WILLIAMS GATEWAY AIRPORT AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
Fiscal Years Ended June 30, 2007 and 2006

The management of Williams Gateway Airport Authority (WGAA) offers readers this overview and
analysis of WGAA’s financial statements and activities for the fiscal years ended June 30, 2007 and June
30, 2006. In the following discussion, references to “WGAA” relate to Williams Gateway Airport Authority
and references to “the Airport” relate to Williams Gateway Airport, which WGAA manages and operates.
Financial Highlights
WGAA’s assets exceeded liabilities at the end of the fiscal year by $123,158,640 (net assets).
Total net assets includes $117,811,717 in capital assets, net of related debt. An additional
$341,777 of the total net assets are restricted for specific uses, and $5,005,146 are unrestricted
net assets. During the year, total net assets decreased by $6,757,658.
Total liabilities (primarily member loans) increased by $ 5,568,803 (8.8%) to $68,578,194.
WGAA’s operations produced a loss of $9,056,188 for the fiscal year. Much of this loss is
attributable to non-cash depreciation expense on assets that were contributed by the federal
government or acquired with the aid of grants. Beyond that, WGAA relies on its member
governments to supplement the revenues it earns from providing airport services.
During the year, member government loans to WGAA increased by $4,641,000 to $52,284,976
and accrued interest relating to that debt increased by $1,691,520 to $10,431,554 . (The first of
these notes comes due in the year 2020.)
Sales in WGAA’s fueling operation were up 5% in volume and down 12% in dollars to
$12,313,072. However, gross margin (gross revenues less cost of goods sold) was up $329,805
(9%). Much of this change was due to a shift in the way WGAA sells fuel to the federal
government. Previously, it was purchased by WGAA and sold. It is now purchased directly from
the supplier by the government and WGAA is paid an increased fee to upload the fuel. As a
result, both revenues and cost of sales relating to this activity are down, but gross margin is up.
Overview of the Financial Statements:
This discussion and analysis serves to introduce WGAA’s financial statements. WGAA’s basic financial
statements have two components, 1) fund financial statements, and 2) notes to the financial statements.
Since WGAA has only one fund, separate government-wide financial statements are not presented.
Fund financial statements.
A fund is a grouping of related accounts used to maintain control over resources that have been
segregated for specific activities or objectives. Like other state and local governments, WGAA uses fund
accounting to ensure and demonstrate compliance with finance-related legal requirements. Unlike most
other governments, which have multiple funds, all of WGAA’s activities are business-type activities and
are accounted for in a single proprietary fund.
Proprietary funds. WGAA maintains its accounting records in a single enterprise fund. An enterprise
fund is a type of proprietary fund used to report business-type activities.
The proprietary fund financial statements can be found on pages 10 -13 of this report.
The statement of net assets presents information on WGAA’s assets and liabilities, with the difference
between the two being shown as net assets. Over time, increases or decreases in net assets may serve
as a useful indicator of whether the financial position of WGAA is improving or deteriorating.
The statement of revenues, expenses and changes in fund net assets presents information on how
WGAA’s net assets changed during the fiscal year. All changes in net assets are reported as soon as the
underlying events giving rise to the changes occur, regardless of the timing of the related cash flows.
Thus, revenues and expenses are reported in this statement for some items that will result in cash flows
in future fiscal periods.

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WILLIAMS GATEWAY AIRPORT AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
Fiscal Years Ended June 30, 2007 and 2006

Notes to Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided in
the fund financial statements. The notes to the financial statements can be found on pages 15 - 27 of this
report.
Financial Analysis
Net assets may serve as a useful indicator of a government’s financial position. At the end of the fiscal
year, WGAA’s assets exceeded liabilities by $123,158,640.
Airports are capital-intensive enterprises. 95.7% of WGAA’s net assets are invested in capital assets (net
of any outstanding debt used to acquire those assets). WGAA uses these assets to provide aviation
access and services to the flying public and the surrounding community, consequently these assets are
not available for future spending. Although WGAA’s investment in its capital assets is reported net of
related debt, the resources needed to pay such debt must be provided from other sources, since the
capital assets themselves cannot be used to liquidate these liabilities.
Williams Gateway Airport Authority’s Net Assets
2007
Current and other assets
Capital assets, net of accumulated depreciation
Total assets

$

7,921,016
183,815,818
191,736,834

Long-term liabilities
Other liabilities
Total liabilities
Net assets:
Invested in capital assets, net of related debt
Restricted
Unrestricted
Total net assets

