241 5,987
Fossil fuel, at average cost . . . . . . . . . . . . . . . . . . . . . 2,383 2,986
Stored natural gas, at average cost . . . . . . . . . . . . . . . . . 658 6,203
Prepaid taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,395 5,846
Other prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . 1,029 1,608
Total Current Assets . . . . . . . . . . . . . . . . . . . . . . . . 72,267 75,820
Deferred charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,554 33,647
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . $485,183 $493,876
CAPITALIZATION AND LIABILITIES
Capitalization (see statement) . . . . . . . . . . . . . . . . . . . . . $324,468 $322,185
Current Liabilities:
Preferred stock sinking fund requirements . . . . . . . . . . . . . . - -
Long-term debt sinking fund requirements (Note 4b) . . . . . . . . . . 200 200
Maturity of 5.45%, 1996 series . . . . . . . . . . . . . . . . . . . . 7,840 7,840
Interim loans - commercial paper outstanding . . . . . . . . . . . . . - 20,500
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,932 25,928
Accrued taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,303 1,500
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,746 2,359
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,871 7,903
Total Current Liabilities . . . . . . . . . . . . . . . . . . . . . 56,892 66,230
Other Credits:
Accumulated deferred income taxes . . . . . . . . . . . . . . . . . . 53,592 54,153
Regulatory liability . . . . . . . . . . . . . . . . . . . . . . . . . 24,711 25,177
Investment tax credit - deferred . . . . . . . . . . . . . . . . . . . 12,043 12,231
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,477 13,900
Total Other Credits . . . . . . . . . . . . . . . . . . . . . . . . 103,823 105,461
Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - -
Total Capitalization and Liabilities . . . . . . . . . . . . . . $485,183 $493,876
<FN>
The accompanying notes are an integral part of the balance sheets.
/TABLE
<PAGE>
Madison Gas and Electric Company and Subsidiaries
CONSOLIDATED STATEMENTS OF CAPITALIZATION
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Mar. 31, Dec. 31,
1996 1995
<S> <C> <C>
Common Shareholders' Equity:
Common stock - par value $1 per share (Note 4a):
Authorized 50,000,000 shares
Outstanding 16,079,718 shares . . . . . . . . . . . . . . . . $ 16,080 $ 16,080
Amount received in excess of par value . . . . . . . . . . . . . 112,558 112,558
Retained income . . . . . . . . . . . . . . . . . . . . . . . . 66,773 64,499
Total Common Shareholders' Equity . . . . . . . . . . . . . . 195,411 193,137
Redeemable Preferred Stock cumulative, $25 par value,
authorized 1,175,000 shares, 0 shares outstanding . . . . . . - -
First Mortgage Bonds:
5.45%, 1996 series . . . . . . . . . . . . . . . . . . . . . . . 7,840 7,840
6 1/2%, 2006 series:
Pollution Control Revenue Bonds . . . . . . . . . . . . . . . 7,075 7,075
8.50%, 2022 series . . . . . . . . . . . . . . . . . . . . . . . 40,000 40,000
6.75%, 2027A series:
Industrial Development Revenue Bonds . . . . . . . . . . . . . 28,000 28,000
6.70%, 2027B series:
Industrial Development Revenue Bonds . . . . . . . . . . . . . 19,300 19,300
7.70%, 2028 series . . . . . . . . . . . . . . . . . . . . . . . 25,000 25,000
First Mortgage Bonds Outstanding . . . . . . . . . . . . . . . 127,215 127,215
Unamortized discount and premium on bonds, net . . . . . . . . . (1,118) (1,127)
Long-term debt sinking fund requirements (Note 4b) . . . . . . . (200) (200)
Maturity of 5.45%, 1996 series . . . . . . . . . . . . . . . . . (7,840) (7,840)
Total First Mortgage Bonds . . . . . . . . . . . . . . . . . . 118,057 118,048
Other Long-Term Debt:
6.01%, interest rate SWAP agreement . . . . . . . . . . . . . . 11,000 11,000
Total Capitalization . . . . . . . . . . . . . . . . . . . . . $324,468 $322,185
<FN>
The accompanying notes are an integral part of the above statements.
</TABLE>
<PAGE>
Notes to Consolidated Financial Statements (Unaudited)
March 31, 1996
The consolidated financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Company believes that the
disclosures made are adequate to make the information presented not
misleading. In the opinion of Company management, all adjustments (consisting
of only normal recurring adjustments) necessary to fairly present results have
been made.
