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: JUNE 30, 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 (IRS Employer
of incorporation or organization) Identification No.)
133 South Blair Street, Madison, Wisconsin 53703
(Address of principal executive offices and ZIP code)
(608) 252-7000
(Registrant's telephone number including area code)
Common Stock Outstanding at August 13, 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>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Madison Gas and Electric Company and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED
INCOME
(Thousands of Dollars)
(Unaudited)
<CAPTION>
Three
Months Ended Six Months Ended
June 30, June 30,
1996
1995 1996 1995
<S> <C>
<C> <C> <C>
STATEMENTS OF INCOME
Operating Revenues:
Electric . . . . . . . . . . . . . . . . . . . . $35,996
$35,980 $ 72,074 $ 70,592
Gas . . . . . . . . . . . . . . . . . . . . . . . 14,378
12,540 58,355 52,381
Total Operating Revenues . . . . . . . . . . . 50,374
48,520 130,429 122,973
Operating Expenses:
Fuel for electric generation . . . . . . . . . . 6,243
7,023 12,801 13,040
Purchased power . . . . . . . . . . . . . . . . . 2,506
1,781 4,398 3,643
Natural gas purchased . . . . . . . . . . . . . . 7,767
6,558 37,335 32,497
Other operations . . . . . . . . . . . . . . . . 13,964
15,051 28,032 29,961
Maintenance . . . . . . . . . . . . . . . . . . . 2,755
3,918 4,895 6,517
Depreciation and amortization . . . . . . . . . . 6,328
6,206 12,525 12,450
Other general taxes . . . . . . . . . . . . . . . 2,203
2,130 4,448 4,346
Income tax items . . . . . . . . . . . . . . . . 2,293
1,085 7,934 5,621
Total Operating Expenses . . . . . . . . . . . 44,059
43,752 112,368 108,075
Net Operating Income . . . . . . . . . . . . . . . . 6,315
4,768 18,061 14,898
AFUDC - equity funds . . . . . . . . . . . . . . . . 16
15 26 37
Other income, net . . . . . . . . . . . . . . . . . .
(741) 785 (2,420) 2,226
Income before interest expense . . . . . . . . . . . 5,590
5,568 15,667 17,161
Interest expense:
Interest on long-term debt . . . . . . . . . . . 2,480
2,592 4,996 5,181
Other interest . . . . . . . . . . . . . . . . . 77
202 275 589
AFUDC - borrowed funds . . . . . . . . . . . . .
(8) (8) (13) (19)
Net Interest Expense . . . . . . . . . . . . . 2,549
2,786 5,258 5,751
Net Income . . . . . . . . . . . . . . . . . . . . . 3,041
2,782 10,409 11,410
Preferred stock dividends . . . . . . . . . . . . . . -
- - 64
Earnings on common stock . . . . . . . . . . . . . . $ 3,041
$ 2,782 $ 10,409 $ 11,346
Earnings per share of common stock (Note 3) . . . . . $0.19
$0.17 $0.65 $0.71
STATEMENTS OF RETAINED INCOME
Balance - beginning of period . . . . . . . . . . . . $66,774
$64,375 $64,499 $60,851
Earnings on common stock . . . . . . . . . . . . . . 3,041
2,782 10,409 11,346
Cash dividends on common stock (Note 3) . . . . . . .
(5,093) (5,036) (10,186) (10,076)
Balance - end of period . . . . . . . . . . . . . . . $64,722
$62,121 $64,722 $62,121
<FN>
The accompanying notes are an integral part of the above
statements.
