-----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, AqLNX30Hf1BeYMOlG5BC3jYkLoG1Pg5jNJeTrRaiSZWVyYtZxdITkEeUeSAn4FWb gR0jHi//hZTv/l0GvINcsQ== 0000061339-96-000007.txt : 19960816 0000061339-96-000007.hdr.sgml : 19960816 ACCESSION NUMBER: 0000061339-96-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 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: 96612629 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: JUNE 30, 1996 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from: __________ to __________ Commission File Number 0-1125 MADISON GAS AND ELECTRIC COMPANY (Exact name of registrant as specified in its charter) Wisconsin 39-0444025 (State or other jurisdiction (IRS Employer of incorporation or organization) Identification No.) 133 South Blair Street, Madison, Wisconsin 53703 (Address of principal executive offices and ZIP code) (608) 252-7000 (Registrant's telephone number including area code) Common Stock Outstanding at August 13, 1996: 16,079,718 shares Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] 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 Ended Six Months Ended June 30, June 30, 1996 1995 1996 1995 STATEMENTS OF INCOME Operating Revenues: Electric . . . . . . . . . . . . . . . . . . . . $35,996 $35,980 $ 72,074 $ 70,592 Gas . . . . . . . . . . . . . . . . . . . . . . . 14,378 12,540 58,355 52,381 Total Operating Revenues . . . . . . . . . . . 50,374 48,520 130,429 122,973 Operating Expenses: Fuel for electric generation . . . . . . . . . . 6,243 7,023 12,801 13,040 Purchased power . . . . . . . . . . . . . . . . . 2,506 1,781 4,398 3,643 Natural gas purchased . . . . . . . . . . . . . . 7,767 6,558 37,335 32,497 Other operations . . . . . . . . . . . . . . . . 13,964 15,051 28,032 29,961 Maintenance . . . . . . . . . . . . . . . . . . . 2,755 3,918 4,895 6,517 Depreciation and amortization . . . . . . . . . . 6,328 6,206 12,525 12,450 Other general taxes . . . . . . . . . . . . . . . 2,203 2,130 4,448 4,346 Income tax items . . . . . . . . . . . . . . . . 2,293 1,085 7,934 5,621 Total Operating Expenses . . . . . . . . . . . 44,059 43,752 112,368 108,075 Net Operating Income . . . . . . . . . . . . . . . . 6,315 4,768 18,061 14,898 AFUDC - equity funds . . . . . . . . . . . . . . . . 16 15 26 37 Other income, net . . . . . . . . . . . . . . . . . . (741) 785 (2,420) 2,226 Income before interest expense . . . . . . . . . . . 5,590 5,568 15,667 17,161 Interest expense: Interest on long-term debt . . . . . . . . . . . 2,480 2,592 4,996 5,181 Other interest . . . . . . . . . . . . . . . . . 77 202 275 589 AFUDC - borrowed funds . . . . . . . . . . . . . (8) (8) (13) (19) Net Interest Expense . . . . . . . . . . . . . 2,549 2,786 5,258 5,751 Net Income . . . . . . . . . . . . . . . . . . . . . 3,041 2,782 10,409 11,410 Preferred stock dividends . . . . . . . . . . . . . . - - - 64 Earnings on common stock . . . . . . . . . . . . . . $ 3,041 $ 2,782 $ 10,409 $ 11,346 Earnings per share of common stock (Note 3) . . . . . $0.19 $0.17 $0.65 $0.71 STATEMENTS OF RETAINED INCOME Balance - beginning of period . . . . . . . . . . . . $66,774 $64,375 $64,499 $60,851 Earnings on common stock . . . . . . . . . . . . . . 3,041 2,782 10,409 11,346 Cash dividends on common stock (Note 3) . . . . . . . (5,093) (5,036) (10,186) (10,076) Balance - end of period . . . . . . . . . . . . . . . $64,722 $62,121 $64,722 $62,121 The accompanying notes are an integral part of the above statements.
