-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MQPD15geAq82u3zwWdUR1Y/2rKblViYl9UFcEgBsn7CXf8qvbJ1dzbr3AIwLPNkE 2miM9z3DX+Frm2hLmdYcWQ== 0000061339-95-000011.txt : 19951119 0000061339-95-000011.hdr.sgml : 19951119 ACCESSION NUMBER: 0000061339-95-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MADISON GAS & ELECTRIC CO CENTRAL INDEX KEY: 0000061339 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [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: 95590003 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 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: SEPTEMBER 30, 1995 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 Identification No.) organization) 133 South Blair Street, Madison, Wisconsin 53701-1231 (Address of principal executive offices and zip code) (608) 252-7000 (Registrant's telephone number including area code) Common Stock outstanding at November 10, 1995: 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) (Unaudited)
Three Months Nine Months Ended Ended September 30, September 30, 1995 1994 1995 1994 STATEMENTS OF INCOME Operating Revenues Electric . . . . . . . . . . . .$47,316 $43,577 $117,908 $115,273 Gas . . . . . . . . . . . . . . 7,407 8,615 59,787 69,424 Total Operating Revenues . . . 54,723 52,192 177,695 184,697 Operating Expenses Fuel for electric generation . . 8,509 6,770 21,549 21,009 Purchased power . . . . . . . . 2,526 4,126 6,169 7,922 Natural gas purchased . . . . . 3,220 4,669 35,716 44,219 Other operations . . . . . . . . 14,764 13,702 44,725 42,842 Maintenance . . . . . . . . . . 2,402 2,419 8,919 8,881 Depreciation and amortization . 6,206 5,610 18,656 16,818 Other general taxes . . . . . . 2,149 2,114 6,495 6,533 Income tax items . . . . . . . . 4,933 3,995 10,554 11,164 Total Operating Expenses . . . 44,709 43,405 152,783 159,388 Net Operating Income . . . . . . . 10,014 8,787 24,912 25,309 AFUDC - equity funds . . . . . . . 10 36 46 91 Other income, net . . . . . . . . . 297 423 2,523 1,519 Income before interest expense . . 10,321 9,246 27,481 26,919 Interest Expense Interest on long-term debt . . . 2,593 2,645 7,774 7,897 Other interest . . . . . . . . . 208 157 797 302 AFUDC - borrowed funds . . . . . (5) (21) (24) (51) Net Interest Expense . . . . . 2,796 2,781 8,547 8,148 Net Income . . . . . . . . . . . . 7,525 6,465 18,934 18,771 Preferred stock dividends . . . . . - 117 64 356 Earnings on common stock . . . . . $7,525 $6,348 $18,870 $18,415 Earnings per share of common stock (Note 3) . . . . . . . . . . . . $0.70 $0.59 $1.76 $1.72 STATEMENTS OF RETAINED INCOME Balance - beginning of period . . .$78,628 $74,964 $77,358 $72,865 Earnings on common stock . . . . . 7,525 6,348 18,870 18,415 Cash dividends on common stock (Note 3) . . . . . . . . . . . . . (5,093) (5,039) (15,168) (15,007) Balance - end of period . . . . . .$81,060 $76,273 $81,060 $76,273 The accompanying notes are an integral part of the above statements. /TABLE Madison Gas and Electric Company and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOW (Thousands of Dollars) (Unaudited)
Three Months Nine Months Ended Ended September 30, September 30, 1995 1994 1995 1994 Operating Activities Net income . . . . . . . . . . . . $7,525 $6,465 $18,934 $18,771 Items not affecting working capital: Depreciation and amortization . 6,206 5,610 18,656 16,818 Deferred income taxes . . . . . (323) (86) (563) 825 Amortization of nuclear fuel . . 797 858 1,927 1,953 Amortization of investment tax credits . . . . . . . . . . . . (192) (194) (581) (581) AFUDC - equity funds . . . . . . (10) (36) (46) (91) Other . . . . . . . . . . . . . 157 (82) 1,061 155 Net funds provided from Operations . . . . . . . . . 14,160 12,535 39,388 37,850 Changes in working capital, excluding cash equivalents, sinking funds, maturities, and interim loans: (Increase)/decrease in current assets . . . . . . . . . . . . . (4,667) (724) 9,985 290 Increase/(decrease) in current liabilities . . . . . . . . . . 1,428 476 (1,610) (2,474) Other noncurrent items, net . . . (2,092) (2,571) (2,073) 244 Cash provided by Operating Activities . . . . . . . . . . . 