$

2006
(restated)
$

10,008,869
182,916,820
192,925,689

2005
(restated)
$

7,121,157
178,561,609
185,682,766

65,977,201
2,600,993
68,578,194

59,683,508
3,325,883
63,009,391

52,100,244
2,698,759
54,799,003

117,811,717
341,777
5,005,146
123,158,640

122,987,750
3,225,292
3,703,256
129,916,298

126,239,707
1,090,137
3,553,920
$ 130,883,764

$

$341,777 (0.3%) of WGAA’s net assets represents resources that are subject to external restrictions on
how they may be used. Restricted assets generally represent deposits and grant funds received that
have not yet been spent for the intended purposes. At June 30, 2007 restricted net assets includes
customer deposits and unspent borrowed funds for construction of a hangar for lease to Arizona State
University. Unrestricted net assets represent funds available for WGAA’s on-going operations. The
remaining net assets are invested in capital assets. Capital assets are shown net of any unpaid debts
used to purchase capital assets, including member governments’ investments in both the operations and
infrastructure of the airport. Member loans and accrued interest are payable beginning June 30, 2020.
At the end of the fiscal year and the previous year, all three categories of net assets had positive
balances.
Net assets decreased by $6,757,658 (5.2%) from the previous fiscal year-end. This was primarily due to
depreciation expense and additional loans from member governments to help pay operating expenses.
Member loans increased in fiscal year 2006-07 by $4,641,000, which is higher than the amount received
in fiscal year 2005-06. Current and restricted assets decreased, primarily due to spending of borrowed
funds for construction of a hangar to be leased to Arizona State University.

4

WILLIAMS GATEWAY AIRPORT AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
Fiscal Years Ended June 30, 2007 and 2006

Invested in capital assets, net of related debt decreased by 4.2%. New investments in capital assets
(less asset dispositions) were $898,998 more than the year’s depreciation expense on capital assets.
Most of the $2,883,515 decrease in restricted assets was due to spending of borrowed funds for
construction of a hangar to be leased to Arizona State University.
Business-type activities
All of WGAA’s activities are classified as business-type activities. Significant changes in the financial
operations of WGAA included reductions in capital grants and contributions, which were down $5,428,065
(60%). Capital grants were down because some grant funds were being held until sufficient funds could
be accumulated to construct a large taxiway project. (Grant funds are recognized as revenue as soon as
all eligibility requirements imposed by the provider have been met.) Fuel sales and related cost of sales
taken together (gross margin) were up $329,805, an increase of 9%. The change came about as
indicated by the following elements of the revenues and expenses:
Williams Gateway Airport Authority’s Changes in Net Assets
2007
Revenues:
Charges for sales and services (gross)
Lease income
Capital grants and contributions
Operating grants and contributions
Other
Total revenues

$

Expenses
Cost of sales
Depreciation
Other operating expenses
Interest expense on loans from member governments
Other non-operating expenses
Total expenses

13,047,806
2,702,719
3,679,160
435,020
19,864,705

8,463,708
6,690,074
9,652,931
1,691,520
124,130
26,622,363

Increase (decrease) in net assets
Net assets at prior year-end (as restated)
Net assets at year-end

(6,757,658)
129,916,298
$123,158,640

2006
$

14,618,487
2,532,710
9,107,225
130,000
271,960
26,660,382

10,503,245
6,897,986
8,629,987
1,543,515
53,115
27,627,848
(967,466)
130,883,764
$129,916,298

2005
$

12,987,564
2,268,373
4,081,130
147,766
288,897
19,773,730

9,110,114
7,528,876
8,482,693
1,399,820
369,968
26,891,471
(7,117,741)
138,001,505
$130,883,764

Revenues:
Charges for sales and services decreased by $1,570,681, primarily due to a change in the way we sell
fuel to the federal government, our largest customer. Previously, WGAA purchased fuel and sold it to the
government. Now, the government purchases their fuel from a supplier and WGAA is paid for uploading
the fuel into their aircraft. This has reduced both sales and cost of sales, but has provided an increase in
gross profit to the airport. The volume of fuel sold was 5% more than the prior year. Lease income was
up $170,009 (7%). Capital grants and contributions decreased by $5,428,065 (60%). Now that the City of
Phoenix is a contributing member of the Airport Authority, it no longer contributes operating grants for
marketing.

5

WILLIAMS GATEWAY AIRPORT AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
Fiscal Years Ended June 30, 2007 and 2006

Revenues
Lease income
14%
Capital grants
and contributions
19%
Charges for
sales and services
(gross)
65%

Other
2%

Expenses:
Cost of sales decreased by $2,039,537 (19%), reflecting the change in method of selling fuel (discussed
on page 5). Other operating expenses increased by $1,022,944 (12%). Most of the increase represents
increases in personnel costs, including salaries, health care insurance and required contributions to the
state retirement system, repair and maintenance, and professional service. Interest expense on loans
from member governments increased by $148,005, reflecting the accumulation of accrued interest and
additional interest relating to annual additions to these loans from the member governments.

