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, 1999
[ ] 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
(State or other jurisdiction of incorporation or organization)
39-0444025
(IRS Employer 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 May 14, 1999: 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
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED INCOME
Thousands of Dollars (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------
1999 1998
------- -------
<S> <C> <C>
STATEMENTS OF INCOME
Operating Revenues:
Electric $41,194 $38,393
Gas 38,340 36,722
------- -------
Total Operating Revenues 79,534 75,115
------- -------
Operating Expenses:
Fuel for electric generation 7,445 6,846
Purchased power 2,423 1,702
Natural gas purchased 22,847 22,781
Other operations 15,928 15,845
Maintenance 2,906 2,527
Depreciation and amortization 8,348 8,258
Other general taxes 2,366 2,330
Income taxes 5,495 4,592
------- -------
Total Operating Expenses 67,758 64,881
------- -------
Net Operating Income 11,776 10,234
Allowance for funds used during
construction - equity funds 68 24
Other income, net 170 824
------- -------
Income before interest expense 12,014 11,082
------- -------
Interest Expense:
Interest on long-term debt 2,876 2,423
Other interest 117 257
Allowance for funds used during
construction - borrowed funds (35) (13)
------- -------
Net Interest Expense 2,958 2,667
------- -------
Net Income $ 9,056 $ 8,415
======= =======
Earnings per share of common stock
(basic and diluted) (Note 3) $0.56 $0.52
======= =======
STATEMENTS OF RETAINED INCOME
Balance - beginning of period $53,637 $52,285
Earnings on common stock 9,056 8,415
Cash dividends on common stock (Note 3) (5,239) (5,199)
------- -------
Balance - end of period $57,454 $55,501
======= =======
The accompanying notes are an integral part of the above statements.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Thousands of Dollars (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1999 1998
------- -------
<S> <C> <C>
Operating Activities:
Net income $ 9,056 $ 8,415
Items not affecting working capital:
Depreciation and amortization 8,348 8,258
Deferred income taxes 1,122 (1,438)
Amortization of nuclear fuel 660 618
Amortization of investment tax credits (184) (186)
Allowance for funds used during
construction - equity funds (68) (24)
Changes in working capital, excluding
cash equivalents, sinking funds,
maturities, and interim loans:
Decrease in current assets 9,152 14,843
Increase in current liabilities 1,244 3,883
Other noncurrent items, net 4,879 6,498
------- -------
Cash provided by Operating Activities 34,209 40,867
Investing Activities:
Additions to utility plant and nuclear fuel (6,520) (5,176)
Allowance for funds used during
construction - borrowed funds (35) (13)
Increase in nuclear decommissioning fund (2,332) (2,517)
------- -------
Cash used for Investing Activities (8,887) (7,706)
------- -------
Financing Activities:
Cash dividends on common and preferred stock (5,239) (5,199)
Other decreases in First Mortgage Bonds 10 10
Increase/(decrease) in interim loans - (24,750)
------- -------
Cash used for Financing Activities (5,229) (29,939)
------- -------
Change in Cash and Cash Equivalents 20,093 3,222
Cash and cash equivalents at beginning of period 7,250 2,108
------- -------
Cash and cash equivalents at end of period $27,343 $ 5,330
======= =======
The accompanying notes are an integral part of the above statements.
