SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: SEPTEMBER 30, 1997
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 Identification No.)
of incorporation or organization)
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 November 13, 1997: 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
<CAPTION>
Madison Gas and Electric Company and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED INCOME
(Thousands of Dollars, Except Per-Share Amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
STATEMENTS OF INCOME
Operating Revenues:
Electric $45,502 $44,547 $123,585 $116,621
Gas 7,655 8,345 67,736 66,700
Total Operating Revenues 53,157 52,892 191,321 183,321
Operating Expenses:
Fuel for electric generation 8,341 7,246 23,833 20,047
Purchased power 3,060 3,203 11,695 7,601
Natural gas purchased 3,255 3,823 42,692 41,158
Other operations 15,041 13,902 46,497 41,934
Maintenance 2,786 2,898 9,409 7,793
Depreciation and
amortization 7,348 6,514 20,115 19,039
Other general taxes 2,112 2,148 6,559 6,596
Income tax items 3,385 4,117 8,600 12,051
Total Operating Expenses 45,328 43,851 169,400 156,219
Net Operating Income 7,829 9,041 21,921 27,102
AFUDC - equity funds (12) 3 12 29
Other income, net 555 419 1,346 938
Non-utility operating
(loss)/income, net (114) (1,382) 796 (4,321)
Income before interest
expense 8,258 8,081 24,075 23,748
Interest expense:
Interest on long-term debt 2,392 2,411 7,212 7,407
Other interest 213 190 621 465
AFUDC - borrowed funds 6 (2) (6) (15)
Net Interest Expense 2,611 2,599 7,827 7,857
Net Income $5,647 $5,482 $16,248 $15,891
Earnings per share of common
stock (Note 3) $0.35 $0.34 $1.01 $0.99
STATEMENTS OF RETAINED INCOME
Balance - beginning of period $50,761 $64,722 $50,451 $64,499
Earnings on common stock 5,647 5,482 16,248 15,891
Cash dividends on common
stock (Note 3) (5,200) (5,144) (15,491) (15,330)
Balance - end of period $51,208 $65,060 $51,208 $65,060
The accompanying notes are an integral part of the above statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Madison Gas and Electric Company and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Operating Activities:
Net income $ 5,647 $ 5,482 $16,248 $15,891
Items not affecting working
capital:
Depreciation and amortization 7,348 6,514 20,115 19,039
Deferred income taxes (388) 22 (1,098) (1,677)
Amortization of nuclear fuel 707 620 805 2,098
Amortization of investment
tax credits (188) (200) (566) (592)
AFUDC - equity funds 12 (3) (12) (29)
Other 68 168 542 (2,625)
Net funds provided from
Operations 13,206 12,603 36,034 32,105
Changes in working capital,
excluding cash, sinking
funds, maturities, and
interim loans:
(Increase)/decrease in
current assets 5,524 (626) 28,251 13,240
Decrease in current
liabilities (6,838) (3,176) (23,338) (7,734)
Other noncurrent items, net (4,226) (1,372) 1,079 8,447
Cash provided by Operating
Activities 7,666 7,429 42,026 46,058
Financing Activities:
Cash dividends on common and
preferred stock (5,200) (5,144) (15,491) (15,330)
Maturities/redemptions of
First Mortgage Bonds - - (3,800) (7,840)
Increase in long-term debt - - 5,000 -
Other decrease in First
Mortgage Bonds 9 9 28 29
Increase/(decrease) in
interim loans 4,500 9,000 (11,750) 2,500
Cash provided by/(used for)
Financing Activities (691) 3,865 (26,013) (20,641)
Investing Activities:
Sale of Superior Lamp, Inc. - - - 201
Additions to utility plant
and nuclear fuel (5,650) (7,037) (14,877) (18,380)
AFUDC - borrowed funds 6 (2) (6) (15)
Increase in nuclear
decommissioning fund (1,884) (1,264) (4,042) (3,516)
Cash used for Investing
Activities (7,528) (8,303) (18,925) (21,710)
Change in Cash and Equivalents (553) 2,991 (2,912) 3,707
Cash and equivalents at
beginning of period 2,929 3,560 5,288 2,844
Cash and equivalents at end
of period $2,376 $6,551 $2,376 $6,551