It is suggested that these consolidated financial statements be read in
conjunction with the financial statements and the notes thereto set forth on
pages 20 through 25 of the Company's 1995 Annual Report to Shareholders and in
the Company's 1995 Annual Report on Form 10-K.
1. Summary of Significant Accounting Policies
The accounting and financial policies relative to the following items have
been described in the "Notes to Consolidated Financial Statements" in the
Company's 1995 Annual Report to Shareholders and have been omitted herein
because they have not changed materially through the date of this report.
a. General
b. Utility plant
c. Nuclear fuel
d. Joint plant ownership
e. Depreciation
f. Income taxes
g. Pension plans
h. Postretirement benefits other than pensions
i. Fair value of financial instruments
j. Capitalization matters: common stock - stock split, redeemable
preferred stock, other long-term debt, notes payable to banks,
commercial paper, and lines of credit
k. Rate matters
l. Commitments
m. Segments of business
n. Regulatory assets and liabilities
2. Nuclear Decommissioning
Nuclear decommissioning costs are accrued over the estimated service life
of the Kewaunee Nuclear Power Plant (Kewaunee), which is through the year
2013. These costs are currently recovered from customers in rates and are
deposited in external trusts. For 1996, the decommissioning costs
recovered in rates will be $3.1 million. These trusts are shown on the
balance sheet in the utility plant section, and as of March 31, 1996,
these trusts totaled $38.2 million (fair market value).
Decommissioning costs are recovered through depreciation expense,
exclusive of earnings on the trusts. Net earnings on the trusts are
included in other income. The long-term, after-tax earnings assumption on
these trusts is 6.2 percent. As of March 31, 1996, the accumulated
provision for depreciation included accumulated provisions for
decommissioning totaling $38.2 million.
<PAGE>
Notes to Consolidated Financial Statements (continued)
The Company's share of Kewaunee decommissioning costs is estimated to be
$67.9 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 site.
3. Per-Share Amounts
Earnings per share of common stock are computed on the basis of the
weighted average of the daily number of shares outstanding. For the three
months ended March 31, 1996 and 1995, there were 16,079,718 shares.
Dividends declared and paid per share of common stock for the three months
ended March 31, 1996 and 1995, were $0.317 and $0.313, respectively.
4. Capitalization Matters
a. Common Shareholders' Equity
The Company's common stock and amount received in excess of par value
have been restated to reflect the change in the Company's par value
from $8 per share to $1 per share. The Company also increased its total
authorized shares from 28 million to 50 million.
Both matters were approved by the Company's shareholders on May 6, 1996
(see Item 4).
b. First Mortgage Bonds
The annual sinking fund requirements of the outstanding First Mortgage
Bonds are $200,000 in 1996. As of March 31, 1996, $200,000 is still
needed to satisfy the 1996 requirements.
5. Supplemental Cash Flow Information
For purposes of the Consolidated Statements of Cash Flows, the Company
considers cash equivalents to be those investments that are highly liquid
with maturity dates of less than three months.
Cash payments for interest, net of amounts capitalized, and income taxes
were as follows:
Three Months Ended
March 31,
(Thousands of dollars) 1996 1995
Interest, net of amounts capitalized . $1,422 $1,876
Income taxes paid . . . . . . . . . . . $2,102 $2,000
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
The Company's internally generated funds were greater than the funds used for
construction and nuclear fuel expenditures during the three months ended
March 31, 1996 and 1995. It is anticipated that 1996 construction and nuclear
fuel expenditures will be approximately $25 million.
Cash provided by operating activities increased $3.2 million, or 11 percent,
from the same three-month period a year ago due to an increase in current
liabilities for natural gas purchases associated with higher gas sales for the
Company and its subsidiaries.
Cash used for financing activities increased $3.2 million, or 14 percent,
compared to the same period a year ago. This was mainly attributable to a
decrease in the Company's short-term debt.
Bank lines of credit available to the Company as of March 31, 1996, were
$40 million, which includes $5 million for Great Lakes Energy Corp. (GLENCO),
a wholly owned subsidiary of the Company, and American Energy Management Inc.
(AEM), a subsidiary of GLENCO.