Expenses
Cost of sales
32%

Depreciation
25%

Other nonoperating
expenses
1%
Interest expense
on loans from
member
governments
6%

Other operating
expenses
36%

6

WILLIAMS GATEWAY AIRPORT AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
Fiscal Years Ended June 30, 2007 and 2006

Budget
WGAA staff prepares a budget annually. It is submitted to the Board of Directors for approval during the
spring of each year. Although the budget is not legally binding, it is an important management tool used
throughout the fiscal year. During the fiscal year, actual activity is compared to the budget on a monthly
basis to assess operating results. See page 31 for a presentation of the budget as supplementary
information.

Capital Assets and Debt Administration
Capital assets (net of depreciation)
At June 30, 2007, WGAA’s capital assets totaled $183,815,818 (net of accumulated depreciation). The
capital assets include land; runways, taxiways, and apron areas; buildings; improvements; machinery and
equipment. A large majority of these assets were contributed to the airport directly or were purchased
with the aid of federal and state grants. Total capital assets, net of depreciation increased by 0.5% during
the fiscal year.
Capital assets (net of depreciation)
2007
Land
Buildings and improvements
Machinery and equipment
Construction in progress
Total capital assets, net

$ 83,017,074
89,933,990
2,439,924
8,424,830
$ 183,815,818

2006
(restated)
$ 83,017,074
89,061,422
2,671,596
8,166,728
$ 182,916,820

2005
(restated)
$ 82,963,159
89,746,119
1,726,653
4,125,678
$ 178,561,609

Major capital asset events during the current fiscal year included the following:
Runway shoulders on 2 runways (underway last year) were completed. Total cost: $4.4 million.
Construction of a $3 million hangar/classroom facility for Arizona State University began and was
nearly complete. Costs to June 30, 2007: $2.9 million.
Construction was completed on extending the service area of the South Central Fire Protection
System to additional lots. This involved added piping and pumps. Due to the prime contractor
going out of business, this project experienced significant delays. Costs to June 30, 2007: $1.6
million.
A parking lot accommodating approximately 150 cars near the passenger terminal (underway last
year) was completed. Total cost: $0.7 million.
Airport Pavement Maintenance System South and Middle Aprons and Taxiways B & G. Total
cost: $.7 million
Taxiway G was essentially completed connecting the runway system with the Cessna facility that
is being built on the airport. Cost to June 30, 2007: $.7 million
Drainage Improvements along the north apron were essentially completed. Estimated cost: $.9
million. Cost to June 30, 2007: $.7 million
Airport Security Fencing. Cost to June 30, 2007: $.5 million

Long-term debt.
At the end of the current fiscal year, WGAA had total debt outstanding of $66,004,101. $62,716,530
(95%) of the total outstanding debt is principal and interest (at 3% annual rate) on loans made by member
governments to help cover operating expenses and airport improvements. The first of these loans are
due June 30, 2020 or such time as the WGAA Board of Directors determines that WGAA has sufficient
funds for repayments. WGAA reduced its capital lease obligations by $350,583 (68%) by making
regularly scheduled principal and interest payments.

7

WILLIAMS GATEWAY AIRPORT AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS
Fiscal Years Ended June 30, 2007 and 2006

Williams Gateway Airport Authority's Outstanding Debt
2007
Loans from Member Governments
(including accrued interest)
ADOT Loan
(including accrued interest)
Capital Leases

2006

2005

$

62,716,530

$ 56,384,010

$ 51,450,495

$

3,119,040
168,531
66,004,101

3,025,947
519,114
$ 59,929,071

871,407
$ 52,321,902

Loans from member governments (principal) increased by $4,641,000 (10%) during the fiscal year,
compared to the $3,390,000 increase in loans during the previous year. $741,000 of the current year
increase is the amount received from the City of Phoenix; the City of Phoenix agreed to make available
$5,000,000 for capital improvements as a condition of it becoming a member of WGAA. The accrued
interest component of member government loans increased by $1,691,520 compared to $1,543,515 in
the previous year. Member loans carry an interest rate of 3% per year.
Additional information on WGAA’s long-term debt can be found in note 3.D. on pages 23 - 24.

Economic Factors
WGAA still depends on annual loans from its member governments to cover some of its operating costs.
This makes WGAA susceptible to downturns in the economy and other difficulties that could affect
member governments’ abilities to provide this annual funding. However, member government support of
this kind has been consistent over the last several years.
With WGAA’s largest fueling customer being the federal government, a significant portion of fueling
revenue depends on continuation of military training and other activities that bring government aircraft to
the airport.
WGAA also depends on capital grants, which have mostly been received from the Federal Aviation
Administration (FAA) and the Arizona Department of Transportation (ADOT), to continue its current level
of capital improvement and renewal programs.

