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Jefferson Utilities
Management Discussion and Analysis
December 31, 2003 and 2002
The management of the Jefferson Utilities Commission offers all persons interested in the financial position
of the utilities an objective, easy to read overview and analysis of the utilities’ financial performance during
the year ending December 31, 2003. You are invited to read this narrative in conjunction with the utilities’
financial statements.
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Financial Highlights

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The water utility plant increased by $608,000 from the prior year. This was mainly due to the
replacement of water main, water services and hydrants on S. Center Ave., S. Highland Ave. and E.
Green St.

The electric utility plant increased by $201,000 from the prior year. This was mainly due to the
upgrade of the utilities’ electric distribution system.

The utility is in the process of expanding the Crawfish River Substation. The total expected project
cost is $627,000, with $560,000 expended by year end. The project is being funded by investments
on hand.

The water utility’s operating revenues decreased by $18,000 or about 2% due to the decrease in water
sold by 25 million gallons in the industrial class.

The water utility’s operating expenses decreased by $90,000 or about 16%. The decrease was due to
the final payment of the painting of the south water tower in 2002.

The electric utility’s operating revenues, generated mostly by user fees, decreased by $744,000 or
about 9% due to the decrease in sales to industrial customers. Total kwh sold decreased by 11%.

The electric utility’s operating expenses decreased by $636,000 or about 9%. Most of the decrease
was due to purchased power costs being less.