8,829 9,716 45,690 35,910 Financing Activities Cash dividends on common and preferred stock . . . . . . . . . (5,093) (5,156) (15,232) (15,363) Other increases/(decreases) in First Mortgage Bonds . . . . . . . 9 7 (233) (64) Decrease in preferred stock . . . - (200) (5,300) (200) Decrease in bond - construction funds . . . . . . . . . . . . . . 1,976 3,141 5,469 7,940 Decrease in interim loans . . . . (1,250) (500) (17,350) (10,000) Cash used for Financing Activities . . . . . . . . . . . (4,358) (2,708) (32,646) (17,687) Investing Activities Acquisition of a nonregulated subsidiary . . . . . . . . . . . . - - (8,036) - Additions to utility plant and nuclear fuel . . . . . . . . . . . (4,997) (8,261) (13,083) (16,757) AFUDC - borrowed funds . . . . . . (5) (21) (24) (51) Increase in decommissioning fund . (1,135) (668) (3,117) (1,925) Cash used for Investing Activities . . . . . . . . . . . (6,137) (8,950) (24,260) (18,733) Change in Cash and Cash Equivalents (Note 5) . . . . . . . . . . . . . . (1,666) (1,942) (11,216) (510) Cash and cash equivalents at beginning of period . . . . . . . 1,984 2,823 11,534 1,391 Cash and cash equivalents at end of period . . . . . . . . . . . . . . $318 $881 $318 $881 The accompanying notes are an integral part of the above statements. /TABLE Madison Gas and Electric Company and Subsidiaries CONSOLIDATED BALANCE SHEETS (Thousands of Dollars) (Unaudited)
Sept. 30 Dec. 31 1995 1994 ASSETS Utility Plant (at original cost), In Service Electric . . . . . . . . . . . . . . . . . . . . . $488,081 $479,346 Gas . . . . . . . . . . . . . . . . . . . . . . . 172,763 167,710 Gross plant in service . . . . . . . . . . . . . 660,844 647,056 Less accumulated provision for depreciation . . . (340,708) (323,511) Net plant in service . . . . . . . . . . . . . . 320,136 323,545 Construction work in progress . . . . . . . . . . 9,240 11,920 Nuclear decommissioning fund (Note 2) . . . . . . 30,932 27,815 Nuclear fuel, net . . . . . . . . . . . . . . . . 6,618 8,386 Total Utility Plant . . . . . . . . . . . . . . 366,926 371,666 Other property and investments . . . . . . . . . . . 18,899 9,843 Current Assets Cash and cash equivalents . . . . . . . . . . . . 318 11,534 Accounts receivable, less reserves of $1,160 and $921, respectively . . . . . . . . . . . . . . . . 22,734 25,998 Unbilled revenue . . . . . . . . . . . . . . . . . 5,644 10,411 Materials and supplies, at average cost . . . . . 6,229 6,424 Fossil fuel, at average cost . . . . . . . . . . . 2,300 2,130 Stored natural gas, at average cost . . . . . . . 8,514 8,551 Prepaid taxes . . . . . . . . . . . . . . . . . . 4,345 5,838 Other prepayments . . . . . . . . . . . . . . . . 1,057 1,456 Total Current Assets . . . . . . . . . . . . . . 51,141 72,342 Deferred charges . . . . . . . . . . . . . . . . . . 36,167 33,908 Total Assets . . . . . . . . . . . . . . . . $473,133 $487,759 CAPITALIZATION AND LIABILITIES Capitalization (see statement) . . . . . . . . . . . $321,621 $325,389 Current Liabilities Preferred stock sinking fund requirements . . . . - 200 Long-term debt sinking fund requirements . . . . . 195 430 Maturity of 5.45%, 1996 series . . . . . . . . . . 7,840 - Interim loans - commercial paper outstanding . . . 11,250 28,600 Accounts payable . . . . . . . . . . . . . . . . . 12,291 18,360 Accrued taxes . . . . . . . . . . . . . . . . . . 527 1,143 Accrued interest . . . . . . . . . . . . . . . . . 3,989 2,803 Other . . . . . . . . . . . . . . . . . . . . . . 8,210 4,327 Total Current Liabilities . . . . . . . . . . . 44,302 55,863 Other Credits Accumulated deferred income taxes . . . . . . . . 55,673 56,595 Regulatory liability . . . . . . . . . . . . . . . 25,563 25,204 Investment tax credit - deferred . . . . . . . . . 12,423 12,998 Other . . . . . . . . . . . . . . . . . . . . . . 13,551 11,710 Total Other Credits . . . . . . . . . . . . . . 107,210 106,507 Commitments . . . . . . . . . . . . . . . . . . . . . - - Total Capitalization and Liabilities . . . . $473,133 $487,759 The accompanying notes are an integral part of the above balance sheets. /TABLE Madison Gas and Electric Company and Subsidiaries CONSOLIDATED STATEMENTS OF CAPITALIZATION (Thousands of Dollars) (Unaudited)
