-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, as+KqZXt1ugq3XwJl6Om9Ep74+IbHBHphiGr5aWRxT3VTGP4JKocCNZzoRoM7BuO Rgyeht3DXh9DYNOjNFY9kA== 0000061339-94-000008.txt : 19940525 0000061339-94-000008.hdr.sgml : 19940525 ACCESSION NUMBER: 0000061339-94-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MADISON GAS & ELECTRIC CO CENTRAL INDEX KEY: 0000061339 STANDARD INDUSTRIAL CLASSIFICATION: 4931 IRS NUMBER: 390444025 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-01125 FILM NUMBER: 94528263 BUSINESS ADDRESS: STREET 1: 133 S BLAIR ST STREET 2: PO BOX 1231 CITY: MADISON STATE: WI ZIP: 53701 BUSINESS PHONE: 6082527923 MAIL ADDRESS: STREET 1: POST OFFICE BOX 1231 CITY: MADISON STATE: WI ZIP: 53701-1231 10-Q 1 _________________________________________________________________ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1994 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 Post Office Box 1231 Madison, Wisconsin 53701-1231 (Address of principal executive offices) (ZIP Code) (608) 252-7923 (Registrant's telephone number, including area code) Common Stock outstanding at May 13, 1994: 10,719,812 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 [ ] 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, Except Per-Share Amounts) (Unaudited)
Three Months Ended March 31, 1994 1993 STATEMENTS OF INCOME Operating Revenues (Note 4): Electric $35,262 $34,771 Gas 46,871 38,180 Total Operating Revenues 82,133 72,951 Operating Expenses: Fuel for electric generation 6,678 6,297 Purchased power 1,666 2,018 Natural gas purchased 31,178 24,561 Other operations 14,512 14,176 Maintenance 2,735 3,336 Depreciation and amortization 5,602 5,307 Other general taxes 2,315 2,126 Income tax items 5,793 4,409 Total Operating Expenses 70,479 62,230 Net Operating Income 11,654 10,721 Allowance for funds used during construction - equity funds 34 13 Other Income, Net 551 512 Income Before Interest Expense 12,239 11,246 Interest Expense: Interest on long-term debt 2,620 2,985 Other interest 113 102 Allowance for funds used during construction - borrowed funds (19) (9) Net Interest Expense 2,714 3,078 Net Income 9,525 8,168 Preferred Stock Dividends 120 124 Earnings on Common Stock $9,405 $8,044 Earnings Per Share of Common Stock (Note 3) $0.88 $0.75 STATEMENTS OF RETAINED INCOME Balance--Beginning of Period 72,865 68,380 Earnings on Common Stock 9,405 8,044 Cash Dividends on Common Stock (Note 3) (4,985) (4,868) Balance--End of Period 77,285 71,556
[FN] The accompanying notes are an integral part of the above statements. Madison Gas and Electric Company and Subsidiaries CONSOLIDATED BALANCE SHEETS (Thousands of dollars) (Unaudited)
Mar. 31, Dec. 31, 1994 1993 ASSETS Utility Plant, at original cost In service - Electric $469,188 $466,984 Gas 159,587 158,458 Gross Plant in Service 628,775 625,442 Less - Accumulated provision for depreciation (308,407) (302,904) Net Plant in Service 320,368 322,538 Construction work in progress 12,669 12,251 Nuclear decommissioning fund (Note 2) 26,025 25,499 Nuclear fuel, net 7,182 8,305 Total Utility Plant 366,244 368,593 Other Property and Investments 7,969 9,822 Current Assets Cash 1,762 1,391 Deposits for jointly owned electric power production facilities 2,581 2,787 Temporary cash investments 4,497 - Accounts receivable, less reserves of $1,074 and $973, respectively 16,373 10,593 Unbilled revenue 8,284 11,458 Materials and supplies, at average cost 7,188 7,254 Fossil fuel, at average cost 3,718 3,333 Stored natural gas, at average cost 730 10,562 Prepaid taxes 4,286 5,693 Other prepayments 825 1,126 Total Current Assets 50,244 54,197 Deferred Charges 29,239 32,752 Total Assets 453,696 465,364 CAPITALIZATION AND LIABILITIES Capitalization (see statement) 318,648 310,791 Current Liabilities Preferred stock sinking fund requirement 100 100 Interim loans -- commercial paper outstanding - 23,500 Accounts payable 16,810 17,890 Accrued taxes 6,176 2,056 Accrued interest 4,002 2,810 Other 5,751 5,998 Total Current Liabilities 32,839 52,354 Other Credits Accumulated deferred income taxes 54,830 54,167 Regulatory liability (Note 7) 25,152 25,264 Investment tax credit - deferred 13,590 13,781 Other 8,637 9,007 Total Other Credits 102,209 102,219 Commitments and Contingencies (Note 5) - - Total Capitalization and Liabilities $453,696 $465,364
[FN] The accompanying notes are an integral part of the above balance Madison Gas and Electric Company and Subsidiaries CONSOLIDATED STATEMENTS OF CAPITALIZATION (Thousands of dollars) (Unaudited)
