WILLIAMS GATEWAY AIRPORT AUTHORITY ANNUAL FINANCIAL REPORT FISCAL YEARS ENDED JUNE 30, 2008 AND 2007 THIS PAGE BLANK WILLIAMS GATEWAY AIRPORT AUTHORITY TABLE OF CONTENTS Fiscal Years Ended June 30, 2008 and 2007 Page Independent Auditor’s Report 1 Management’s Discussion and Analysis 3 Basic Financial Statements Statement of Net Assets – Proprietary Fund 10 Statement of Revenues, Expenses and Changes in Fund Net Assets Proprietary Fund 11 Statement of Cash Flows – Proprietary Fund 12 Notes to the Basic Financial Statements 15 Supplementary Information Statement of Revenues and Expenses (Budget Basis) 31 WILLIAMS GATEWAY AIRPORT AUTHORITY TABLE OF CONTENTS Fiscal Years Ended June 30, 2008 and 2007 THIS PAGE BLANK WILLIAMS GATEWAY AIRPORT AUTHORITY MANAGEMENT’S DISCUSSION AND ANALYSIS Fiscal Years Ended June 30, 2008 and 2007 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, 2008 and June 30, 2007. In the following discussion, references to “WGAA” relate to Williams Gateway Airport Authority and references to “the Airport” relate to Phoenix-Mesa Gateway Airport, which WGAA manages and operates. Financial Highlights WGAA’s assets exceeded liabilities at the end of the fiscal year by $127,271,994 (net assets). Total net assets included $119,030,879 in capital assets, net of related debt. An additional $65,075 of the total net assets were restricted for specific uses, and $8,176,040 were unrestricted net assets. During the year, total net assets increased by $4,113,354. During the year, member government loans to WGAA increased by $8,003,720 to $60,288,696 and accrued interest relating to that debt increased by $1,881,496 to $12,313,050 . (The first of these notes comes due in the year 2020.) Total liabilities (primarily member loans) increased by $ 9,884,726 (14.4%) to $78,462,920. Sales in WGAA’s fueling operation were down 37% in dollars to $7,758,454 but up 53% in volume, due to Allegiant Airlines starting passenger service. Gross margin (gross revenues less cost of goods sold) was up $1,243,128 (32%). 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. Fuel 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. WGAA’s operations produced a loss of $9,584,957 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. 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. 3 WILLIAMS GATEWAY AIRPORT AUTHORITY MANAGEMENT’S DISCUSSION AND ANALYSIS Fiscal Years Ended June 30, 2008 and 2007 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 $127,271,994. Airports are capital-intensive enterprises. 93.5% 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 2008 2007 Current and other assets Capital assets, net of accumulated depreciation Total assets $ 11,045,532 194,689,382 205,734,914 Long-term liabilities Other liabilities Total liabilities Net assets: Invested in capital assets, net of related debt Restricted Unrestricted Total net assets $ $ 7,921,016 183,815,818 191,736,834 2006 $ 10,008,869 182,916,820 192,925,689 75,839,822 2,623,098 78,462,920 65,977,201 2,600,993 68,578,194 59,683,508 3,325,883 63,009,391 119,030,879 65,075 8,176,040 127,271,994 117,811,717 341,777 5,005,146 123,158,640 122,987,750 3,225,292 3,703,256 $ 129,916,298 $ $65,075 (0.1%) 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. Unrestricted net assets represent funds available for WGAA’s ongoing 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 increased by $4,113,354 (3.3%) from the previous fiscal year-end. This was primarily due to an increase in capital contributions from the Federal Aviation Administration and Arizona Department Of Transportation for capital projects. Member loans increased in fiscal year 2007-08 by $8,003,720, which is higher than the amount received in fiscal year 2006-07. This included an extra $4,083,719 contributions from the City of Phoenix to fund capital projects. 4 WILLIAMS GATEWAY AIRPORT AUTHORITY MANAGEMENT’S DISCUSSION AND ANALYSIS Fiscal Years Ended June 30, 2008 and 2007 Net assets invested in capital assets, net of related debt increased by 1.0%. New investments in capital assets (less asset dispositions) were $10,873,564 more than the year’s depreciation expense on capital assets. Most of the $276,702 decrease in restricted net assets was due to spending of borrowed funds for construction of a hangar now 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 increases in capital grants and contributions, which were up $12,316,003 (335%). Capital grant revenue was up because of increased spending on capital projects. (Grant funds are recognized as revenue when all eligibility requirements imposed by the provider have been met.) Fuel sales and related cost of sales taken together (gross margin) were up $1,243,128, an increase of 32%. The change came about as indicated by the following elements of the revenues and expenses: Williams Gateway Airport Authority’s Changes in Net Assets 2008 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 8,818,571 2,485,384 15,995,163 304,581 27,603,699 2,668,884 7,099,278 11,120,750 1,881,496 719,937 23,490,345 Increase (decrease) in net assets Net assets at prior year-end (as restated) Net assets at year-end 4,113,354 123,158,640 $127,271,994 2007 $ 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 (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 Revenues: Capital grants and contributions increased by $12,316,003 (335%). Charges for sales and services decreased by $4,229,235 , 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 53% more than the prior year, due mostly to Allegiant Airlines starting passenger service. Lease income was down $217,335 (8%), primarily due to the end of several Boeing leases. 5 WILLIAMS GATEWAY AIRPORT AUTHORITY MANAGEMENT’S DISCUSSION AND ANALYSIS Fiscal Years Ended June 30, 2008 and 2007 Revenues Capital grants and contributions 58% Other 1% Lease income 9% Charges for sales and services (gross) 32% Expenses: Cost of sales decreased by $5,794,824 (68%), reflecting the change in method of selling fuel (discussed on page 5). Other operating expenses increased by $1,467,819 (15%). 