City of fort wayne utilities

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  • CITY OF FORT WORTH, TEXAS FIRE LANE AND FIRE HYDRANT ...
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City of Fort Wayne Wastewater Treatment Plant

B42567
City of Fort Wayne Utilities
A Division of the
City of Fort Wayne, Indiana
Financial Statements
FI09
L/09/2
E013
D
December 31, 2012 & 2011
CITY OF FORT WAYNE UTILITIES
Table of Contents
Page
INDEPENDENT AUDITORS' REPORT 1-2
MANAGEMENT'S DISCUSSION AND ANALYSIS 3-9
FINANCIAL STATEMENTS:
Statement of Net Position 2012............................................................ 10
Statement of Net Position 2011............................................................ 11
Statement of Revenues, Expenses, and Changes in Net Position 2012........ 12
Statement of Revenues, Expenses, and Changes in Net Position 2011........ 13
Statement of Cash Flows 2012........................................................... 14
Statement of Cash Flows 2011........................................................... 15
Notes to Financial Statements 16-41
STATE OF INDIANA
AN EQUAL OPPORTUNITY EMPLOYER STATE BOARD OF ACCOUNTS
302 WEST WASHINGTON STREET
ROOM E418
INDIANAPOLIS, INDIANA 46204-2769
Telephone: (317) 232-2513
Fax: (317) 232-4711
Web Site: sboa
INDEPENDENT AUDITOR'S REPORT
TO: THE OFFICIALS OF THE CITY OF FORT WAYNE UTILITIES, ALLEN COUNTY, INDIANA
Report on the Financial Statements
We have audited the accompanying financial statements of each major enterprise fund of the City
of Fort Wayne Utilities (City Utilities), as of and for the years ended December 31, 2012, and 2011, and
the related notes to the financial statements, which collectively comprise the City Utilities' basic financial
statements as listed in the Table of Contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements
in accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor's judgment,
including the assessment of the risks of material misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor considers internal control relevant to the
entity's preparation and fair presentation of the financial statements in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the City Utilities' internal control. Accordingly, we express no such opinion. An audit
includes evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the
financial statement.
We believe that the audit evidence obtained is sufficient and appropriate to provide a basis for our
audit opinions.
INDEPENDENT AUDITOR'S REPORT
(Continued)
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of each major fund of the City Utilities as of December 31, 2012, and
2011, and the respective changes in financial position and cash flows, thereof and for the years then
ended, in accordance with accounting principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that
Management's Discussion and Analysis, as listed in the table of contents, be presented to supplement
the basic financial statements. Such information, although not part of the basic financial statements, is
required by the Governmental Accounting Standards Board who considers it to be an essential part of
financial reporting for placing the financial statements in an appropriate operational, economic, or
historical context. We have applied certain limited procedures to the required supplementary information
in accordance with auditing standards generally accepted in the United States of America, which
consisted of inquiries of management about the methods of preparing the information and comparing the
information for consistency with management's responses to our inquiries, the basic financial statements
and other knowledge we obtained during our audit of the basic financial statements. We do not express
an opinion or provide any assurance on the information because the limited procedures do not provide us
with sufficient evidence to express an opinion or provide any assurance.
Bruce Hartman - State Examiner
State Board of Accounts
June 27, 2013
Management's Discussion and Analysis
Introduction
As management of the City of Fort Wayne Utilities (Utilities), we offer readers of
the Utilities' financial statements, this narrative overview and analysis of the
financial activities of the Utilities for the fiscal years ended December 31, 2012
and 2011. We encourage readers to consider the information presented here in
conjunction with additional information that we have furnished in the basic
financial statements and the notes to the basic financial statements.
Financial Highlights
? In August 2011, the Indiana Utility Regulatory Commission ratified an
agreement to transfer (sell) all Electric Utility operating assets in exchange
for a multi-year compensation package in excess of $39 million over 15
years. The Utilities recognized a gain of $24.6 million from the transfer.
With the exception of a few non-operating capital assets, the Electric
Utility transferred its net position valued at $61.4 million to the City's
Community Legacy Fund.