Mar. 31, Dec. 31, 1994 1993 Common Shareholders' Equity Common Stock - Par value $8 per share - authorized 28,000,000 shares outstanding 10,719,812 shares, $ 85,758 $ 85,758 Amount received in excess of par value 26,372 26,372 Retained income 77,285 72,865 Total Common Shareholders' Equity 189,415 184,995 Redeemable Preferred Stock cumulative, $25 par value, authorized 1,199,000 shares Series E, 8.70%, 220,000 shares outstanding, less current sinking fund requirements of $100 5,400 5,400 First Mortgage Bonds 5.45%, 1996 series 8,000 8,000 7 3/4%, 2001 series 11,478 11,482 6 1/2%, 2006 series, Pollution Control Revenue Bonds, principal amount $8,780, less construction fund of $1,568 and $1,556, respectively 7,212 7,224 8.50%, 2022 series 40,000 40,000 6.75%, 2027A series, Industrial Development Revenue Bonds principal amount $28,000, less construction fund of $13,980 and $17,426, respectively 14,020 10,574 6.70%, 2027B series, Industrial Development Revenue Bonds 19,300 19,300 7.70%, 2028 series 25,000 25,000 First Mortgage Bonds Outstanding 125,010 121,580 Unamortized discount and premium on bonds, net (1,177) (1,184) Total First Mortgage Bonds 123,833 120,396 Total Capitalization $318,648 $310,791
[FN] The accompanying notes are an integral part of the above statements. Madison Gas and Electric Company and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (Thousand of Dollars) (Unaudited)
Three Months Ended March 31, 1994 1993 OPERATING ACTIVITIES Net income $ 9,525 $ 8,168 Items not affecting working capital: Depreciation and amortization 5,602 5,307 Deferred income taxes 551 1,096 Amortization of nuclear fuel 628 574 Amortization of investment tax credits (191) (200) Allowance for funds used during construction - equity funds (34) (13) Other (13) 132 Net Funds Provided from Operations 16,068 15,064 Changes in working capital, excluding cash, sinking funds, maturities, and interim loans: Decrease in current assets 4,324 7,738 Increase in current liabilities 3,985 4,151 Other noncurrent items, net 5,381 (29) Cash Provided by Operating Activities 29,758 26,924 FINANCING ACTIVITIES Cash dividends on common and preferred stock (5,105) (4,992) Sale of First Mortgage Bonds - 25,000 Maturities/redemptions of First Mortgage Bonds - (25,000) Other increases/(decreases) in First Mortgage Bonds 3 (148) Decrease in bond construction funds 3,434 739 Decrease in interim loans (23,500) (15,000) Cash used for Financing Activities (25,168) (19,401) INVESTING ACTIVITIES Additions to utility plant and nuclear fuel (3,674) (4,450) Allowance for funds used during construction - borrowed funds (19) (9) Increase in decommissioning fund (526) (679) Cash used for Investing Activities (4,219) (5,138) CHANGE IN CASH (Note 6) 371 2,385 Cash at Beginning of Period 1,391 2,030 Cash at End of Period $1,762 $4,415
[FN] The accompanying notes are an integral part of the above statement MADISON GAS AND ELECTRIC COMPANY Notes to Consolidated Financial Statements (Unaudited) March 31, 1994 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 17 through 26 of the Company's 1993 Annual Report to Shareholders and in the Company's 1993 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 1993 Annual Report to Shareholders and have been omitted herein because they have not changed materially through the date of this report. a. Basis of consolidation b. Revenue recognition c. Utility plant d. Nuclear fuel e. Joint plant ownership f. Depreciation g. Income taxes h. Accounts receivable i. Pension plans j. Postretirement benefits other than pensions k. Postemployment benefits other than pensions and health care l. Fair value of financial instruments m. Capitalization matters--common stock, redeemable preferred stock, First Mortgage Bonds, notes payable to banks, commercial paper, and lines of credit n. Segments of business 2. Nuclear Decommissioning Nuclear decommissioning costs are accrued over the estimated service life of Kewaunee nuclear plant (Kewaunee), which is through the year 2013. These costs are currently recovered from customers in rates and are deposited in external trusts. For 1994, decommissioning costs recovered in rates will be $1.3 million. These trusts are shown on the balance sheet in the utility plant section, and as of March 31, 1994, these trusts totalled $26 million. Notes to Consolidated Financial Statements (Unaudited) (continued) 