The accompanying notes are an integral part of the above statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Madison Gas and Electric Company and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
(Unaudited)
Sept. 30, Dec. 31,
1997 1996
<S> <C> <C>
ASSETS
Utility Plant, at original cost, in service:
Electric $507,475 $500,690
Gas 180,980 178,312
Gross plant in service 688,455 679,002
Less accumulated provision for depreciation (398,941) (374,315)
Net plant in service 289,514 304,687
Construction work in progress 9,003 7,517
Nuclear decommissioning fund (Note 2) 55,571 44,617
Nuclear fuel, net 8,342 8,378
Total Utility Plant 362,430 365,199
Other property and investments 6,751 7,115
Current Assets:
Cash and cash equivalents 2,376 5,288
Accounts receivable, less reserves of $1,696
and $1,220, respectively 20,044 39,145
Unbilled revenue 8,037 13,852
Materials and supplies, at average cost 5,461 5,740
Fossil fuel, at average cost 2,643 1,808
Stored natural gas, at average cost 5,927 7,189
Prepaid taxes 4,499 7,258
Other prepayments 1,560 1,429
Total Current Assets 50,547 81,709
Deferred charges 30,583 30,146
Total Assets $450,311 $484,169
CAPITALIZATION AND LIABILITIES
Capitalization (see statement) $309,960 $307,975
Current Liabilities:
Long-term debt sinking fund requirements 200 200
Interim loans - commercial paper outstanding 18,000 29,750
Accounts payable 7,586 30,094
Accrued taxes 442 79
Accrued interest 3,557 2,322
Accrued nonregulated items 5,586 7,923
Other 7,562 7,653
Total Current Liabilities 42,933 78,021
Other Credits:
Deferred income taxes 45,458 46,972
Regulatory liability - SFAS 109 24,330 23,914
Investment tax credit - deferred 10,873 11,439
Other regulatory liabilities 16,757 15,848
Total Other Credits 97,418 98,173
Commitments - -
Total Capitalization and Liabilities $450,311 $484,169
The accompanying notes are an integral part of the above balance sheets.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Madison Gas and Electric Company and Subsidiaries
CONSOLIDATED STATEMENTS OF CAPITALIZATION
(Thousands of Dollars)
(Unaudited)
Sept. 30, Dec. 31,
1997 1996
<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 51,208 50,451
Total Common Shareholders' Equity 179,846 179,089
First Mortgage Bonds:
6 1/2%, 2006 series:
Pollution Control Revenue Bonds 6,875 6,875
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 21,200 25,000
First Mortgage Bonds Outstanding 115,375 119,175
Unamortized discount and premium on bonds, net (1,061) (1,089)
Long-term debt sinking fund requirements (200) (200)
Total First Mortgage Bonds 114,114 117,886
Other Long-Term Debt:
6.01%, due 2000 11,000 11,000
6.91%, due 2004 5,000 -
Total Capitalization $309,960 $307,975
The accompanying notes are an integral part of the above statements.
</TABLE>
<PAGE>
Notes to Consolidated Financial Statements (Unaudited)
September 30, 1997
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 14 through 19 of the Company's 1996 Annual Report to Shareholders and in
the Company's 1996 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 1996 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: preferred stock; and notes payable to
banks, commercial paper, and lines of credit
k. Gas marketing subsidiaries
l. GLENCO economic benefit
m. Commitments
n. Segments of business
o. Regulatory assets and liabilities
<PAGE>
2. Nuclear Decommissioning
Nuclear decommissioning costs are accrued over the estimated service
life of the Kewaunee Nuclear Power Plant (Kewaunee), which is now
through the year end 2002. These costs are currently recovered from
customers in rates and are deposited in external trusts. The Company is
presently funding decommissioning costs in the amount of $8.1 million
annually. These trusts are shown on the balance sheet in the utility
plant section. As of September 30, 1997, these trusts totaled $55.6
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.