Sept. 30 Dec. 31 1995 1994 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 . . . . . . . . . . . . . . . . . 81,060 77,359 Total Common Shareholders' Equity . . . . . . . 193,190 189,489 Redeemable Preferred Stock cumulative, $25 par value, authorized 1,175,000 shares (Note 4a) Series E, 8.70%, 0 and 212,000 shares outstanding, respectively, less current sinking fund requirements of $0 and $200, respectively . . . . . - 5,100 First Mortgage Bonds 5.45%, 1996 series (Note 4b) . . . . . . . . . . . 7,840 7,920 7 3/4%, 2001 series (Note 4c) . . . . . . . . . . 11,302 11,478 6 1/2%, 2006 series: Pollution Control Revenue Bonds, principal amount $8,775 and $8,780 respectively, less pollution control fund of $1,687 and $1,618, respectively . . . . 7,088 7,162 8.50%, 2022 series . . . . . . . . . . . . . . . . 40,000 40,000 6.75%, 2027A series: Industrial Development Revenue Bonds, principal amount $28,000, less construction fund of $934 and $6,472, respectively . . . . . . . . 27,066 21,528 6.70%, 2027B series: Industrial Development Revenue Bonds . . . . . . 19,300 19,300 7.70%, 2028 series . . . . . . . . . . . . . . . . 25,000 25,000 First Mortgage Bonds Outstanding . . . . . . . . 137,596 132,388 Unamortized discount and premium on bonds, net . . (1,130) (1,158) Long-term debt sinking fund requirements . . . . . (195) (430) Maturity of 5.45%, 1996 series . . . . . . . . . . (7,840) - Total First Mortgage Bonds . . . . . . . . . . . 128,431 130,800 Total Capitalization . . . . . . . . . . . . $321,621 $325,389 The accompanying notes are an integral part of the above statements.
Notes to Consolidated Financial Statements (Unaudited) September 30, 1995 The consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures made are adequate to make the information presented not misleading. In the opinion of Company management, all adjustments (consisting of only normal recurring adjustments) necessary to fairly present results have been made. It is suggested that these consolidated financial statements be read in conjunction with the financial statements and the notes thereto set forth on pages 20 through 25 of the Company's 1994 Annual Report to Shareholders and in the Company's 1994 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 1994 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. Cash and cash equivalents g. Depreciation h. Income taxes i. Accounts receivable j. Pension plans k. Postretirement benefits other than pensions l. Fair value of financial instruments m. Capitalization matters: common stock, notes payable to banks, commercial paper, and lines of credit n. Rate matters o. Commitments p. Segments of business 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 1995, 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 September 30, 1995, these trusts totaled $30.9 million. Notes to Consolidated Financial Statements (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 6.2 percent. As of September 30, 1995, the accumulated provision for depreciation included accumulated provisions for decommissioning totaling $30.9 million. The Company's share of Kewaunee decommissioning costs is estimated to be $66.1 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 nine months ended September 30, 1995 and 1994, there were 10,719,812 shares. Dividends declared and paid per share of common stock for the periods ended September 30, 1995 and 1994, were, respectively, for the three months $0.475 and $0.47; for the nine months, $1.415 and $1.40 4. Capitalization Matters a. Redeemable preferred stock. On February 21, 1995, the Company retired 16,000 Series E shares for $400,000 in satisfying its annual sinking fund retirement obligation. The Company repurchased all remaining shares outstanding of its Series E, 8.70%, preferred stock on the same day. The total amount of approximately $5.5 million was financed with short-term borrowings. b. First Mortgage Bonds. The annual sinking fund requirements of the outstanding First Mortgage Bonds are $430,000 in 1995. As of September 30, 1995, $195,000 is still needed to satisfy the 1995 requirements. The 5.45%, First Mortgage Bonds, 1996 