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 advertising. Interest expense on loans from member governments increased by $189,976, reflecting the accumulation of accrued interest and additional interest relating to annual additions to these loans from the member governments. (Capital grants and contributions indicated in the chart above are not included in the chart below because they were spent on assets, not expenses.) Expenses Depreciation 30% Cost of sales 11% Other operating expenses 48% Other non-operating expenses 3% Interest expense on loans from member governments 8% 6 WILLIAMS GATEWAY AIRPORT AUTHORITY MANAGEMENT’S DISCUSSION AND ANALYSIS Fiscal Years Ended June 30, 2008 and 2007 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, 2008 , WGAA’s capital assets totaled $194,689,382 (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 5.9% during the fiscal year. Capital assets (net of depreciation) Land Buildings and improvements Machinery and equipment Construction in progress Total capital assets, net 2008 2007 2006 $ 84,703,586 91,779,882 2,763,351 15,442,563 $ 194,689,382 $ 83,017,074 89,933,990 2,439,924 8,424,830 $ 183,815,818 $ 83,017,074 89,061,422 2,671,596 8,166,728 $ 182,916,820 Major capital asset events during the current fiscal year included the following: Construct Taxiway B between H and G: Spent in FY08: $7.5 million Construct Sossaman Road parking: Spent in FY08: $2.1 million Construct code upgrades for Hangar 31: Spent in FY08: $1.6 million Construct cul-de-sac road in the north tract: Spent in FY08: $1.2 million Pave airfield perimeter road: Spent in FY08: $1 million Airfield drainage improvements: Spent in FY08: $.8 million Nineteen acres were deeded from the Air Force at a value of $1.6 million Long-term debt. At the end of the current fiscal year, WGAA had total debt outstanding of $75,658,503. $72,601,746 (96%) 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 nominally due June 30, 2020, more specifically at such time as the WGAA Board of Directors determines that WGAA has sufficient funds for repayments. WGAA reduced its capital lease obligations by $163,003 (97%) by making regularly scheduled principal and interest payments. 7 WILLIAMS GATEWAY AIRPORT AUTHORITY MANAGEMENT’S DISCUSSION AND ANALYSIS Fiscal Years Ended June 30, 2008 and 2007 Williams Gateway Airport Authority's Outstanding Debt 2008 Loans from Member Governments (including accrued interest) ADOT Loan (including accrued interest) Capital Leases 2007 2006 $ 72,601,746 $ 62,716,530 $ 56,384,010 $ 3,051,229 5,528 75,658,503 3,119,040 168,531 $ 66,004,101 3,025,947 519,114 $ 59,929,071 Loans from member governments (principal) increased by $8,003,720 (15%) during the fiscal year, compared to the $4,641,000 increase in loans during the previous year. $4,083,719 of the current year increase is an extra 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 $1,881,496 compared to $1,691,520 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 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, mostly 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 August 2008, Allegiant Airlines agreed to loan WGAA $3,000,000 to expand the passenger terminal to accommodate more passengers due to increased operations. This loan will be repaid along with $1,000,000 in interest out of future Passenger Facility Charge (PFC) revenues. The FAA approved WGAA’s application to impose PFC’s beginning November 1, 2008. 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 BASIC FINANCIAL STATEMENTS WILLIAMS GATEWAY AIRPORT AUTHORITY STATEMENT OF NET ASSETS PROPRIETARY FUND June 30, 2008 and 2007 Business-type Activities Enterprise Fund 2008 2007 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 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 $ 7,286,698 482,040 2,668,078 44,123 173,894 10,654,833 $ 5,946,477 572,694 439,298 102,229 315,222 7,375,920 390,699 545,096 100,146,149 94,543,233 195,080,081 91,441,904 92,373,914 184,360,914 205,734,914 191,736,834 1,581,768 140,606 419,392 1,845 13,869 19,874 51,229 68,891 2,297,474 1,468,374 105,834 396,782 163,003 13,594 67,811 182,276 2,397,674 325,624 203,319 60,288,696 12,313,050 2,980,126 3,683 254,267 75,839,822 52,284,976 10,431,554 3,000,000 51,229 5,528 203,914 65,977,201 78,462,920 68,578,194 119,030,879 65,075 8,176,040 127,271,994 117,811,717 341,777 5,005,147 123,158,640 $ 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, 2008 AND 2007 Business-type Activities Enterprise Fund 2008 2007 Operating revenues Fueling operations Lease income Maintenance services Airport usage fees Total operating revenues $ 7,758,454 2,485,384 734,803 325,314 11,303,955 $ 12,313,072 2,702,719 467,940 266,794 15,750,525 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 6,585,977 1,358,903 2,629,549 39,335 909,145 386,511 270,790 1,609,424 7,099,278 20,888,912 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 Operating loss (9,584,957) (9,056,188) 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) 274,067 27,631 2,883 (605,078) (1,881,496) (114,859) (2,296,852) 368,674 30,052 36,294 (1,691,520) (124,130) (1,380,630) (11,881,809) (10,436,818) Capital contributions 15,995,163 3,679,160 Change in net assets 4,113,354 (6,757,658) Loss before contributions and transfers Net assets, beginning of year (as restated) 123,158,640 Net assets, end of year $ 127,271,994 The accompanying notes to the basic financial statements are an integral part of this statement. 