The Company's share of Kewaunee decommissioning costs is estimated to be
$77.7 million in current dollars based on a site-specific study
performed in 1992. Decommissioning costs are assumed to inflate at an
average rate of 6.1 percent. It is currently estimated that the plant
will be in mothball status for 12 years. Physical decommissioning is
expected to occur during the period 2014 through 2021, with additional
expenditures being incurred during the period 2022 through 2039 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 and for the nine months ended September 30, 1997 and 1996, there
were 16,079,718 shares.
Dividends declared and paid per share of common stock for the periods
ended September 30, 1997 and 1996, were, respectively, for the three
months $0.323 and $0.320; for the nine months $0.963 and $0.953.
4. Rate Matters
Rate changes, effective August 20, 1997, will increase electric rates
$4.9 million, or 3.1 percent, and gas rates $3.5 million, or 3.5
percent. These rates will remain in place until the next test year,
which is scheduled to begin January 1, 1999. The current rates are based
on a return on common stock equity of 12.0 percent. The proposed early
recovery of the Kewaunee investment and accelerated decommissioning
collections are the primary reasons for the increase in electric rates.
Gas rates increased due to substantial technology upgrades and
infrastructure improvements as well as higher operating costs due to
inflation.
<PAGE>
The Company received an interim rate order from the PSCW in March 1997.
The order provided for a 0.507 cent per kilowatt-hour surcharge on
customers' bills to cover the continuing costs that were incurred by the
Company while Kewaunee was out of service.
On June 12, 1997, the repairs to Kewaunee were completed and Kewaunee
began its return to commercial operation. On June 25, 1997, Kewaunee
increased power to its maximum capability and started the agreed upon
seven-day window needed to perform the primary to secondary tests to
ensure final verification of the steam generation repairs. The surcharge
ceased on July 1, 1997.
Prior to the recently approved increases, rates for electric service had
not been increased since 1990 and were reduced in 1993 and 1994. Gas
rates had not been increased since 1989 and were reduced in 1990, 1992,
and 1993.
5. First Mortgage Bonds and Other Long-Term Debt
On April 18, 1997, the Company purchased on the open market $3.8 million
of its 7.70%, 2028 series, First Mortgage Bonds. The Company purchased
these bonds at a discount and later retired them.
On June 10, 1997, the Company entered into a fixed interest rate
agreement with a commercial bank in a principal amount of $5.0 million
at 6.91%, maturing on June 10, 2004.
6. Supplemental Cash Flow Information
For purposes of the Consolidated Statements of Cash Flow, the Company
considers cash equivalents to be those investments that are highly
liquid with maturity dates of less than three months.
Cash payments for interest, net of amounts capitalized, and income taxes
were as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
(Thousands of dollars) 1997 1996 1997 1996
Interest, net of
amounts capitalized $1,244 $1,420 $6,521 $6,642
Income taxes paid $3,849 $3,702 $11,016 $13,274
<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 for the nine-month period ended
September 30, 1997. The Company experienced decreased additions to utility
plant and nuclear fuel expenditures during the first nine months of 1997
compared to 1996. It is anticipated that 1997 construction and nuclear fuel
expenditures will be approximately $30.8 million.
Cash provided by operating activities decreased $4.0 million, or 8.8 percent,
during the first nine months of 1997 compared to 1996 due in part to an
increase in deferred charges relating to costs associated with the summer's
power reliability problems and the Company's leasing of portable generators.
Cash provided by operating activities during the third quarter of 1997
increased $0.2 million compared to last year's third quarter. This is mainly
attributable to the decrease in current liabilities due to the timing of the
Company's payables offset by a decrease in current assets.
Bank lines of credit available to the Company as of September 30, 1997, were
$45 million.