</TABLE>
<PAGE>
CONSOLIDATED BALANCE SHEETS
Thousands of Dollars (Unaudited)
<TABLE>
<CAPTION>
Mar. 31, Dec. 31,
1999 1998
-------- --------
<S> <C> <C>
ASSETS
Utility Plant, at Original Cost, in Service:
Electric $ 527,477 $ 520,753
Gas 186,632 184,868
--------- ---------
Gross plant in service 714,109 705,621
Less accumulated provision for depreciation (455,830) (446,984)
--------- ---------
Net plant in service 258,279 258,637
Construction work in progress 18,989 21,490
Nuclear decommissioning fund 82,954 79,089
Nuclear fuel, net 7,428 8,086
--------- ---------
Total Utility Plant 367,650 367,302
--------- ---------
Other property and investments 6,551 6,700
--------- ---------
Current Assets:
Cash and cash equivalents 27,343 7,250
Accounts receivable, less reserves of
$1,224 and $1,281, respectively 31,060 26,812
Unbilled revenue 9,413 13,113
Materials and supplies, at average cost 6,215 5,936
Fossil fuel, at average cost 3,213 3,509
Stored natural gas, at average cost 1,772 9,709
Prepaid taxes 5,027 6,573
Other prepayments 830 1,030
--------- ---------
Total Current Assets 84,873 73,932
--------- ---------
Deferred charges 22,254 18,331
--------- ---------
Total Assets $ 481,328 $ 466,265
========= =========
CAPITALIZATION AND LIABILITIES
Capitalization (see statement) $ 345,863 $ 342,036
--------- ---------
Current Liabilities:
Long-term debt sinking fund requirements 200 200
Interim loans - commercial paper outstanding - -
Accounts payable 12,410 15,364
Accrued taxes 4,707 549
Accrued interest 3,692 2,734
Accrued nonregulated items 2,613 2,771
Other 10,975 4,696
---------- ---------
Total Current Liabilities 34,597 26,314
---------- ---------
Other Credits:
Deferred income taxes 45,465 44,343
Regulatory liability - SFAS 109 23,416 23,745
Investment tax credit - deferred 9,754 9,938
Other regulatory liabilities 22,233 19,889
---------- ---------
Total Other Credits 100,868 97,915
---------- ---------
Commitments - -
---------- ---------
Total Liabilities 135,465 124,229
---------- ---------
Total Capitalization and Liabilities $481,328 $466,265
========== =========
The accompanying notes are an integral part of the balance sheets.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF CAPITALIZATION
Thousands of Dollars (Unaudited)
<TABLE>
<CAPTION>
Mar. 31, Dec. 31,
1999 1998
-------- --------
<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 57,454 53,637
-------- --------
Total Common Shareholders' Equity 186,092 182,275
-------- --------
First Mortgage Bonds:
6 1/2%, 2006 series:
Pollution Control Revenue Bonds 6,475 6,475
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 21,200
-------- --------
First Mortgage Bonds Outstanding 114,975 114,975
Unamortized discount and premium on bonds, net (1,004) (1,014)
Long-term debt sinking fund requirements (200) (200)
-------- --------
Total First Mortgage Bonds 113,771 113,761
Other Long-Term Debt:
6.01%, due 2000 11,000 11,000
6.91%, due 2004 5,000 5,000
6.02%, due 2008 30,000 30,000
-------- --------
Total Long-Term Debt 159,771 159,761
-------- --------
Total Capitalization $345,863 $342,036
======== ========
The accompanying notes are an integral part of the above statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 1999
======================================================
MGE prepared these consolidated financial statements, without audit
(except for balance sheet information at December 31, 1998), 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. MGE believes the disclosures provided are
accurate and not misleading. MGE management believes it has made all
normal recurring adjustments needed to present fairly the financial
statements and notes in this report.
It is suggested that these consolidated financial statements be read in
conjunction with the financial statements and the notes on pages 18
through 27 of MGE's 1998 Annual Report to Shareholders and in MGE's 1998
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 1998 Annual Report to Shareholders. The
information is not repeated here because it has not changed materially
at this time.
a. General
b. Utility plant
c. Nuclear fuel
d. Joint plant ownership
e. Depreciation
f. Income taxes
g. Pension plans
h. Fair value of financial instruments
i. Capitalization matters: First Mortgage Bonds and other long-term
debt; preferred stock; and notes payable to banks, commercial paper,
and lines of credit
j. Gas marketing subsidiaries
k. Segments of business
l. Regulatory assets and liabilities
2. NUCLEAR DECOMMISSIONING
Nuclear decommissioning costs for the Kewaunee Nuclear Power Plant
(Kewaunee) are currently being accrued for full cost recovery by the end
of 2002 . These costs are currently recovered from customers in rates
and are deposited in external trusts. MGE is presently funding
decommissioning costs at the $8.1 million annual level. These trusts are
shown on the balance sheet in the utility plant section. As of March 31,
1999, these trusts totaled $83.0 million (fair market value) and are
offset by an equal amount under accumulated provision for depreciation.
Decommissioning costs are recovered through depreciation expense,
exclusive of earnings on the trusts. Net earnings on the trusts are
included in other income. MGE assumed a 5.6% long-term, after-tax
earnings on these trusts.