Total investment income for the utilities decreased $16,000 or 28% in 2003 because of the lower
interest rates and use of investments for the substation project.
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Overview of the Financial Statement
The utilities (water and electric) are self-supporting entities and separate enterprise funds of the City of
Jefferson. The utilities provide electric and water to properties within the City of Jefferson and some
areas of the Jefferson and Aztalan townships.
Jefferson Utilities
Management Discussion and Analysis
December 31, 2003 and 2002
The utilities is managed by a Utility Commission and operates under service rules and rates that are
established by the Public Service Commission of Wisconsin (PSC). The accounting records are
maintained in accordance with the Uniform System of Accounts prescribed by the PSC, and in
accordance with the Governmental Accounting Standards Board.
The annual report consists of two parts: Management’s Discussion and Analysis and the basic financial
statements as well as the independent auditor’s report.
An analysis of the utilities’ financial position begins with a review of the Statement of Net Assets, and
the Statement of Revenues, Expenses and Changes in Net Assets. These two statements report the
utilities’ net assets and changes therein. The utility’s net assets – ‘the difference between assets and
liabilities’ is the key to measuring the financial health of the utility. Over time, increases or decreases in
the net asset value are an indicator of whether the financial position is improving or deteriorating.
However, it should be noted that the financial position may also be affected by other non-financial
factors, including economic conditions, customer growth, climate conditions and new regulations.
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Utility Financial Analysis
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The Statement of Net Assets includes all of the utilities’ assets and liabilities and provides information
about the nature and amount of investments in resources and the obligations to creditors. This statement
provides the basis for evaluating the capital structure and assessing the liquidity and financial flexibility
of the utilities.
A summary of the utilities’ Statement of Net Assets is presented below in Tables 1.
Jefferson Utilities
Management’s Discussion and Analysis
December 31, 2003 and 2002
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Utility Financial Analysis (cont.)
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Table 1
Condensed Statement of Net Assets
2003
2002
Dollar
Change
2,911,140
15,335,745
18,246,885
3,379,463
14,469,289
17,848,752
-468,323
866,456
398,133
Outstanding Long-term Debt
Other Liabilities
Total Liabilities
4,010,000
930,379
4,940,379
4,225,000
898,448
5,123,448
-215,000
31,931
(183,069)
Investing in Capital Assets,
Net of Related Debt
-Restricted for Debt Service
-Unrestricted
11,675,951
305,160
1,325,395
10,640,976
300,798
1,783,530
1,034,975
4,362
-458,135
Total Net Assets
13,306,506
12,725,304
581,202
Current and Other Assets
Capital Assets
Total Assets
As can be seen from the above table, Jefferson Utilities’ assets increased $398,000 in 2003. The increase in
net assets of $581,000 is primarily due to the increase in capital assets and decrease in long-term debt.
The restricted portion of net assets include accounts that are limited by bond covenants. Listed below are
restricted assets:
Redemption - Used for debt service payments
Reserve
- Used for any deficiencies in the redemption account
Depreciation - Used to restore deficiencies in the redemption and reserve accounts,
And for funding plant replacements.
Construction - Bond issue monies used only for the restricted construction project.
The specific nature or source of these changes becomes more evident in the Condensed Statement of
Revenues, Expenses and Changes in Net Assets as shown in Table 2.
Jefferson Utilities
Management’s Discussion and Analysis
December 31, 2003 and 2002
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Utility Financial Analysis (cont.)
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Table 2
Condensed Statement of Revenues,
Expenses and Changes in Net Assets
2003
2002
Dollar
Change
Operating Revenues
Non-Operating Revenues
Total Revenues
8,453,856
46,358
8,500,213
9,215,987
665,224
9,281,211
-762,132
- 18,866
-780,998
Depreciation Expenses
Other Operating Expenses
Non-Operating Expenses
Total Expenses
548,734
7,046,672
262,336
7,857,742
550,458
7,765,307
289,123
8,604,888
- 1,724
-718,635
- 26,787
-747,146
642,471
676,323
- 33,852
287,573
-348,842
12,945
-336,674
274,628
- 12,168
581,202
352,594
228,608
12,725,304
12,372,710
352,594
13,306,506
12,725,304
581,202
Income Before Capital
Contributions
Capital Contributions
Transfers – Tax Equivalent
Changes in Net Assets
Beginning Net Assets
Total Net Assets – Ending
The utilities operating revenues decrease is due to decreased consumption by our two largest industrial
customers.
Jefferson Utilities
Management’s Discussion and Analysis
December 31, 2003 and 2002
Comparison of Water Revenues
500,000
400,000
300,000
2002
200,000
2003
100,000
0
Res.
Comm.
Ind.
Private
Fire
Public
Authority
Other
The average annual customers increased by 36 in 2003; but with the decrease by over 25 million gallons in
industrial sales, revenues decreased $18,463 or 1.88% in 2003.
Comparison of Electric Revenues
4,000,000
3,000,000
2,000,000
2002
1,000,000
2003
0
Res.
Comm.
Ind.
Lg.
Power
Sm. St. Lights Indept.
Power
Other
Sales of electricity decreased $706,786 or 8.68% in 2003. The number of customers increased by 353 in
2003. The decrease again results from reduced usage by the two largest industrial customers.
Jefferson Utilities
Management’s Discussion and Analysis
December 31, 2003 and 2002
Comparison of Water Expenses
200,000
150,000
100,000
2002
50,000
2003
0
Pumping
Water
Treatment
T&D
Customer
Accts.
Sales Exp. Adm. & Gen.
Deprec.
Taxes
Water operating expenses decreased by $94,761 or 12.83% in 2003 mainly due to the final payment for
the painting of the south water tower and use of outside engineering costs.
Comparison of Electric Expenses
400,000
300,000
200,000
2002
100,000
2003
0
Distribution
Cust. Accts.
Sales Exp.
Adm. & Gen.
Deprec.
Taxes
Electric operating expenses decreased by $625,598 or 8.26% in 2003. Purchased power expense, not
shown in the above graph, went down from $6,477,706 in 2002 to $5,807,913 in 2003. Purchased
Power directly corresponds to the amount of energy sold. The remaining electric operating expenses
actually increased by $44,195 of 4%.
Jefferson Utilities
Management’s Discussion and Analysis
December 31, 2003 and 2002
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Utility Financial Analysis (cont.)
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The Statement of Cash Flows reports the cash provided and used by operating activities, as well as other cash
sources such as investment income and cash payments for repayment of bonds and capital additions.
Table 3
Condensed Statement of Cash Flows
2003
Cash & Cash Equivalents
Beginning of Year:
2002
Dollar
Change
905,034
848,755
56,279
1,560,107
-336,674
-1,634,441
542,985
1,454,735
-322,532
-1,333,326
257,402
105,372
-14,142
-301,115
285,583
131,977
56,279
75,698
Cash & Cash Equivalents
End of Year:
1,037,011
905,034
131,977
Investments
End of Year:
1,000,000
1,500,000
-500,000
Total Cash & Investment
End of Year:
2,037,011
2,405,034
-368,023
Cash Flows From:
Operating Income
Noncapital Financing
Capital Financing
Investing
Net Change in Cash
and Cash Equivalents
The primary reason for the decrease in total cash and investments is the use of funds for the Crawfish River
Substation transformer and the water system replacements.
Jefferson Utilities
Management’s Discussion and Analysis
December 31, 2003 and 2002
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Long-Term Debt
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As of December 31, 2003, the utility has total revenue bond debt outstanding of $4,010,000 secured by a
pledge of income and revenue to be derived from the operation of the utility. This issue was for the
construction of the Crawfish Substation in 1998. The original debt was $6,000,000.
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Currently Known Facts/Economic Conditions
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The Jefferson Utilities has maintained project and financial planning in keeping pace with the City’s growth.
Recent capital additions include a substation expansion, well and water tower. Infrastructure in new
subdivisions and developments is contributed by the developer. Rate structures are consistently reviewed.
The decrease in industrial electric and water sales resulted mostly from a labor strike at the largest utility
customer. This strike was settled in early 2004.
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Contacting Utilities’ Financial Management
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This financial report is designed to provide our customers and creditors with a general overview of the
utilities’ finances. If you have questions about this report, or need additional financial information, contact
Jefferson Utilities, 425 Collins Rd., P.O. Box 396, Jefferson, WI 53549 (920-674-7711).
General information relating to the Jefferson Utilities can be found at the utilities web site
www.jeffersonutilities.com