series will be maturing on June 1, 1996, requiring $7.8 million to retire this series of bonds. c. Subsequent Event. On November 22, 1995, the Company will redeem the outstanding $11.3 million, 7 3/4%, 2001 series, First Mortgage Bonds and replace these bonds with commercial paper. The Company has entered into an agreement with a commercial bank to fix the interest rate payable by the Company for a five-year period. Notes to Consolidated Financial Statements (continued) 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. Cash payments for interest, net of amounts capitalized, and income taxes were as follows: Three Months Nine Months Ended Ended September 30, September 30, (Thousands of dollars) 1995 1994 1995 1994 Interest, net of amounts capitalized $1,601 $1,589 $7,481 $6,920 Income taxes paid $4,515 $3,301 $13,495 $9,302 6. Acquisition of Nonregulated Subsidiary In January 1995 the Company purchased certain assets of American Energy Management, Inc. (AEM), a national energy marketing firm that provides gas marketing, energy management, energy auditing, and conservation services to customers in twelve states. The acquisition has been accounted for as a purchase, and the results of AEM have been included in the accompanying consolidated financial statements since the date of acquisition. Pro forma results are not presented because the amounts do not significantly differ from historical results. The costs of the acquisition have been allocated on the basis of the estimated fair market value of the assets acquired and the liabilities assumed. The resulting goodwill is being amortized over 25 years. Additionally, the former owner has an option to purchase 20 percent of AEM at any time prior to the year 2000. 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 all of the periods ended September 30, 1995. It is anticipated that 1995 construction and nuclear fuel expenditures will be between $22 million and $25 million. The Company also expects to capitalize about $2 million to $3 million of spending on conservation programs with internally generated funds. Approximately $6 million of the Company's electric construction program during this period has been met with construction fund draw-downs. During the first quarter of 1995, the Company purchased all of its outstanding 8.70%, Series E, preferred stock and acquired AEM with internally generated cash. Bank lines of credit available to Madison Gas and Electric Company (MGE) are currently $25 million. Great Lakes Energy Corp. (GLENCO), a wholly owned subsidiary of MGE, and AEM, a subsidiary of GLENCO, have established bank lines of credit up to $5 million. The Company's capitalization ratios were as follows: Sept. 30, Dec. 31, 1995 1994 Common shareholders' equity . . 56.7% 53.4% Redeemable preferred stock* . . - 1.5 Long-term debt* . . . . . . . . 40.0 37.0 Short-term debt . . . . . . . . 3.3 8.1 *Includes current maturities and current sinking fund requirements. The Company's bonds are currently rated Aa2 by Moody's Investors Service, Inc., and AA by Standard & Poor's Corporation. The Company's dealer-issued commercial paper carries the highest ratings assigned by Moody's and Standard & Poor's. Business Environment On May 1, 1995, Northern States Power Company and Wisconsin Energy Corporation announced a proposed merger. If approved, the two companies would form a holding company called Primergy Corporation, creating the tenth largest utility company in the United States. The merger has been approved by the shareholders of both companies. Various regulatory agency approval is required including the Securities and Exchange Commission, the Nuclear Regulatory Commission, the Federal Energy Regulatory Commission, and state regulatory agencies. The Company is opposing approval of the merger on the grounds that the merger would violate antitrust laws and principles. The outcome of this proposed merger and the impacts it may have on the Company are unknown at this time. Regulatory Environment The Public Service Commission of Wisconsin (PSCW) has opened a docket to examine the costs and benefits of changing electric utility company structure and regulation. The