Text

Orlando Utils Commission 1996 Annual Rept
	ML20138H165
Person / Time
Site:	Crystal River
Issue date:	09/30/1996
From:	Haven R, Martinez M; ORLANDO UTILITIES COMMISSION
To:	;
Shared Package
ML20138H133	List: 3F0497-13, Forwards Annual Financial Rept for 1996 & Annual Financial Repts for Gainesville Regional Utils,Fl Progress Corp, Orlando Utils Commission,City of New Smyrna Beach,City of Leesburg,City of Tallahasee & City of Ocala; ML20138H143; ML20138H150; ML20138H165; ML20138H193; ML20138H209; ML20138H219; ML20138H227;
References
	NUDOCS 9705070089
	Download: ML20138H165 (118)
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A message to our staiseholders Last year we told you we were positioning the 1,013 employees, the lowest level since 1988, representing Orlando Utilities Commission for competition. This year's a 20% improvement in productivity since then. This was exceptional pedonnance shows we are well on our wayl accomplished through normal attrition and stimments. ~ No one knows when stail wheeling will come to Electric operating and maintenance costs per megawatt Florida's electric utility industry, bringing with it customer hour were also lower than in 1988. choice. But the possibility of this change has provided us We are progressing on schedule with Water Project 2000, with the oppodunity to change, too. 'As a result, overall. our plan to complete the most compmhensive improve-perfm mance for Fiscal '96 was exceptionally simng, and ments to the water system in OUC history by the year 2000. our customers are almady beginning to enjoy the benefits ' Our first new ozone water tmatment plant is scheduled to ofcompetition. begin operation this year. Construction is underway on the - We brought our second 468-megawatt coal-fimd second new ozone tmatment plant and on converting . generating unit on line on time for $460 million - existing plants to this impmved tmatment process. We are 562 million under budget - and witliout an incmase in continuing to pay for these major impmvements through - the price of electric service to our customers. The typical existing financing and increases in water rates and fees. ' Orlando resident will pay only 2.3% more for power in Even with these increases, our water rates remain among - 1997 than a decade ago. And the price of power for our the lowest among major water utilities in the state. commertial customers mmains among the lowest in the We are proud of the year's accomplishments and of our state. At the same time, we achieved a moord level of employees whose skill and dedication made this level of electric reliability, performance possible. In the next year, we will continue - We have achieved these milestones by being ahead of to focus on controlling costs and maintaining our excellent the curve. OUC was among the first utilities in the nation standing in providing high quality and miiable services, to restructum its electric operations. This was accom-flowever, our continued success will not rest on such plished one and one halfyears ago, and this year we are accomplishments alone. There l>. a new entrepreneurial now reaping the benefits of this major morganization. spirit at 000. We are facing the future from new Electric and water sales and mvenues reached record perspectives and envisioning prospects for new business highs. Combined revenues were $381 million while net opportunities that will further strengthen our competitive income was the highest it has been in a decade - $39.75 position. = million. In turn, this produced a record transfer to the City Ultimately, success for OUC will depend on fonning of Orlando and its citizens. With the new generating unit in strong alliances and strong relationships with our operation, sales of wholesale power rose 62.9%, driving customen. Therefore, in Fiscal '97 our focus will be total electric sales to a moord 6.2 million MWH,18.9% to become the utility of choice by understanding our h'igher than 'the previous year, customers' needs even better and developing innovative Meanwhile, the size of our workforte has declined to services to meet those needs. l / r Mel R. Martinez Robert C. Haven, P. E. President - General Manager and Orlando Utilities CcT.,,-_'n's, Chief Executive Officer 3 m o

P E R F 0 R H A N C E P E R S P E C T I V E S i Simrv results eam O~ 5 marks or Fiscal '96, combined F revenues rose $40 year, OUC ranked fifth low-electric and water TOTAL. OPERATING REVENUES est in the price of power for residential customers per million to a total of $381 (994: ? :. 53su 1,000 KWIIin a comparison million, an 11.8% increase } } l to 12 peer utilities in dm 0995Y'E[S3MM over the previous year. Net j state. In the commercial 1 I income rose 11.2% to $39.75 category,it ranked second , 1994. " $326,2 million, the highest levelin l l I lowest.m pn,ce for the largest a decade. ldM.2 $Wd}H M In the spring, an analyst k l Water Business Unit I reported in Moody's Credit 199T. ' ~. 5307.3 l Water Business Unit Perspectives that OUC is All figures are in millions also posted record sales "among the municipal and revenues for Fiscal '96. utilities that Moody's expects from sales to other utilities rose 16.5% to $264.7 million, Operating revenues rose to be positioned to compete and power marketers, due primarily to a $26.4 13.4% to $26.65 million within a newly deregulated Revenues from these sales million increase in fuel while sales rose 2.4% to 27.3 electric industry." And at the increased 56% over the expenses. Fuel expense billion gallons. The increase beginning of the new fiscal previous year to a record increases were tied to higher in revenues was driven year, heding rating agencies $76.5 million. In terms of sales and higher natural gas primarily by the first of a affirmed OUC's double A consumption, bulk sales rose and oil prices. five-year series of 10% rate lxmd ratings which it has 62.9% to 2.2 million MWii. increases. maintained since the 1940s. Total electric sides rose 18.9% Electric rates competitive These rate increases are to a high of 6.2 million MWii. For Fiscal'96, the typical planned to help fund Water Electric Business Units Winter weather also residential customer's Prohtt 2000, the most com. With the startup of Stanton significantly affected sales, electric bill was $77.47 a prehensive program of water 2 and a longer period of cold with OLC experiencing the month for 1,000 KWH, system improvements and weather, total electric operat-highest number of heating only 2.3% higher than in expansion in the history of ing mvenues rose $37 million degree days since 1981. 1987. For Fiscal '07 the price the utility. The Commission to a record $354 million As a result, residential sales of OUC power for retail has also approved a second while ehotric rates remained increased 6.4%. Total active customes will remain 10% increase for Fiscal '97 unchanged. retail ehmtric services unchanged, even with the Even with this second Nearly three-fourths of the increased 2.2% to 129,714. startup of Stanton 2. increase the price of water increase in revenues was Electric operating expenses At the end of the fiscid for an Orlando resident will

OPERATING REVENUES OPERATING EXPENSES and ? { i s!&Rt r i o ""d w3mns Midb. l All figures are in millions l l be among the lowest in the approximately the amount and ample financial reserves. expenditures. The only major state. That customer will OUC would have paid the Fitch investors Service capital improvement project then pay $10.82 a month for City over time under the and Standard & Poor's also now is Water Project 2000. 10,000 gallons of water, rolling average method. affirmed their AA+ and which includes spending Total active services AA ratings of senior debt approximately $160 million increased 1.9% to 109,437. High ratnigs affirmed respectively. to improve and expand the Moody's investors Service water system. This program Benefits for stakeholders reported that OUC is Financial Management of capital improvements is OUC annually makes " positioned strongly for As it continues to prepare being funded with present significant cash transfers to competition" when it for competition, OUC is bond proceeds and water its owners - the City of announced that it had focusing on reducing fixed rate increases. Over the next Orlando and its citizens - confirmed its Aa1 rating on costs. It is holding the line several years, OUC may based on revenues and net the utility's senior debt in on debt and writing down issue approximately $40 income. For Fiscal '96, it November,1996. some of its non-oconomical million in bonds to provide Nr's",$"incrcaIo"f !000 is positioned strongip tor competition; ll"1 y l""""""8 '"' ~ '" "d 22.9% over the previous aCC0rding"10 Moody's Investors Service; o year, However, this unusually Productivity gains high increase is due in part A Moody's Gmdit Perspectives assets. Its debt / equity ratio In Fiscal'96, the number to a one-time $3.6 million report concluded that has steadily improved over of OUC employees declined udjustment. The balance " Financial flexibility, low the last four years. In Fiscal to 1,013 through normal of the transfer includes a cost structure, and manage- '96 that ratio was 72%/28% attrition and retirements. dividend payment of ment's aggressive planning compared to 77%/23% in This Icvel of employment is $23.8 million, up 16% over for change are all key Fiscal '93. lower than it was in Fiscal the previous year, and a components" that should No new debt is anticipated '88. In that span of time, revenuo-based payment of enable OUC to remain among for Fiscal '9/. However, on productivity has improved 4 2.2 million, up 4.4%. industry leaders, it also December 1,1996, OUC significantly. Now there is Starting in Fiscal '96, the noted that OUC has a " sound issued 599.995 million in one OUC employee for l dividend transfers are based financial and market bonds to refund $99.995 every 236 active retail on the year's net incomo position" with its strong million in Bond Anticipen electric and water meters. I instead of a five-year rolling financial margins, competi-Notes issued in 1991. In Fiscal '88, that ratio was average of not income. Tim tive ekctric retail rates, in general, OUC is one employee for every one-time 6djustment was strong debt service coverage, reducing annual capital 196 meters.

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E L E C T R O S P E C T 1 V E S Service Ou Can CO ton n a study of 41 major reliability, the Electric This extraordinary mainte-and critical customers such electric utilities spanning Distribution Business UnP nance effort, coupled with a as hospitals, airports, post the continental U.S. and staged an aggressive preven-conunued emphasis on offices, and other public including Hawaii and tive and pmdictive mainte-expeditious restoration facilities, as well as major England, OUC's distribution nance effort in Fiscal'96. of service after outages, commercial customers. system nmked e cond in An exhaustive inspection helped OUC achieve record Within 20 seconds, this reliability. This ive t.ie of the distribution system reliability this year;it also monitoring system auto-conclusion of the 996 wa4 conducted over a four-enhances future reliability. matically reports outages. Electric 'Dunsmission and month summer period. enabling OUC to respond Distribution Best Pmctices Repairs were made where Yalue-added services immediately. Suney conducted by needed and trees trimmed. EDBU has established a Theodore Barry & Associates, .. major cause of outages new Power Quality Section, Energy Management a nationally recognized in the system. All of this committed to developing EDBU has also laid the management consultant, was accomplished by a value-added services and groundwork for implement-and was based on calendar strategic combination of energy solutions for OUC's ing the first phase of a 1995 performance. insourcing and outsourcing key commercial customers in u'lique energy management in Fiscal '96, OUC work. the coming year, program in Fiscal'97. While designed to help meet surpassed its own best record 10U0 is committed t0 maintaining.itS/ W system demand criteria, a by reducing system interrup-I[800fd Of BM0pti0fdlf8llabiIit[I "'i" l"' ""P"'i "Y "'"""d "" I tions to an average of 38.8 '~ reducing the peak demand minutes per customer per year. Its previous record was This effort included its staff already provides on sehx.ted distribution 39.2 minutes in Fiscal '93. infrared inspection of th9 service beyond the meter, circuits. This will extend At that time OUC ranked first underground system's 2,200 inspecting customers' equip-the useful life of existing in reliability among major three-phase transformers and ment with sophisticated distribution equipment Florida utilities. Since then, switches. Line technicians infrared and ultrasound while enhancing reliability l utilities have discontinued also inspected 38 apartment diagnostic equipment. This and deferring - or even sharing this data because of and condominium complex-helps businesses prevent eliminating - the need to competitive pressures. Those es and subdivisions. As a equipment failures and lost make major construction t,ame pressures, however, result, overhead equipment productivity, investments. This voluntary only motivated OUC to make failures were down 58% A new automatic outage program is designed to I a good record even better. and foliage-related outages reporting system has also have minimal impact on Committed to exceptional cut in half. been installed for sensitive participants. J

E L E C T R O S P E C T I V E S Deliveririglowcost, a felale 30wer a11c va11e s ~ ] l \\ t - f I t i ! ( .~

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b A nation to restructure mong the first in the less in Fiscal'96 than in new perspectives and price of powerin 1997 will Fiscal'88, even though net developing prospects for be only 2.3% higher for its electric operations, generation was 54% higher, new business opportunities. Orlando residents than it the Orlando Utilities Distribution and transmis-Stanton 2 on time, was in 1987. Commission is ahead of the sion O&M costs for calendar under budget Approximately $100 curve and maintaining its 1995 were among the lowest Tim 468 MW Curtis 11. million of the overall project competitive edge by remain-of 40 utilities surveyed Stanton Energy Center Unit 2 cost is for leading edge ing a low-cost provider of across the nation. OUC is began commercial operation technology to protect the competitively priced and also consistently &co avur-on June 1,1996, on time environment and air quality. highly reliable power. its age in reliability throughout and $62 million under the Designed to comply with the operation and maintenance its electric operatiocs. Ilut original budget of $522 latest air quality regulations, expenses for generation OUC is not only building on million. As a result of these the unit is one of the first of (excluding fuel) were 8% success; it is also gaining and other savin,as, the retail its kind and size in the

'.yj /. to farmalize the structure nation to use a selective ) for a new wholesale power catalytic reduction system marketing division and f to remove nitrogen oxides i 'N 0 develop new strategies and (NO ) from the flue gas. [ i x non classical approaches The unit came on line in to tap the potential of this time to meet the growing ~~ needs of Orlando, and 13 market segment Also envisioned is the emergence other municipal utilities ofinnovative alliances in the state. OUC's peak with customers and even demand in Fiscal '90 was com}.etitors to enjoy 933 MW, compared to the economms of scale. 673 MW })eak recorded m OUC's Electric Transmission the summer of 1987 when c, Business Unit, operator of Stanton 1 went commercial. the power pool, now handles Like the first unit, the t : As e businees owner, OUC Commissioner Richard Fletcher, left,. short-term energy sales of a new one is jointly owned.

low cost, rehe6de power ond the value-edded energy.