MGE's share of Kewaunee decommissioning costs is estimated to be
$84.4 million in current dollars based on a site-specific study
performed in 1992 using immediate dismantlement as the method of
decommissioning. In accordance with the agreement between Wisconsin
Public Service Corporation and MGE regarding the sale of Kewaunee, MGE's
decommissioning liability has been limited to the current fund balances
plus all decommissioning contributions through 2002. Decommissioning
costs are assumed to inflate at an average rate of 6.0%. Physical
decommissioning is expected to occur during the period 2014 through
2021, with additional expenditures being incurred during the period 2022
through 2039 for storing spent 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, 1999 and 1998, there were 16,079,718 shares
outstanding.
Dividends declared and paid per share of common stock for the three
months ended March 31, 1999 and 1998, were $0.326 and $0.323,
respectively.
4. RATE MATTERS
In January 1999, the Public Service Commission of Wisconsin's (PSCW)
rate order became effective, increasing annual electric rates $8.4
million, or 5.1%, and natural gas rates $0.7 million, or 0.7%. These
rates will remain in place until the next test year, which is scheduled
to begin January 1, 2001. The current rates are based on a 12.2%
authorized return on common stock equity.
The electric rate increase is needed to cover higher fuel costs and new
investments in transmission and generation projects that will improve
electric reliability. Gas rates rose slightly to help offset the impact
of inflation on operating costs. Both rate increases include costs to
implement technology needed to ensure system compatibility with the
"Year 2000" issue.
5. SUPPLEMENTAL CASH FLOW INFORMATION
For purposes of the Consolidated Statements of Cash Flows, MGE 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 net cash
receipts from income tax refunds were as follows:
Three Months Ended
March 31,
------------------
(Thousands of dollars) 1999 1998
------ -----
Interest paid, net of amounts capitalized... $2,000 $993
Income taxes paid (received), net........... $952 ($894)
6. COMMITMENTS
Beginning in March 1999, MGE had entered a purchased power commitment
with Commonwealth Edison to purchase 60 MW of firm capacity and energy
for approximately $10.2 million for 1999. This amount includes costs
paid by MGE to secure firm transmission to deliver firm capacity and
energy to the MGE system.
Also beginning in March 1999, MGE entered into an agreement to sell 30
of the 60 MW to Wisconsin Public Power Inc. for approximately $4.8
million for 1999 plus any taxes applicable to the sale.
MGE has several other firm purchased power contracts for capacity.
Purchase obligations on these contracts for 1999 are $3.5 million.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
CAPITAL REQUIREMENTS
MGE's liquidity is primarily affected by its construction requirements.
During the first quarter of this year, MGE's plant additions totaled
$6.5 million. It is anticipated that 1999 capital expenditures will be
$62.5 million. Major projects for 1999 include:
* A wind farm;
* Improvements at MGE's Blount Generating Station;
* A gas pipeline expansion; and
* MGE-owned backup generators, located at customers' sites, to help meet
their energy needs.
MGE's internally generated funds exceeded the funds used for
construction and nuclear fuel expenditures during the three months ended
March 31, 1999 and 1998.
CASH PROVIDED BY OPERATING ACTIVITIES
Cash provided by operating activities decreased $6.6 million, or 16%,
for the first quarter of 1999. This is primarily due to a $4.2 million
increase in accounts receivable and a $2.9 million decrease in accounts
payable from year-end 1998.
CASH USED FOR INVESTING ACTIVITIES
MGE increased its cash used for investing activities by $1.1 million, or
15%. This is due to plant additions increasing by $1.3 million.
CASH USED FOR FINANCING AND CAPITAL RESOURCE ACTIVITIES
Cash from financing activities increased $24.7 million compared to the
first quarter of 1998. In September 1998, MGE issued $30 million in
unsecured Medium Term Notes to reduce short-term debt and finance
capital spending. Capital expenditures were less than anticipated in the
first quarter due to the timing of projects.
Bank lines of credit available to MGE as of March 31, 1999, were
$45 million.
MGE's capitalization ratios were as follows:
Mar. 31, Dec. 31,
1999 1998
-------- --------
Common shareholders' equity...... 53.8% 53.3%
Long-term debt*.................. 46.2% 46.7%
*Includes current maturities and current sinking fund requirements.
MGE's First Mortgage Bonds are currently rated Aa2 by Moody's Investors
Service, Inc., and AA by Standard & Poor's Corporation. MGE's Medium
Term Notes are currently rated Aa3 by Moody's and AA- by Standard &
Poor's. MGE's dealer-issued commercial paper carries the highest ratings
assigned by Moody's and Standard & Poor's.