Commissioner chairing the advisory committee to study this issue and the Wisconsin Assembly Utilities Committee agreed that the PSCW would continue to study the matter but no legislation would be considered during 1995 or 1996. It is unknown at this time what Management's Discussion and Analysis (continued) impact (if any) this examination will have on the Company. The PSCW has also opened a docket to examine what changes are needed in the cost recovery mechanism for purchasing gas costs. It is not known what changes (if any) will be made to the Purchased Gas Adjustment Clause. Results of Operations Electric Sales and Revenues The extremely hot weather experienced this summer contributed to increased electric sales for the three and nine months ended September 30, 1995, compared to the same periods last year (see table below). Electric retail sales increased approximately 13 percent for the three months ended September 30, 1995, compared to the same time period a year ago. Cooling degree days (measured by the number of degrees the mean daily temperature is above 65 degrees Fahrenheit) for the third quarter of 1995 increased approximately 92 percent over last year's third quarter, and approximately 70 percent over normal. The average temperature for this year's third quarter was 70 degrees Fahrenheit, 3 degrees higher than the average temperature for the third quarter of 1994. Electric Sales in Megawatt-Hours
Three Months Ended September 30 Nine Months Ended Sept. 30 1995 1994 % Change 1995 1994 % Change Residential 227,414 179,750 26.52% 561,923 515,159 9.08% Large commercial and industrial* 258,855 283,081 (8.56) 712,285 746,505 (4.58) Small commercial and industrial 192,348 172,771 11.33 528,405 508,336 3.95 Other 93,779 46,356 102.30 245,047 128,796 90.26 Total retail 772,396 681,958 13.26 2,047,660 1,898,796 7.84 Sales for resale 2,859 2,563 11.55 16,768 32,462 (48.35) Total sales 775,255 684,521 13.26 2,064,428 1,931,258 6.90 The significant increase in other electric sales is due to a shift in a major customer from the large commercial and industrial class.
The increase in electric sales for both the three- and nine-month periods contributed to the increase in electric operating revenues of $3.7 million or 8.6 percent for this year's third quarter, and $2.6 million or 2.3 percent for the nine months ended September 30, 1995, as compared to the same periods the previous year. Electric rates were effectively reduced by $5.1 million or 3.3 percent effective January 1, 1995. Management's Discussion and Analysis (continued) Gas Sales and Revenues For the nine months ended September 30, 1995, gas revenues decreased about $10 million or 14 percent compared to the same 1994 period. The decrease in gas revenues can be attributed, in part, to lower sales volumes due to the warm weather experienced in the first quarter of this year as compared to the cold first quarter in 1994. In addition, gas costs on a per-unit basis were less this year compared to the previous year. The lower gas costs are reflected in revenues by the Company's Purchased Gas Adjustment Clause. For the three months ended September 30, 1995, gas revenues decreased about $1 million or 14 percent as compared to the same period last year. The decrease for both the three- and nine-month periods ended September 30, 1995, compared to last year, is also attributable to a shift in customers from system rates to transportation rates (see table). Transport customers' revenue is recorded only as margin (revenue less cost of gas). The following table illustrates gas deliveries as compared to the previous year: Gas Deliveries in Thousands of Therms
Three Months Ended September 30 Nine Months Ended September 30 1995 1994 % Change 1995 1994 % Change Residential 5,702 5,608 1.68% 56,419 59,711 (5.52)% Commercial and Industrial 10,099 10,660 (5.26) 61,437 71,837 (14.48) Total retail 15,801 16,268 (2.87) 117,856 131,554 (10.41) Transport 10,036 8,265 21.43 26,677 15,030 77.49 Total gas deliveries 25,837 24,533 5.32 144,533 146,584 (1.40) The significant increase in transport is due to a shift in customers from system rates to transportation rates.