Madison Gas and Electric Company and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOW (Thousands of Dollars) (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, 1996 1995 1996 1995 Operating Activities: Net income . . . . . . . . . . . . . . . . . . . $ 3,041 $2,782 $10,409 $11,410 Items not affecting cash: Depreciation and amortization . . . . . . . . . 6,328 6,206 12,525 12,450 Deferred income taxes . . . . . . . . . . . . . (672) (182) (1,699) (240) Amortization of nuclear fuel . . . . . . . . . 723 356 1,478 1,130 Amortization of investment tax credits . . . . (204) (192) (392) (389) AFUDC - equity funds . . . . . . . . . . . . . (16) (15) (26) (37) Other . . . . . . . . . . . . . . . . . . . . . 188 393 (2,793) 905 Net funds provided from Operations . . . . . 9,388 9,348 19,502 25,229 Changes in working capital, excluding cash equivalents, sinking funds, maturities, and interim loans: Decrease in current assets . . . . . . . . . . 9,526 8,117 13,866 14,652 Decrease in current liabilities . . . . . . . . (15,720) (5,983) (4,558) (3,038) Other noncurrent items, net . . . . . . . . . . . 4,634 (2,266) 9,819 19 Cash provided by Operating Activities . . . . . 7,828 9,216 38,629 36,862 Financing Activities: Cash dividends on common and preferred stock . . (5,093) (5,036) (10,186) (10,140) Maturities/redemptions of First Mortgage Bonds . (7,840) - (7,840) - Other increase/(decrease) in First Mortgage Bonds. 10 (71) 20 (242) Decrease in preferred stock . . . . . . . . . . . - - - (5,300) Decrease in bond construction funds, net . . . . - 1,734 - 3,493 (Decrease)/increase in interim loans . . . . . . 14,000 (2,500) (6,500) (16,100) Cash provided by/(used for) Financing Activities 1,077 (5,873) (24,506) (28,289) Investing Activities: Acquisition of nonregulated subsidiary . . . . . - - - (8,036) Sale of Superior Lamp, Inc . . . . . . . . . . . 201 - 201 - Additions to utility plant and nuclear fuel . . . (7,993) (3,993) (11,343) (8,086) AFUDC - borrowed funds . . . . . . . . . . . . . (8) (8) (13) (19) Increase in nuclear decommissioning fund . . . . (1,176) (1,089) (2,252) (1,982) Cash used for Investing Activities . . . . . . (8,976) (5,090) (13,407) (18,123) Change in Cash and Cash Equivalents (Note 5) . . . . (71) (1,747) 716 (9,550) Cash and cash equivalents at beginning of period . 3,631 3,731 2,844 11,534 Cash and cash equivalents at end of period . . . . $ 3,560 $1,984 $ 3,560 $ 1,984 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)
June 30, Dec. 31, 1996 1995 ASSETS Utility Plant, at original cost, in service: Electric . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $493,992 $489,399 Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175,950 173,890 Gross plant in service . . . . . . . . . . . . . . . . . . . . . . . . 669,942 663,289 Less accumulated provision for depreciation . . . . . . . . . . . . . . . (360,391) (348,254) Net plant in service . . . . . . . . . . . . . . . . . . . . . . . . . 309,551 315,035 Construction work in progress . . . . . . . . . . . . . . . . . . . . . . 8,545 9,061 Nuclear decommissioning fund (Note 2) . . . . . . . . . . . . . . . . . . 39,916 36,965 Nuclear fuel, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,486 6,172 Total Utility Plant . . . . . . . . . . . . . . . . . . . . . . . . . . 365,498 367,233 Other property and investments . . . . . . . . . . . . . . . . . . . . . . . 15,447 17,176 Current Assets: Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . 3,560 2,844 Accounts receivable, less reserves of $1,165 and $1,379, respectively . . 33,950 36,817 Unbilled revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,267 13,529 Materials and supplies, at average cost . . . . . . . . . . . . . . . . . 5,825 5,987 Fossil fuel, at average cost . . . . . . . . . . . . . . . . . . . . . . 