11 129,916,298 $ 123,158,640 WILLIAMS GATEWAY AIRPORT AUTHORITY STATEMENT OF CASH FLOWS PROPRIETARY FUND FISCAL YEARS ENDED JUNE 30, 2008 AND 2007 Business-type Activities Enterprise Funds 2008 2007 Cash flows from operating activities Receipts from customers Payments to employees Payments to suppliers Customer deposits Net cash flows from operating activities $ 10,302,417 (6,477,966) (7,296,368) 122,305 (3,349,612) $ 16,595,966 (5,832,770) (12,351,251) 65,883 (1,522,172) Cash flows from non-capital financing activities Loans from member governments Net cash flows from non-capital financing activities 8,003,720 8,003,720 4,641,000 4,641,000 Cash flows from capital and financing activities Acquisition of capital assets (net) Principal paid on capital leases Interest paid on ADOT loan Interest paid on capital leases Capital grants received Net cash flows from capital and financing activities (16,537,583) (163,003) (215,389) (2,081) 13,145,191 (3,772,865) (7,373,325) (350,583) (53,848) (12,870) 3,528,130 (4,262,496) Cash flows from investing activities Investment income Investment gain Other income/expense Net cash flows from investing activities 274,067 2,883 27,631 304,581 Net change in cash and cash equivalents 1,185,824 Cash and cash equivalents, beginning of year 6,491,573 Cash and cash equivalents, end of year $ 7,677,397 368,674 36,294 30,052 435,020 (708,648) 7,200,221 $ 6,491,573 $ 5,946,477 545,096 6,491,573 RECONCILIATION OF CASH AND CASH EQUIVALENTS TO THE BALANCE SHEET Cash and cash equivalents Restricted assets Total $ $ 7,286,698 390,699 7,677,397 $ (Continued) The accompanying notes to the basic financial statements are an integral part of this statement. 12 WILLIAMS GATEWAY AIRPORT AUTHORITY STATEMENT OF CASH FLOWS PROPRIETARY FUND FISCAL YEARS ENDED JUNE 30, 2008 AND 2007 Business-type Activities Enterprise Funds 2008 2007 (Concluded) Reconciliation of operating income (loss) to net cash provided by operating activities Operating loss $ Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation Change in assets/liabilities: Accounts receivable Prepaid costs Inventories Accounts payable and accrued liabilities Unearned revenue Tenant deposits Compensated absences payable Net cash used by operating activities $ ($9,584,957) $ (9,056,188) 7,099,278 6,690,074 (888,153) 58,106 141,328 (257,372) (113,385) 122,305 73,238 ($3,349,612) 796,070 19,105 94,325 (248,416) 49,371 65,883 67,604 (1,522,172) $ NON-CASH INVESTING, CAPITAL AND FINANCING ACTIVITIES The Authority recognized $1,881,496 and $1,691,520 of interest payable on loans from member governments during fiscal years 2008 and 2007, respectively. The Authority capitalized $34,800 of interest during the year. Included in capital contributions is $1,600,000 of land deeded to WGAA by the Air Force. The accompanying notes to the basic financial statements are an integral part of this statement. 13 THIS PAGE BLANK WILLIAMS GATEWAY AIRPORT AUTHORITY NOTES TO THE BASIC FINANCIAL STATEMENTS Fiscal Years Ended June 30, 2008 and 2007 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying financial statements of Williams Gateway Airport Authority (WGAA) have been prepared in conformity with accounting principles generally accepted in the United States of America applicable to governmental units adopted by the Governmental Accounting Standards Board (GASB). A. Reporting entity Williams Gateway Airport Authority was established on May 19, 1994 as a joint powers airport authority pursuant to Arizona Revised Statutes Title 28, Chapter 25, Article 8. It operates 3,005 acres as Phoenix-Mesa Gateway Airport (“the Airport”). WGAA is overseen by a five-person board of directors, which is comprised of a representative from each of the member governments. The members of WGAA are the Gila River Indian Community; Town of Gilbert, Arizona; City of Mesa, Arizona; City of Phoenix, Arizona; and Town of Queen Creek, Arizona. In addition to WGAA’s board of directors, a variety of federal, state and local laws, agreements and regulations govern the operations at the airport. The Federal Aviation Administration (FAA) has jurisdiction over aircraft operations, including aircraft, personnel, facilities and many technical issues, including noise limits and reasonableness of fees. Under federal law and the FAA’s regulations and grant agreements, WGAA cannot legally transfer revenues to its member governments except in exchange for fair value received. WGAA is legally separate from other state and local governments. There are no component units combined with WGAA for financial statement presentation purposes and WGAA is not included in any other governmental reporting entity. These financial statements present the financial position and activities of WGAA only, for which its governing board is financially accountable. WGAA earns revenue from leases of land and airport facilities. Fees received for use of the airport include landing fees, tie down fees, terminal usage fees, fuel flowage, and fixed base operator (FBO) fees. WGAA also operates a fueling operation at the airport and contracts with various tenants and users of the facilities within the airport area to provide maintenance services. Major expenses include salaries and fringe benefits, professional services for fire protection, legal and development consulting, maintenance and utilities. B. Government-wide and fund financial statements Government-wide financial statements are not presented, since WGAA only engages in business-type activities. WGAA has only one fund, an enterprise fund. Accordingly, the statement of net assets, the statement of revenues, expenses and changes in net assets and the statement of cash flows report information for that single enterprise fund only. C. Measurement focus, basis of accounting, and financial statement presentation The statement of net assets and statement of revenues, expenses and changes in fund net assets are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Such revenue is subject to review by the funding agency, which may result in disallowance in subsequent periods. All of WGAA’s activities are accounted for in a single proprietary or business-type fund. 15 WILLIAMS GATEWAY AIRPORT AUTHORITY NOTES TO THE BASIC FINANCIAL STATEMENTS Fiscal Years Ended June 30, 2008 and 2007 Private-sector standards of accounting and financial reporting issued prior to December 1, 1989 generally are followed in the proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments have the option of following subsequent private-sector guidance for the business-type activities, subject to this same limitation. WGAA has elected not to follow subsequent private-sector guidance. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. Revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. D. Assets, liabilities, and net assets or equity 1. Deposits and investments WGAA’s cash and cash equivalents are comprised of cash on hand, demand deposits, cash and investments held by the State Treasurer, and highly liquid investments with maturities of three months or less from the date of acquisition. Arizona Revised Statutes authorize WGAA to invest public monies in the State and County Treasurer's investment pools; U.S. Treasury obligations; specified state and local government bonds; and interest-earning investment contracts such as savings accounts, certificates of deposit, and repurchase agreements in eligible depositories. 2. Receivables All trade receivables are shown net of an allowance for uncollectible receivables. WGAA annually reviews the balance in the reserve account during the budget process to determine if, based on past history, the account is adequate to cover current trade receivables. If judged to be inadequate, an additional amount is budgeted and recorded over the course of the year. Receivables from governments are assumed to be entirely collectible and are not included in this analysis. Over the last two years, this allowance has ranged from 9% to 12% of accounts receivable. 3. Inventories and prepaid items Supply inventories are valued at cost using the first-in/first-out (FIFO) method. The cost of inventory is reported as an expense at the time the individual items are consumed. Fuel inventories are valued at cost using the moving average method. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in the financial statements. 4. Capital assets Capital assets include property, plant, equipment, and infrastructure assets. Capital assets are defined by WGAA as assets with an initial, individual cost of more than $10,000 and an estimated useful life in excess of one year. Property, plant, equipment and infrastructure assets purchased or acquired are carried at historical cost or estimated historical cost. Contributed assets are recorded at fair market value as of the date received. Additions, improvements and other capital outlays that significantly extend the useful life of an asset are capitalized. Interest incurred during construction of capital assets is included as part of the capitalized cost of the assets constructed. Costs incurred for repairs and maintenance are expensed as incurred. 16 WILLIAMS GATEWAY AIRPORT AUTHORITY NOTES TO THE BASIC FINANCIAL STATEMENTS Fiscal Years Ended June 30, 2008 and 2007 Depreciation on all assets is provided on a straight-line basis over the following estimated useful lives: Buildings and improvements Improvements other than buildings Machinery and equipment 20 – 30 years 5 – 30 years 3 – 10 years Amortization of leased capital assets is provided using the straight-line method based on the estimated useful lives of the leased assets. Such amortization is added to accumulated depreciation and depreciation expense for reporting purposes. When assets are retired or sold, the costs of those assets and the related accumulated depreciation are eliminated from the accounts, and any resulting gain or loss is charged to income or expense. 5. Compensated absences The liability for compensated absences reported in the statement of net assets consists of unpaid, accumulated leave balances. The liability has been calculated using the vesting method, in which leave amounts are included for employees who currently are eligible to receive termination payments. 6. Net assets In the statement of net assets, net assets are reported in three categories: net assets invested in capital assets, net of related debt; restricted net assets; and unrestricted net assets. Net assets invested in capital assets, net of related debt is reported separately because it makes up a significant portion of total net assets. Restricted net assets are the portion of net assets restricted by parties outside WGAA. Unrestricted net assets are the remaining net assets not included in the previous two categories. 7. Income taxes WGAA is exempt from federal and state income taxes as a political subdivision under Section 115 of the Internal Revenue Code. Accordingly, no provision for income taxes has been recorded. 8. Use of estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 17 WILLIAMS GATEWAY AIRPORT AUTHORITY NOTES TO THE BASIC FINANCIAL STATEMENTS Fiscal Years Ended June 30, 2008 and 2007 NOTE 2 - STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. Budgetary information WGAA uses a budget process that culminates in the adoption of a formal annual budget by the board of directors. The budget is a planning and control device; it is not legally binding in the sense of appropriations commonly required in municipal governments. NOTE 3 - DETAILED NOTES A. Assets 1. Deposits and investments Deposits and investments at June 30, 2008 and 2007 consist of the following: Cash on hand Deposits Cash in bank Investments Overnight Sweep Account State Treasurer's Investment Pool Total deposits and investments Less: restricted cash Total cash and equivalents $ 2008 1,780 7,187 27,147 7,641,283 7,677,397 (390,699) $ 7,286,698 $ 2007 7,482 7,749 289,425 6,186,917 6,491,573 (545,096) $ 5,946,477 Deposits - WGAA's deposits at June 30, 2008, were covered by federal depository insurance or by