ELECTRIC RELIABILITY ACT
Under Governor Thompson's 1997 Wisconsin Act 204 - the Wisconsin
Electric Reliability Act (the Act), MGE is building a $15 million wind
project that will help fulfill the state requirement to build 50 MWs of
new generation using renewable energy sources. MGE's 17-turbine wind
farm, located in northeast Wisconsin, is targeted to be fully
operational by the end of June.
Also in relation to the Act, MGE has entered into an agreement with
Wisconsin Public Service Corporation to build an 83-MW gas combustion
turbine, scheduled for operation June 1, 2000.
To help meet this summer's power demand, MGE has taken the following
steps:
* Installed backup generators for its large commercial customers.
* Maintenance on the Blount Generating Station has taken place during
the spring to assure its reliability during the summer.
* Purchased additional power on the open market.
YEAR 2000
The Year 2000 (Y2K) issue is the result of computer programs that were
written using two digits rather than four to define the applicable year.
A failure due to the Y2K issue could cause disruptions in normal
business operations.
MGE has not experienced any significant Y2K failure to date. However,
the most conscientious efforts cannot guarantee that every problem will
be found and corrected prior to January 1, 2000. MGE is taking the
necessary steps to identify and reduce risks associated with the Y2K
issue. MGE expects to have contingency plans in place by June 30, 1999,
for its critical operating and business systems.
MGE estimates its total Y2K costs to be $4.3 million, of which
approximately $3.1 million has been spent. These costs are being
expensed as incurred and funded through operating cash flow. Costs
incurred for the replacement of computerized systems, if any, will be
capitalized.
MGE's Y2K project team, created in 1997, developed a work plan that
includes the following phases:
Percentage Complete as of 3/31/99 Information Embedded
Systems Systems
----------- --------
Project organization and awareness...... 100% 100%
Assessment.............................. 99 99
Remediation............................. 85 95
Verification and testing................ 85 95
Auditing................................ 25 25
Contingency planning and preparedness... 30 75
MGE has completed its assessment of the Y2K impact on its business. MGE
prioritized critical systems and developed action plans accordingly.
Approximately 80% of MGE's Y2K work is in the information systems area.
MGE expects testing and auditing of all critical systems to be completed
by June 30, 1999. Independent consultants have reviewed MGE's
guidelines, project methodology, and project organization to become Y2K
ready.
MGE has identified its major suppliers and is assessing their Y2K
readiness through surveys and interviews. Our two most critical vendors
are operators of our jointly owned power plants. Kewaunee is following
the Y2K readiness guidelines and methods that have been established by
the Nuclear Energy Institute (NEI). An evaluation of Kewaunee's Y2K
readiness plans, processes, and progress was made by an independent
consultant. It is expected that Columbia will be Y2K ready by June 30,
1999.
Y2K operational contingency planning is under way. MGE's contingency
plans follow guidelines issued by the North American Electric
Reliability Council (NERC). These plans are being coordinated with other
electric and gas utilities in the region as well as local emergency
management agencies. Through the Mid-America Interconnected Network, MGE
is participating in NERC's industry-wide Y2K preparedness and
contingency planning efforts. This effort includes monthly readiness
assessments and two industry-wide Y2K drills.
MGE participated in the NERC first nationwide drill on April 9 ,1999,
along with 200 other electric utilities. During the drill, MGE
successfully tested backup communications for monitoring the gas and
electric systems. MGE field crews manually checked pressure and flow
readings at natural gas facilities and metering devices at electric
substations. Two-way radios were used to communicate between the field
locations and MGE's Systems Operation Center (SOC) control room. Staff
at MGE's SOC recorded the field reports on paper and then entered the
data on an offline backup computer. The drill did not affect gas and
electric service to MGE customers. NERC's second drill is scheduled for
September 9, 1999.
MGE participates in quarterly assessments of the gas utility industry
coordinated by the American Gas Association to communicate Y2K readiness
of the industry.
MGE subsidiaries are being assessed for Y2K issues, but those systems
are not critical and therefore will not have a material effect on normal
operations.
RESULTS OF OPERATIONS
- ---------------------
ELECTRIC SALES AND REVENUES
Electric retail sales increased slightly during the three months ended
March 31, 1999 (see table below).