The Company's capitalization ratios were as follows:
Sept. 30, 1997 Dec. 31, 1996
Common shareholders' equity 54.8% 53.0%
Long-term debt* 39.7 38.2
Short-term debt 5.5 8.8
*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 and Regulatory Environment
During the summer of 1997, Wisconsin and Illinois experienced electric supply
concerns due to the outage of a large number of nuclear power plants in
Illinois and Wisconsin. For May and June 1997, these plants included Kewaunee
(the Company owns 17.8 percent). Although Kewaunee became available for the
majority of the summer, other nuclear units in Wisconsin and Illinois remained
out of service for the entire summer causing electric supply shortages for
some utilities in eastern Wisconsin and northern Illinois.
<PAGE>
The Company foresaw the possibility of this shortage and leased temporary
diesel generators to help ameliorate the supply shortage. The Company
subsequently received commission approval for rate recovery from customers for
the lease expenses. As a result of leasing the equipment and the return of
Kewaunee to service, the Company was the only investor-owned utility in
Wisconsin that did not interrupt service to any customers during the summer of
1997.
The electric reliability crisis caused the PSCW to revise its previous plans
for restructuring the electric industry to assure that reliability concerns
were met before any significant restructuring occurred. This conclusion was
consistent with plans advocated by the Company and a broad coalition of
customers and others.
The new plan focuses on the construction of generation and transmission
infrastructure by all Wisconsin utilities. The PSCW plans to move forward to
create a strong state or regional Independent System Operator (ISO) to assure
that the transmission system is operated safely, reliably, and with open and
nondiscriminatory access. The PSCW has specifically indicated that the costs
of this construction will be paid for by customers. The PSCW has further
concluded that these infrastructure improvements must be accomplished before
the PSCW proceeds with any significant industry restructuring. The PSCW has
not set a date for retail competition and has concluded that any decision
whether to go to retail competition in the electric industry remains to be
made in the future.
These conclusions are consistent with and follow plans for enhancing electric
reliability in eastern Wisconsin and positions on electric industry
restructuring actively advocated by the Company. The Company has expressed a
willingness to participate in the construction of new generation and
transmission facilities in a manner proportionate to the participation of
other Wisconsin utilities.
The Executive and Legislative branches of Wisconsin government are interested
in the preservation of electric reliability in Wisconsin. The Company has
taken a lead advocacy role with Executive and Legislative branch agencies to
promote effective reliability plans.
The Company's rate case order authorized a gas cost recovery mechanism that
allows recovery of pipeline capacity, FERC-approved/mandated charges, and
supply demand costs. Under the new mechanism, gas commodity costs will be
compared to a monthly benchmark equal to the first of the month index plus
adders reflecting the effects on pricing for reliability, flexibility,
weather, and variable transportation costs. If actual costs are below the
benchmark, full recovery is allowed. Gas commodity costs above the benchmark
will be reviewed by the PSCW. A target will also be determined for capacity
release. Capacity release above the target will be shared 60 percent with
ratepayers and 40 percent with shareholders. Any shortfalls in capacity
release will be shared 40 percent with ratepayers and 60 percent with
shareholders.
<PAGE>
Results of Operations
Electric Sales and Revenues
Electric retail sales increased 2.0 percent for the nine-month period ended
September 30, 1997, over the comparable period last year (see table).
<TABLE>
<CAPTION>
ELECTRIC SALES IN MEGAWATT-HOURS
Three Months Ended September 30, Nine Months Ended September 30,
1997 1996 %Change 1997 1996 %Change
<S> <C> <C> <C> <C> <C> <C>
Residential 200,916 194,608 3.24% 544,340 544,853 (0.09)%
Large commercial
and industrial 243,417 259,585 (6.23) 716,950 716,855 0.01
Small commercial
and industrial 210,055 196,611 6.84 566,229 540,584 4.74
Other 88,916 81,943 8.51 253,116 237,900 6.40
Total retail 743,304 732,747 1.44 2,080,635 2,040,192 1.98
Sales for resale 24,857 8,393 196.16 44,709 23,256 92.25
Total sales 768,161 741,140 3.65 2,125,344 2,063,448 3.00
</TABLE>
Electric operating revenues increased $7.0 million, or 6.0 percent, for the
first nine months of 1997 compared to the same period in 1996. The increase
was due to an increase in the electric customer base and the 0.507 cent per
kilowatt-hour surcharge related to the extended outage of Kewaunee (see
footnote 4).