</TABLE>
<PAGE>
<TABLE>
Madison Gas and Electric Company and
Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOW
(Thousands of Dollars)
(Unaudited)
<CAPTION>
Three
Months Ended Six Months Ended
June 30, June 30,
1996
1995 1996 1995
<S> <C>
<C> <C> <C>
Operating Activities:
Net income . . . . . . . . . . . . . . . . . . . $ 3,041
$2,782 $10,409 $11,410
Items not affecting cash:
Depreciation and amortization . . . . . . . . . 6,328
6,206 12,525 12,450
Deferred income taxes . . . . . . . . . . . . . (672)
(182) (1,699) (240)
Amortization of nuclear fuel . . . . . . . . . 723
356 1,478 1,130
Amortization of investment tax credits . . . . (204)
(192) (392) (389)
AFUDC - equity funds . . . . . . . . . . . . . (16)
(15) (26) (37)
Other . . . . . . . . . . . . . . . . . . . . . 188
393 (2,793) 905
Net funds provided from Operations . . . . . 9,388
9,348 19,502 25,229
Changes in working capital, excluding cash
equivalents, sinking funds, maturities, and
interim loans:
Decrease in current assets . . . . . . . . . . 9,526
8,117 13,866 14,652
Decrease in current liabilities . . . . . . . . (15,720)
(5,983) (4,558) (3,038)
Other noncurrent items, net . . . . . . . . . . . 4,634
(2,266) 9,819 19
Cash provided by Operating Activities . . . . . 7,828
9,216 38,629 36,862
Financing Activities:
Cash dividends on common and preferred stock . . (5,093)
(5,036) (10,186) (10,140)
Maturities/redemptions of First Mortgage Bonds . (7,840)
- (7,840) -
Other increase/(decrease) in First Mortgage Bonds. 10
(71) 20 (242)
Decrease in preferred stock . . . . . . . . . . . -
- - (5,300)
Decrease in bond construction funds, net . . . . -
1,734 - 3,493
(Decrease)/increase in interim loans . . . . . . 14,000
(2,500) (6,500) (16,100)
Cash provided by/(used for) Financing Activities 1,077
(5,873) (24,506) (28,289)
Investing Activities:
Acquisition of nonregulated subsidiary . . . . . -
- - (8,036)
Sale of Superior Lamp, Inc . . . . . . . . . . . 201
- 201 -
Additions to utility plant and nuclear fuel . . . (7,993)
(3,993) (11,343) (8,086)
AFUDC - borrowed funds . . . . . . . . . . . . . (8)
(8) (13) (19)
Increase in nuclear decommissioning fund . . . . (1,176)
(1,089) (2,252) (1,982)
Cash used for Investing Activities . . . . . . (8,976)
(5,090) (13,407) (18,123)
Change in Cash and Cash Equivalents (Note 5) . . . . (71)
(1,747) 716 (9,550)
Cash and cash equivalents at beginning of period . 3,631
3,731 2,844 11,534
Cash and cash equivalents at end of period . . . . $ 3,560
$1,984 $ 3,560 $ 1,984
<FN>
The accompanying notes are an integral part of the above
statements.
</TABLE>
<PAGE>
<TABLE>
Madison Gas and Electric Company and
Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
(Unaudited)
<CAPTION>
June 30, Dec. 31,
1996 1995
<S>
<C> <C>
ASSETS
Utility Plant, at original cost, in service:
Electric . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . $493,992 $489,399
Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . 175,950 173,890
Gross plant in service . . . . . . . . . . . . . . . . .
. . . . . . . 669,942 663,289
Less accumulated provision for depreciation . . . . . . . .
. . . . . . . (360,391) (348,254)
Net plant in service . . . . . . . . . . . . . . . . . .
. . . . . . . 309,551 315,035
Construction work in progress . . . . . . . . . . . . . . .
. . . . . . . 8,545 9,061
Nuclear decommissioning fund (Note 2) . . . . . . . . . . .
. . . . . . . 39,916 36,965
Nuclear fuel, net . . . . . . . . . . . . . . . . . . . . .
. . . . . . . 7,486 6,172
Total Utility Plant . . . . . . . . . . . . . . . . . . .
. . . . . . . 365,498 367,233
Other property and investments . . . . . . . . . . . . . . . .
. . . . . . . 15,447 17,176
Current Assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . .
. . . . . . . 3,560 2,844
Accounts receivable, less reserves of $1,165 and $1,379,
respectively . . 33,950 36,817
Unbilled revenue . . . . . . . . . . . . . . . . . . . . .
. . . . . . . 5,267 13,529
Materials and supplies, at average cost . . . . . . . . . .
