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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q


Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2004


Commission
 
Registrant’s Name, State of Incorporation,
 
IRS Employer
File Number
 
Address and Telephone Number
 
Identification No.
 
333-90553
 
MIDAMERICAN FUNDING, LLC
 
47-0819200
 
 
(An Iowa Limited Liability Company)
 
 
 
 
666 Grand Ave. PO Box 657
 
 
 
 
Des Moines, Iowa 50303
 
 
 
 
515-242-4300
 
 
 
1-11505
 
MIDAMERICAN ENERGY COMPANY
 
42-1425214
 
 
(An Iowa Corporation)
 
 
 
 
666 Grand Ave. PO Box 657
 
 
 
 
Des Moines, Iowa 50303
 
 
 
 
515-242-4300
 
 

Indicate by check mark whether the registrants (1) have 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 (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes [X]    No [ ]

Indicate by check mark whether the registrants are accelerated filers (as defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]

As of April 26, 2004, all of the member’s equity of MidAmerican Funding, LLC was held by its parent company, MidAmerican Energy Holdings Company.

As of April 26, 2004, all 70,980,203 outstanding shares of MidAmerican Energy Company’s voting stock were held by its parent company, MHC Inc., a direct, wholly owned subsidiary of MidAmerican Funding, LLC.
 

 
     
 

MidAmerican Funding, LLC ("MidAmerican Funding") and MidAmerican Energy Company ("MidAmerican Energy") separately file this combined Form 10-Q. Information relating to each individual registrant is filed by such registrant on its own behalf. Except for its subsidiaries, MidAmerican Energy makes no representation as to information relating to any other subsidiary of MidAmerican Funding.
 
TABLE OF CONTENTS
 

 PART I - FINANCIAL STATEMENTS

     
Item 1.  Financial Statements

 3

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations

 23

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

 34

Item 4.  Controls and Procedures

  34

     

 PART II - OTHER INFORMATION

  
     
Item 1.  Legal Proceedings

35

Item 2.  Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities

 35

Item 3.  Defaults Upon Senior Securities

 35

Item 4.  Submission of Matters to a Vote of Security Holders

35

Item 5.  Other Information

36

Item 6.  Exhibits and Reports on Form 8-K

 36

     
SIGNATURES

 37

EXHIBIT INDEX

 38

 
 
 
  2  
 

PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements.

 
 
  Page
 
MidAmerican Energy Company
Independent Accountants' Report
4
Consolidated Balance Sheets
5
Consolidated Statements of Operations
6
Consolidated Statements of Cash Flows
7
Notes to Consolidated Financial Statements
8
 
 
MidAmerican Funding, LLC
Independent Accountants' Report
15
Consolidated Balance Sheets
16
Consolidated Statements of Operations
17
Consolidated Statements of Cash Flows
18
Notes to Consolidated Financial Statements
19

 
  3  
 

INDEPENDENT ACCOUNTANTS' REPORT


Board of Directors and Shareholder
MidAmerican Energy Company
Des Moines, Iowa

We have reviewed the accompanying consolidated balance sheet of MidAmerican Energy Company and subsidiary (the “Company”) as of March 31, 2004, and the related consolidated statements of operations and cash flows for the three-month periods ended March 31, 2004 and 2003. These interim financial statements are the responsibility of the Company's management.

We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to such consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet and statement of capitalization (not presented herein) of MidAmerican Energy Company and subsidiary as of December 31, 2003, and the related consolidated statements of operations, comprehensive income, retained earnings, and cash flows for the year then ended (not presented herein); and in our report dated February 9, 2004 (March 1, 2004 as to Notes (1)(b), (1)(c), (1)(j) and (12)), we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2003 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.


/s/ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP
Des Moines, Iowa
April 30, 2004

 
  4  
 
 
MIDAMERICAN ENERGY COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands)

 
  
As of
   
     
March 31, 
  

December 31, 

  
     
2004 
  

 2003 

  
 

 

     
(Unaudited) 
  

 ASSETS

Utility Plant, Net
    
 
    
 
  
Electric
  
$
5,070,399
  
$
5,030,960
  
Gas
    
927,615
    
922,099
  
   
 
    
5,998,014
    
5,953,059
  
Accumulated depreciation and amortization
    
(2,864,131
)
  
(2,810,336
)
   
 
 
 
    
3,133,883
    
3,142,723
  
Construction work in progress
    
289,098
    
217,537
  
   
 
 
 
    
3,422,981
    
3,360,260
  
   
 
 
 
    
 
    
 
  
Current Assets
    
 
    
 
  