collateral held by WGAA's custodial bank in WGAA's name. WGAA's bank accounts are covered up to $100,000 by federal depository insurance. In addition, WGAA's bank has pledged collateral having a market value at June 30, 2008 of $2,088,257 to cover deposits in excess of the federal depository insurance coverage. WGAA’s bank balance was $225,044 . Investments - WGAA’s investments (detailed below) only include deposits with the Arizona State Treasurer’s Local Government Investment Pool and overnight sweep investments of its bank deposits. WGAA does not have a formally adopted investment policy. The State Board of Deposit provides oversight for the State Treasurer's pools, and the Local Government Investment Pool Advisory Committee provides consultation and advice to the Treasurer. At June 30, 2008, according to the Arizona State Treasurer’s Office, the fair market value of the underlying securities in its Local Government Investment Pool (LGIP) was $1.00 per $1.00 of carrying value in the Pool. The LGIP shares are not identified with specific investments held for WGAA in physical or book entry form. Investments in the State Treasurer’s Local Government Investment Pool are not insured or collateralized. The most recent rating for these funds is AAAf. 18 WILLIAMS GATEWAY AIRPORT AUTHORITY NOTES TO THE BASIC FINANCIAL STATEMENTS Fiscal Years Ended June 30, 2008 and 2007 Custodial Credit Risk – Custodial Credit risk is the risk that, in the event of the failure of the counterparty, the government will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. WGAA is not subject to custodial credit risk since its investments are not identified with specific investments held by others for WGAA in physical or book entry form. WGAA does not have a formal policy regarding credit risk. Concentration Risk – Concentration risk is the increased risk to the organization when a significant portion of its resources are invested with a single issuer. WGAA does not have a formal policy for concentration of credit risk. Concentration percentages are shown below. As of June 30, 2008, WGAA had the following investments: Investment Type State Treasurer's Investment Pool 5 Overnight sweep account Total investments Rating Aaaf Aaa Rating Agency Amount Standard & Poor's $ Moody's $ % 7,641,283 99.65% 27,147 0.35% 7,668,430 100.00% Foreign Currency Risk – Foreign currency risk is the chance that changes in exchange rates will adversely affect the fair market value of investments and deposits. WGAA has no investments or deposits denominated in a foreign currency. WGAA does not have a formal policy for foreign currency risk. Interest rate risk – Due to the short maturities of WGAA’s investments, the risk of losses due to market interest rate changes are minimal. WGAA does not have a formal policy regarding interest rate risk. The following table shows the investment maturities by year and type of security: Investment Maturities Investment Type Amount State Treasurer's Investment Pool 5 $ Overnight sweep account $ 7,641,283 27,147 7,668,430 Less than 1 year $ $ 7,641,283 27,147 7,668,430 2. Restricted assets Certain assets of WGAA are classified as restricted net assets because their use is restricted by grant or contractual agreements. Restricted assets include the following: Customer deposits ADOT loan and related earned interest State appropriation and related interest Total restricted assets 19 2008 2007 $ 325,624 65,075 $ 390,699 $ 203,319 183,217 158,560 $ 545,096 WILLIAMS GATEWAY AIRPORT AUTHORITY NOTES TO THE BASIC FINANCIAL STATEMENTS Fiscal Years Ended June 30, 2008 and 2007 3. Receivables Total accounts receivable has been reduced by an allowance for uncollectible accounts: 2008 Trade receivables - governments Grants receivable Total due from other governments $ $ Total accounts receivable Less allowance for uncollectible accounts Accounts receivable, net $ $ 1,005,775 1,662,303 2,668,078 531,993 (49,953) 482,040 2007 $ 26,967 412,331 439,298 $ $ 651,372 (78,678) 572,694 $ 4. Capital assets Capital asset activity for the year ended June 30, 2008 was as follows: Beginning Balance 6/30/2007 Increases Capital assets not being depreciated Land (as restated) $ 83,017,074 $ 1,686,512 Construction in progress 8,424,830 16,450,802 Total capital assets not being depreciated $ 91,441,904 $18,137,314 Ending Balance 6/30/2008 Decreases $ $ (9,433,069) (9,433,069) $ (1,003,943) (1,003,943) $ $ 84,703,586 15,442,563 100,146,149 $ 160,064,598 6,606,729 166,671,327 $ 68,284,716 3,843,378 72,128,094 Capital assets being depreciated Buildings and improvements Machinery and equipment Total capital assets being depreciated $151,905,005 5,896,590 $157,801,595 9,163,536 710,139 $ 9,873,675 Less accumulated depreciation for: Buildings and improvements Machinery and equipment Total accumulated depreciation $ 61,971,015 3,456,666 $ 65,427,681 6,712,566 386,712 $ 7,099,278 $ (398,865) (398,865) Total capital assets being depreciated, net $ 92,373,914 $ 2,774,397 $ (605,078) $ 94,543,233 Business-type activities capital assets, net $183,815,818 $20,911,711 $ (10,038,147) $ 194,689,382 20 WILLIAMS GATEWAY AIRPORT AUTHORITY NOTES TO THE BASIC FINANCIAL STATEMENTS Fiscal Years Ended June 30, 2008 and 2007 B. Purchase commitments As of June 30, 2008, WGAA had entered into various contracts and commitments for purchases of goods and consulting and construction/renovation services, both on its own account and under grant programs. June 30, 2008 June 30, 2007 Open purchase commitments (net of cost of goods and services received against these commitments) $ 3,500,000 $ 5,400,000 Portion of above funded by grants $ 1,600,000 $ 4,641,000 WGAA had 35 active design or construction projects at June 30, 2008. These projects are expected to cost a total of $28.6 million, of which $18 million has been committed and $15 million has been spent, including closed and open commitments. At