Other Potentially Significant Matters
In September 2007, the Board of Directors of WGAA voted to change the name of the airport from
Williams Gateway Airport to Phoenix-Mesa Gateway Airport. The name of the airport authority did not
change. WGAA expects to incur less than $100,000 in costs related to the name change.

Requests for Information
This financial report is designed to provide a general overview of WGAA’s finances for all those who are
interested. Questions concerning any of the information provided in this report or requests for additional
financial information should be addressed to the Director of Finance, Williams Gateway Airport Authority,
5835 S. Sossaman Road, Mesa, AZ 85212.

8

WILLIAMS GATEWAY AIRPORT AUTHORITY
STATEMENT OF NET ASSETS
PROPRIETARY FUND
June 30, 2007 and 2006
Business-type Activities Enterprise Fund
2007
2006
Assets
Current assets:
Cash and cash equivalents
Accounts receivable, net
Due from other governments
Prepaid costs
Inventories
Total current assets

$

Noncurrent assets:
Restricted assets
Capital assets:
Nondepreciable (as restated)
Depreciable
Total noncurrent assets
Total assets
Liabilities
Current liabilities:
Accounts payable
Accrued liabilities
Vacation benefits payable
Capital lease obligations payable
Retirement sick leave payable
ADOT loan
Accrued interest payable to ADOT
Unearned revenue
Total current liabilities

Current liabilities payable from restricted assets:
Tenant deposits
Noncurrent liabilities:
Loans payable to member governments
Accrued interest payable to member governments
ADOT loan
Accrued interest payable to ADOT
Capital leases
Retirement sick leave payable
Total noncurrent liabilities
Total liabilities
Net assets
Invested in capital assets, net of related debt
Restricted net assets
Unrestricted net assets
Total net assets

$

5,946,477
572,694
439,298
102,229
315,222
7,375,920

$

3,837,493
397,028
1,880,739
121,334
409,547
6,646,141

545,096

3,362,728

91,441,904
92,373,914
184,360,914

91,183,802
91,733,018
186,279,548

191,736,834

192,925,689

1,468,374
105,834
396,782
163,003
13,594
67,811
182,276
2,397,674

2,158,065
105,228
384,978
350,600
14,268
16,456
25,947
132,905
3,188,447

203,319

137,436

52,284,976
10,431,554
3,000,000
51,229
5,528
203,914
65,977,201

47,643,976
8,740,034
2,983,544
168,514
147,440
59,683,508

68,578,194

63,009,391

117,811,717
341,777
5,005,146
123,158,640

122,987,750
3,225,292
3,703,256
129,916,298

$

The accompanying notes to the basic financial statements are an integral part of this statement.
10

WILLIAMS GATEWAY AIRPORT AUTHORITY
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUND
FISCAL YEARS ENDED JUNE 30, 2007 AND 2006
Business-type Activities
Enterprise Fund
2007
2006
Operating revenues
Fueling operations
Lease income
Maintenance services
Airport usage fees
Total operating revenues

$

12,313,072
2,702,719
467,940
266,794
15,750,525

$

14,031,048
2,532,710
325,856
261,583
17,151,197

Operating expenses
Personnel costs
Professional services
Cost of goods sold - fueling operations
Costs of maintenance services sold
Repair and maintenance
Utilities
Insurance
Other expense
Depreciation
Total operating expenses

5,900,980
1,231,214
8,427,295
36,413
723,747
342,013
273,149
1,181,828
6,690,074
24,806,713

5,549,231
1,051,078
10,475,076
28,169
494,191
320,436
243,933
971,118
6,897,986
26,031,218

Operating loss

(9,056,188)

(8,880,021)

Nonoperating revenues (expenses)
Operating grants from other governments
Investment income
Other income
Recovery of prior loss - AZ State - Local Govt Investment Pool
Gain/(loss) on disposition of assets
Interest expense - notes payable to member governments
Interest expense - other
Total nonoperating revenues (expenses)

368,674
30,052
36,294
(1,691,520)
(124,130)
(1,380,630)

130,000
211,862
20,593
39,505
(9,181)
(1,543,515)
(43,934)
(1,194,670)

(10,436,818)

(10,074,691)

Capital contributions

3,679,160

9,107,225

Change in net assets

(6,757,658)

Loss before contributions and transfers

Net assets, beginning of year (as restated)

(967,466)

129,916,298

Net assets, end of year

$

123,158,640

130,883,764
$

The accompanying notes to the basic financial statements are an integral part of this statement.
11

129,916,298