Electric operating revenues for the three-month period ended September 30,
1997, increased $1.0 million, or 2.1 percent, compared to last year's third
quarter. The increase in revenues is due mainly to the increase in electric
rates (see footnote 4) and an increase in the customer base.
Gas Sales and Revenues
For the nine months ended September 30, 1997, gas operating revenues increased
$1.0 million, or 1.6 percent, compared to the same period in 1996. This
increase in revenues, despite a decrease in gas deliveries of 4.0 percent (see
table), is due primarily to higher-unit gas costs, specifically during the
first quarter, which were passed on to customers through the Purchased Gas
Adjustment Clause (PGAC).
<PAGE>
For the three months ended September 30, 1997, gas revenues decreased $0.7
million, or 8.3 percent, compared to last year. This can be partially
attributed to the relatively flat gas deliveries caused by the cooler weather
in this year's third quarter compared to last year's.
The following table illustrates gas deliveries as compared to the previous
year:
<TABLE>
<CAPTION>
GAS DELIVERIES IN THOUSANDS OF THERMS
Three Months Ended September 30, Nine Months Ended September 30,
1997 1996 %Change 1997 1996 %Change
<S> <C> <C> <C> <C> <C> <C>
Residential 5,533 5,702 (2.96)% 60,217 64,705 (6.94)%
Commercial and
Industrial 8,828 9,117 (3.18) 59,083 61,593 (4.08)
Total retail 14,361 14,819 (3.09) 119,300 126,298 (5.54)
Transport 10,340 9,142 13.10 29,434 28,578 3.00
Total deliveries 24,701 23,961 3.09 148,734 154,876 (3.97)
</TABLE>
Electric Fuel and Natural Gas Costs
Fuel costs for electric generation and purchased power increased 9.1 percent,
or $1.0 million, for the third quarter of 1997 compared to last year's third
quarter. This increase is mainly attributed to higher sales and higher
generation cost during July due to the unavailability of power resulting from
the regional power shortages.
Fuel costs and purchased power increased 28.5 percent, or $7.9 million, for
the nine months ended September 30, 1997, as compared to last year. In
addition to the items mentioned above, the increase is also due to the higher
cost of replacement power due to the extended outage at Kewaunee.
Natural gas costs for the nine-month period ended September 30, 1997,
increased $1.5 million, or 3.7 percent, compared to the same period a year
ago. This is mainly due to the higher unit gas costs in the first quarter of
1997.
Natural gas costs for the three months ended September 30, 1997, versus the
1996 comparative period decreased 14.9 percent, or $0.6 million, due to a
decrease in the unit gas cost of $0.03, or 12.0 percent.
<PAGE>
Other Operating Expenses
Income taxes decreased for both the three- and nine-month periods ended
September 30, 1997, compared to the same periods last year. For the three
months ended, income taxes decreased $0.7 million, or 17.8 percent, and for
the nine months ended, income taxes decreased $3.5 million, or 28.6 percent.
This is mainly attributable to a decrease in pretax operating income.
Operations and maintenance costs increased $1.0 million, or 6.1 percent, for
the third quarter of 1997 and increased $6.2 million, or 12.4 percent, for the
first nine months of the year compared to the same periods a year ago. The
primary reasons for the increases are the higher operating and maintenance
costs for Company-owned generation due to the extended outage of Kewaunee and
costs associated with the regional electric power shortages which caused other
sources of energy to be unavailable.
Depreciation and amortization increased $0.1 million, or 12.8 percent, for the
third quarter and $1.1 million, or 5.7 percent, for the nine months ended
September 30, 1997. This increase is due, in part, to the accelerated
depreciation of Kewaunee.