fiscal year end, WGAA's commitments remaining open with contractors relating to these projects were as follows: Spent-to-date on uncompleted contracts Project Airfield Perimeter Road Airport Capital Proj & Financial Plan Airport Master Plan Construct Code Upgrades Hangar 31 Construct Perimeter Rd/ Rel Fence Construct Taxiway B - Phase II Design W. Terminal Expansion Drainage Improvements (Airfield) - Phase I Drainage Improvements (North) - Phase II Drainage Improvements (South) - Phase I Electric meter entrances Parking Bldg 19 & 33 Revenue Controls Terminal Parking Taxiway B Phase II Weather Canopy Fire Pumps Other Total $940,931 427,086 48,295 1,354,646 54,933 2,811,470 139,763 711,358 57,703 114,909 0 20,014 107,763 52,129 11,565 4,397 6,856,962 Remaining Contract $175,084 131,514 176,956 115,371 290,937 698,076 29,623 279,067 30,731 41,839 195,095 686,851 161,644 3,159 81,436 44,855 3,142,238 C. Obligations under leases Operating leases WGAA has leased land to a tenant who constructed a building on the property and in 2000 leased the building to WGAA for 15 years. The total rent due from WGAA over the remaining life of the lease is $1,584,374 plus agreed upon escalation factors. WGAA subleases the space in the building to other airport tenants. The longterm lease agreement is classified as an operating lease. Future rents will include adjustments based on the Consumer Price Index, which are not projected in the following schedules. Total rent expenses for operating leases for the years ended June 30, 2008 and 2007 were $216,051 and $210,781 respectively. 21 WILLIAMS GATEWAY AIRPORT AUTHORITY NOTES TO THE BASIC FINANCIAL STATEMENTS Fiscal Years Ended June 30, 2008 and 2007 The future minimum operating lease payments as of June 30, 2008 and June 30, 2007 were payable as follows: Year ending June 30, 2008 2008 2009 2010 2011 2012 2013 2014-2015 Minimum operating lease payments 2007 $ 231,860 231,860 231,860 231,860 231,860 425,074 $ 1,584,374 $ 210,781 210,782 210,782 210,782 210,781 210,781 386,433 $ 1,651,122 Capital leases WGAA has entered into lease agreements as lessee for financing the acquisition of various equipment items. These lease agreements qualify as capital leases for accounting purposes. The leased assets have been recorded at cost. The assets acquired through capital leases are as follows: 2008 Asset type: Machinery and equipment Less: Accumulated depreciation Total $ 2,618,120 (495,333) $ 2,122,787 2007 $ $ 2,618,120 (361,182) 2,256,938 Capital leases result in purchases of capital assets, which are funded by outside entities. Such assets are pledged as collateral against the full payment of the lease obligations. As of June 30, 2008 and June 30, 2007, the future minimum capital lease obligations and the net present value of these minimum lease payments were payable as follows: Year ending June 30, 2008 2008 2009 2010 2011 Total minimum lease payments $ Less: amounts representing interest Present value of minimum lease payments $ 22 2,126 2,126 1,773 6,025 (497) 5,528 2007 $ $ 165,084 2,126 2,126 1,773 171,109 (2,578) 168,531 WILLIAMS GATEWAY AIRPORT AUTHORITY NOTES TO THE BASIC FINANCIAL STATEMENTS Fiscal Years Ended June 30, 2008 and 2007 D. Long-term obligations WGAA has long-term loans payable from its member governments to provide funds for its shortfall in operating revenues and for capital improvements. During FY2006, the Arizona Department of Transportation (ADOT) loaned WGAA $3 million at 4.77% interest with a 25 year term to finance construction of a hangar and teaching facility on the airport for Arizona State University. The quarterly payments began in June 2007. Changes in long-term obligations for the year ended June 30, 2008 are as follows: June 30, 2007 Loans payable Principal on member loans $ 52,284,976 Accrued Interest on member loans 10,431,554 Member loans 62,716,530 Other Loans 3,000,000 Accrued Interest on other loans 119,040 Other Liabilities Capital Leases 168,531 Compensated absences 614,290 Business-type long-term liabilities $ 66,618,391 Increases $ 8,003,720 1,881,496 9,885,216 - 501,681 $ 10,386,897 Due Within One Year Decreases June 30, 2008 $ (67,811) $ 60,288,696 12,313,050 72,601,746 3,000,000 51,229 $ (163,003) (428,443) $ (659,257) 5,528 687,528 $ 76,346,031 1,845 433,261 $ 506,209 19,874 51,229 Debt service requirements on long-term loans payable at June 30, 2008, including future interest based on current repayment schedules, are as follows: Year Ending June 30 2009 2010 2011 2012 2013 2014-2018 2019-2023 2024-2028 2029-2032 Total Principal $ 19,874 74,556 78,177 81,973 85,954 496,581 44,883,419 16,832,573 735,589 $ 63,288,696 23 Interest $ 195,514 140,832 137,211 133,415 129,434 580,358 36,351,715 15,709,572 72,115 $ 53,450,166 WILLIAMS GATEWAY AIRPORT AUTHORITY NOTES TO THE BASIC FINANCIAL STATEMENTS Fiscal Years Ended June 30, 2008 and 2007 Loans from member governments: Member governments have by agreement provided annual funding for operations and capital expenditures as follows: City of Mesa City of Phoenix Gila River Indian Community Town of Gilbert Town of Queen Creek Year Ended June 30, 2008 43.4% 33.1% 11.5% 8.9% 3.1% 100.0% Year Ended June 30, 2007 43.6% 33.3% 11.5% 9.0% 2.6% 100.0% As a condition of joining the Airport Authority, the City of Phoenix agreed to make available to WGAA $5,000,000 toward capital needs of the airport, in addition to its share of annual funding (shown). During FY08, WGAA received $4,083,719 of the $5,000,000, which is not reflected in the above percentages. Based on the Joint Powers Airport Authority Agreement entered into by the members of WGAA, all payments made to WGAA by the members are considered loans to be repaid to the members. The intent of the members in providing funds to WGAA is to invest in the operation and development of the airport for the benefit of the citizens of their communities. The Federal Aviation