2,664 2,986 Stored natural gas, at average cost . . . . . . . . . . . . . . . . . . . 4,418 6,203 Prepaid taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,841 5,846 Other prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,145 1,608 Total Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . 62,670 75,820 Deferred charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,581 33,647 Total Assets . . . . . . . . . . . . . . . . . $473,196 $493,876 CAPITALIZATION AND LIABILITIES Capitalization (see statement) . . . . . . . . . . . . . . . . . . . . . . . $322,427 $322,185 Current Liabilities: Long-term debt sinking fund requirements . . . . . . . . . . . . . . . . 200 200 Maturity of 5.45%, 1996 series . . . . . . . . . . . . . . . . . . . . . - 7,840 Interim loans - commercial paper outstanding . . . . . . . . . . . . . . 14,000 20,500 Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,802 25,928 Accrued taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 448 1,500 Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,324 2,359 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,558 7,903 Total Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . 47,332 66,230 Other Credits: Accumulated deferred income taxes . . . . . . . . . . . . . . . . . . . . 53,274 54,153 Regulatory liability . . . . . . . . . . . . . . . . . . . . . . . . . . 24,357 25,177 Investment tax credit - deferred . . . . . . . . . . . . . . . . . . . . 11,839 12,231 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,967 13,900 Total Other Credits . . . . . . . . . . . . . . . . . . . . . . . . . . 103,437 105,461 Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - Total Capitalization and Liabilities . . . . . . . . . . . . . . . . . $473,196 $493,876 The accompanying notes are an integral part of the above balance sheets.
Madison Gas and Electric Company and Subsidiaries CONSOLIDATED STATEMENTS OF CAPITALIZATION (Thousands of Dollars) (Unaudited)
June 30, Dec. 31, 1996 1995 Common Shareholders' Equity: Common stock - par value $1 per share: Authorized 50,000,000 shares Outstanding 16,079,718 shares . . . . . . . . . . . . . . . . . . . . . $ 16,080 $ 16,080 Amount received in excess of par value . . . . . . . . . . . . . . . . . 112,558 112,558 Retained income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,722 64,499 Total Common Shareholders' Equity . . . . . . . . . . . . . . . . . . . 193,360 193,137 Redeemable Preferred Stock cumulative, $25 par value, authorized 1,175,000, 0 shares outstanding . . . . . . . . . . . . . . . - - First Mortgage Bonds: 5.45%, 1996 series . . . . . . . . . . . . . . . . . . . . . . . . . . . - 7,840 6 1/2%, 2006 series: Pollution Control Revenue Bonds . . . . . . . . . . . . . . . . . . . . 7,075 7,075 8.50%, 2022 series . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000 40,000 6.75%, 2027A series: Industrial Development Revenue Bonds . . . . . . . . . . . . . . . . . 28,000 28,000 6.70%, 2027B series: Industrial Development Revenue Bonds . . . . . . . . . . . . . . . . . 19,300 19,300 7.70%, 2028 series . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000 25,000 First Mortgage Bonds Outstanding . . . . . . . . . . . . . . . . . . . 119,375 127,215 Unamortized discount and premium on bonds, net . . . . . . . . . . . . . (1,108) (1,127) Long-term debt sinking fund requirements . . . . . . . . . . . . . . . . (200) (200) Maturity of 5.45%, 1996 series . . . . . . . . . . . . . . . . . . . . . - (7,840) Total First Mortgage Bonds . . . . . . . . . . . . . . . . . . . . . . 118,067 118,048 Other Long-Term Debt: 6.01%, interest rate SWAP agreement . . . . . . . . . . . . . . . . . . . 11,000 11,000 Total Capitalization . . . . . . . . . . . . . . . . . . . . . . . . $322,427 $322,185 The accompanying notes are an integral part of the above statements.