Three Months Ended
Electric Sales (megawatt-hours) March 31,
------------------
1999 1998 % Change
------- ------- --------
Residential....................... 194,589 185,793 4.7
Large commercial.................. 254,357 245,297 3.7
Small commercial.................. 174,390 169,971 2.6
Other............................. 63,049 75,053 (16.0)
------- -------
Total Retail...................... 686,385 676,114 1.5
Resale............................ 37,696 26,969 39.8
------- -------
Total Sales....................... 724,081 703,083 3.0
======= =======
Electric operating revenues for the same period rose $2.8 million, or
7.3%, due to increased sales and a 5.1% electric rate increase,
effective January 1999 (see Footnote 4, Rate Matters).
GAS SALES AND REVENUES
For the three months ended March 31, 1999, retail gas deliveries
increased 7.6% due to colder temperatures, adding $1.6 million to gas
revenues, a 4.4% increase over 1998 (see table below). The average
temperature for the three months ended March 31, 1999, was 27.1 degrees
Fahrenheit, or 12.6% colder than the 31.0 degrees Fahrenheit for the
same period last year.
Three Months Ended
Gas Deliveries(thousands of therms) March 31,
------------------
1999 1998 % Change
------ ------ --------
Residential......................... 39,368 35,506 10.9
Commercial.......................... 30,347 29,296 3.6
------ ------
Total Retail........................ 69,715 64,802 7.6
Transport........................... 15,752 11,277 39.7
------ ------
Total Gas Deliveries................ 85,467 76,079 12.3
====== ======
ELECTRIC FUEL AND NATURAL GAS COSTS
Fuel cost for electric generation and purchased power costs increased
$1.3 million, or 15.4%, for the first three months of 1999. During the
first quarter of this year the Columbia plant was out of service, which
required MGE to generate more power at its Blount Generating Station at
a higher fuel cost. Also, MGE entered into a purchased power contract
with Commonwealth Edison to purchase 60 MW of capacity. MGE sold 30 MW
of this purchased power contract to Wisconsin Public Power Inc. MGE's
electric margin (revenues less fuel and purchased power costs) increased
$1.5 million, or 5.0%, for the first quarter of 1999. Electric margins
were up primarily because of the 5.1% rate increase authorized by the
PSCW.
Natural gas costs increased $0.7 million, or 3%, because gas deliveries
were up for the three months ended March 31, 1999. MGE's gas margin
(revenues less purchased gas costs) increased $1.6 million, or 11.1%,
due mostly to the higher gas deliveries.
OTHER OPERATING EXPENSES
Income taxes went up 19.7% as pretax operating income rose $1.5 million,
or 15.1%, for the first three months of 1999. Other operating expenses,
including operations and maintenance, depreciation, and other general
taxes, increased $0.6 million, or 2.1%.
OTHER INCOME
Other income decreased $0.7 million, or 79%, from last year's first
quarter. In the first quarter of 1998, MGE benefitted from gains on
weather insurance due to the extremely mild weather.
PART II. OTHER INFORMATION
==========================
ITEM 5 - OTHER INFORMATION
Forward-Looking Statements
This report, and certain other MGE public documents, contain forward-
looking statements that reflect management's current assumptions and
estimates of future performance and economic conditions, especially as
they relate to future revenues, expenses, financial resources and
regulatory matters. These forward-looking statements are made pursuant
to the Safe Harbor provisions of the Private Securities Litigation
Reform Act of 1995. MGE cautions investors that forward-looking
statements are subject to known and unknown risks and uncertainties that
may cause MGE's actual results to differ materially from those
projected, expressed or implied. Some of those risks and uncertainties
include the following:
* Economic and market conditions in MGE's service territory;
* Magnitude and timing of capital expenditures;
* Regulatory environment (including restructuring the electric utility
industry in Wisconsin);
* Availability and cost of power supplies; and
* MGE's ability to become Year 2000 compliant at a reasonable cost.
Kewaunee Nuclear Power Plant
Kewaunee is operated by Wisconsin Public Service Corporation (WPSC). MGE
has a 17.8% ownership interest in Kewaunee. Kewaunee is operating with a
license that expires in 2013.
The Nuclear Regulatory Commission (NRC) completed a Plant Performance
Review of the Kewaunee plant on February 4, 1999. This process replaced
the previous Systematic Assessment of Licensee Performance which
provided numerical rankings of various plant performance
characteristics. The Plant Performance Review process does not provide
numerical rankings but is designed to concentrate on identifying areas
for improvement. The NRC indicated that overall performance has been
acceptable during the assessment period. In addition to identifying
where the Kewaunee plant is performing as expected, the NRC identified
several areas where performance can be improved including some aspects
of operations and timeliness in closing out corrective actions.
