Condensed Parent Company Financial Statements

12 Months Ended

Dec. 31, 2013

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Parent Company Financial Statements

Schedule I
Condensed Parent Company Financial Statements
MGE Energy, Inc.
Statements of Comprehensive Income
(Parent Company Only)
(In thousands)
		For the years ended December 31,
		2013		2012		2011
Operating Expenses:
Other operations and maintenance	$	613	$	649	$	718
Total Operating Expenses		613		649		718
Operating Loss		(613)		(649)		(718)
Equity in earnings of investments		76,362		65,132		61,075
Other income/(loss), net		(1,863)		(496)		505
Other interest		55		45		(22)
Income before income taxes		73,941		64,032		60,840
Income tax provision		964		414		88
Net Income		74,905		64,446		60,928
Other Comprehensive Income (Loss), Net of Tax:
Unrealized gain (loss) on available-for-sale securities, net of
tax ($189, $12, and $10)		283		(18)		(15)
Reclassification of realized gain on available-for-sale
securities, net of tax ($-, $-, and $10)		0		0		(15)
Comprehensive Income	$	75,188	$	64,428	$	60,898
The accompanying notes are an integral part of the above consolidated financial statements.

MGE Energy, Inc.
Statements of Cash Flows
(Parent Company Only)
(In thousands)
		For the years ended December 31,
		2013		2012		2011
Net Cash Flows Provided by Operating Activities	$	53,952	$	49,819	$	50,696
Investing Activities:
Return of investment - affiliates		0		0		30,000
Other investing		(2,425)		(1,558)		(3,022)
Cash Provided by (Used for) Investing Activities		(2,425)		(1,558)		26,978
Financing Activities:
Cash dividends paid on common stock		(37,107)		(35,951)		(35,026)
Change in short-term debt		0		0		(19,000)
Other financing		(97)		(49)		0
Cash Used for Financing Activities		(37,204)		(36,000)		(54,026)
Change in Cash and Cash Equivalents:		14,323		12,261		23,648
Cash and cash equivalents at beginning of period		36,881		24,620		972
Cash and cash equivalents at end of period	$	51,204	$	36,881	$	24,620
The accompanying notes are an integral part of the above consolidated financial statements.

Schedule I
Condensed Parent Company Financial Statements (continued)
MGE Energy, Inc.
Balance Sheets
(Parent Company Only)
(In thousands)
		At December 31,
ASSETS		2013		2012
Current Assets:
Cash and cash equivalents	$	51,204	$	36,881
Accounts receivable, net:
Accounts receivable from affiliates		125		795
Prepaid taxes and other		1,015		451
Total Current Assets		52,344		38,127
Other deferred assets and other		157		129
Investments:
Investments in affiliates		583,435		556,911
Other investments		948		787
Total Investments		584,383		557,698
Total Assets	$	636,884	$	595,954
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable to affiliates	$	530	$	603
Accrued taxes		4,297		4,164
Other current liabilities		3,076		1,148
Total Current Liabilities		7,903		5,915
Other Credits:
Deferred income taxes		5,646		4,228
Accounts payable to affiliates		5,825		6,382
Total Other Credits		11,471		10,610
Shareholders' Equity:
Common shareholders' equity		350,936		350,936
Retained income		266,197		228,399
Other comprehensive income		377		94
Total Shareholders' Equity		617,510		579,429
Commitments and contingencies (see Footnote 18)		0		0
Total Liabilities and Shareholders' Equity	$	636,884	$	595,954
The accompanying notes are an integral part of the above consolidated financial statements.

Schedule I

Condensed Parent Company Financial Statements (continued)

Notes to Condensed Financial Statements

(Parent Company Only)

1.       Basis of Presentation.

MGE Energy is a holding company and conducts substantially all of its business operations through its subsidiaries. For Parent Company only presentation, investment in subsidiaries are accounted for using the equity method. These condensed Parent Company financial statements and related notes have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X. These statements should be read in conjunction with the financial statements and the notes in Item 8. Financial Statements and Supplementary Data of the Annual Report on Form 10-K for the year ended December 31, 2013.

2.       Credit Agreements.

As of December 31, 2013, MGE Energy had access to an unsecured, committed credit facility with aggregate bank commitments of $50.0 million. At December 31, 2013, no borrowings were outstanding under this facility.

See Footnote 10 of the Notes to Consolidated Financial Statements for further information regarding MGE Energy's credit agreements.

3.       Commitments and Contingencies.

See Footnote 18 of the Notes to Consolidated Financial Statements for commitments and contingencies.

4.       Dividends from Affiliates.

		Dividends from Affiliates
(In thousands)		2013		2012		2011
MGE	$	25,000	$	20,404	$	26,648
MGE Construct		0		239		0
MGE Power Elm Road		17,300		16,000		43,000
MGE Power		0		200		0
MGE Power West Campus		9,250		7,500		9,500
MGE Transco		816		0		0
Total	$	52,366	$	44,343	$	79,148

Dividend Restrictions

Dividend payments by MGE to MGE Energy are subject to restrictions arising under a PSCW rate order and, to a lesser degree, MGE's first mortgage bonds. The PSCW order restricts any dividends that MGE may pay MGE Energy if its common equity ratio, calculated in the manner used in the rate proceeding, is less than 55%. MGE's thirteen month rolling average common equity ratio at December 31, 2013 is 57.6% as determined under the calculation used in the rate proceeding. MGE paid cash dividends of $25.0million to MGE Energy in 2013.The rate proceeding calculation includes as indebtedness imputed amounts for MGE's outstanding purchase power capacity payments and other PSCW adjustments, but does not include the indebtedness associated with MGE Power Elm Roador MGE Power West Campus, which are consolidated into MGE's financial statements but are not direct obligations of MGE.

MGE has covenanted with the holders of its first mortgage bonds not to declare or pay any dividend or make any other distribution on or purchase any shares of its common stock unless, after giving effect thereto, the aggregate amount of all such dividends and distributions and all amounts applied to such purchases, after December 31, 1945, shall not exceed the earned surplus (retained earnings) accumulated subsequent to December 31, 1945. As of December 31, 2013, approximately $305.6 million was available for the payment of dividends under this covenant.

See Footnotes 9 and 10 of the Notes to Consolidated Financial Statement for long-term debt and lines of credit dividend restrictions.

Stock Split

On December 20, 2013, MGE Energy's Board of Directors declared a three-for-two stock split of MGE Energy's common stock in the form of a stock dividend. The additional shares were distributed February 7, 2014 to all shareholders of record as of January 24, 2014. All share and per share data provided in this report give effect to this stock split.