Notes to Consolidated Financial Statements (Unaudited) June 30, 1996 The consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures made are adequate to make the information presented not misleading. In the opinion of Company management, all adjustments (consisting of only normal recurring adjustments) necessary to fairly present results have been made. It is suggested that these consolidated financial statements be read in conjunction with the financial statements and the notes thereto set forth on pages 20 through 25 of the Company's 1995 Annual Report to Shareholders and in the Company's 1995 Annual Report on Form 10-K. 1. Summary of Significant Accounting Policies The accounting and financial policies relative to the following items have been described in the "Notes to Consolidated Financial Statements" in the Company's 1995 Annual Report to Shareholders and have been omitted herein because they have not changed materially through the date of this report. a. General b. Utility plant c. Nuclear fuel d. Joint plant ownership e. Depreciation f. Income taxes g. Pension plans h. Postretirement benefits other than pensions i. Fair value of financial instruments j. Capitalization matters: common stock - stock split, redeemable preferred stock, other long-term debt, notes payable to banks, commercial paper, and lines of credit k. Rate matters l. Commitments m. Segments of business n. Regulatory assets and liabilities 2. Nuclear Decommissioning Nuclear decommissioning costs are accrued over the estimated service life of the Kewaunee Nuclear Power Plant (Kewaunee), which is through the year 2013. These costs are currently recovered from customers in rates and are deposited in external trusts. For 1996, the decommissioning costs recovered in rates will be $3.1 million. These trusts are shown on the balance sheet in the utility plant section, and as of June 30, 1996, these trusts totaled $39.9 million (fair market value). Decommissioning costs are recovered through depreciation expense, exclusive of earnings on the trusts. Net earnings on the trusts are included in other income. The long-term, after-tax earnings assumption on these trusts is 6.2 percent. As of June 30, 1996, the accumulated provision for depreciation included accumulated provisions for decommissioning totaling $39.9 million. The Company's share of Kewaunee decommissioning costs is estimated to be $67.9 million in current dollars based on a site-specific study performed in 1992 using immediate dismantlement as the method of decommissioning. Decommissioning costs are assumed to inflate at an average rate of 6.1 percent. Physical decommissioning is expected to occur during the period 2014 through 2021, with additional expenditures being incurred during the period 2022 through 2050 related to the storage of spent nuclear fuel at the site. 3. Per-Share Amounts Earnings per share of common stock are computed on the basis of the weighted average of the daily number of shares outstanding. For the three months and for the six months ended June 30, 1996 and 1995, there were 16,079,718 shares. Dividends declared and paid per share of common stock for the periods ended June 30, 1996 and 1995, were, respectively, for the three months $0.317 and $0.313; for the six months $0.634 and $0.626. Both the shares outstanding and the dividends per-share amounts reflect the Company's 3-for-2 stock split which was effective in the first quarter of 1996. 4. Capitalization Matters a. First Mortgage Bonds. The annual sinking fund requirements of the outstanding First Mortgage Bonds are $200,000 in 1996. As of June 30, 1996, $200,000 is still needed to satisfy the 1996 requirements. The 5.45%, First Mortgage Bonds, 1996 series matured on June 1, 1996, requiring funding of $7.8 million in short-term debt to retire this bond series. 5. Supplemental Cash Flow Information For purposes of the Consolidated Statements of Cash Flow, the Company considers cash equivalents to be those investments that are highly liquid with maturity dates of less than three months. Cash payments for interest, net of amounts capitalized, and income taxes were as follows: Three Months Six Months Ended Ended June 30, June 30, (Thousands of dollars) 1996 1995 1996 1995 Interest, net of amounts capitalized $4,078 $3,995 $5,338 $5,872 Income taxes paid $7,470 $6,980 $9,572 $8,980 6. Sale of Nonregulated Subsidiary In May 1996 the Company sold its 50 percent share in Superior Lamp Recycling, Inc., a jointly owned subsidiary of the Company and Superior Services, Inc., purchased during 1993. Superior Lamp recycles fluorescent lamps that are banned from landfills. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources The Company's internally generated funds were nearly 100 percent of the funds used for construction and nuclear fuel expenditures for the six-month period ended June 30, 1996. The Company experienced increased additions to utility plant and nuclear fuel expenditures during the first half of 1996 compared to 1995. It is anticipated that 1996 construction and nuclear fuel expenditures will be approximately $25 million. Cash provided by operating activities increased nearly $2 million, or 5 percent, during the first half of 1996 compared to 1995 due to an increase in the Company's working capital. Cash provided by operating activities during the second quarter of 1996 decreased more than $1 million, or 15 percent, compared to last year's second quarter. This is mainly attributable to the decrease in current liabilities due to the timing of the Company's payables and the maturity of the 5.45%, 1996 series, First Mortgage Bonds. Cash used for financing activities decreased $7 million for the three months ended June 30, 1996, compared to the same period a year ago. This was primarily attributed to an increase in the Company's short-term debt. Bank lines of credit available to the Company as of June 30, 1996, were $45 million, which includes $10 million for Great Lakes Energy Corp. (GLENCO), a wholly owned subsidiary of the Company, and American Energy Management Inc., a subsidiary of GLENCO. The Company's capitalization ratios were as follows: June 30, Dec. 31, 1996 1995 Common shareholders' equity 57.4% 55.1% Long-term debt* 38.4 39.1 Short-term debt 4.2 5.8 *Includes current maturities and current sinking fund requirements. The Company's bonds are currently rated Aa2 by Moody's Investors Service, Inc., and AA by Standard & Poor's Corporation. The Company's dealer-issued commercial paper carries the highest ratings assigned by Moody's and Standard & Poor's. Business Environment On May 1, 1995, Northern States Power Company and Wisconsin Energy Corporation announced a proposed merger. If approved, the two companies would form a holding company called Primergy Corporation, creating the tenth largest utility company in the United States. The merger has been approved by the shareholders of both companies. Various regulatory agency approval is required including the SEC, the Nuclear Regulatory Commission (NRC), the Federal Energy Regulatory Commission (FERC), and state regulatory agencies. The Company is opposing approval of the merger on the grounds that the merger would violate antitrust laws and principles. Hearings on the proposed merger have been concluded before the FERC. Hearings on the proposed merger are scheduled before the Wisconsin and Minnesota Public Service Commissions later this year. The outcome of this proposed merger and the impacts it may have on the Company are unknown at this time. Regulatory Environment The Public Service Commission of Wisconsin voted in December 1995 to carefully pursue the restructuring of the electric utility industry in Wisconsin. This approach is largely consistent with a plan developed and supported by the Company. The process included a report by the Commissioners to the legislature, a draft work plan, and a series of dockets and proceedings over the next three to seven years to implement the whole plan. It is unknown at this time what impact (if any) this plan will have on the Company. An order is expected some time this year regarding a docket that was opened to examine what changes are needed in the cost recovery mechanism for purchasing gas costs. Hearings have been concluded on this matter. No material changes are expected at this time. Results of Operations Electric Sales and Revenues Electric retail sales increased approximately 2.5 percent for the six-month period ended June 30, 1996, over the comparable period last year (see table). Electric Sales in Megawatt-Hours