1, week's duration or less. The [,lveiens Mertweing's Jon Aspuru sad other members of

se As majority owner / operator t The ResourceTeem" con denver, a.

pool consists of OUC, FMPA, OUC retains 72% of Unit 2. m - ~~ ~4 The Florida Municipal program saved approximate-increased 63% in Fiscal '90, the City of Lakeland, and a Power Agency owns 28% on ly $10 million in insurance reaching 2.2 million MWil. new member, the Kissimmee behalf of these cities: premiums. Net revenues from inter. Utility Authority. Bushnell, Clewiston, Fort At least 70% of the work-change transactions, includ-Diverse, reliable Pierce, Green Cove Springs, force was from the Central ing transmission fees, totaled generation llomestead, JacksonviPe Florida region, and 28% $25.8 million, a nearly 47% OUC has a diverse and Beach, Key West, Kissimmee, were minorities and women. increase over the previous highly reliable generation mix. Its Indian River Power Ocala, Leesburg, Starke, St. In addition,37% of the year. Cloud, and Vero Ikach. more than 560 million in Long a player in the Plant and Stanton Energy Employing approximately subcontracts, supplies, and wholesale market, OUC is Center provide OUC with 5,600 people on site during permanent plant material looking at the prospects in 88% of its not winter capa-39 months of construction, was awarded to minority this market fmm a whole bility. OUC owns a combined Stanton 2 was one of the and women business new perspective as competi-851 MW capacity at Indian safest such construction enterprises. live pressures mount. Its River where it myns thnm Pmm Resoun'es Business steam units that can burn oil projects in the nation, earn-Bulk sales and ing the STAR award from the benefits soar Unit (PRBU)is now responsi-or natund gas, and is majori-Federal Occupational Safety With Stanton 2 on line, ble for all wholesale transac-ty owner of four combustion andllcalth Administration. OUC's power sales to other tions over seven days in turbine units. OUC owns OUC's aggressive safety utilities and power marketers length. PRBU will continue 023 MW of the coal-fired [ fomc%, Thousands" Journey to *.he Center" More than 5,000 visitors were drawn to the Stanton Energy Center for the Unit 2 z THE sesication. rhe three-say cerchmtion inciuses a pubiic open house that srea 3.soo; ENTE a t,ain rise for neariy roo civic ans positicar rease,,;a power becoufa,1 fo,3oo civic, insustry, ans electric utiitty leasers;ans a picnic for more than 1,000 employees ans ,,%,wW l family members.

capacity he Stanton .- L-enable members to Ene;gy Center. 7 The remaining 12% [ f O enjoy economics of ~ M % scalein purchasing J s of OUC's not winter capacity comes from natural gas. ) its ownership of 136 P,rutecting air, water MW capacity in a OUC continues to coal-fired plant owned - he committed to by another municipal y '. protecting air utility, and a com-f, k 't quality and conserv-bined 65 MW of ( 7-mg water resources. nuclear capacity in f g s it operates the two investor-owned -g Q Indian River power power plants. $f,.Ej. i Plant considerably ' All of the units at U#$-{' -.- M F' Indian River and E. N h.4 ~,1 cleanor than envi- .c- .,_c y. ,, ggg ronmental regula-Stanton are above < '. A> average in reliability. } f. tions for this plant y r-- require. Stanton 1 Their equivalent [ )M' continues to surpass availability rates are ~ consistently higher . t all federal and state c emission standards than national averages while their forced outage that apply to this unit, while Stanton 2 is in rates are below national [3, s, nrhisconnf,oro compliance with emission

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storage crea is limits that are among the A delivering rate relief Strategies control 4 for ovcs customers. Imvest imposed on any coal-fuel costs [ ED-l GAS Having on emple fired plant in the nation. in Fiscal '90, the .f supply ofcoal-fsred ,N 4 ,,n,,osjon a,ips Continuous ambient air system average fuel D oil OUC mo!ntain a f low cost, reliable monitoring at Stanton cost per million BTU (4 a g. supply of power. proves that neither unit has was 52.02, approximately [ ,[' d'**'' I"',',, had a measurable impact on 7 um 13 cents higher than the fossil fuel. The system air quality in Central Florida. _% W previous year, but only fuel mix shown on the lefils boned on The Stanton E,nergy a cents higher than the reaerot'aa-Center is also a true zero average for the previous S $T UEL X decade. The system fuel water discharge facility. 9 mix for Fiscal 16 based on Neither unit releases plant wastewater into surface or generation was: coal. 65.5%: ground water, also. Both gas 21.6%; oil,5.8% and assets, and coordinates fuel aggressively manages its coal units use reclaimed Orange nuclear, 7.1% needs daily with power inventory, keeping on hand County wastewater and Power Resources plants and power dispatch to approximately a 15 day storm runoff as cooling maintains a diverse portfolio farther control its fuel costs. supply of coal compared to water. Thus, OUC provides of short-and long-tenn OUC entered into favor-the 45-day industry average. the county with an c<mtracts with terms tied ably priced coal contracts OUC also plans to join environmentally sound to market indices or to fixed with two more suppliers, the Florida Gas Utilities, an way to dispose of up to 10 prices. It also manages retaining the unilateral right alliance of municipal electric million gallons a day of partnerships, markets fuel to extend the contracts, it and gas utilities fonned to treated wastewater.

/ E L E C T R O S P E C T I V E S Oe 33 <<COIlnect1011s 0 Transmission llusiness - ' !-- 2 Cashing in on change UC's Electric D' / ~ OUC infrastructure - I ) / Unit (ETHU) has the I"*""' SP"" interconnections that give f / m distribution ducts, even OUC the ability to market / wholesale energy across the / - old abandoned water pipes, as well as dark fiber-is in nation. It now has thirteen p 4i 230 KV interconnections demand by telecommunica-7 / tions companies seekmg with six Florida utilities p j' ' / ""88 I """ *"'k IS' which,in turn, link it to ETHU is leveraging these i the nationwide grid. These 1 interconnections enhance ' T [_,g e/ assets and others to pay for l/ -j cmnpleting OUC's liber / reliability as u cll as facilitate f, f. ptics system and generating energy marketing in a net menues, to. Companies competitive environment. k, f am leasing cap city n OUC's I Preparing for deregulation, E/, " " " " " 9"" N ' ' ' " 'j - ? ETHU is filing an open h ' / in its former load dispatch / access transmission tariff center. Othon am buying g with the Federal Energy / Regulatory Commission ' y 5:' [ l and installing fiber for (FERC) under its " safe ' 5 ' # M/ /$. s [ OUC in exchange for the . i r@t to use some of tlm harbor" provision for non-Eopcinashe'madL, - posWea em enhanced by no wrwen r I 230 W aren nasw.= ti.: wish sin nome usesies end she n.si wide utility's infrastructure, junsdictional utilitm.s such .g y %gg as municipal entities. i besiana wait the 8esicol oponeer orthe swide Monicipes reww p t so cmn;

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K..in c.m -,e um J the sale of a portion of the Building for success needed to carry power from digital system on this loop capacity of a 230 KV in Fiscal '90, a new the new Stanton unit and within 18 months. transmission line to another 14-mile 230 KV transmission enhances reliability. Negotiations are also utility, netting a gain of line linking the Stanton This business unit also underway to begin extending S6 million in revenues Energy Center to the Taft completed the installation this high-speed fiber and nmeiving a portion of Substation was completed on of a 160-mile fiber-optic loop communication system to capacity in one of that time and under ht.dget. This around the City of Orlando, its interconnections with utility's transmission lines line provides the capacity It now expects to install a other utilities. and substation.

W A T E R W A Y S Launc:ainstae / o ) H O ~C f eet 2 I ,,.-..,n y., m 7 m, to modernize its Oaone N W water h h nemew Wess M. U k will deelver top inweer that sesses es good or 6etter then bettir d and, computer control L costs nesch less.^ system so that it + can continue to f-j .. operate all ofits / ) water plants by 4,g.a, ) s' ' ( Iremote control. . ', g j g, h By implementing ?, .T the ozone process, [ *. ' ' A he Water Business Unit OUC will significantly ..'.a/ T ahead to launch a fleet is moving full speed reduce the amount of , g. # ' ' l.', g,,,. a chlorine used in treatment .f (- of new and renewed water and completely remove './ j ( treatment plants that will hydrogen sulfide - a harm-( ") ' dispense a new product: less, naturally occurring ? j. J. g' / Il 0UC-ozone-treated compound that gives water ,(* 2 water that will taste as good an unpleasant taste and odor. or better than bottled water Fla hip plant 9 4 and cost much less. to bu in'97 , j g,. ~- It is doing this under the in 1997, OUC will place its 'y;',p i-banner of Water Project 2000, first ozone-treatment plant in 4 1-the most comprehensive service. This Southwest Ui ICE. [h I,' plan for expanding and plant is located on Thrkey ., %f ] ~. modernizing the water Lake Road near Universal i system infrastructure in Studios. Once it is in full OUCi history. OUC is service. OUC will be able to investing approximately close and remove both the $165 million to build new Martin and Dr. Phillips ozone treatment plants, to Water Treatment Plants. expand and convert existing The new plant will have a plants to ozone, to expand capacity of 30 million and improve pipelines, and gallons a day and is

projected to cost $29 million. a its new plants. Construction started in 8 a This new treatment November 1996 on an ozone 1 process helps prevent copper water treatment plant at the 5 or lead from leaching into N-water from customers' (# corner of Weber and Highland Avenue, near the 47-year-old plant it will plumbing. 3< The natural copper orlead replace. This plant is ] content of OUC water is well t scheduled to ho completed .f within all safe drinking in 1999. After its completion, water standards. However, the old plant will be there may be instances demolished and removed. W where the level of copper or Also in November 1996, lead in drinking water is construction started on s higher than normal because converting the Conway of prolonged exposure of the Water Plant to ozone and water to plumbing or fixtures doubling its capacity. By the in homes or businesses, summer of 1997, work is 4 Tests conducted in 100 expected to begin on [, room of the new Southwest water plant with Wster Pmject 2 ment process was installed l homes after the new treat- "{, [ [ converting both the Pine lillis and Kirkman Water demonstrated that the Plants to ozone, too. Impact on rates pmcess is effective and These projects are expect. To fund the progressive that OUC is in complete ed to be completed within a Water Project 2000 program, compliance with regulations. Iwo-to three-year time frame. Water Pf0 ject 2000-theCommissionhasaaopied the m0St the second in a live-year Leaks linked to lightning Significantly, rll four of these plants will be low profile series or proposea 10,5 Researchers in OUC s w ter r t increases. Even Water Quality Laboratory complexes. The tall stacks C0mpfehenSiV8 %80 and odors historically associ-with the second increase, ham linked pmhole pipe ated with water plants will f0f impf0Ving the OUC s water rates remain leaks with lightning. Es is also be eliminated. among the lowest in the of p rticular significance to Wal8f SySlem state. For Fiscal 97, the Orlando which is considered FAIM on track typical Orlando resident's the lightning capital of the Excellent progress was in OUC hist 0ry. ,;;i,,,,,,,,s,,,,,,3,, nation. made in Fiscal '96 on $10.82 for 10.000 gallons of Based on their studies in developing the new Facility water a month, compared to nmdel home, they further Automation and Information the S16.51 Orange County theorize such leaks are most Management System (FAIM) charges for the same amount likely to occur in modern which will allow OUC to of water. plumbing that features operate the new, more OUC to operate plants fmm copper pipes combined sophisticated and complicat. any existing facility or a Corrosion control with nonmetallic or plastic ed ozone treatment plants by remote location with a lap-In Fiscal '96, OUC fittings. remote control as it does top computer. The new completed installing new A leading lightning presently at its existing H 0UC Southwest Water corrosion control treatment scientist has said the theory 2 plants. While OUC will Treatment Plant will be the equipment at all but one of is promising. Ilowever, more maintain a contml center, first to be completely on the its existing water plants and tests are needed to coniirm FAIM will ultimately enable new FAIM system. will install this process on its validity. s