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 5.0 percent. As of March 31, 1994, the accumulated provision for depreciation included accumulated provisions for decommissioning totalling $26 million. The Company's share of Kewaunee decommissioning costs is estimated to be $65 million in current dollars based on a site-specific study performed in 1992 using immediate dismantlement as the method of decommissioning. Based on the Company's current rate filing (see Note 4), decommissioning costs are assumed to inflate at a rate of 5.0 percent. Physical decommissioning is expected to occur during the period 2014-2021, with additional expenditures being incurred during the period 2022-2050 related to the storage of spent nuclear fuel at the site. The undiscounted amount of decommissioning costs to be expended between the years 2014-2050 is estimated to be $271.3 million. 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, and for the three months ended March 31, 1994 and 1993, were 10,719,812 and 10,697,218 shares. Dividends declared and paid per share of common stock for the three months ended March 31, 1994 and 1993, were $0.465 and $0.455. 4. Rate Matters In April 1994, the Company announced its intention to reduce electric rates for the test period beginning January 1, 1995, by approximately $5.8 million and freeze natural gas rates for the same time period. The proposed changes would remain in effect through December 31, 1996. 5. Commitments and Contingencies ANR Pipeline Company (ANR) and Northern Natural Gas Company (NNG) have both entered into settlements with their gas suppliers concerning take- or-pay provisions of gas supply contracts that are being canceled and other transition costs associated with implementation of Order 636. Known charges currently applicable to the Company for take-or-pay or transition costs on ANR are $830,000 including interest. This is being paid to ANR as a fixed charge through July 31, 1995. Also, a volumetric surcharge is being paid to both ANR and NNG. ANR's surcharge is applied through April 1998; NNG's is effective through May 1996. These amounts will change over time. The PSCW has approved procedures whereby the Company is allowed to recover both the fixed and volumetric take-or-pay charges in rates. 6. Supplemental Cash Flow Information For purposes of the Consolidated Statements of Cash Flows, the Company considers cash equivalents to be cash on hand. Notes to Consolidated Financial Statements (Unaudited) (continued) Cash payments for interest, net of amounts capitalized, and income taxes were as follows (in thousands of dollars): Three Months Ended March 31 1994 1993 Interest, net of amounts capitalized $1,551 $1,791 Income taxes paid $ 625 $ 827 7. Regulatory Liability Effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." The cumulative effect of implementation on net earnings for the three months ended March 31, 1993, was insignificant. As a result of applying the provisions of SFAS No. 109, the Company has recorded, at March 31, 1994, a regulatory liability of $25,152,000, which represents the probable future cash flow associated with deferred taxes previously collected from ratepayers. 8. Accounting Policies Effective January 1, 1994, the Company adopted SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities," which addresses the accounting and reporting for investments in equity securities that have readily determinable fair values and for all investments in debt securities. The adoption of SFAS No. 115 did not have a material effect on the financial position of the Company. 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, 1994 and 1993, respectively. It is anticipated that 1994 construction and nuclear fuel expenditures will be $20 million. The Company also expects to capitalize about $3 million of spending on conservation programs. The Company expects to meet these requirements with internally generated funds and construction fund draw-downs. Bank lines of credit available to the Company are currently $25 million. The Company's capitalization ratios were as follows: March 31, 1994 December 31, 1993 Common Shareholders' Equity 59.4% 55.3% Redeemable Preferred Stock* 1.7 1.7 Long-term Debt 38.9 36.0 Short-term Debt 0.0 7.0 *Includes current maturities and current sinking fund requirements. The Company's bonds are currently rated AA by Fitch Investors Service, Inc.; 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. RESULTS OF