Three Months Ended Six Months Ended June 30, June 30, 1996 1995 %Change 1996 1995 %Change Residential 156,825 156,625 0.13% 350,245 334,509 4.70% Large commercial and industrial 233,358 232,904 0.20 457,270 453,430 0.85 Small commercial and industrial 171,400 176,931 (3.13) 343,973 336,057 2.36 Other 82,712 78,831 4.92 155,958 151,268 3.10 Total retail 644,295 645,291 (0.15) 1,307,446 1,275,264 2.52 Sales for resale 5,704 3,101 83.94 14,863 13,909 6.86 Total sales 649,999 648,392 0.25 1,322,309 1,289,173 2.57
Electric operating revenues increased about $1.5 million, or 2 percent, as compared to the same period in 1995, even though cooling degree days for the first half of 1996 decreased 43 percent. The increases were due to an increase in the electric customer base. Total sales and electric operating revenues for the three-month period ended June 30, 1996, remained relatively flat compared with the same period last year. Gas Sales and Revenues For the six months ended June 30, 1996, gas operating revenues increased approximately $6 million, or 11 percent, compared with the same period in 1995. This increase in revenues is due to colder weather experienced in the first half of the year, causing total deliveries to increase nearly 10 percent (see table), and higher unit gas costs, which are passed on to customers through the purchased gas adjustment clause. The heating degree days (HDD) for the six months ended June 30, 1996, measured by the number of degrees the mean daily temperature is below 65 degrees Fahrenheit, were 5,029 HDD compared to 4,291 HDD for the same period last year, a 17 percent increase in HDD. For the three months ended June 30, 1996, gas revenues increased about $2 million, or 15 percent, compared to last year. Again, this can be directly attributed to the cooler weather experienced in this year's second quarter compared to last year's. The average temperature for the second quarter of 1996 was approximately four degrees cooler than last year's second quarter. The following table illustrates gas deliveries as compared to the previous year: Gas Deliveries in Thousands of Therms
Three Months Ended Six Months Ended June 30, June 30, 1996 1995 %Change 1996 1995 %Change Residential 14,321 12,533 14.26% 59,003 50,717 16.34% Commercial and Industrial 13,245 13,930 (4.92) 52,476 51,338 2.22 Total retail 27,566 26,463 4.17 111,479 102,055 9.23 Transport 10,127 9,516 6.42 19,436 16,641 16.80 Total deliveries 37,693 35,979 4.76 130,915 118,696 10.29
Electric Fuel and Natural Gas Costs Fuel costs for electric generation and purchased power decreased less than 1 percent for the second quarter of 1996 compared to last year's second quarter. Fuel costs and purchased power increased approximately $0.5 million, or 3 percent, for the six-month period ended June 30, 1996, as compared to last year. This is primarily due to an increase in the cost of purchased power caused by increases in the cost of capacity purchases. This was somewhat offset with increased low-cost generation at Kewaunee. Natural gas costs for the six-month period ended June 30, 1996, increased nearly $5 million, or 15 percent, compared to the same period a year ago. This is due mainly to the higher demand resulting from the cold weather experienced during the first half of the year. Natural gas costs for the three months ended June 30, 1996, versus the comparative period in 1995 increased just over $1 million, or 18 percent. This is due mainly to the cooler weather experienced this spring and an increased cost-per-therm of nearly 16 percent. Other Operating Expenses Income taxes increased for both the three- and six-month periods ended June 30, 1996, compared to the same periods last year. For the three months ended, income taxes increased about $1 million, or 111 percent, and for the six months ended, income taxes increased around $2 million, or 41 percent. This is due to an increase in pretax operating income for both periods. Operations and maintenance costs decreased over $2 million, or 12 percent, for the second quarter of 1996 and decreased nearly $4 million, or 10 percent, for the first half of the year compared to the same periods a year ago. The primary reasons for the decrease are continued cost-control efforts throughout the Company and the conversion from a 12-month to an 18-month fuel cycle at Kewaunee. During 1995, Kewaunee was on a 12-month fuel cycle with the outage occurring in the second quarter, increasing operations and maintenance expenses. Due to the conversion, these operations and maintenance expenses will shift from the second quarter to the fourth quarter of this year. Other Items Interest expense