Other Items
The Company's two gas marketing subsidiaries, Great Lakes Energy Corp. and
American Energy Management, Inc., formed a joint venture effective January 1,
1997, with National Gas and Electric L.P. to market natural gas and energy
services to industrial and commercial customers in the Great Lakes region. The
joint venture is called National Energy Management, L.L.C., and is based in
Chicago.
The Company's non-utility operating income for the nine months ended September
30, 1997 was $0.8 million. For the same period a year ago, the Company
experienced non-utility net operating losses of $4.3 million, mainly
attributed to the Company's two gas marketing subsidiaries.
<PAGE>
PART II. OTHER INFORMATION
Item 5 - Other Information
Effective March 20, 1997, the Kewaunee owners received authorization from the
PSCW to defer all costs associated with the repair of the steam generators.
The co-owners of Kewaunee will be requesting rate recovery of these deferred
costs in a future proceeding. Repairs are complete, and the Company's portion
of these costs, which is approximately $1.9 million, has been deferred through
September 30, 1997. The Company's assessment of future alternatives for
Kewaunee is, and will be asserted in future steam generator replacement
hearings, that early plant closure and repowering Kewaunee with gas is the
most viable alternative and offers the most benefits to the Company's
customers and shareholders. Kewaunee is operated by Wisconsin Public Service
Corporation. The Company has a 17.8 percent ownership interest in Kewaunee.
The PSCW is accelerating its review of the request for steam generator
replacement at Kewaunee. A decision is expected from the PSCW in March or
April of 1998.
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.
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: November 13, 1997 /s/ David C. Mebane
David C. Mebane
Chairman, President and Chief
Executive Officer
(Duly Authorized Officer)
Date: November 13, 1997 /s/ Terry A. Hanson
Terry A. Hanson
Vice President - Finance
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from SEC
Form 10-Q. Items 1 through 22 are as of September 30, 1997. Items 23 through 38
are for the nine months ended September 30, 1997.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 362,430
<OTHER-PROPERTY-AND-INVEST> 6,751
<TOTAL-CURRENT-ASSETS> 50,547
<TOTAL-DEFERRED-CHARGES> 30,583
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 450,311
<COMMON> 16,080
<CAPITAL-SURPLUS-PAID-IN> 112,558
<RETAINED-EARNINGS> 51,208
<TOTAL-COMMON-STOCKHOLDERS-EQ> 179,846
0
0
<LONG-TERM-DEBT-NET> 130,114
<SHORT-TERM-NOTES> 18,000
<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> 122,151
<TOT-CAPITALIZATION-AND-LIAB> 450,311
<GROSS-OPERATING-REVENUE> 191,321
<INCOME-TAX-EXPENSE> 8,600
<OTHER-OPERATING-EXPENSES> 160,800
<TOTAL-OPERATING-EXPENSES> 169,400
<OPERATING-INCOME-LOSS> 21,921
<OTHER-INCOME-NET> 2,154
<INCOME-BEFORE-INTEREST-EXPEN> 24,075
<TOTAL-INTEREST-EXPENSE> 7,827
<NET-INCOME> 16,248
0
<EARNINGS-AVAILABLE-FOR-COMM> 16,248
<COMMON-STOCK-DIVIDENDS> (15,491)
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 42,026
<EPS-PRIMARY> 1.01
<EPS-DILUTED> 0
</TABLE>
Ratio of Earnings to Fixed Charges Exhibit 12
Nine Months Ended
September 30, 1997
(000s)
Earnings
Income before interest expense $24,075
Add:
Income tax items 8,600
Income tax on other income 1,063
Amortization of debt discount, premium expense 216
AFUDC - borrowed funds 6
Interest on rentals 676
Total Earnings $34,636
Fixed Charges
Interest on long-term debt $ 7,212
Other interest 621
Amortization of debt discount, premium expense 216
Interest on rentals 676
Total Fixed Charges $ 8,725
Ratio of Earnings to Fixed Charges 3.97x