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C O M M ! T M E N T T O C O M M U N I T I E S Beine afooc neignaor, c.O O Q menc, ancganner UC is committed to Reaching out 0 being a good neighbor, OUC combines communi-friend, and partner not ty relations activities with only to Orlando but also to ^ highly proactive communi-other Central Florida com-cations. Through its munities it serves or affects. Neighborhood Outreach Program and Speakers G,,ng back to Bureau, OUC reaches m its hometown ut in person, providing ~ As a good corporate speakers for neighborhood citizen. OUC is a major and homeowners supporter of United Arts, associations as well United Way, Public s f r clubs and civic Television Channel 24, the organizations. Minority / Women Business it ni ches out through Enterprise Alliance and cyberspace, too, at liabitat for Humanity. It was aM http://www.ouc.com. a key contributor to the c ? _.. In addition, OUC keeps Orlando Science Center's ! opc ww#.cles.#y nh she any ero #.w.) es sy, d'ove, ch < customers m. fonned new Power Station exhibit ! i'. ^ - e sw*.s pesy m. Hwe oucs ?>." / - pictured at left. [e aisem % " c Giende How,i thmugh the OUCustomer p"e sim, app,s.c.( _ _. - 4 News mad. d with bills and e Cu - - ~ ' 'e OUC employees also public meetings, and dor, ate thousands of hours of dw m 1ndustry of sponus a Manatee through special newsletters n mn service and raise thousands the Year" by the Greater Awareness Day and hosts a and notices sent to areas of dollars annually for Oweola Cmmty - St. Cloud community July 4 fireworks that may be affected by worthwhile causes. Chamber of Commerce in event at the plant. OUC construction projects. Shining in St. Cloud recognition of its community OUC extends its Educational These targeted mailings Since forming a power involvement. OUC is also an Outreach Program into may range from a few partnership with the City of active partner in North Osceola. North Brevard and hundred newsletters or St. Cloud, OUC has also Brevard County where the East Orange County schools postcards to thousands of become a partner with that staff ofits Indian IUver as well as those in its Greater letters, depending on the community, in fact, OUC was Power Plant annually Orlando service area. scope of the pn@ct.

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V A L U E A N D S E R V I C E Reachinne onc. the thet r uring the past year, to managing and utilizing D beyond the traditional OUC began to move energy and water resources gg for maximum efficiency and methods used by utilities to optimum savings. The team define customers by meter brings to businesses OUC's locations and the "one size wide range of experience in fits all mentality," focusing the utility industry and Instead upon customers' musemamamassmannemen serms as a resource by individual needs, whether working to analyze and commercial or residential. understand each business's Comprehensive efforts have THE "P"'i'i' "" ds-been initiated to better Members of The Resource imderstand the operations Team

conduct Commercial and lifestyles of our cus-RE S O U RC E Energy Surveys for commer-tomers. These efforts are cial customers. In addition, bannered under the service T E A M~

OuC ofrers energy smcieni marks of The Resoume Lighting and ufilcient Team

for the commercial Cooling Programs. Both of market and Brighterldeas*

these programs provide for the residential market. OUC's new, proactive cus-its commercial customers' incentives to assist business-In addition, OUC intro-tomer attitude and focus and abilities to successfully es in implementing the duced.its new Gold Ring

are designed to provide assis-compete in their respective retrofits and upgrades that ilomo program for the new tance to existing commercial industries.

ultimately save them money home buyer, and residential customers as To help them meet the while conserving energy. These initiatives position well as to attract new cus-challenges, OUC has assem-A record number of firru OUC as a concerned and tomers into our service area. blod The Re.oume Team *- took advantage of these committed company, as qualified, skilled profession-energy efficiency programs well as an experienced The ResourceTeam" als from throughout the in Fiscal'%. I source for innovative and With the challenges facing company who can provide Through TheResomre cificient solutions in the businesses, a key component the depth of expertise to Team *, OUC is " Dedicating area of energy and water of OUC's success in the establish new and innova-our energies to improving resources. They represent future will be determined by live, client-tailored solutions lour customers'] businesses."

r Gold Ring Homes" message: Things are Carrying the message of changing at OUC. It also energy efnciency a step more clearly distinguishes funher, OUC is partnering OUC from other local and with builders in its service state agencies. 6-area through its new Gold The new h>go made its Ring" program. A new home debut on customers' fMp in Orlando bearing a Gold redesigned monthly bills, s [ Ringa is one which surpass. The bills are now larger es standard code when it and easier to read and comes to energy efficiency, display customers' historical 4 one which is " Rated Year patterns of water and ( D Round Energy Efficient /* electric use. The Gold Ring

emblem f@%

At your service { is a symbol of long-tenn Gmd customer service is r-value, savings, and year-round comfort for the buyer OUC's primary focus, and we continue t introduce ,? that gives the builders a p marketing advantage and Pmgrams that will further enhanm convenience and helps position OUC for service. " faq%w Gemode h Wm OUC h competit.mn. c,el.R When, Ph.tk.with caseemer redeedens p,ocedwes that ' New customers can For the home buyer, the r.,pect. the m par wwce" monde ihm pee, m he,e.' A purchase of a Gold Ring, n w sign up for service by A - ~ ~ - home can mean buying more telephone and pay their through OUC's new ing our telephone service house and spending less on deposit by credit card at Automatic Withdrawal Plan. hours to evenings and for the same thne. Their bill will tell them providing walk in service heating and cooling. Compared to an identical Bill-paying has never appmximately when the hours on Saturday mornings, been easier. Customers can electronic transfer will occur. And we won't stop there. home built to local code, an OUC Gold Ring" home can call and pay their bill by OUC is also conducting a When you're focused on cost 20% to 30% less to emdit card. Or they can pay survey to see if there is the customer's needs, your operate every month. The their bill chictronically sufficient demand for extend-job is never done, buyer of a Gold Ring

home may also qualify for various Enesyy EfGcient Mortgages Thmugh Brighter Ideas *,0UC is moving beyond the

[ \\b that allow for up to S8.000 meter to improve and promote energy effciency within the more tc,.1 mortgage, f am [ g residence. Highly twined OUC representatives conduct Ushering in changes energy audits of homes, identifying home improvements A new h>go and a new bill h such as insulation or heat pumps that could help lower ushered.m other changes m. customer service at OUC customers' monthly uth bills. The impmvements typically ~ ~ " " " " " during Yiscal '06. 3he pay for themselves through energy cost savings which vibrant blue OUC logo in continue month ciler month. In addition, the improvements contemporary letters enhance the home's value and continue to save our resources. replaces a traditional logo Through Brighter Ideas *,0UC is " Dedicating our energies to [our customers'] way oflife." of orange and green. immediately conveying the

S E P T E M B E R 3 0 1 9 9 6 Aucjtec Financia~ btatements Management Commission Members & Officers Robert C. Haven ORLANDC UilLillES COMMIS510N General Manager and Mel R. Martinez Chief Executive OEcer President William H.Herrington Ray D.McCleese SeniorVice President firstVice President Contents A.Raymond Boyd,Jr. Carol P. Wilson. Ph.D. SeniorVice President SecondVice President Balance Sheets.................. A-2

',',,,*","Z,,n,t &

u Richard L Fletcher.Jr. Immediate Past President Frederick F. Haddad.Jr. Vice Presidesit Glenda E. Hood Power Resources Business Unit Mayor Commissioner i Statemenis of Revenues, Expenses, "*""*jf;* "*" v p a,3,,,c,g,,,, Eiectric Distribution Business Unit and Changes in Retained Earnings... A-4 Secretary Thomas E.Washburn Virginia B. Rutledge Vice President Betty J. Perrow Electric Transmission Business Unit Sharon L Knudsen Assistant Secretaries Statements of Cash Flows.......... A-5 vi,, inia B.Ru. dge Vice President and Chief Financial Officer George M.Standridge Notes to Financial Statements...... A-6 vice Presieent Customer & Support Services Thomas B. Tart,Esq. Vice President and Independent Auditors' Report..... A-27 Generai Counsei

Balance Sheeta Orl:ndo Utilities C:mmi:Elon September 30 I ASSETS 1996 1995 Utility Plant - Note B in Service: Electric -- Notes H and K $1,594,508,852 $1,270,374,143 Watet. 168,262,011 165,411,834 Common. 90,896,561 89,696,949 Allowances for depreciation and amortization (deduction). (493,571,323) (451,176,438) 1,360,096,101 1.074,306,438 Construction work in progress. 85,820,393 297,594,942 1,445,916,494 1,371,901,430 Restricted Assets - Notes C and D Debt serv ce and related accounts. 193,323,755 192.117.016 Construction and related accounts. 25,687,548 105,745,619 Renewal and replacement accourt. 35,270,972 33,885.487 Customer meter deposits. 15,129.355 14.254,934 1 269,411,630 346,003.056 l .1 Current Assets Cash and investments --Note D, 54,564.671 48,907,880 Accounts receivable, less allowance for doubtful accounts l (1996 -- $1,164,454,1995 -- $926,901). 40,544,291 35,202,053 Accrued utility revenue, 15,727,194 15,488,591 l Fuel for generation inventory. 13,664,536 7.866,264 Materials and supplies inventory. 26,910,279 26,930,535 l Accrued interest receivable 2.691,172 3.628,035 Miscellaneous receivables and prepaid expenses. 7,080.088 6,103.474 l 161,182,231 144,126,832 l Other Assets i Self-insurance account -- Note E. 5,642,853 6,053,049 j Investment fund, 25,108,350 25,024.050 Fuel stabilization fund 8,716,259 11,445,449 Rate stabilization fund 25,178,941 22,855,724 Unamortized debt issuance costs. 2,321,369 3,089,743 Minibond sinking funds--Note D. 9.855,527 8,241,056 Deferred compensation plan investments --Note I. 12,268,573 10,507,21i Deferred interest expense on bonds. 10,609,292 11,017,342 99,701,164 98.233,624 1 Total Ansets $1.976,211.519 $1.960,264,942 i See notes to the financial statements. A-2