. . . . . . . 5,825 5,987
Fossil fuel, at average cost . . . . . . . . . . . . . . .
. . . . . . . 2,664 2,986
Stored natural gas, at average cost . . . . . . . . . . . .
. . . . . . . 4,418 6,203
Prepaid taxes . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . 5,841 5,846
Other prepayments . . . . . . . . . . . . . . . . . . . . .
. . . . . . . 1,145 1,608
Total Current Assets . . . . . . . . . . . . . . . . . .
. . . . . . . 62,670 75,820
Deferred charges . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . 29,581 33,647
Total Assets . . . . . . . . . .
. . . . . . . $473,196 $493,876
CAPITALIZATION AND LIABILITIES
Capitalization (see statement) . . . . . . . . . . . . . . . .
. . . . . . . $322,427 $322,185
Current Liabilities:
Long-term debt sinking fund requirements . . . . . . . . .
. . . . . . . 200 200
Maturity of 5.45%, 1996 series . . . . . . . . . . . . . .
. . . . . . . - 7,840
Interim loans - commercial paper outstanding . . . . . . .
. . . . . . . 14,000 20,500
Accounts payable . . . . . . . . . . . . . . . . . . . . .
. . . . . . . 23,802 25,928
Accrued taxes . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . 448 1,500
Accrued interest . . . . . . . . . . . . . . . . . . . . .
. . . . . . . 2,324 2,359
Other . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . 6,558 7,903
Total Current Liabilities . . . . . . . . . . . . . . . .
. . . . . . . 47,332 66,230
Other Credits:
Accumulated deferred income taxes . . . . . . . . . . . . .
. . . . . . . 53,274 54,153
Regulatory liability . . . . . . . . . . . . . . . . . . .
. . . . . . . 24,357 25,177
Investment tax credit - deferred . . . . . . . . . . . . .
. . . . . . . 11,839 12,231
Other . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . 13,967 13,900
Total Other Credits . . . . . . . . . . . . . . . . . . .
. . . . . . . 103,437 105,461
Commitments . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . - -
Total Capitalization and Liabilities . . . . . . . . . .
. . . . . . . $473,196 $493,876
<FN>
The accompanying notes are an integral part of the above balance
sheets.
</TABLE>
<PAGE>
<TABLE>
Madison Gas and Electric Company and
Subsidiaries
CONSOLIDATED STATEMENTS OF CAPITALIZATION
(Thousands of Dollars)
(Unaudited)
<CAPTION>
June 30, Dec. 31,
1996 1995
<S>
<C> <C>
Common Shareholders' Equity:
Common stock - par value $1 per share:
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 . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . 64,722 64,499
Total Common Shareholders' Equity . . . . . . . . . . . .
. . . . . . . 193,360 193,137
Redeemable Preferred Stock cumulative, $25 par value,
authorized 1,175,000, 0 shares outstanding . . . . . . . .
. . . . . . . - -
First Mortgage Bonds:
5.45%, 1996 series . . . . . . . . . . . . . . . . . . . .
. . . . . . . - 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 . . . . . . . . . . . .
. . . . . . . 119,375 127,215
Unamortized discount and premium on bonds, net . . . . . .
. . . . . . . (1,108) (1,127)
Long-term debt sinking fund requirements . . . . . . . . .
. . . . . . . (200) (200)
Maturity of 5.45%, 1996 series . . . . . . . . . . . . . .
. . . . . . . - (7,840)
Total First Mortgage Bonds . . . . . . . . . . . . . . .
. . . . . . . 118,067 118,048
Other Long-Term Debt:
6.01%, interest rate SWAP agreement . . . . . . . . . . . .
. . . . . . . 11,000 11,000
Total Capitalization . . . . . . . . . . . . . . . . .
. . . . . . . $322,427 $322,185
<FN>
The accompanying notes are an integral part of the above
statements.
</TABLE>
<PAGE>
Notes to Consolidated Financial Statements (Unaudited)
June 30, 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 (SEC).
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 June 30, 1996, these
trusts totaled $39.9 million (fair market value).