? The assets of the Utilities exceeded its liabilities (net position) as of
December 31, 2012, 2011 and 2010 by $481.6 million, $525.3 million and
$481.6 million, respectively. The reduction in net position in 2012 reflects
the transfer of $61.4 million to the City.
? The Utilities' net position increased (decreased) for the years ended
December 31, 2012, 2011 and 2010 by ($43.7) million, $43.7 million and
$16.2 million, respectively. Excluding the transfer of $61.4 million to the
City, the Utilities' net position increased in 2012 by $17.7 million.
? The Utilities' added new bonded debt and long-term notes payable for
years ended December 31, 2012, 2011 and 2010 of $100.0 million, $69.4
million and $44.2 million, respectively. The 2012 increase in debt consists
of one new Water Revenue Bond, one new Wastewater Revenue Bond,
one new Wastewater SRF loan and additional withdrawals against existing
SRF loans.
The Utilities were able to take advantage of the recent low interest rate
financial markets and acquire new long term debt in 2012 at rates ranging
from 1.78% to 3.0%. Additionally, refunding bonds issued in late 2012
and early 2013 at rates ranging from 1% to 3% were issued to retire bonds
with interest rates ranging from 4% to 5.5%.
? The Utilities' net investment in capital assets for the years ended
December 31, 2012, 2011 and 2010 increased approximately $57.7
3
million, $27.2 million and $40.3 million, respectively. Significantly, the
Utilities continue to meet all 2009-2012 capital investment milestones
required by the 2008 Federal Consent Decree.
Overview of the Financial Statements
This discussion and analysis is an introduction to the Utilities' basic financial
statements. The Utilities are governmental entities classified as enterprise funds,
subsets of proprietary funds. When an entity charges a fee to cover the entire
cost of its operation, these services are classified as a proprietary fund. And
more specifically, when an entity is self-supported completely by providing
services to outside customers, it is an enterprise fund. An enterprise fund's
financial statements are comprised of three statements and the accompanying
notes to these statements. The three statements are: 1) statement of net
position, 2) statement of revenues, expenses and changes in net position and 3)
statement of cash flows. The notes provide additional information that is
essential to a full understanding of the data provided in the Utilities' financial
statements. The notes can be found on pages 16-41 of this report.
The Utilities provide water, wastewater, stormwater, and yard waste services.
The Utilities' financial statements have been prepared to reflect the activity of
each of these services. The Electric Utility's generation and distribution systems
(operating system) were leased to a private firm in 1975 and the entire operating
system was purchased by that private firm in 2011. Since 1975 portions of the
lease payments were accumulated in a Community Trust Fund and that Trust
Fund coupled with the assets generated from the sale of the Electric Utility's
operating assets were transferred to the City Community Legacy Fund in 2012.
City of Fort Wayne Utilities
Condensed Statement of Net Position
($millions) Variance Variance
December 31 2011-2012 2010-2011
2012 2011 2010 $millions % $millions %
Net capital assets $ 701.0 $ 643.3 $ 616.1 $ 57.7 9.0% $ 27.2 4.4%
Other assets 150.7 215.1 132.2 (64.4) -29.9% 82.9 62.7%
Total assets $ 851.7 $ 858.4 $ 748.3 $ (6.7) -0.8% $ 110.1 14.7%
Current liabilities 40.9 55.0 53.7 (14.1) -25.6% 1.3 2.4%
Long term liabilities 329.2 278.1 213.0 51.1 18.4% 65.1 30.6%
Total liabilities 370.1 333.1 266.7 37.0 11.1% 66.4 24.9%
Total net assets $ 481.6 $ 525.3 $ 481.6 $ (43.7) -8.3% $ 43.7 9.1%
Net invested in capital assets $ 424.2 $ 412.6 $ 408.2 11.6 2.8% 4.4 1.1%
Restricted 35.7 68.5 56.2 (32.8) -47.9% 12.3 21.9%
Unrestricted 21.7 44.2 17.2 (22.5) -50.9% 27.0 157.0%
Total net position $ 481.6 $ 525.3 $ 481.6 $ (43.7) -8.3% $ 43.7 9.1%
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