C:pitalizati n cnd Llibilities September 30 CAPITALIZATION 1996 1995 Equity Accumulated retamed earnings: Reserved for debt service. $ 127,416,669 $ 137.269,273 Reserved for renewal and replacement. 35,270,972 33,885,487 Unreserved ~ invested in or designated for plant and working capital 206,593,344 183,156,869 369,280,985 354.311,629 Contributed capital--Note F, I I 2,321,866 90,106.760 481,602,851 444,418,389 Long-Term Debt - Note G Bond and note principal 1,353,821,871 1,472,944,016 Unamortized discount and deferred amount on refunding. 1143,463,783) (150,800,809) 1,210,358,088 1.322,143,207 Total Capitalization 1,691,960,939 1,766,561,596 LIABILITIES Current Liabilities ~ payable from restricted assets Accrued interest payable on notes and bonds. 35,972,586 36,232.743 Current portion of long-term debt--Note G 29.934,500 18,615,000 i Customer meter deposits and interest thereon, 15.129,355 14.254,934 81,036,441 69,102,677 Current Liabilities -- payable from current assets Accounts payable and accrued expenses. 45,514,493 39,911,625 Billings on behalf of state and local governments 9,367,892 9,346,882 Accrued payments to the General Fund of the City of Orlando - Note i 4,108,502 1,799.653 Current portion of long-term debt-Note G 89.995,500 148,986,387 51,058,160 Other Liabilities and Deferred Credits Fuel stabilization account. 8,716,259 11,445,449 Rate stabilization account 25,178,941 22.855,724 Water and electric construction deposits.. 7,942,342 27,971,788 Deferred materials and supplies 121,637 762,337 Deferred compensation plan liability -- Note 1. 12.268.573 10.507,211 54,227,752 73,542,509 Total Liabilities 284,250,580 193,703,346 Total Capitalization and Liabilities $1.976,211,519 $1.960,264,942 See notes to the financial statements. H l l A-3

t Statements of R; venues, Expenses cnd Changes in Retained Earning 3 Year Ended September 30 1996 1995 Operating Revenues $381,068.126 $340,720,505 Operating Expenses: 3 i Fuel for generation and purchased power, 131,998,173 105,580,690 Production, 39,321,263 34,570,882 Transmission and distribution 15,700,699 12,831,318 (L preciation and amortization. 44,413,198 43,076,026 Customer services. 10,869,324 9,867,044 ' O netal and administrative,, 22,881,739 21,907,522 State utilities gross receipts and property taxes. 6,445,757 6,154,190 Revenue based payment to the General Fund of the City of Orlando -- Note i 12.161,469 11,649,708 Total Operating Expenses 283,791,622 245,637,380 Operating income 97,276,504 95,083,125 Non-Operating income (Expense): Interest income. 23,603,175 26,849,565 Other income -- Note B, 8.890,767 1,257,353 interest expense. (80,948,117) (78,042,6961 i Amortization of deferred amount on refundings and other expenses (9.073,3681 (9.411,126) Net income 39,748,961 35,736,221 Accumulated retained earnings at beginning of year 354,311,629 336,822,205 Dividends to the General Fund - of the City of Orlando - Note i, (27,412,973) '(20,542,000) Depreciation of contributed utility plant. 2,633,368 2,295,203 Accumulated Retained Earnings at End of Year $369.280,985 $354,311,629 See notes to the financial statements. 1 1 i A-4 --\\

Statements of Crh Flows Year Ended September 30 1996 1995 Cash Flows from Operating Activities Operating Ineome, S 97,276,504 $ 95,083,125 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization of plant charged to operations, 44,413,198 43,076,026 Depreciation and amortization charged to fuel costs. 2,072,850 2.859,899 Depreciation of vehicles and equipment charged to general and administrative costs 1,597,358 1.985,679 Changes in operating assets and liabilities: (Increase) in receivables and accrued revenue. (6,557,455) (4,898.511) Decrease (increase)in fuel l and materials and supplies inventories. (5,778,017) 45,046 Increase in accounts payable and accruals. 14.312,668 3,342,544 increase in deposits payable and deferred items. 2,329,276 1,837,671 (Decrease) in fuel and rate stabilization accounts. (405.973) (1,307,829) Net cash provided by operating activities 149,260,409 142.023,650 Cash Flows from Non-Capital Financing Activities Dividend payment to the General Fund of the City of Orlando. (25,112,000) (19,431,000) Net cash used in non-capital financing activities (25,112,000) (19,431.000) Cash Flows from Capital and Related Financing Activities Debt interest expense. (78.886,940) (81,380,356) Principal payments on long-term debt. (17,807,142) (17,291,064) Construction and acquisition of utility plant. (130,843,375) (140,819,129) Proceeds relating to utility plant. 6,580,776 854,347 Contributed capital. 2,216,200 6,207,011 Net cash used in capital and related financing activities (218,740,481) (232.429,191) Cash Flows from lavesting Activities Purchases of investment securities. (4,020,573,U3) (4,233,299,581) Proceeds from sales and maturities of investment securities. 4,073,530,931 4.338,877,464 Investment income 26.479,090 27,307,263 i Net cash provided by investing activities 79.436,198 132,885,146 (Decrease) increase in Cash and Cash Equivalents (15,155,874) 23.048,605 Cash and Cash Equivalents at Beginning of Year 108,458,537 85,409,932 Cash and Cash Equivalents at End of Year S 93,302,663 $ 108.458,537 See notes to the financial statements. Supplemental disclosure of non-cash financing activities: During the year ended September 30,1996, approximately $22,125,000 was transferred from water and electric construction deposits to contributed capital. A-5

Notes To i Finan:ial Statement 3 September 30,1996 5 NOTE A-

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Orlando utilities commission (the Commission) are presented in conformity with generally accepted accounting principles as applicable to govemments The existing hierarchy provides that accounting guidance should first be sought in statements of the Govemmental Accounting Standards Board (GASB). If the GASB has not issued a standard applicable to a situation, then pronouncements of the Financial Accounting Standards Board (FASB) are presumed to apply. Additionally, the financial statements are presented substantially in conformity with accounting principles and methods prescribed by the Federal Energy Regulatory Cornmission (FERC), except for the method of accounting for contributed capital described in the notes to the financial statements. The following is a summary of the more significant accounting policies: Reporting Entity: The Orlando Utilities Commission (the Commission) was created in 1923 by a Special Act of the Florida Legislature as a statutory commission of the State of Florida. The Commission consists of five members, including the Mayor of the City of Orlando Members, with the exception of the Mayor who is an ex-officio member of the Commission, serve without compensation and rnay serve no more than two consecutive four year terms. The process for new member selections begins when the Nominating Board of the City of Orlando, which for this purpose functions only as a screening committee, submits the names of three persons to the Commission for consideration. The Commission may nominate one of these persons or j reject all three. The nominee is then subject to election or rejection by the Orlando City Council. Once i elected. Commission members cannot be removed for any reason by the City Council. The Commission meets the criteria of an other stand-alone government" as defir-ed in Statement 14 of the Governmental Accounting Standards Board, The Financial Reporting Entity. No component units exist as defined in Statement 14; however, the Commission has undivided mterests in a number of power plants through participation agreements, as described in Note B. Under these arrangements, the title to the property is held in the proportion of each party's interest and each party is obligated for its shu of l operations. There are no separate entities or organizations associated with the agreements. The ) Commission reports its proportionate share of assets, liabilities, revenues and expenses that are associated j with the loint operations on its financial statements. Measurement Focus and Basis of Accounting: The Commission operates the electric and water system in a manner similar to private business: therefore, operations are accounted for as an enterprise fund where costs (expenses, including depreciation) of providing services to customers on a continuing basis are recovered through user charges. The Commission's financial statements are prepared on an accrual basis of accounting, with revenues being recognized when earned and expenses recoanized when incurred. The Commission has elected to not apply FASB statements and interpretat ons issued after November 30,1989, as permitted by Statement No. 20 of the Governmental Accounting Standards Board, Accounting and Financial Reporting for proprietary Funds and other Governmental Entities that use proprietary Fund Accounting. Budgets: Revenue and expense budgets are prepared on an annual basis in accordance with the Commission's budget policy and bond resolutions and submitted to the Commission for approval prior to i October 1 of the fiscal year. Legal adoption of budgets is not required. Actual revenues and expenses are j compared to the budgets on a line item basis within departments and an analysis of variances report is j prepared and submitted to the Commission each month as required by the Commission's budget policy and bond resolutions. ] Utility Plant: Utility plant is stated at historical cost, which includes cost of contract work, labor, ) materials and allocated indirect charges for equipment, supervision and engineering and labor related costs. Donated assets are recorded at the cost provided by the developer which approximates fair market value at date of donation. The Commission charges the cost of repairs and minor replacements to maintenance expense. The cost of electric or water plant retired or otherwise disposed of, together with l removal costs less salvage, is charged to accumulated depreciation at such time as property is removed 1 ( from service. ( A-6

NOTE A-

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES--Continusd Depreciation: Utility plant is depreciated using the straight-line method for each of the various plant classifications at rates which will amortize the costs over the estimated economic useful lives of the assets. Depreciation of vehicles and other construction equipment is charged to departmental operating expenses. Amounts for all other assets are charged to depreciation expense. The estimated useful lives of utility plant are as follows: Electric Plant: Generating Plant: Fossil 20- 40 years Nuclear 27 - 36 years Structures and improvements 30 - 50 years Equi; ment 6 2/3 - 50 years Water Plant: Water wells... 25 - 50 years Structures and improvements 50 years Equipment, 6 2/3 - 50 years Common Plant: Structures and improvements 50 years Office furniture.. 3 - 141/3 years Vehicles and other construction equipment 4 - 30 years Cash and investments: Cash and investments are recorded at cost or amortized cost, except for Deferred Compensation Plan investments which are reported at market value. The Commission's investment policy, related Florida Statutes and applicable debt resolutions define investment parameters. The Commission is authorized to invest in the Surplus Funds investment Pool Trust Fund administered by the State Board of Administration of Florida, obligations of the United States Treasury and its various agencies, Interest-bearing time certificates of deposit, repurchase agreements, reverse repurchase agreements, state and local government obligations, bankers' acceptances and prime commercial paper. Repurchase agreements are purchases of securities with a simultaneous agreement that the dealers or banking institutions will repurchase them in the future at the same price plus a contract rate of interest. The market value of the securities underlying repurchase agreements exceeds the cash received, providing a margin against a decline in market value of the semrMies. Except for overnight repurchase agreements with the Commission's depository bank, securities unsninng repurchase agreements are held in the l Commissions accounts by a third party. If the dealers default on their obligations to repurchase these l securities from the Commission, the Commission would suffer an economic loss equal to the difference between the market value plus accrued interest of the underlying securities and the agreement obligation, including accrued interest. Statements of Cash Flows: For purposes cf the Statements of Cash Flows, cash and cash equivalents include all cash and investment accounts (including restricted assets) with a maturity of three months or less when purchased. Customer Accounts Receivable: The Commission bills customers monthly on a cyclical basis and accrues revenues at the end of the fiscal year for electric and water consumed but not billed. See " Rates and Revenues" below, i The customer accounts receivable balance of $40,544.291 and $35,202,053 at September 30,1996 and j 1995 respectively, includes billings done on behalf of state and other local governments. The net liability of 1 $9,367,892 and $9.346.882 at September 30,1996 and 1995 respectively, (billings on behalf of state and local governments less expenses) represents the September billings of these governments. A-7

=.---. -. - - NOTE A-

SUMMARY

CF SIGNIFICANT ACCOUNTING POLICIES-Continusd Fuel for Generation and Materials and Supplies inventory: Fuel oil, coal and materials and supplies inventories are stated at average cost. Nuclear fuel is included in electric utility plant and amortized to fuel l expense as it is used. l Investment Fund: The Investment Fund consists of monies set aside for the retirement of outstandmg 1 l debt and payment of construction costs. Unamortized Debt issuance Costs: Unamortized debt issuance costs represent issuance costs related to bond issuances which are amortized using the bonds outstanding method and recorded net of accumulated amortization. l Deferred laterest Expense on Bonds: Deferred interest exper se on bonds represents interest costs on Series 1993 and 1993B bonds which are in excess of interest costs that would have been incurred on short-term debt. The Commission elected to defer this additional interest cost for rate-setting purposes l until fiscal 1996. Deferred interest expense on bonds is amortized to interest expense over the life of the Series 1993 and 1993B bonds beginning in fiscal 1996, in accordance with the Commission's rate setting methodology, interest expense deferred during 1995 amounted to approximately $3,576.292, and deferred interest amortized to expense during 1996 was $408.050. l Contdbuted Capital: Amounts received for construction of utility plant and utility plant contributed by developers are recorded as capital contributions. Depreciation applicable to contributed utility plant is included as an operating expense in determining net income and is subsequently charged against contributed capital from accumulated retained earnings. Interest Rate Swap Agreement: The differential to be paid or received on the interest swap agreement I discussed in Note G is accrued as interest rates change and is recognized over the life of the agreement, i Unamortised Discount and Deferred Amount on Refunding: Unamortized discount on outstanding l l bonds is amortized using the bonds outstanding method and is recorded net of accumulated amortization. Deferred amount on refunding represents deferred losses on bond refundings which are amortized over the l shorter of the lives of the refunded debt or refunding debt using the straight-line method and are recorded net of accumulated amortization. j Compensated Absences: The Commission records compensation for unused vacation and sick leave as an expense in the year in which the vacation and sick leave is earned in accordance with the Governmental Accounting Standards Board 16 Accountingfor Compensated Afisences. At September 30,1996 and 1995, annual vacation leave earned but not taken was $1,183,725 and $1,107,077; sick leave accumulated but not taken was $2,505,316 and $2,446,330, respectively. i t I l Rates and Revenues: Each year, the Commission's staff performs a rate adequacy study to determine the electric and water revenue requirements. Based on this study, current cost of service studies, and regulations of the Florida Public Service Commission regarding electric " rate structure", the Commission's staff develops its electric and water rate schedules which are presented to the Commission at a public workshop then presented for approval at a subsequent commission meeting. The Commission staff makes its determination of revenue requirements using the rate base method an'd includes construction work in progress in the rate base. Therefore, in accordance with proper ratemaking theory, the Commission does not use an allowance for funds used during construction (AFUDC) in determining revenue requirements. Since the Commission's level of revenue requirements and subsequent revenue is determined without regard to AFUDC, the Commission does not capitalize interest on l construction work in progress. I l A-8 l l