<PAGE>
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 June
30, 1996, the accumulated provision for depreciation included
accumulated provisions for decommissioning totaling $39.9
million.
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 and for the six months ended June 30, 1996
and 1995, there were 16,079,718 shares.
Dividends declared and paid per share of common stock for the
periods ended June 30, 1996 and 1995, were, respectively, for the
three months $0.317 and $0.313; for the six months $0.634 and
$0.626.
Both the shares outstanding and the dividends per-share amounts
reflect the Company's 3-for-2 stock split which was effective in
the first quarter of 1996.
4. Capitalization Matters
a. First Mortgage Bonds.
The annual sinking fund requirements of the outstanding First
Mortgage Bonds are $200,000 in 1996. As of June 30, 1996,
$200,000 is still needed to satisfy the 1996 requirements.
The 5.45%, First Mortgage Bonds, 1996 series matured on June 1,
1996, requiring funding of $7.8 million in short-term debt to
retire this bond series.
5. Supplemental Cash Flow Information
For purposes of the Consolidated Statements of Cash Flow, the
Company considers cash equivalents to be those investments that
are highly liquid with maturity dates of less than three months.
<PAGE>
Cash payments for interest, net of amounts capitalized, and
income taxes were as follows:
Three Months Six Months
Ended Ended
June 30, June 30,
(Thousands of dollars) 1996 1995 1996 1995
Interest, net of amounts
capitalized $4,078 $3,995 $5,338 $5,872
Income taxes paid $7,470 $6,980 $9,572 $8,980
6. Sale of Nonregulated Subsidiary
In May 1996 the Company sold its 50 percent share in Superior
Lamp Recycling, Inc., a jointly owned subsidiary of the Company
and Superior Services, Inc., purchased during 1993. Superior Lamp
recycles fluorescent lamps that are banned from landfills.
<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 nearly 100 percent
of the funds used for construction and nuclear fuel expenditures
for the six-month period ended June 30, 1996. The Company
experienced increased additions to utility plant and nuclear fuel
expenditures during the first half of 1996 compared to 1995. It
is anticipated that 1996 construction and nuclear fuel
expenditures will be approximately $25 million.
Cash provided by operating activities increased nearly $2
million, or 5 percent, during the first half of 1996 compared to
1995 due to an increase in the Company's working capital. Cash
provided by operating activities during the second quarter of
1996 decreased more than $1 million, or 15 percent, compared to
last year's second quarter. This is mainly attributable to the
decrease in current liabilities due to the timing of the
Company's payables and the maturity of the 5.45%, 1996 series,
First Mortgage Bonds.
Cash used for financing activities decreased $7 million for the
three months ended June 30, 1996, compared to the same period a
year ago. This was primarily attributed to an increase in the
Company's short-term debt.
Bank lines of credit available to the Company as of June 30,
1996, were $45 million, which includes $10 million for Great
Lakes Energy Corp. (GLENCO), a wholly owned subsidiary of the
Company, and American Energy Management Inc., a subsidiary of
GLENCO.
The Company's capitalization ratios were as follows:
June 30, Dec. 31,
1996 1995
Common shareholders' equity 57.4% 55.1%
Long-term debt* 38.4 39.1
Short-term debt 4.2 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.
<PAGE>
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 SEC, the Nuclear Regulatory Commission (NRC), the
Federal Energy Regulatory Commission (FERC), and state regulatory
agencies.
The Company is opposing approval of the merger on the grounds
that the merger would violate antitrust laws and principles.
Hearings on the proposed merger have been concluded before the
FERC. Hearings on the proposed merger are scheduled before the
Wisconsin and Minnesota Public Service Commissions later this
year. The outcome of this proposed merger and the impacts it may
have on the Company are unknown at this time.
Regulatory Environment
The Public Service Commission of Wisconsin 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 included
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.
An order is expected some time this year regarding a docket that
was opened to examine what changes are needed in the cost
recovery mechanism for purchasing gas costs. Hearings have been
concluded on this matter. No material changes are expected at
this time.
Results of Operations
Electric Sales and Revenues
Electric retail sales increased approximately 2.5 percent for the
six-month period ended June 30, 1996, over the comparable period
last year (see table).