Administration has established a “six year rule” limiting retroactive reimbursement of contributions unless appropriate documented agreements are in place. In order to maintain WGAA’s right to eventually repay contributions made by its members, WGAA and its member governments have drawn up formal promissory notes stating that previous and future payments are to be repaid on specified dates or at such later time as WGAA's board of directors deems appropriate, with 3% interest (compounded annually). Loans payable to member governments increased by $8,003,719 in principal and $1,881,496 in accrued interest in fiscal year 2008 and by $4,641,000 in principal and $1,691,520 in accrued interest in fiscal year 2007: Amounts due each member government at year-end (including accrued interest) were: City of Mesa City of Phoenix Gila River Indian Community Town of Gilbert Town of Queen Creek Loans Payable to member governments at June 30 2008 $ 50,174,924 7,485,949 6,868,408 6,615,022 1,457,443 $ 72,601,746 2007 $ 47,063,033 2,041,000 6,231,464 6,082,545 1,298,488 $ 62,716,530 In addition to the above investments by the member governments, representatives from the City of Mesa, Gila River Indian Community, City of Phoenix, and Towns of Gilbert and Queen Creek provide time to WGAA to consult with its management, attend meetings and provide other services. 24 WILLIAMS GATEWAY AIRPORT AUTHORITY NOTES TO THE BASIC FINANCIAL STATEMENTS Fiscal Years Ended June 30, 2008 and 2007 E. Operating lease revenue WGAA leases out various facilities on the airport. Leases are primarily for office buildings and hangars, but also include ground leases for tenant development. Occasionally WGAA’s lease agreements provide for rents based on the tenants’ operating revenues or other criteria. Lease income included $208,000 and $118,000 of such contingent rents in the fiscal years ending June 30, 2008 and 2007, respectively. The following schedule shows contracted future revenue from noncancelable lease agreements in place at June 30, 2008 and June 30, 2007: Fiscal Years Ending June 30: 2008 2009 2010 2011 2012 2013 2014 and thereafter 2008 1,953,066 1,450,584 1,466,031 1,426,889 1,447,445 51,289,889 2007 $ 1,683,656 775,324 650,614 544,740 588,898 605,395 11,706,594 $59,033,904 $16,555,221 $ Totals With few exceptions, WGAA’s leases include escalation clauses, which will result in increases in future rents. The escalation clauses typically provide for annual rent increases of 5 percent or the change in the Consumer Price Index. Such increases are not included in the above figures. Several long-term land leases were signed during the year, accounting for the increase from 2007. NOTE 4 - OTHER INFORMATION A. Risk management In addition to safety efforts, WGAA’s risk management activities include purchase of commercial insurance for all significant risks. Risks retained by WGAA include normal deductibles and the small risk of losses in excess of insurance coverage. The amounts of settlements have not exceeded insurance coverage for the past three years. There have been no significant reductions in insurance coverage. The financial statements do not include any liability for claims at June 30, 2008 and 2007. Losses arising from claims and judgments are expensed when (1) it is probable that an asset has been impaired or a liability has been incurred at the date of the financial statements, and (2) the amount of the loss can be reasonably estimated. B. Contingencies 1. Air Force prime lease and deed In April 1998, the United States Air Force conveyed to WGAA a quitclaim deed for 2,931 acres of real property for the purpose of developing a public airport. Since then, portions of the leased property have been deeded to the airport as environmental clearances have been completed, including nineteen acres in March, 2008. Thirtyone acres remain under the 25-year lease, which WGAA entered in January 1996. Together, the deed and longterm lease encompass approximately 3,005 acres of land, which includes the three runways, and 120 buildings or facilities (such as navigational aids). The real property conveyed in the deed was recorded at estimated fair market value at the date of the transfer. 25 WILLIAMS GATEWAY AIRPORT AUTHORITY NOTES TO THE BASIC FINANCIAL STATEMENTS Fiscal Years Ended June 30, 2008 and 2007 Included in Property and Equipment are donated assets (referred to in this note as “the Property”) received from the U.S. Air Force (Federal government) totaling $117,811,778 (net of accumulated depreciation) that are subject to certain restrictions contained in an indenture between the United States of America and WGAA. Under the terms of the deed, this property cannot be sold or transferred and the Property must be operated as a public airport. Noncompliance with the terms of the indenture could, at the option of the Federal government, result in the Property reverting back to the United States of America. 2. Arizona Department of Transportation Property and Equipment includes $42,354,080 (net of accumulated depreciation) in improvements to real property that were paid for (in part) with funds from ADOT. Such improvements or any real property necessarily connected or used in conjunction therewith cannot be relocated, sold, transferred, exchanged, mortgaged or encumbered in any way without the prior written permission of ADOT. 3. Economic dependence WGAA is dependent upon its members to fund its current shortfall in operating activities. Continuation of construction and improvement activities is dependent upon continued support from the federal government and other governmental entities. C. Related party transactions WGAA has earned revenues, incurred expenses and made other payments involving some of its member governments. Following is a summary of these transactions: WGAA Capital Projects WGAA Revenues WGAA Expenses Fiscal Year ended June 30, 2008 City of Mesa Town