NOTE A-

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES--Continued l Operating revenues are recorded based on actual billings to customers plus an estimate for accrued j unbilled electric and water consumption at the end of each fiscal year. The Commission has established a policy on recovery of fuel costs in accordance with guidelines from the Public Utilities Regulatory Policies Act of 1978 (PURPA). Under PURPA only fuel costs incurred are to be recovered. The Commission estimates on an annual basis a fuel component charge to be applied during the l i next fiscal year. The difference between the fuel costs actually charged to the customers and the fuel cost actually incurred is applied to the fuel stabilization account, The Commission determines what portion of the fuel stabilization account will be utilized to reduce rates annually during the rate-setting process, l In addition to fuel, costs 1 revenues) which are to be recovered by (used to reduce) rates in periods other than when incurred (realized) are deferred until the periods in which the Commission recognizes them in l utility rates. These items are included in the rate stabilization account. Specific approval is required by the Commission's governing board for all increases or decreases to this account. The balances in the fuel stabilization account and the rate stabilization account are funded by internally restricted cash accounts and earn the same interest rate as the Commission's operating investment portfolio. Following is a summary of deferred costs (revenues) resulting from the Commission's policy on recovery of fuel cozts and from actions by the Commission's governing board for rate-setting purposes: 4 September 30 1996 1995 Deferred interest on bonds $ 10,607,292 $ 11,017,342 Fuel stabilization account (8,716,259) (11,445,449) l Rate stabilization account. (25,178,941) (22,855,724) Deferred materials and supplies (121,637) (762,337) l $ (23,407,545) $ (24.046,168) 4 t NOTE B-UTILITY PLANT The following is a summary of utility plant at September 30,1996, by major classes: Electric Water Common Total Land 19,768,820 $ 3.544.181 1,730,508 25.043,509 Electric generating plant 1,092,523,710 1,092,523,710 Water wells 16,703,600 16,703,600 Structures and improvements. 72.123,786 6.189,841 53,407,408 131,721.035 Equipment 410.092,536 141,824.389 35,/58,645 587,675,570 i 1,594.508.852 168,262,011 90.896,561 1,853.667,424 Allowances for depreciation and amortization (417.384,578) (44,187,011) (31,999,734) (493.571,323) Construction work in progress 39.066.351 39,744,970 7,009.072 85,820.393 Net utility plent $ 1,216.190,625 $ 163.819,970 $ 65,905.899 $ 1,445.916,494 A-9

NOTE B-UTILITY PLANT--Continued The following is a summary of utility plant at September 30,1995, by major classes: Electdc Water Common Total Land $ 20 091,210 $ 3,536,488 $ 1,730,508 25,358,206 Electric generating plant 785,177,008 Water wells 785,177,008 15,934,548 15,934,548 Structures and improvements 70,954,955 6.172.266 54.076,189 131,203,410 Equipment 394,150,970 139,768,532 33,890,252 567.809.754 1,270,374,143 165,411,834 89,696,949 1,525,482.926 Allowances for depreciation and amortization (381,889,684) (40,944,051) (28,342,703) (451,176,438) Construction work in progress 281,537,987 10,624,384 5,432,571 297.594,942 Net utility plant $1,170,022,446 $ 135,092.167 $ 66,786,817 $ 1.371,901,430 participation Agreements: In 1980 the Commission entered into a Participation Agreement with Florida Power and Light Company (FPL) to purchase a 6.08951% (52 net megawatts) undivided ownership interest in St. Lucie Unit No. 2 nuclear powered electric generating facility constructed by FPL This unit is presently rated at 853 net megawatts (MW) and commenced commercial operation in 1983. The Commission has also entered into a Reliability Exchange Agreement with FPL The Reliability Exchange Agreement results in the Commission exchanging 50% of its share of the output from St. Lucie Unit No. 2 for a like amount from St. Lucie Unit No 1. a nuclear powered electric generating facility. FPL has operational control of both projects. The Commission funds nuclear decommissioning costs for St. Lucie Unit No. 2 on an annual basis in accordance w!!h the estimale included in Florida Public Service Commission's (FPSCl docket #941352-El issued December 12,1995. A trust fund has been established to provide certain financial assurances that funds will be available when needed for required decommissioning activities. The annual funding is calculated based on an estimated earnings rate of 6 5% expected over the life of the trust. The total obligation of the Commission as approved by the FPSC in 1995 is $22,494,913, which is not presented as a liability on the Commission's Balance Sheet. Trust fund assets at September 30.1996 and 1995 were $6,655,086 and $5,733,346, respectively, and were recorded as a restricted asset (see Note C - Restricted Assets). Estimated costs of decommissioning are periodically adjusted in response to requirements of the FPSC and the Nuclear Regulatory Comm!ssion (NRC). The Commission also has a Participation Agreement with the City of Lakeland, Florida dated April 4, 1978. Under the terms of this Agreement the Commission has a 40% (136 net MW) undivided ownership interest in a 340 net MW refuse and coal-fired steam generating unit (McIntosh Unit No. 3) owned by the City of Lakeland The City of Lakeland has operational control of this project. Since 1975, the Commission has owned a 1.6015% (13 net MW) undivided ownership interest in Florida Power Corporation's 835 net MW nuclear powered electric generating plant designated Crystal River Unit No. 3. This ownership interest was acquired under the terms of a single Participation Agreement with Florida Power Corporation and ten Florida municipal utilities. Florida Nwer Corporation has operational control of this project. The Commission funds nuclear decommissioning costs for Crystal River Unit No. 3 on an annual basis in accordance with the enimate included in Florida Public Service Commission's (FPSCl docket #941352 El issued December 12,1995. A trust fund has been established to provide certain financial assurances that funds will be available when needed for required decommissioning activities. The annual funding is calculated based on an estimated earnings rate of 6 5% expeded over the life of the trust.The total obligation of the Commission as approved by the FPSC in 1995 is $6,479,823, which is not presented as a liability on the Commission's Balance Sheet. Trust fund assets at September 30,1996 and 1995 were $2,544,404 and $1,949,710, respectively, and were recorded as a restricted asset (see Note C - Restricted Assets). Estimated costs of decommissioning are periodically adjusted in response to requirements of the FPSC and the Nuclear Regulatory Commission INRC). I A - 10 y

NOTE G-UTILITY PLANT--Continued in 1984 and 1985, the Commission entered into Participation Agreements with Florida Municipal Power Agency (FMPA) and the Kissimmee Utility Authority (KUA) to sell a portion of Stanton Energy Center Unit #1 (SEC !) excluding common and external facilities. SEC 1 is rated at 440 net MW. Under the terms of these agreements, FMPA has a 26.6265% undivided ownership interest and KUA hae a 4.8193% undivided ownership interest. The Commission, which has retained a 68.5542% undivided ownership interest, has operational control of this project. In 1988, the Commission entered into Participation Agreements with FMPA and KUA to sell a portion of the Commission's Indian River Plant Combustion Turbine Project for units A and B excluding common facilities. The Commission's Combustion Turbine Project for units A and B includes two 48 MW combustion { ' turbines which can generate electricity utilizing natural gas or light diesel oil. Under the terms of these agreements, FMPA has a 39% undivided ownership interest and KUA has a 12.2% undivided ownership interest. The Commission, which has retained a 48.8% undivided ownership interest, has operational control l of this project. in 1990, the Commission entered into a Participation Agreement with FMPA to sell a portion of the Commission's Indian River Plant Combustion Turbine Project for Units C and D, excluding common l l facilities. The Commission's Combustion Turbine Project for Units C and D includes two 118 MW l combustion turbines which can generate electricity utilizing natural gas and light diesel oil. Unit C was l placed in commercial operation in August,1992, with Unit D placed in service in October 1992. Under the l terms of this agreement, FMPA has a 21% undivided ownership interest. The Commission, which has retained a 79% (93 net megawatts per unit) undivided ownership interest. has operational control of this project. In 1991, the Commission entered into a Participation Agreement with FMPA to sell a portion of Stanton Energy Center Unit #2 (SEC 2) which was completed this year. Under the terms of this agreement FMPA has an undivided ownership interest of 28.4091% The Commission, which has retained a 71.5909% undivided ownership interest, has operational control of this project. Following is a summary of the Commission's proportionate share of each jointly owned plant, SEC 1, SEC 2, McIntosh Unit No. 3. and the Indian River Plant Combustion Turbine Projects include the cost of commen and/or external facilities, the other plants do not, but the participants pay user charges to the operatirm entity, According to the participation agreements, each participant must provide its own financing and each participant's share of expenses for the operations of the plants are included in the corresponding operating expenses of its own income statement. Allowance for depreciation and amortization of utility plant in service is determined by each participant based on their depreciation methods and rates relating to their share of the plant. i l Plants as of September 30,1996 Stanton Stanton Energy Energy Indian River St. Lucle McIntosh Crystal River Center Center Combustion Unit No. 2 Unit No. 3 Unit No. 3 Unit No. I Unit No. 2 Turbines Utility plant l In service $109.556.081 $108.764.978 $16,607,136 $374.501,221 $320.901,939 $55.809,035 I Allowance for depreciation & amortization (47,572,714) (44.031,179) (13.159,354) i85,244,770) (2,666.715) (10.089.726) Construction work j in progress 1.272,109 6.121,878 453.062 2 Commission's net share $ 61.983,367 $ 64.733,799 $ 3.447,782 $290.528,560 $324.357,102 $46.172.371 L i A-11

NOTE B-UTILITY PLANT--Continued l Plants as of September 30,1995 Stanton Stanton Energy Energy Indian River St. Lucie McIntosh Crystal River Center Center Combustion i Unit No. 2 Unit No. 3 Unit No. 3 Unit No. I Unit No. 2 Turbines Utility plant in service $111.074,935 $106.076,576 $15.637,424 $374,872,719 $ 15.513,501 $55.772,980 Allowance for depreciation & amortization (46,621,718) (40.499,035) (11,977,059) (76.012.407) (354.467) 18 098.427) Construction work in progress. 263.647.584 Commission's net share $ 64.453,217 $ 65.577,541 $ 3.660.365 $298.860,312 $278,806.618 $47,674.553 The Commission presents its share of jointly owned assets in utility plant classifications shown above. The Commission also presents its share of related operations in respective revenue and expense classifications on the Statements of Revenues, Expenses and Changes in Retained Earnings. lt has been determined that none of the participation agreements to which the Commission is a party meet the criteria of a joint venture as specified in Statement 14 of the Governmental Accounting Standards Board. The Commission lacks operational control over the St. Lucie Unit No. 2 McIntosh Unit No. 3 and Crystal River Unit No. 3 plants. SEC 1, SEC 2 and Indian River Combustion Turbine Projects are controlled by the Commission. Fiscal and budgetary control of SEC 1, SEC 2 and the Combustion Turbine Projects remains with the Commission. No separate governing authority exists for any of the participation plants. The Commission also has an agreement with Orange County, Florida to share operating costs of a waste water treatment facility at the SEC 1 and SEC 2 site. The Commission operates the facility and charges Orange County an annual fee amounting to $818,261 and $646.044 during the years ended September 30, 1996 and 1995, respectively. The annual fee is classified as a reduction to SEC 1 and SEC 2 operating and maintenance expenses. During fiscal year 1995, the Commission authorized an additional $2,500,000 in amortization of its interest in the Crystal River Unit No. 3 nuclear generating plant. During 1996, the commission sold 25% of the 230,000 volt Taft-to-Lakeland transmission line to Tampa Electric Company (TECO) for $5,517,175 in cash and a portion of a new $1.621,08169 KV underground transmission line and substation. (OUC owns 17.9% of the substation and 26 4% of the transmission line.) j in turn TECO will pay 25% of the operating and maintenance costs of the 230.000 volt line. The j Commission's gain on the entire transaction was $6,000.000, recorded as other income. Under the Full Requirements Power Supply agreement between the Commission and the City of St. Cloud (STC), plans are in. place to extend a 69KV transmission line to STC by January 1,1998. STC will reimburse the cost of the transmission line, plus interest over a period of 18 years. Water Project 2000 is a five-year accelerated, $178 million expansion / upgrade of the water utilities system. The Commission will increase rates 10% a year for five years to implement this program. During fiscal year 1995, the Commission authorized $1,158.240 of water plant write-down due to planned abandonment of the Martin plant, which was closed in fiscal year 1996. This write down was included as other expenses on the Statement of Revenues. Expenses and Changes in Retained Earnings. Four additional i water plants are planned to be closed in future years: Primrose, Lake Highland, Dr. Phillips, and Kuhl. The Commission has determined that the disposition of cost for these water plants, which have a net carrying value of $4.557,878 at September 30,1996, will be addressed as the project progresses. A - 12