<PAGE>
<TABLE>
Electric Sales in
Megawatt-Hours
<CAPTION>
Three Months Ended Six
Months Ended
June 30,
June 30,
1996 1995 %Change 1996
1995 %Change
<S> <C> <C> <C> <C>
<C> <C>
Residential 156,825 156,625 0.13% 350,245
334,509 4.70%
Large commercial
and industrial 233,358 232,904 0.20 457,270
453,430 0.85
Small commercial
and industrial 171,400 176,931 (3.13) 343,973
336,057 2.36
Other 82,712 78,831 4.92 155,958
151,268 3.10
Total retail 644,295 645,291 (0.15) 1,307,446
1,275,264 2.52
Sales for resale 5,704 3,101 83.94 14,863
13,909 6.86
Total sales 649,999 648,392 0.25 1,322,309
1,289,173 2.57
</TABLE>
Electric operating revenues increased about $1.5 million, or 2
percent, as compared to the same period in 1995, even though
cooling degree days for the first half of 1996 decreased 43
percent. The increases were due to an increase in the electric
customer base. Total sales and electric operating revenues for
the three-month period ended June 30, 1996, remained relatively
flat compared with the same period last year.
Gas Sales and Revenues
For the six months ended June 30, 1996, gas operating revenues
increased approximately $6 million, or 11 percent, compared with
the same period in 1995. This increase in revenues is due to
colder weather experienced in the first half of the year, causing
total deliveries to increase nearly 10 percent (see table), and
higher unit gas costs, which are passed on to customers through
the purchased gas adjustment clause.
The heating degree days (HDD) for the six months ended June 30,
1996, measured by the number of degrees the mean daily
temperature is below 65 degrees Fahrenheit, were 5,029 HDD
compared to 4,291 HDD for the same period last year, a 17 percent
increase in HDD.
For the three months ended June 30, 1996, gas revenues increased
about $2 million, or 15 percent, compared to last year. Again,
this can be directly attributed to the cooler weather experienced
in this year's second quarter compared to last year's.
The average temperature for the second quarter of 1996 was
approximately four degrees cooler than last year's second
quarter.
<PAGE>
The following table illustrates gas deliveries as compared to the
previous year:
<TABLE>
Gas Deliveries in Thousands of
Therms
<CAPTION>
Three Months Ended Six Months
Ended
June 30, June
30,
1996 1995 %Change 1996 1995
%Change
<S> <C> <C> <C> <C> <C>
<C>
Residential 14,321 12,533 14.26% 59,003
50,717 16.34%
Commercial and
Industrial 13,245 13,930 (4.92) 52,476
51,338 2.22
Total retail 27,566 26,463 4.17 111,479
102,055 9.23
Transport 10,127 9,516 6.42 19,436
16,641 16.80
Total deliveries 37,693 35,979 4.76 130,915
118,696 10.29
</TABLE>
Electric Fuel and Natural Gas Costs
Fuel costs for electric generation and purchased power decreased
less than 1 percent for the second quarter of 1996 compared to
last year's second quarter.
Fuel costs and purchased power increased approximately $0.5
million, or 3 percent, for the six-month period ended June 30,
1996, as compared to last year. This is primarily due to an
increase in the cost of purchased power caused by increases in
the cost of capacity purchases. This was somewhat offset with
increased low-cost generation at Kewaunee.
Natural gas costs for the six-month period ended June 30, 1996,
increased nearly $5 million, or 15 percent, compared to the same
period a year ago. This is due mainly to the higher demand
resulting from the cold weather experienced during the first half
of the year.
Natural gas costs for the three months ended June 30, 1996,
versus the comparative period in 1995 increased just over $1
million, or 18 percent. This is due mainly to the cooler weather
experienced this spring and an increased cost-per-therm of nearly
16 percent.
<PAGE>
Other Operating Expenses
Income taxes increased for both the three- and six-month periods
ended June 30, 1996, compared to the same periods last year. For
the three months ended, income taxes increased about $1 million,
or 111 percent, and for the six months ended, income taxes
increased around $2 million, or 41 percent. This is due to an
increase in pretax operating income for both periods.