The two steam generators at Kewaunee are scheduled to be replaced in the
fall of 2001 rather than in the spring of 2000. The equipment
manufacturer is not able to meet the spring 2000 delivery schedule. In
order to keep Kewaunee in service to meet customer demands during the
summer of 2000 and 2001, the steam generators will be replaced in the
fall of 2001 when the plant is scheduled to be shut down for refueling.
This delay should not adversely impact the reliability of Kewaunee in
the interim. The plant is also scheduled for refueling in the spring of
2000.
Kewaunee has been in operation since 1974 and is jointly owned by MGE,
WPSC, and Wisconsin Power and Light Company, a subsidiary of Alliant
Energy. The delay in the replacement of the steam generators will also
delay the transfer of MGE's ownership interest in Kewaunee to WPSC.
Under the agreement between the two utilities, WPSC has agreed to credit
the book value of MGE's interest in Kewaunee against the purchased price
of a planned 83-MW natural gas-fired combustion turbine which WPSC has
agreed to build for MGE near Marinette, Wisconsin. The asset transfer
will take place when Kewaunee shuts down for replacement of the steam
generators and regulatory approval has been given.
Background information regarding Kewaunee steam generator repair issues
and WPSC's agreement to buy MGE's 17.8% share of the plant is set forth
in the registrant's Annual Report on Form 10-K for the year ended
December 31, 1998.
ITEM 6(a) - EXHIBITS
Exhibit 4 - Indenture of Mortgage and Deed of Trust between MGE and
Firstar Trust Company, as Trustee (and supplements) reference was
provided in MGE's 1998 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...... 17
Exhibit 27...... 18
ITEM 6(b) REPORTS ON FORM 8-K
No reports on 8-K were filed during the quarter for which this report is
filed.
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, 1999 /s/ David C. Mebane
--------------------------------
Chairman, President and Chief Executive Officer
(Duly Authorized Officer)
Date: May 14, 1999 /s/ Terry A. Hanson
--------------------------------
Vice President - Finance
(Chief Financial and Accounting Officer)
EXHIBIT 12
RATIO OF EARNINGS TO FIXED CHARGES
----------------------------------
Three Months
(Thousands of dollars) Ended
Mar. 31, 1999
-------------
EARNINGS
Income before interest expense 12,014
Add:
Income tax items 5,495
Income tax on other income 232
Amortization of debt discount, premium expense 83
Allowance for funds used during construction -
borrowed funds 35
Interest on rentals 228
------
Total earnings before interest and taxes 18,087
======
FIXED CHARGES
Interest on long-term debt 2,876
Other interest 117
Amortization of debt discount, premium expense 83
Interest on rentals 228
------
Total fixed charges 3,304
======
Ratio of Earnings to Fixed Charges 5.47x
======
<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, 1999. Items 23 through 38
are for the three months ended March 31, 1999.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 367,650
<OTHER-PROPERTY-AND-INVEST> 6,551
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<TOTAL-DEFERRED-CHARGES> 22,254
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 481,328
<COMMON> 16,080
<CAPITAL-SURPLUS-PAID-IN> 112,558
<RETAINED-EARNINGS> 57,454
<TOTAL-COMMON-STOCKHOLDERS-EQ> 186,092
0
0
<LONG-TERM-DEBT-NET> 159,771
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
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<LONG-TERM-DEBT-CURRENT-PORT> 200
0
<CAPITAL-LEASE-OBLIGATIONS> 0
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<OTHER-ITEMS-CAPITAL-AND-LIAB> 135,265
<TOT-CAPITALIZATION-AND-LIAB> 481,328
<GROSS-OPERATING-REVENUE> 79,534
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<OTHER-OPERATING-EXPENSES> 62,263
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<OPERATING-INCOME-LOSS> 11,776
<OTHER-INCOME-NET> 238
<INCOME-BEFORE-INTEREST-EXPEN> 12,014
<TOTAL-INTEREST-EXPENSE> 2,958
<NET-INCOME> 9,056
0
<EARNINGS-AVAILABLE-FOR-COMM> 9,056
<COMMON-STOCK-DIVIDENDS> (5,239)
<TOTAL-INTEREST-ON-BONDS> 2,159
<CASH-FLOW-OPERATIONS> 34,209
<EPS-PRIMARY> .56
<EPS-DILUTED> .56
</TABLE>