___ - -.~. NOTE C-RESTRICTED ASSETS Certain assets are restricted by bond resolution; additionally, some assets have been classified as restricted in accordance with governmental accounting standards for enterprise funds and utility industry accounting practices. The Commission's restricted assets consist of the following accounts: 1 September 30 1996 1995 Debt senice and related accounts-Note G: Principal and interest accounts $ 55,907,587 $ 54,909,347 Debt service reserve accounts 137,416,168 137,207,669 Total debt senice and related accounts 193,323,755 192.117.016 Construction and related accounts: Nuclear generation facility decommissioning accounts. 9,199,490 7,683,056 Bond construction accounts, 16,488.058 98.062,563 Total construction and related accounts 25,687,548 105.745,619 4 Renewal and replacement account 35,270,972 33,885,487 Customer deposits and interest thereon 15.129,355 14,254,934 Total restricted assets S 269,411,630 S346,003.056 The accounts consist of: Cash 5,239 9,4 I I Investments 266,918,105 341,482,007 Accrued interest receivable. 2,488,286 4,511,638 $ 269,411,630 $ 346,003,056 NOTE D-CASH AND INVESTMENTS 1 d At September 30,1996 and 1995, the carrying amount of the Commission's cash was S1,061,183 and I $3,007,033, respectively, and the bank balances were $866,685 and $2,650,442, respectively The bank balances were covered by federal depository insurance or collateralized by a pool of U S. Government I securities held in trust by a third party bank in the name of the Commission's banking institution. The Commission invested funds throughout the year with the Local Government Surplus Funds investment Pool Trust Fund (the " Surplus Funds investment Pool"), an investment pool administered bv the State Board of Administration of Florida. Throughout the years ended and as of September 30,1996 and i 1995, the Surplus Funds investments Pool contained certain floating rate notes which were indexed cased on the prime rate and/or one and three month London Interbank Offered Rate rates. These investments, representing approximately.8% and 2% of the Surplus Funds investment Pool portfolio at September 30, 1996 and 1995 respectively, were purchased to add relative value to the portfolio. Funds held with the Surplus Funds Investment Pool at September 30,1996 and 1995 totaled $16,630,547 and $84.640, respectively. In the following schedule the Commission's investments are summarized and categorized to give an indication of the level of risk assumed by the Comrnission at September 30,1996 and 1995. Category 1 includes investments that are insured or registered or for which the securities are held by the Commission or its agent in the Commission's name, Category 2 includes uninsured and unregistered investments for which the securities are held by the bank's trust department or agent in the Commission's name. Category 3 includes uninsured and unregistered investments for which the securities are held by the bank's trust department or agent but not in the Commission s name. A - 13

J NOTE D-CASH AND INVESTMENTS--Continued j Deferred compensation plan benefit investments and the Surplus Fund Investment Pool investments are not categorized because they are not evidenced by securities that exist in physical or book entry form. Category Carrying Market investments 1 2 3 Amount Value September 30,1996: a Repurchase agreements $ 53,877,241 $23,359,000 $ 77,236,241 $ 77,236,241 U.S. Government securities 218,469,861 218,469,861 219.524,316 Other U.S. and agency backed securities. 61,115,787 61,115,787 61,140,379 State and local government securities 15,961,034 15,961,034 15,909,909 Commercial paper. 4,976,203 4,976,203 4,976.203 $354,400,126 $23,359.000 $377,759,126 $ 378,787,048 September 30,1995: Repurchase agreements $121,477,749 $ 6,933,000 $128,410,749 $ 128,410.749 U.S. Government securities, 239,965.615 239,965,615 245,860,558 Other U S. and agency backed securities. 68,838,897 68,838,897 68,774.473 State and local government securities 23,252,731 23.252,731 22,945,267 $453,534,992 $ 6.933,000 $460,467,992 $465,991.047 These investments are held in the following accounts: September 30 1996 I995 Restricted assets $269,411.630 $346,003,056 Cash and investments 54,564,671 48,907,880 Accrued interest receivable, 2.691,172 3.628.035 Self-insurance account 5.642,853 6,053,049 investment fund 25,108,350 25,024,050 fuel stabilizatien account 8,716,259 11,445,449 Rate stabilization account 25,178,941 22,855.724 Minibond sinking funds, 9,855 527 8.241,056 401,169,403 472,158,299 Less; Cash from restricted assets. (5,239) (9,411) Accrued interest receivable from restricted assets (2,488,286) (4,511,638) Cash from cash and investments. (1,061,183) (3,007,0331 Accrued interest receivable on current assets (2,691,172) (3.628,035) Accrued interest receivabie from investment fund (533,850) (449,550) Surplus Fund Investment Pool (16,630,547) (84,640) Total im estments $377,759,126 $460,467.992 Cash and cash equivalents 93,302.663 S108,458,537 investroents 302,153,432 355,110.539 Accrued interest 5,713,308 8,589,223 $401,169,403 $472,158,299 A - 14

NOTE E-SELF-INSURANCE The Commission's self-insurance program covers a portion of its workers' compensation, general liability and automobile liability exposures. An accrued liability of $400,000 has been established to recognize estimated obligations under this program at September 30,1996. A self-insurance cash and investments account is used to pay claims as incurred. A summary of activity in the self-insurance cash and investments account for the years ended September 30 is as follows: 1996 1995 Balance, beginning of year S 6.053,049 $ 5,861,680 Interest income 337,558 337,189 Payments of claims (747.754) (145.820) Balance, end of year. S 5 642 853 $ 6 053 049 Under the self-insurance program the commission is liable for all claims up to certain maximum amounts. Claims in excess of the maximum amounts are covered by insurance. The maximum amounts at September 30 are as follows: l 1996 1995 Workers' compensation S 250,000 $ 250,000 Generalliability. 1.000,000 1.000,000 Automobile liability 1,000.000 1,000,000 The commission's transmission and distribution system is not covered by insurance, since such coverage is generally not available. It is the opinion of general counsel that the Orlando Utilities Commission, as a statutory commission, may enjoy sovereign immunity in the same manner as a municipality, as allowed by Florida Court of Appeals rulings. Under said rulings, Florida Statutes limit liability for claims or judgements by one person to $100,000 or a total of $200,000 for the same incident or occurrence; greater liability can result only through an act of the Florida Legislature. Furthermore, any defense of sovereign immunity shall not be deemed to have been waived or the limits of liability increased as a tesult of obtaining or providing insurance in excess of statutory limitations It is also the opinion o: general counsel that the Commission, as a municipal utility, is statutorily immune from suit for malicious prosecution. NOTE F-CONTRIBUTED CAPITAL Changes in Contributed Capital are as follows: September 30 1996 1995 Source: Electric $ 22,503,929 $ 5,473,970 Water 2,344,545 3,151,563 Total additions 24,848,474 8.625,533 Depreciation (2,633,368) (2,2951031 Contributed Capital at the Beginning of the Year 90,106,760 83,7/6.430 Contributed Capital at the End of the Year $112,321,866 $90,106,760 l A - 15

NOTE G-LONO-TERM DEDT Long-term debt principal outstanding is as follows. Issue Date 1996 1995 SENIOR LIEN: Series 1992,4.4% to 6 00% due serially December 1996 to 2010 1972 $ 414.595.000 $ 432,875,000 Series 1993,4,75% to 5.00% due serially September 201I to 2013 and 5.125% and 5.00% due 1993 in term form in years 2019 and 2023 139,020,000 139,020,000 553,615,000 571,895.000 IUNIOR LIEN: Series 1989D 5.00% to 6.75% due in term December form in years 2017,2020 and 2023 1989 253,945,000 253,945,000 Series 1991 A,5.50% due in term form in January year 2026 I99I i15,380,000 115,380,000 Series 1992A,6 00% and 5.50% due in term August form in years 2020 and 2027 1992 74,520.000 74,520.000 Series 1993A 3.9% to 5.50% due serially lune 1996 to 2010 and 5.50% and 5.25% in 1993 term form in years 2012,2014,2023 87,290.000 87.625,000 Series 1993B,4.15% to 5.40% due serially August 1997 to 2009,5.25% in term form in year 1993 2023 and Select Auction Variable Rate Securities and Residual Interest Bonds, 5.60% and 5.664% due 2013 and 2017 139,240,000 139,240,000 Series 1994A. 3 25% to 5.00% due serially lanuary 1996 to 2012 and 5.00% in term form in 1994 years 2014 and 2020 137,305,000 137,305,000 807,680,000 808,015,000 OTHER DEBT: Series 1990AA,7.10% Capital Appreciation Bonds, "Minibonds", maturing March February 8,2000 1990 12.461,871 11,654,016 Series 1991 Variable Rate Demand December Bond Anticipation Notes, maturing 1991 December 1996 99,995,000 99,995,000 112,456,871 111,649,016 Less current portion (l19.930,0001 (18,615,0001 ~ $1,353,821,871 $1,472,944,016 i f I A - 16 I

NOTE Q-LONG-TERM DECT--Continued Following is a schedule of annual principal and interest sinking fund requirements on the revenue bonds and notes outstanding at September 30,1996 Fiscal Year Ending Principal Interest Total 1997 $ 123,460.000 $ 73,403,317 $ 196.863,317 1998 24.245,000 72.281,350 96,526.350 1999 25,625,000 71,148,511 96.773,5 I I 2000 42.422,000 69.896,692 112,318.692 2001 28,225,000 68,529,823 96,754.823 2002-2006 165.060.000 318.292,966 483,352,966 2007-2011 211.800.000 265,618,546 477,418,546 2012-2016 254,435,000 200.518.668 454.953,668 2017-2021 334,785,u00 120.529,673 455,314.673 2022-2026 240.510,000 32,189,238 272,699.238 2027 6,575,000 361,625 6,936,625 1 $1,457,I42,000 $1,292,770,409 $2.749,912,409 Senior Uen Bonds: The senior lien bonds are payable and secured by a first lien upon and pledge of the net revenues derived by the Commission from the operation of the water and electric system and from certain investment income. The Commission has covenanted in the senior lien bond resolution to fix, establish and maintain rates and collect such fees, rentals or other charges for the services and facilities of the water and electric system, which shall be adequate at all times to pay in each fiscal year at least one hundred twenty-five percent (125%) of the annual debt service requirements for the bonds, and that the net revenues shall be sufficient to make all other payments required by the terms of the senior bond resolution. The senior bond resolution establishes the Revenue Fund Account, Renewal and Replacement Fund Account and Sinking Fund Account, which is comprised of the Interest, principal, Investment, Bond Redemption, Debt Service Reserve and Demand Charge Component accounts. In accordance with the senior bond resolution, gross revenues derived from the operation of the water and electric system are to be deposited in the Revenue Fund and shall be applied only in the following manner: 1. Revenues are first to be used to pay the current operating expenses of the water and electric system and then all Sinking Fund and Renewal and Replacement Fund requirements. 2. The balance of any revenues remaining in the Revenue Fund shall, at the option of the Commission, be used til for any lawful purpose in connection with the water and electric system and (ii) to make any l payments of funds to the City of Orlando, provided however, that none of the revenues is ever to be used for the purposes described in (i) and (ii) unless all payments required in (1) above, including any deficiencies for prior payments, have been made in full to the date of such use. and the Commission shall have fully complied with all covenants and agreements contained in the bond resolution. Junior Uen Bonds: The junior lien bonds are payable from, and secured by, a lien upon and a pledge of the net revenues derived by the Commission from the operation of the water and electric system and certain investment income, subject to the prior lien thereon of the Commission's outstanding senior lien bonds. l l 1 l A - 17 I

