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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 September 30, 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 October 25, 2004, all of the member’s equity of MidAmerican Funding, LLC was held by its parent company, MidAmerican Energy Holdings Company.

As of October 25, 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 subsidiary, MidAmerican Energy makes no representation as to information relating to any other subsidiary of MidAmerican Funding.



TABLE OF CONTENTS



 
Part I - Financial Information
  
     
Item 1.
Financial Statements
 3
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
 24
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
38
Item 4.
Controls and Procedures
38
   
 
 
Part II - Other Information
  
     
Item 1.
Legal Proceedings
39
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
39
Item 3.
Defaults Upon Senior Securities
39
Item 4.
Submission of Matters to a Vote of Security Holders
39
Item 5.
Other Information
39
Item 6.
Exhibits
39
Signatures
   40
Exhibit Index
   41
 

2

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.


MidAmerican Energy Company
  
   
Report of Independent Registered Public Accounting Firm
 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
  
   
Report of Independent Registered Public Accounting Firm
 16
Consolidated Balance Sheets
 17
Consolidated Statements of Operations
 18
Consolidated Statements of Cash Flows
 19
Notes to Consolidated Financial Statements
 20

 
3

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the 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 September 30, 2004, and the related consolidated statements of operations for the three-month and nine-month periods ended September 30, 2004 and 2003, and of cash flows for the nine-month periods ended September 30, 2004 and 2003. These interim financial statements are the responsibility of the Company's management.

We conducted our reviews in accordance with standards of the Public Company Accounting Oversight Board (United States). 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 standards of the Public Company Accounting Oversight Board (United States), 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 standards of the Public Company Accounting Oversight Board (United States), 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 b alance sheet from which it has been derived.


/s/ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP
Des Moines, Iowa
November 1, 2004
 
4
 
MIDAMERICAN ENERGY COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands)

   
As of
  
   
September 30,
  
December 31,
  
   
2004
  
2003
  
   
(Unaudited)
      
ASSETS
  
Utility Plant, Net
              
Electric
  
$
5,158,793
  
$
5,030,960
  
Gas
    
947,801
    
922,099
  
     
6,106,594
    
5,953,059
  
Accumulated depreciation and amortization
    
(2,946,206
)
  
(2,810,336
)
     
3,160,388
    
3,142,723
  
Construction work in progress
    
465,945
    
217,537
  
     
3,626,333
    
3,360,260
  
               
Current Assets
              
Cash and cash equivalents
    
40,231
    
3,151
  
Receivables, net
    
218,691
    
300,643
  
Inventories
    
97,650
    
85,465
  
Other
    
45,609
    
42,459
  
     
402,181
    
431,718
  
               
Investments and Nonregulated Property, Net
    
319,709
    
299,103
  
Regulatory Assets
    
258,601
    
261,696
  
Other Assets
    
87,817
    
51,657
  
               
Total Assets
  
$
4,694,641
  
$
4,404,434
  
 
CAPITALIZATION AND LIABILITIES
Capitalization
              
Common shareholder’s equity
  
$
1,476,941
  
$
1,318,519
  
MidAmerican Energy preferred securities
    
30,329
    
31,759
  
Long-term debt, excluding current portion
    
982,269
    
1,072,496
  
     
2,489,539
    
2,422,774
  
Current Liabilities
              
Notes payable
    
-
    
48,000
  
Current portion of long-term debt
    
90,629
    
56,151
  
Accounts payable
    
186,724
    
198,273
  
Taxes accrued
    
23,184
    
72,558
  
Interest accrued
    
14,370
    
10,235
  
Other
    
81,120
    
67,160
  
     
396,027
    
452,377
  
Other Liabilities
              
Deferred income taxes
    
505,387
    
415,788
  
Investment tax credits
    
49,232
    
52,510
  
Asset retirement obligations
    
280,704
    
269,124
  
Regulatory liabilities
    
664,185
    
574,490
  
Other
    
309,567
    
217,371
  
     
1,809,075
    
1,529,283
  
               
Total Capitalization and Liabilities
  
$
4,694,641
  
$
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
  
Nine Months
  
   
Ended September 30,
  
Ended September 30,
  
   
2004
  
2003
  
2004
  
2003
  
       

 (Unaudited)

      
                           
Operating Revenues
                          
Regulated electric
  
$
391,751
  
$
422,565
  
$
1,099,310
  
$
1,066,794
  
Regulated gas
    
117,190
    
110,882
    
684,430
    
679,736
  
Nonregulated
    
56,312
    
42,554
    
195,416
    
180,550
  
     
565,253
    
576,001
    
1,979,156
    
1,927,080
  
                           
Operating Expenses
                          
Regulated:
                          
Cost of fuel, energy and capacity
    
91,798
    
123,261
    
305,472
    
294,133
  
Cost of gas sold
    
82,490
    
76,125