The Company's capitalization ratios were as follows:
Mar. 31, 1996 Dec. 31, 1995
Common shareholders' equity . . . . . 58.8% 55.1%
Long-term debt* . . . . . . . . . . . 41.2 39.1
Short-term debt . . . . . . . . . . . - 5.8
*Includes current maturities and current sinking fund requirements.
The Company's bonds are currently rated Aa2 by Moody's Investors Service,
Inc., and AA by Standard & Poor's Corporation. The Company's dealer-issued
commercial paper carries the highest ratings assigned by Moody's and
Standard & Poor's.
Business Environment
On May 1, 1995, Northern States Power Company and Wisconsin Energy Corporation
announced a proposed merger. If approved, the two companies would form a
holding company called Primergy Corporation, creating the tenth largest
utility company in the United States. The merger has been approved by the
shareholders of both companies. Various regulatory agency approval is required
including the Securities and Exchange Commission, the Nuclear Regulatory
Commission, the Federal Energy Regulatory Commission, and state regulatory
agencies. The Company is opposing approval of the merger on the grounds that
the merger would violate antitrust laws and principles. The outcome of this
proposed merger and the impacts it may have on the Company are unknown at this
time.
<PAGE>
Management's Discussion and Analysis (continued)
Regulatory Environment
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 whole
plan. It is unknown at this time what impact (if any) this plan will have on
the Company. The PSCW has also opened a docket to examine what changes are
needed in the cost recovery mechanism for purchasing gas costs. It is not
known what changes (if any) will be made to the Purchased Gas Adjustment
Clause.
Results of Operations
Electric Sales and Revenues
Electric retail sales increased approximately 5 percent in the three-month
period ending March 31, 1996, over the comparable period last year.
Three Months Ended March 31,
Electric Sales (megawatt-hours) 1996 1995 % Change
Residential . . . . . . . . . . . 193,420 177,884 8.7%
Large commercial and industrial . 223,912 220,526 1.5
Small commercial and industrial . 172,573 159,126 8.5
Other . . . . . . . . . . . . . . 73,246 72,437 1.1
Total Retail . . . . . . . . . 663,151 629,973 5.3
Resale . . . . . . . . . . . . . 9,159 10,808 (15.3)
Total Sales . . . . . . . . . 672,310 640,781 4.9
The increased sales were due, in part, to an increased customer base of
approximately 1 percent over the comparative three-month period ended a year
ago and to the colder weather experienced in this year's first quarter
compared to last year. Electric operating revenues for the same period
increased approximately $1.5 million, or 4.2 percent. The increase in electric
operating revenues was the result of increased sales (see table above).
Gas Sales and Revenues
The significant increase in gas delivered was due to the cold weather
experienced in the first quarter of this year (see table below).
<PAGE>
Management's Discussion and Analysis (continued)
The average temperature for the three months ended March 31, 1996, was
22.0 degrees Fahrenheit as compared to 27.0 degrees Fahrenheit for the same
three months ended last year and to a normal temperature of 24.8 degrees
Fahrenheit. The first quarter average temperature was 19 percent colder than
last year's first quarter.
Three Months Ended March 31,
Gas Deliveries (thousands of therms) 1996 1995 % Change
Residential . . . . . . . . . . . 44,682 38,184 17.0%
Commercial and industrial . . . . 39,231 37,408 4.9
Total Retail . . . . . . . . . 83,913 75,592 11.0
Transport . . . . . . . . . . . . 9,309 7,125 30.7
Total Gas Deliveries . . . . . 93,222 82,717 12.7
For the three months ended March 31, 1996, gas revenues increased
$4.1 million, or 10 percent, as compared to the same period last year.
The gas customer base increased approximately 2 percent for the three months
ended March 31, 1996, when compared to the same time period a year ago.
The Company actively manages contracts with natural gas suppliers to assure
that adequate supplies of gas will be available to meet the long-term needs of
its customers.
Electric Fuel and Natural Gas Costs
Fuel cost for electric generation increased approximately 9 percent for the
first three months of 1996 when compared to the same time period in 1995. This
is due to an increase in generation due to increased sales for the quarter.
Natural gas costs for the three months ended March 31, 1996, versus the 1995
comparative period increased about $3.6 million, or 14 percent. This is due
mainly to higher demand resulting from the extremely cold weather experienced
in this year's first quarter compared to last year.
Other Operating Expenses
Income tax items increased from utility operations approximately $1 million,
or 24 percent, for the first three months of 1996 when compared to the same
time period in 1995. This was mainly attributable to an increase in pretax
operating income.