NOTE G-LONG-TERM DEBT--Continusd The Commission has covenanted in the junior lien bond resolution to fix, establish and maintain such rates and collect such fees, rentals or other charges for the services and facilities as will always provide in each fiscal year, net revenues which will be adequate after the deduction of amounts required to be deposited from net revenues in each fiscal year to provide for the annual debt service requirement for senior lien bonds, to fund any debt service reserve requirement for such senior lien bonds and to make any required deposit to other funds and accounts established under documents evidencing or securing senior lien bonds at all times to pay in each fiscal year the sum of at least (i) one hundred percent (100%) of the annual debt service requirement for the bonds issued pursuant to the resolution and any pari passu additional bonds hereafter issued for the then current fiscal year and (ii) one hundred percent (100%) of the amount required to be deposited into the Demand Charge Component Account for the then current fiscal year, and that such net revenues will be sufficient to make all other payments required by the terms of the resolution and that such rates, fees, rentals or other charges shall not be reduced so as to be insufficient to provide adequate revenues for such purposes. The junior tien bond resolution establishes the Sinking Fund which includes the Interest, Principal, Bond Redemption and Demand Charge Component Accounts. In accordance with the resolution gross revenues are to be applied in accordance with the senior lien bond resolution and then to be applied to the junior Lien Sinking Fund accounts. Other Debt: The Water and Electric Subordinated Revenue Bonds, Series 1990AA (Minibonds) are issued as fully registered capital appreciation bonds in the initial principal amount of $250 and integral multiples thereof. The Minibonds bear interest at 7.10% per annum componWd semi-annually, and are not subject to redemption prior to maturity. 'l he Minibonds are payable solely from and secured by a lien upon the net revenues derived by the Commission from the operation of the water and electric system and of certain mvestment income, as provided in the Minibond Resolution The lien of the Minibonds upon the net revenues is junior and subordinate to the prior lien thereon of the Commission's outstanding senior and l junior lien debt obligations. i The Variable Rate Demand Water and Electric Revenue Bond Anticipation Notes Series 1991 (Series 1991 l Notes) are due December 10,1996 and were issued in the weekly pricing mode. The average yield for fiscal f year 1996 was 3.54% l The Series 1991 Notes are pay 6le from and sec ured retably by a lien on and pledge of (i) the proceeds of ( Bonds to be issued by the Commission to pay the precipal of and accrued and unpaid interest on the Series 1991 Notes (other than proceeds of Bonds deposited in a reserve fund or funded interest accounts therefore or used to pay costs of issuance thereof), which lien and pledge are superior to all other tiens thereon, (ii) the moneys on deposit in the Note Debt Service Reserve Account, which hen and pledge are superior to all other liens thereon and (iii: ine moneys on deposit in the Construction Account, which lien and pledge are superior to all other liens teereon. In addition to the sources described in clauses (ii) and (iii) above, payment of interest on the Series 1991 Notes is payable from and secured by a lien on and pledge of Net l Revenues. The Commission received bids on November 19,1996 for Water and Electric Revenue Bonds Series 1996A and 1996B, dated December 1,1996 in the amount of $99,995,000. The purpose of the Series 1996A and 19968 Bonds is to refund the $99,995,000 Variable Rate Demand Water and Electric Revenue Anticipation Nctes, Series 1991. There is iso gain or loss associated with this transaction in conjunction with the 1996A and 1995B bonds. On November 20,1996 the Commission received bids on two interest rate swap agreements, une in the amount of $60,000.000 for a term of five years and one in the amount of $40,000,000 for a term of hfteen years. Defeased Bonds: Refunding proceeds were invested in United States obligations in irrevocable Escrow Deposit Trust Funds. Such United States obligations mature at such time so as to provide sufficient funds for the payment of maturing principal and interest on the Refunded Bonds All interest earned or accrued on the United States obligations have been pledged and will be used for the payment of the principal and interest on each respective bond series. All Refunded Bonds are treated as extinguished debt for financial reporting purposes and have been removed from the balance sheet. 1 A - 18 )

NOTE G-LONG-TERM DECT--Continusd Defeased debt principal outstanding is as follows-i Remaining Remaining Refunded Refunding Final Outstanding as Principal e Principal 9 Sedes Series Payment of Refunding 9S0/96 98W95 l 1970 1978 1996 $ 18.9I5,000 1,940.000 1971 1978 1998 31,530.000 10.005,000 14.680.000 l973 1978 2003 13,525,000 5,875.000 6.075,000 1975B 1978 2005 9,730,000 5,700.000 6,075,000 l 1976 1978 2002 8.500.000 4.950.000 5,400,000 -1978(1) 1978 4/1/2008 94.650.000 6.120.000 8.245,000 1978 1985 4/l/2006 110,330.000 89.160.000 96.640.000 1978A 1985 4/1/2008 40.000.000 32,800.000 34.630.000 1978B-1985 4/1/2003 75.000,000 50.890.000 52,445,000 I932 1985 10/i/2003 110.000,000 71,830.000 76.820.000 1989C 1993A 10/1/2000 75.000.000 75,000,000 75.000,000 1991 A (2) 1994A 10/1/2020 120,440.000 120.440.000 120.440,000 1985 1992 10/1/95 536,720,000 508,720,000 $1,244,340,000 $472,770,000 $1,007.110,000 (1) Special Obligation Bonds, Series 1978. (2) The Series 1994A bonds only refunded a portion of the Series 1991 A Bonds. Related Debt Information: On May 18,1994 the Commission entered into a five year interest rate swap agreement on a notional amount of $25,000,000. Under the terms of the agreement the Commission will 4 l receive a fixed rate of 5.07% and pay a variable rate based on the Public Securities Association Index (pSA Indexl until April 1,1999. The Commission will be obligated to pay the variable rate if the counter party to the swap defaults or if the swap is terminated. A termination of the swap may also result in the Commission's making or receiving a termination payment. However, the Commission does not anticipate nonperformance by the counter party. l The Commission has no matenal operating or capital leases. NOTE H-ELECTRIC SUPPLY AGREEMENTS Power Sales Contracts: The following table provides a summary of the Commission's power sales contracts with other companies. Unit Salas System Sales Iotal No. of Amount of No. of Amount of No. of Amount of Year Contracts Sales MW Contracts Sales MW Contracts Sales MW i 1997 7 326 6 92 13 418 l 1998 6 340 5 77 11 417 l 1999 6 333 5 79 11 412 2000 6 331 5 80 11 all 2001 4 255 4 69 8 324 4 214 2 62 6 276 2002 4 2 2 63 6 2% '003 3 130 1 50 4 I80 2004 2 54 1 49 3 103 2005 1 30 1 53 2 83 2006 f i A - 19 l

NOTE H-ELECTRIC SUPPLY ACREEMENTS -- ContinuId i la 1994, the Commission entered a 21-year Full Requirements contract with STC to supply STC with l wholesale electricity beginning December 1994 through 2015. The Commission will act as STC's agent to direct the commitment and dispatch of the City's diesels, purchase power contracts, and manage the procurement of its fuel resources. Florida Municipal Power Pool: In May 1988, an agreement was entered into between the Commission, the City of Lakeland, Florida (LAK) and the FMPA's All-Requirements Project to cooperate in the interconnected operation of the respective electric supply systems, so as to obtain the fullest advantage of each systems' generating resources. In 1995, KUA was added as a member to the Florida Municipal Power Pool. l i NOTE I -DEFERRED COMPENSATION PLAN The Commission offers its employees a deferred compensation plan created in accordance with internal Revenue Code Section 457. The plan, available to all Commission employees, permits employees to contribute 25% of their base salary, exclusive of total pension, dependent medical care and flexible spending plan contributions, up to $7.500 per year. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. Assets and liabilities of the plan are recorded at market value. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, are (until paid or made available to the employee or other beneficiary) solely the property of the Commission (without being restricted to the provisions of benefits under the plan), subject only to the claims of the Commission's general creditors. Participants' rights under the plan are equal to those of general creditors of the Commission in an amount equal to the fair market value of the deferred account for each participant. j lt is the opinion of the Commission's legal counsel that the Commission has no liability for losses under j the plan but does have the duty of due care that would be required of an ordinary prudent investor. The Commission believes that it is unlikely that it will use the assets to satisfy the claims of general creditors in j the future. NOTE J-PAYMENTS TO THE CITY OF ORLANDO AND ORANGE COUNTY Two types of payments are made to the General Fund of the City of Orlando pursuant to agreements between the Commission and the City of Orlando; a revenue based payment and an income based payment. The revenue based payment is calculated at six percent of gross retail electric and water billings to customers within the City This payment is made pursuant to a policy established by the Commission and classified as an operating expense. The income-based dividend payment, which is recorded as a reduction of retained earnings rather than as an operating expense, had, prior to 19 6 been calculated using 60% of a rolling five year average of net income. In 1996, the City and the Commission amended the income-based dividend payment to be 60% of net income, resulting in a 1996 dividend payment of $20,899,000 and dividends accrued at September 30,1996 of $2,949,973. In addition, a dividend payment of $3.564,000 was made in 1996 as a final installment under the previous agreement. Payments are made to Orange County based on one percent of gross retail electric billings within the County but outside the city limits of the City of Orlando This payment, which was $662.827 and $635,910 for fiscal years ended September 30,1996 and 1995, respectively, is classified as an operating (general and administrative) expense. Payments are made pursuant to a policy established by the Commission. j A - 20

l NOTE K-C@MMITMENTS AND CONTINGENT LIABILITIES 1. The Commission and the other participants in SEC.I and SEC 2 have entered into coal supply contracts which expire in 2000,2005 and 2006, with renewal options of two, two and five years, respectively. The contracts require minimum annual purchases as follows: 1997 $48,270,160 1998-1999 47,120.160 2000 40,436.160 2001 - 2005 28,796,I60 2006 9.404,160 2. The Commission and the other participants in SEC 1 and SEC 2 have also agreed to a contract that expires on December 31,2007 for rail delivery of the units' coal purchases. 3. In September 1992, the Commission approved construction of a second coal fired generating unit. The unit is a 440 net MW unit that will supply 315 MW to the system. The Commission paid an estimated $332,821,910 for its 71.59% ownership of the unit. Commercial operation began June 1,1996. At September 30,1996 the Commission's construction contracts totaled $309.180,358, of which $23,641,552 is still outstanding. 4. The commission has a natural gas contract with a term that ends on March 31,1999. The contract requires minimum annual purchases of 5,140,000 MMBTUs. 5. The Commission has also entered into contracts which expire in 2004 and 2014 with tt or renewal options for delivery of all natural gas purchases. The contracts require minimum annual delivery as follows: 1997 $10,193,882 1998 7,273,882 1999 7,455,729 2000 7,637,576 2001 - 2003 7,819,423 1 2004 6,666.097 2005-2014 5,750.132 6. The Commission's 1.6015% interest in the Crystal River Unit No. 3 has also been the subject of ad valorem tax litigation. In May 1996, the trial court in Citrus County granted summary judgment in favor of the Commission and other municipalities who own a portion of Crystal River Unit No. 3, determining that the Commission is entitled to the ad valorem property tax exemption. The property appraiser of Citrus County has appealed the decision of ti,e trial court to the Fifth District Court of Appeal and that appeal is pending An adverse decision in this case would result in the commission being obligated to pay taxes from 1991 through 1996 of $841,544. On an annual basis the Commission would owe approximately $120.000 in ad valorem taxes as a result of its partial ownership of electrical facilities in the Crystal River linit No. 3. On September 17,1996 the property appraiser for St. Lucie County notified the Commission of the denial of the Commission's exemption application for the 6.08951% the Commission owns in St. Lucie Unit No. 2. The Commission has filed a petition with the value Adjustment Board for St. Lucie County asking the Board to overturn the Property Appraiser's denial of the exemption. As with other challenges to the Commission's entitlement to exemption from ad valorem taxes, the Commission intends to i vigorously pursue its right to exemption from ad valorem taxation in St. Lucie County. An adverse j decision in this case would result in the Commission being obligated to pay, on an annual basis. l approximately $1.3 million in ad valorem taxes as a result of its partial ownership of electrical facilities in the St. Lucie Unit No. 2. I i A - 21 I l l