decreased in both the three- and six-month periods ended June 30, 1996, when compared to the same periods a year ago. This is due to lower levels of short-term debt outstanding during the 1996 periods compared to 1995. Other income decreased approximately $5 million for the six-month period ended June 30, 1996, primarily due to the Company's unregulated gas marketing subsidiaries. In the first quarter of 1996, extremely cold weather caused natural gas supply prices to substantially rise. Because of this demand for natural gas, gas marketing companies were forced to pay premium prices to fill customer orders. High natural gas prices continued through the second quarter making some contracts unprofitable. PART II. OTHER INFORMATION Item 5 Other Information Kewaunee is operated by Wisconsin Public Service Corporation. The Company has a 17.8 percent ownership interest in Kewaunee which it owns jointly with two other utilities. Kewaunee is operating with a license that expires in 2013. Operating and maintenance costs at Kewaunee have been reduced more than 25 percent over the last three years. Continued reduction of costs, while not sacrificing safety and reliability, is planned to keep Kewaunee costs competitive in the near future. The NRC recently rated Kewaunee superior (Category 1) in all areas: maintenance, operations, engineering, and plant support. The steam generator tubes at Kewaunee are susceptible to corrosion characteristics seen throughout the nuclear industry. The owners of Kewaunee are continuing to evaluate various economic alternatives to deal with the potential future loss of capacity resulting from the continuing degradation of the steam generator tubes. These alternatives range from repairing/replacing the existing steam generators to early plant closure with replacement power options. Replacement of steam generators is estimated to cost $100 million (the Company's share would be 17.8 percent), excluding additional purchased power costs associated with an extended shutdown. The Company is evaluating the need to accelerate the collection of funds through rates for decommissioning and the recovery of the existing net plant investment. Item 6(a) Exhibits Exhibit 4 - Indenture of Mortgage and Deed of Trust between the Company and Firstar Trust Company, as Trustee (and supplements). Reference was provided in the Company's 1995 Annual Report on Form 10-K (Commission File No. 0-1125). Exhibit 12 - Ratio of Earnings to Fixed Charges. Exhibit 27 - Appendix E to Item 601(c) of Regulation S-K: Public Utility Companies Financial Data Schedule UT. Exhibit Page Exhibit 4 NA Exhibit 12 16 Exhibit 27 17 Item 6(b) Reports on Form 8-K No reports on 8-K were filed during the quarter for which this report is filed. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MADISON GAS AND ELECTRIC COMPANY (Registrant) Date: August 13, 1996 /s/ David C. Mebane David C. Mebane Chairman, President and Chief Executive Officer (Duly Authorized Officer) Date: August 13, 1996 /s/ Joseph T. Krzos Joseph T. Krzos Vice President - Finance (Chief Financial and Accounting Officer) EX-27 2
UT This schedule contains summary financial information extracted from SEC Form 10-Q. Items 1 through 22 are as of June 30, 1996. Items 23 through 38 are for the six months ended June 30, 1996. 1,000 6-MOS DEC-31-1996 JUN-30-1996 PER-BOOK 365,498 15,447 62,670 29,581 0 473,196 16,080 112,558 64,722 193,360 0 0 129,067 14,000 0 0 200 0 0 0 136,569 473,196 130,429 7,934 104,434 112,368 18,061 (2,394) 15,667 5,258 10,409 0 10,409 (10,186) 0 38,629 0.65 0
EX-12 3 Ratio of Earnings to Fixed Charges Exhibit 12 Six Months Ended June 30, 1996 (000s) Earnings Income before interest expense . . . . . $15,667 Add: Income tax items . . . . . . . . . . . . 7,934 Income tax on other income . . . . . . . 320 Amortization of debt discount, premium expense . . . . . . . . . . . . . . . . . 144 AFUDC - borrowed funds . . . . . . . . . 13 Interest on rentals . . . . . . . . . . . 149 Total Earnings . . . . . . . . . . . . . $24,227 Fixed Charges Interest on long-term debt . . . . . . . $ 4,996 Other interest . . . . . . . . . . . . . 275 Amortization of debt discount, premium expense . . . . . . . . . . . . . . . . . 144 Interest on rentals . . . . . . . . . . . 149 Total Fixed Charges . . . . . . . . . . $ 5,564 Ratio of Earnings to Fixed Charges . . . 4.35x -----END PRIVACY-ENHANCED MESSAGE-----