Operations and maintenance costs decreased over $2 million, or 12
percent, for the second quarter of 1996 and decreased nearly $4
million, or 10 percent, for the first half of the year compared
to the same periods a year ago. The primary reasons for the
decrease are continued cost-control efforts throughout the
Company and the conversion from a 12-month to an 18-month fuel
cycle at Kewaunee. During 1995, Kewaunee was on a 12-month fuel
cycle with the outage occurring in the second quarter, increasing
operations and maintenance expenses. Due to the conversion, these
operations and maintenance expenses will shift from the second
quarter to the fourth quarter of this year.
Other Items
Interest expense decreased in both the three- and six-month
periods ended June 30, 1996, when compared to the same periods a
year ago. This is due to lower levels of short-term debt
outstanding during the 1996 periods compared to 1995.
Other income decreased approximately $5 million for the six-month
period ended June 30, 1996, primarily due to the Company's
unregulated gas marketing subsidiaries. In the first quarter of
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. High natural gas prices continued through the
second quarter making some contracts unprofitable.
<PAGE>
PART II. OTHER INFORMATION
Item 5 Other Information
Kewaunee is operated by Wisconsin Public Service Corporation.
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 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 percent), 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 investment.
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 16
Exhibit 27 17
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: August 13, 1996 /s/ David C. Mebane
David C. Mebane
Chairman, President and Chief
Executive Officer
(Duly Authorized Officer)
Date: August 13, 1996 /s/ Joseph T. Krzos
Joseph T. Krzos
Vice President - Finance
(Chief Financial and Accounting
Officer)
<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 June 30, 1996. Items 23 through
38 are for the six months ended June 30, 1996.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 365,498
<OTHER-PROPERTY-AND-INVEST> 15,447
<TOTAL-CURRENT-ASSETS> 62,670
<TOTAL-DEFERRED-CHARGES> 29,581
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 473,196
<COMMON> 16,080
<CAPITAL-SURPLUS-PAID-IN> 112,558
<RETAINED-EARNINGS> 64,722
<TOTAL-COMMON-STOCKHOLDERS-EQ> 193,360
0
0
<LONG-TERM-DEBT-NET> 129,067
<SHORT-TERM-NOTES> 14,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 200
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 136,569
<TOT-CAPITALIZATION-AND-LIAB> 473,196
<GROSS-OPERATING-REVENUE> 130,429
<INCOME-TAX-EXPENSE> 7,934
<OTHER-OPERATING-EXPENSES> 104,434
<TOTAL-OPERATING-EXPENSES> 112,368
<OPERATING-INCOME-LOSS> 18,061
<OTHER-INCOME-NET> (2,394)
<INCOME-BEFORE-INTEREST-EXPEN> 15,667
<TOTAL-INTEREST-EXPENSE> 5,258
<NET-INCOME> 10,409
0
<EARNINGS-AVAILABLE-FOR-COMM> 10,409
<COMMON-STOCK-DIVIDENDS> (10,186)
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 38,629
<EPS-PRIMARY> 0.65
<EPS-DILUTED> 0
</TABLE>
Ratio of Earnings to Fixed Charges Exhibit 12
Six Months Ended
June 30, 1996
(000s)
Earnings
Income before interest expense . . . . . $15,667
Add:
Income tax items . . . . . . . . . . . . 7,934
Income tax on other income . . . . . . . 320
Amortization of debt discount, premium
expense . . . . . . . . . . . . . . . . . 144
AFUDC - borrowed funds . . . . . . . . . 13
Interest on rentals . . . . . . . . . . . 149
Total Earnings . . . . . . . . . . . . . $24,227
Fixed Charges
Interest on long-term debt . . . . . . . $ 4,996
Other interest . . . . . . . . . . . . . 275
Amortization of debt discount, premium
expense . . . . . . . . . . . . . . . . . 144
Interest on rentals . . . . . . . . . . . 149
Total Fixed Charges . . . . . . . . . . $ 5,564
Ratio of Earnings to Fixed Charges . . . 4.35x