of Gilbert $ 8,687 - $ 757,278 225 $ 4,017 - Fiscal Year ended June 30, 2007 City of Mesa Town of Gilbert $ 8,114 - $ 700,693 - $ 24,224 - Sales Taxes Collected/ Remitted $ 99,191 - $ 137,121 - WGAA revenues above consist of real property leases, utilities billings and minor maintenance work. WGAA expenses include airport rescue and fire fighting protection and permits. D. Retirement plans Arizona State Retirement System – Plan Description WGAA contributes to a cost-sharing multiple-employer defined benefit pension plan administered by the Arizona State Retirement System. Benefits are established by state statute and generally provide retirement, death, long-term disability, survivor, and health insurance premium benefits. The system is governed by the Arizona State Retirement System Board, according to the provisions of A.R.S. Title 38, Chapter 5, Article 2. The System issues a comprehensive annual financial report that includes financial statements and required supplementary information. The most recent report may be obtained by writing to the Arizona State Retirement, 26 WILLIAMS GATEWAY AIRPORT AUTHORITY NOTES TO THE BASIC FINANCIAL STATEMENTS Fiscal Years Ended June 30, 2008 and 2007 3300 North Central Avenue, P.O. Box 33910, Phoenix, AZ 85067-3910 or by calling (602) 240-2000 or (800) 621-3778. Funding Policy - The Arizona State Legislature establishes and may amend active plan members' and WGAA's contribution rates. For the year ended June 30, 2008, active plan members and WGAA were each required by statute to contribute at the actuarially determined rate of 9.60 percent (9.10 percent retirement and 0.50 percent long-term disability) of the members' annual covered payroll. WGAA's contributions to the System for the years ended June 30, 2008, 2007, and 2006 were $481,573, $406,831, and $324,171, respectively, which were equal to the required contributions for the year. Deferred Compensation Plans WGAA offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan is available to all WGAA employees and permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death or unforeseeable emergency. Trust agreements are in place, making these funds available only to employees and their beneficiaries. Accordingly, these funds are not reflected in WGAA financial statements. WGAA provides its employees the opportunity to participate in two plans: one administered by ING Insurance & Annuity Company and the other by the International City Management Association. E. Subsequent Events In August 2008, Allegiant Airlines agreed to loan WGAA $3,000,000 to expand the passenger terminal to accommodate more passengers due to increased operations. This loan will be repaid along with $1,000,000 in interest out of future Passenger Facility Charge (PFC) revenues. The FAA approved WGAA’s application to impose PFC’s beginning November 1, 2008. 27 THIS PAGE BLANK 28 SUPPLEMENTARY INFORMATION 29 THIS PAGE BLANK 30 AIRPORT - All Operations Original 2008 Budget Revised 2008 Budget Fiscal YTD Actual % of Budget YTD = Operating revenues Fueling Sales Flowage Fees Landing Fees Lease Income Misc. Services Tie Down / Hangaring Income Total operating revenues YTD Actual Over(Under) Ann'l Budget 100.0 8,562,533 611,804 245,252 2,893,002 546,801 119,936 12,979,328 8,562,533 611,804 245,252 2,893,002 546,801 119,936 12,979,328 7,147,262 611,192 180,110 2,485,384 734,803 145,204 11,303,955 83% 100% 73% 86% 134% 121% 87% (1,520,881) (612) (65,142) (407,618) 293,612 25,268 (1,675,373) Cost of Goods Sold Cost of Goods Sold re Service Work Cost of Fueling Sales Total Cost of Sales 36,134 4,231,331 4,267,465 36,134 4,231,331 4,267,465 39,335 2,629,549 2,668,884 109% 62% 63% 3,201 (1,601,782) (1,598,581) Gross Margin 8,711,863 8,711,863 8,635,071 99% (76,792) Operating expenses Advertising Bad Debt Expense Bank/Credit Card Fees Equipment - Office Equipment - Operating Equipment - Rent Fringe Benefits Fuel Insurance Lease Expense (Real Estate) Office Supplies Operating Supplies Other Postage & Shipping Printing Professional Services Repair & Maintenance Salaries Telephone/Radio Training Travel Utilities Total operating expenses 374,280 12,000 77,809 82,600 26,950 176,236 1,941,950 82,488 309,000 215,259 93,700 100,503 91,352 25,065 76,548 1,565,938 744,865 4,633,549 99,866 86,611 123,381 375,142 11,315,092 388,280 12,000 77,809 82,600 26,950 176,236 1,941,950 82,488 309,000 215,259 93,700 100,503 91,352 26,065 86,548 1,565,938 890,350 4,633,549 99,866 86,611 123,381 375,142 11,485,577 323,507 12,000 79,757 107,126 26,998 152,510 1,875,444 110,425 270,790 216,626 85,846 96,885 90,022 16,716 65,167 1,358,903 909,145 4,710,533 88,670 64,615 72,554 386,511 11,120,750 83% 100% 103% 130% 100% 87% 97% 134% 88% 101% 92% 96% 99% 64% 75% 87% 102% 102% 89% 75% 59% 103% 97% (64,773) 0 1,948 24,526 48 (23,726) (66,506) 27,937 (38,210) 1,367 (7,854) (3,618) (1,330) (9,349) (21,381) (207,035) 18,795 76,984 (11,196) (21,996) (50,827) 11,369 (364,827) Operating income (loss) before Depreciation (2,603,229) (2,773,714) (2,485,679) 90% 288,035 Depreciation Operating income (loss) 7,247,029 (9,850,258) 7,247,029 (10,020,743) 7,099,278 (9,584,957) 98% 96% (147,751) 435,786 Nonoperating revenues (expenses) Investment income Other income Loss on disposition of assets Interest expense - member govts Interest expense - other Other non-operating expense Total nonoperating rev (exp) 124,750 4,587 0 (1,904,266) (177,062) 0 (1,951,991) 124,750 4,587 0 (1,904,266) (177,062) 0 (1,951,991) 274,067 27,631 (605,078) (1,881,496) (114,859) 2,883 (2,296,852) 220% 602% -99% 65% -118% 149,317 23,044 (605,078) 22,770 62,203 2,883 (344,861) (11,802,249) (11,972,734) (11,881,809) 99% 90,925 11,805,733 11,805,733 15,995,163 135% 4,189,430 4,113,354 -2463% 4,280,355 Income before contributions and transfers Capital contributions (capital grants earned) Change in net assets 3,484 31 (167,001) THIS PAGE BLANK 32