Operations and maintenance costs decreased approximately $1 million, or
7 percent, for the three months ended March 31, 1996, compared to the same
time period a year ago. Management continues its efforts to control operating
and maintenance expenses.
<PAGE>
Management's Discussion and Analysis (continued)
Other Items
Interest expense for the three months ended March 31, 1996, decreased
approximately 9 percent when compared to the same time period for 1995. This
is due to lower levels of short-term debt outstanding in the first quarter of
1996 compared to the same period last year.
Other income for the three months ended March 31, 1996, decreased from last
year's first quarter. This is primarily due to the Company's unregulated gas
marketing subsidiaries. In January and February 1996, extremely cold weather
caused natural gas supply prices to substantially rise. Because of this demand
for natural gas, gas marketing companies were forced to pay premium prices to
fill customer orders.
<PAGE>
PART II. OTHER INFORMATION
Item 4 Results of Votes of Security Holders
The Company's Annual Meeting of Shareholders was held on May 6,
1996, in Middleton, Wisconsin. Proxies for the meeting were
solicited pursuant to Regulation 14A of the Securities Exchange
Act. The election of a slate of nominees for directors of Class I
to hold office until 1999 and approval of an amendment to the
Company's Restated Articles of Incorporation were voted upon by
the shareholders at the meeting. Listed below are the results of
the shareholders' votes.
The election of members of the Board of Directors Class I to hold
office until 1999:
For Withhold
Authority
Jean Manchester Biddick 13,680,323 192,578
David C. Mebane 13,683,991 188,910
Regina M. Millner 13,662,427 210,474
An amendment of Article Third, Division A, of the Company's
Restated Articles of Incorporation to (1) increase the number of
shares of Common Stock authorized for issuance by the Company from
the present 28,000,000 shares to 50,000,000 shares, and (2) reduce
the par value of Common Stock from $8 per share to $1 per share.
For Against Abstain
12,020,007 1,169,934 682,959
Item 5 Other Information
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.
<PAGE>
Part II. Other Information (continued)
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.
Item 6(a) Exhibits
Exhibit 4 Indenture of Mortgage and Deed of Trust between the Company and
Firstar Trust Company, as Trustee (and supplements) reference
was provided in the Company's 1995 Annual Report on Form 10-K
(Commission File No. 0-1125).
Exhibit 12 Ratio of Earnings to Fixed Charges
Exhibit 27 Appendix E to Item 601(c) of Regulation S-K: Public Utility
Companies Financial Data Schedule UT.
Exhibit Page
Exhibit 4 NA
Exhibit 12 15
Exhibit 27 16
Item 6(b) Reports on Form 8-K
No reports on 8-K were filed during the quarter for
which this report is filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MADISON GAS AND ELECTRIC COMPANY
(Registrant)
Date: May 14, 1996 /s/ David C. Mebane
David C. Mebane
Chairman, President and Chief Executive
Officer
(Duly Authorized Officer)
Date: May 14, 1996 /s/ Joseph T. Krzos
Joseph T. Krzos
Vice President - Finance
(Chief Financial and Accounting Officer)
Ratio of Earnings to Fixed Charges Exhibit 12
Three Months
Ended
(Thousands of dollars) March 31, 1996
Earnings
Income before interest expense . . . . . . . . . . $10,075
Add:
Income tax items . . . . . . . . . . . . . . . . . 5,642
Income tax on other income . . . . . . . . . . . . 129
Amortization of debt discount, premium expense . . 72
Allowance for funds used during construction -
borrowed funds . . . . . . . . . . . . . . . . 5
Interest on rentals . . . . . . . . . . . . . . . . 83
Total Earnings . . . . . . . . . . . . . . . . $16,006
Fixed Charges
Interest on long-term debt . . . . . . . . . . . . $ 2,516
Other interest . . . . . . . . . . . . . . . . . . 198
Amortization of debt discount, premium expense . . 72
Interest on rentals . . . . . . . . . . . . . . . . 83
Total Fixed Charges . . . . . . . . . . . . . $ 2,869
Ratio of Earnings to Fixed Charges . . . . . . . . 5.58x
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from SEC Form
10-Q. Items 1 through 22 are as of March 31, 1996. Items 23 through 38 are for
the three months ended March 31, 1996.
</LEGEND>
<MULTIPLIER> 1,000
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