Electric Fuel and Natural Gas Costs Fuel for electric generation increased approximately $2.0 million or 26 percent for the third quarter of 1995 compared to last year's third quarter. This was mainly attributable to the significant increase in power demands due to the hot and humid weather experienced during this time. Purchased power decreased approximately $2 million or 40 percent for the three months ended September 30, 1995, compared to the same period last year. The Company was able to use lower cost fuel during this time period, thus reducing the volume of purchased power needed. The volume of purchased power for the third quarter of 1995 decreased by approximately 65 gigawatt-hours or 43 percent. Fuel costs and purchased power decreased approximately $1.2 million or 4 percent for the nine-month period ended September 30, 1995, when compared to the same period last year. This was due to a decrease in fuel cost at the Company's Columbia Energy Center along with a decrease in purchased power costs. Management's Discussion and Analysis (continued) The extremely hot July and August caused power demands to increase significantly. On July 13, 1995, the Company set a record for peak demand of 598 megawatts for one hour, breaking the previously set record of 570 megawatts for one hour set in June 1995. Natural gas costs for the nine-month period ended September 30, 1995, decreased $8.5 million or 19 percent compared to the same nine-month period a year ago. This was due to the following factors: a lower demand resulting from the warm weather experienced in this year's first quarter compared to the cold weather in the first quarter of 1994, a decrease in the cost per therm of $0.03, and the shift in customers from system rates to transport rates as described earlier. Natural gas costs for the three months ended September 30, 1995, versus the 1994 comparative period decreased $1.4 million or 31 percent. This is due to a decrease in the cost per therm of approximately $0.08 or 29 percent and the shift in customers from system rates to transport rates. Other Operating Expenses Depreciation expense for the three months and nine months ended September 30, 1995, when compared to the same time periods in 1994, increased $0.6 million and $1.8 million or 11 percent, respectively. This is attributable to an increase in decommissioning costs recorded as depreciation expenses (see Note 2). Income taxes increased $1 million or 23 percent for the three months ended September 30, 1995, compared to the same 1994 period. For the nine-month period ended September 30, 1995, income taxes decreased $0.6 million or 5 percent compared to last year. The increase in income taxes for the third quarter of this year is due to an increase in pretax operating income. The decrease for the nine months ended September 30, 1995, is due to the decrease in pretax operating income for this period. Other Items Other income increased $1 million for the nine months ended September 30, 1995, compared to the same period last year due to earnings realized from the Company's nonregulated business. Other interest expense increased for both the three- and nine-month periods ended September 30, 1995, when compared to the same periods a year ago. This is due to higher levels of short-term debt outstanding during 1995 periods than in 1994 because of the repurchase of the Series E preferred stock earlier this year. PART II. OTHER INFORMATION Item 6(a) Exhibits Exh. No. Indenture of Mortgage and Deed of Trust Between the 4 Company and Firstar Trust Company, as Trustee (and supplements). Reference was provided in the Company's 1994 Annual Report on Form 10-K (Commission File No. 0-1125). Exh. No. Ratio of Earnings to Fixed Charges 12 Exh. No. Appendix E to Item 601(c) of Regulation S-K: Public 27 Utility Companies Financial Data Schedule UT Exhibit Index Exhibit Sequentially No. Exhibit Numbered Page 4 Indenture of Mortgage and Deed of Trust Between the the Company and Firstar Trust Company NA 12 Ratio of Earnings to Fixed Charges 15 27 Regulation S-K: Financial Data Schedule UT 16 Item 6(b) Reports on Form 8-K No reports on Form 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: November 10, 1995 /s/ David C. Mebane David C. Mebane Chairman, President and Chief Executive Officer (Duly Authorized Officer) Date: November 10, 1995 /s/ Joseph T. Krzos Joseph T. Krzos Vice President - Finance (Chief Financial and Accounting Officer) EX-12 2 Ratio of Earnings to Fixed Charges Exhibit 12 Nine Months Ended Sept. 30, 1995 (000s) Earnings Income before interest expense . . . . . $27,481 Add: Income tax items . . . . . . . . . . . . 10,554 Income tax on other income . . . . . . . 1,129 Amortization of debt discount, premium expense . . . . . . . . . . . . . . . . 190 AFUDC - borrowed funds . . . . . . . . . 24 Interest on rentals . . . . . . . . . . . 147 Total Earnings . . . . . . . . . . . . $39,525 Fixed Charges Interest on long-term debt . . . . . . . 7,774 Other interest . . . . . . . . . . . . . 797 Amortization of debt discount, premium expense . . . . . . . . . . . . . . . . 190 Interest on rentals . . . . . . . . . . . 147 Total Fixed Charges . . . . . . . . . . $8,908 Ratio of Earnings to Fixed Charges . . . 4.44x EX-27 3
UT This schedule contains summary financial information extracted from SEC Form 10-Q. Items 1 through 22 are as of September 30, 1995. Items 23 through 38 are for the nine months ended September 30, 1995. 1,000 9-MOS DEC-31-1995 SEP-30-1995 PER-BOOK 366,926 18,899 51,141 36,167 0 473,133 85,758 26,372 81,060 193,190 0 0 128,431 0 0 11,250 8,035 0 0 0 132,227 473,133 177,695 10,554 142,229 152,783 24,912 2,569 27,481 8,547 18,934 64 18,870 (15,168) 0 45,690 1.76 0
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