Cash and cash equivalents
    
60,675
    
3,151
  
Receivables, net
    
322,345
    
300,643
  
Inventories
    
28,202
    
85,465
  
Other
    
36,371
    
42,459
  
   
 
 
 
    
447,593
    
431,718
  
   
 
 
 
    
 
    
 
  
Investments and Nonregulated Property, Net
    
313,657
    
299,103
  
Regulatory Assets
    
289,535
    
261,696
  
Other Assets
    
55,987
    
51,657
  
   
 
 
 
    
 
    
 
  
Total Assets
  
$
4,529,753
  
$
4,404,434
  
   
 
 
 
CAPITALIZATION AND LIABILITIES
Capitalization
    
 
    
 
  
Common shareholder’s equity
  
$
1,382,837
  
$
1,318,519
  
MidAmerican Energy preferred securities
    
30,329
    
31,759
  
Long-term debt, excluding current portion
    
982,093
    
1,072,496
  
   
 
 
 
    
2,395,259
    
2,422,774
  
 
 
 
Current Liabilities
    
 
    
 
  
Notes payable
    
-
    
48,000
  
Current portion of long-term debt
    
146,518
    
56,151
  
Accounts payable
    
185,351
    
198,273
  
Taxes accrued
    
71,966
    
72,558
  
Interest accrued
    
15,912
    
10,235
  
Other
    
101,914
    
67,160
  
 
 
 
 
    
521,661
    
452,377
  
 
 
 
Other Liabilities
    
 
    
 
  
Deferred income taxes
    
450,681
    
415,788
  
Investment tax credits
    
51,418
    
52,510
  
Asset retirement obligations
    
272,930
    
269,124
  
Regulatory liabilities
    
603,556
    
574,490
  
Other
    
234,248
    
217,371
  
   
 
 
 
    
1,612,833
    
1,529,283
  
   
 
 
 
    
 
    
 
  
Total Capitalization and Liabilities
  
$
4,529,753
  
$
4,404,434
  
   
 
 

The accompanying notes are an integral part of these financial statements.
 
 
  5  
 
 
MIDAMERICAN ENERGY COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)

 
 
  
Three Months
 
  
Ended March 31,
   
     
2004 
    
2003 
  
   
 
 
     
(Unaudited) 
  
Operating Revenues
    
 
    
 
  
Regulated electric
  
$
363,184
  
$
314,942
  
Regulated gas
    
393,571
    
413,779
  
Nonregulated
    
83,177
    
86,475
  
   
 
 
 
    
839,932
    
815,196
  
   
 
 
 
    
 
    
 
  
Operating Expenses
    
 
    
 
  
Regulated:
    
 
    
 
  
  Cost of fuel, energy and capacity
    
114,613
    
88,418
  
  Cost of gas sold
    
310,775
    
329,527
  
  Other operating expenses
    
87,013
    
82,648
  
  Maintenance
    
32,933
    
28,282
  
  Depreciation and amortization
    
82,528
    
68,485
  
  Property and other taxes
    
21,662
    
20,557
  
   
 
 
 
    
649,524
    
617,917
  
   
 
 
Nonregulated:
    
 
    
 
  
  Cost of sales
    
74,804
    
77,389
  
  Other
    
4,155
    
3,732
  
   
 
 
 
    
78,959
    
81,121
  
   
 
 
  Total operating expenses
    
728,483
    
699,038
  
   
 
 
 
    
 
    
 
  
Operating Income
    
111,449
    
116,158
  
   
 
 
 
    
 
    
 
  
Non-Operating Income
    
 
    
 
  
Interest and dividend income
    
599
    
1,126
  
Other income
    
4,365
    
4,438
  
Other expense
    
(761
)
  
(349
)
   
 
 
 
    
4,203
    
5,215
  
   
 
 
Fixed Charges
    
 
    
 
  
Interest on long-term debt
    
17,579
    
18,558
  
Other interest expense
    
1,237
    
1,019
  
Allowance for borrowed funds
    
(1,322
)
  
(1,591
)
   
 
 
 
    
17,494
    
17,986
  
   
 
 
 
    
 
    
 
  
Income Before Income Taxes
    
98,158
    
103,387
  
Income Taxes
    
33,271
    
44,695
  
   
 
 
Net Income
    
64,887
    
58,692
  
Preferred Dividends
    
309
    
437
  
   
 
 
 
    
 
    
 
  
Earnings on Common Stock
  
$
64,578
  
$
58,255
  
   
 
 

The accompanying notes are an integral part of these financial statements.
 
 
  6  
 
 
MIDAMERICAN ENERGY COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

 
  
Three Months