OPERATIONS Electric Revenues Electric retail sales increased approximately 3 percent in the three-month period ending March 31, 1994, over the comparable period last year. Electric operating revenues for the same period increased 1.4 percent over the 1993 period. The increased sales for the three months ended March 31, 1994 was due, in part, to an increased customer base of approximately 2 percent for the comparative three-month period ended a year ago. The operating revenues increase was due to the increased customer base which was partially offset by the Company's 2.9 percent rate decrease implemented in June 1993. Gas Revenues For the three months ended March 31, 1994, gas revenues increased about 23 percent as compared to the same period last year. Retail gas sold for the same time periods increased 15 percent or 11.4 million therms. The significant increase in both sales and revenues was due to the cold weather experienced in January and February of this year. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Average temperature for the three-months ended March 31, 1994, was 20.3 degrees Fahrenheit as compared to 25.0 degrees Fahrenheit for the same three months ended last year and compared to a normal of 24.6 degrees Fahrenheit. The gas customer base increased approximately 5 percent for the three-months ended March 31, 1994, when compared to the same time period a year ago. This was aided by the acquisition of two gas utilities, with estimated revenues of about $1.7 million on an annualized basis. The Company actively manages contacts 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 and purchased power, combined, increased less than 1 percent for the first three months of 1994 when compared to the same time period last year. Natural gas costs for the three-months ended March 31, 1994, versus the 1993 comparative period increased about 27 percent. This is due mainly to an increased customer base, higher demand due to the cold weather, and an increase in the cost per therm. Other Operating Expenses Other operations and maintenance expenses decreased 1.5 percent for the first three months versus the first quarter of 1993 despite customer growth and an inflationary increase in material and labor costs. Income tax items increased approximately 30 percent for the first three months of 1994 when compared to the same time period in 1993. This was mainly attributable to an increase in the federal tax rate from 34 to 35 percent and the higher first quarter taxable earnings in 1994. Other Items Interest expense for the three months ended March 31, 1994, decreased approximately 11 percent when compared to the same time period for 1993. This is due to the Company refinancing its long-term debt at lower interest rates. The Company is currently under union contract negotiations with both the Office and Professional Employees International Union (OPEIU) and the International Brotherhood of Electrical Workers (IBEW). PART II. OTHER INFORMATION Item 6 (a) Exhibits Exh. No. Description of Document 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 1993 Annual Report on Form 10-K (Commission File No. 0-1125). Item 6 (b) Reports on Form 8-K On March 4, 1994, the Company filed a Current Report on Form 8-K dated February 11, 1994, under Item 5, "Other Events," which contains, under Exhibit 99, the audited consolidated financial statements of the Company for the year ended December 31, 1993; Notes to Consolidated Financial Statements; and Management's Discussion and Analysis of Financial Condition and Operations. Item 12 Ratio of Earnings to Fixed Charges Three Months Ended March 31, 1994 Earnings Income before interest expense $12,239 Add: Income tax items 5,793 Income tax on other income 105 Amortization of debt discount, premium expense 43 Allowance for funds used during construction - borrowed funds 19 Interest on rentals 186 Total Earnings $18,385 Fixed Charges Interest on long-term debt $2,620 Other interest 113 Amortization of debt discount premium expense 43 Interest on rentals 186 Total Fixed Charges $2,962 Ratio of Earnings to Fixed Charges 6.21x S I G N A T U R E S 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 13, 1994 /s/ David C. Mebane David C. Mebane Chairman, President and Chief Executive Officer (Duly Authorized Officer) Date: May 13, 1994 /s/ Joseph T. Krzos Joseph T. Krzos Vice President - Finance (Chief Financial and Accounting Officer) -----END PRIVACY-ENHANCED MESSAGE-----