NOTE L-PENSION PLAN The Commission has a single employer defined benefit pension plan covering all employees who regularly work 20 or more hours per week. Employees participate in the plan immediately upon einployment and receive a pension benefit equal to 2 h % of the highest three consecutive years average base eamings times years of employment. A maximum of 30 years of service is, credited. Benefits are vested aftei T vears of service. The pension plan states that the Commission shall make such contributions to the retirement fund as shall be required under accepted actuarial principles to at least be sufficient to maintain the plan as a qualified employee defined benefit plan meer'ng +' minimum funding standard requirements of the Internal Revenue Code with respect to its mer.., as shall be determined from time to time by the actuary. The Commission shall not have any right, title, or interest in the contributions made to the retirement fund under the plan, and no part of the retirement fund shall revert to the Commission, except that: a. Upon complete termination of the plan and the allocation and distribution of the retirement fund as provided herein, any funds remaining in the retirement fund after the satisfaction of all fixed and contingent liabilities under the plan with respect to the Commission may revert to the Commission. b. If an excess contribution is made to the retirement fund by the Commission, then such contribution may be returned to the Commission within one year after the payment of the contribution. c. If the internal Revenue Service determines that the plan does not meet the requirements of Code section 40lta), the plan shall be null and void, and any contributions shall be returned to the Commission within one year following the determination that the plan does not meet such requirements, unless the Commission elects to make the changes to the plan necessary to receive a determination from the Internal Revenue Service that the requirements of Code section 40lta) are met. Required participant contribution obligations are four percent of earnings until the'later of age 62 or completion of 30 years of service, with no required contributions thereafter. The benefit reduction for early retirement prior to age 62 is 1% per year. Total payroll and covered payroll for the year ended September 30,1996, amounted to $45.478,520 and $40,483,416, respectively. Employer and employee contributions to the Plan for the year ended September 30,1996 amounted to $3.691,716 and $1,550,009, respectively, representing 9.1% and 3.8% of covered payroll. payroll and contribution data for fiscal 1995 is included in the three year trend information. The Commission's contributions for the years ended September 30,1996 and 1995 were made in accordance with actuarially determined contnbution requirements to cover normal wst, utilizing the aggregate actuarial cost method. Significant actuarial assumptions used to compute actuarially determined contributions requirements are the same as those used to compute the pension benefit obligation, including a rate of return on the investment of present and future assets of 8.25% compounded annually and projected salary increases of 6% per year. The pension benefit obligation is a standard measure of the present value of pension benefits estimated to be payable in the future based on employee service date, adjusted for the effects of projected salary increases of 6% per year, A - 22

NOTE L-PENSION PLAN--Continued Plan data as of October 1,1995 (latest actuarial valuation) as developed by consulting actuaries is as follows: Projected benefit funded status: Vested: Retirees and beneficiaries currently receiving benefits, terminated & disabled employees not yet receiving benefits S 63,943,242 Current employees: Accumulated employee contributions 16,424,429 Employer-financed (vested) 49,352,405 Employer-financed (non-vested) 858,727 Total pension benefit obligation $130,578,803 Trend information gives an indication of the progress made in accumulating sufficient assets to pay benefits when due. The following information is presented for the three most recent years available: Year Ended September 30 1995 1994 1993 Net assets available for benefits $ 140,666,432 $127,557,755 $125,478,328 l Pension benefit tbligations (PBO) $ 130,578,503 $117,414,855 $107.657,524 l Overfunded PBO $ 10.087,929 $ 10,142,900 $ 17,820,804 l Net assets available for benefits as a percent of the PBO. 107.7% 108 6% 116.6 % Total payroll $ 43,577,202 $ 43,361,111 $ 42,883,835 i Annual covered payroll $ 40,525,414 $ 40.645,961 $ 40,318,967 i Overfunded PBO as a percent of annual covered payroll 24.9 % 25.0% 44.2 % l Actuarially determined l employer contributions. 2,706.006 $ 2,960.272 $ 3,226.220 Employer contributions 2.896,534 $ 3,230,549 $ 3.452,277 i Employer contributions as a percent of covered payroll 7.2% 80% 8.6% P h E w A - 23 l

NOTE M-PENSION PLAN SUPPLEMENTARY INFORMATION (UNAUDITED) This schedule presents required supplemental historical pension benefit information for the last ten years currently available. This trend information provides information about progress made in accumulating sufficient assets to pay benefits when due. l (6) l (1) (4) Overfunded l l Net Overfunded Pension Assets (2) Pension (5) Obligation as Year Available Pension (3) Benefit . Annual a Percentage l Ended for Benefit Percentage Obligation Covered of Annual September Benefits Obligation Funded (I)-(2) Payroll Covered Payroll 30 (Millions) (Millions) (I V(2) (Millions) (Millions) (4V(5) 1995 $140.67 S130.58 107.73% $10.09 $40.53 24.90% 1994 127.56 117.41 108.64 10.14 40.65 24.97 1993 125.48 107.66 116.55 17.82 40.32 44.20 1992 110 05 99.19 110.95 10 86 38.57 28.16 2 1991 101.44 91.14 111.30 10.30 36.97 27.86 1990 87.84 83.80 104.82 4.04 32.43 12.46 1989 85.68 71.64 119.60 14.04 30.43 46.14 1988 74.58 61.95 120.39 12.63 28.33 44.58 1987 (A) 70.74 60.72 116.50 10 02 28.04 35.73 1986 42.57 24.90 170.96 17.67 19.72 89.60 (A) The pension benefit obligation was valued by the actuary as prescribed by the Governmental Accounting Standards Board Statement 5 in 1987. This method differed from prior years in that projected benefits were allocated on a level basis to employee's years of service This resulted in a 39.2% increase. Contract amendments increased the pension benefit obli8ation by 68.8% and net assets available for benefits by 44.3%. NOTE N-OTHER POSTEMPLOYMENT BENEFITS in addition to the pension benefits described in Note L, the Commission has a policy to provide health care benefits and life insurance coverage to all employees who retire on or after attaining age 55 with at least 10 years of service or at any age after completing 25 years of service. Currently 328 retirees meet the eligibility requirements. Retirees may also elect to provide health care insurance for their qualifying dependents by paying ?5 percent of the calculated premium. The Commission is a secondary provider for those retirees and/or their dependents who are eligible for Medicare benefits. The Commission's health care plan is administered through an insurance company on a Minimum j payment Plan but operates as a self-insurance program with an additional purchased insurance policy to i cover those claims over $150,000. In this plan the insurance company administers the plan and processes the claims according to insurance coverage with the Commission reimbursing the insurance company for its 4 payouts. Expenses are recorded by the Commission when paid to the insurance company. Total post employment health care costs recognized by the Commission for the years ended September 30,1996 and 1995, were $1,439,900 and $1.301,862 respectively; post employment life insurance costs during the same periods were $91,01I and $56.745. Health care coverage is offered to employees who terminate before retirement and certain dependents who are no longer eligible for employee dependent coverage in accordance with federal law (COBRAl. On September 30,1996, there were 3 COBRA participants. All participants are responsible for 100 percent of their insurance premiums. A - 24

1 N3TE G-REOULATION According to existing laws of the State of Florida, the five board members of the Orlando Utilities Commission act as the regulatory authority for the establishment of electric and water rates. The Florida Public Service Commission (FPSC) has authority to regulate the electric rate structures" of municipal utilities in Florida. It is believed that " rate structures" are clearly distinguishable from the total amount of revenues which a particular utility may receive from rates, and that distinction has thus far been carefully made by the FPSC. Prior to implementation of any rate change, the Commission files the proposed tariff with the Florida Public Ser/ ice Commission and has established the prerequisite of a Public Notice and the holding of a Public Hearing. Florida Public Service Commission: As noted above, the FPSC has jurisdiction to regulate electric " rate structures" of municipal utilities. In addition, the Florida Electric Power Plant Siting Act and the Transmission Line Siting Act have given the FPSC exclusive authority to approve the need for new power plants and transmission lines. The FPSC also exercises jurisdiction under the Florida Energy Efficiency and Conservation Act as related to electric use conservation programs and prescribes conformance to the Federal Energy Regulatory Commission's Uniform System of Accounts. The FPSC also approves territorial agreements and settles territorial disputes. Environmental and Other Regulations: Operations of the Commission are subject to environmental regulation by Federal. State and local authorities and to zoning regulations by local authorities. The Commission's interconnection agreements with investor owned utilities are subject to review and approval by the FERC. FERC also exercises jurisdiction over the commission under the Public Utility Regulatory Policies Act of 1978. Federal and State standards and procedures that govern control of the envire ..it can change. These changes can arise from continuing legislative, regulatory, and judicial action rec aang the standards and procedures. Therefore, there is no assurance that the electric and water plan" .>peration, under construction, or contemplated will always remain subject to the regulations current!. in effect, or will always be in compliance with future regulations. An inability to comply with environmental standards or deadlines could result in reduced operating levels or complete shutdown of individual electric generating units or water plant facilities not in compliance. Furthermore. compliance with environmental standards or deadlines may substantially increase capital and operating costs. e A - 25

. = _ - NOTE P-2USINESS SEOMENTS i l The Commission operates in two business segments -- the generation, transmission and distribution of electricity and the production, treatment, and distribution of water. A summary of the segment information iviivws: Electric Water Total Year Ended September 30,1996: Operating revenues S 354,418,910 $ 26,649,216 S 381,068,126 Depreciation and amortization 40,518,802 3,894,396 44,413,198 Operating income 89,748,349 7,528,155 97,276,504 Federal Emergency Management Assistance Grant, 133,009 0 133,009 Net income 37,179,367 2,569,594 39,748,961 Dividends to the General Fund of theCityof Orlando 26,042,324 1,370,649 27,412,973 Contributed capital additions. 22,503,929 2,344,545 24,848,474 Utility plant additions (excluding CWIP) 7,495,550 947,182 8,442,732 Construction work in progress additions. 82,630,314 31,329,449 113,959,763 Net utility plant deletions (excluding CWIP) 1,271,781 41,757 1,313,538 Net working capital. 17,402,418 (5,206,574) 12.195,844 Total assets 1,775,161,075 201,050.444 1,976,211,519 Long-term debt - net. 1,160,464,140 49,893,948 1.210,358.088 Total equity (accumulated retained earnings and contributed plant) 360,263,955 121,338,896 481,602,851 Year Ended September 30,1995: Operating revenues S 317,224,520 $ 23,495,985 S 340,720,505 Depreciation and amortization 39,109,313 3,966,713 43,076,026 Operating income 90,043,399 5,039,726 95,083,125 Federal Emergency Management Assistance Grant. 218,088 22,068 240,156 Net income 33.504,339 2,231,882 35.736,221 Dividends to the General Fund of the City of Orlando 17,460,700 3,081,300 20.542.000 Contributed capital additions 5,473,970 3,151,563 8.625,533 Utility plant additions (excluding CWIP) 11,151.152 1,259,156 12.410,308 Construction work in progress additions. 116,949,668 11,971,564 128,921,232 Net utility plant deletions (excluding CWIPJ 636,045 1,158,239 1,794,284 Net working capital, 90.211,164 2,857,509 93,068,673 Total assets 1,779,710,791 180,554,151 1,960,264,942 Long-term debt - net, 1.263,311.560 58,831,647 1,322,143,207 Total equity (accumulated retained earnings and contributed plant) 324,340,348 120.078,041 444,418,389 A - 26 I

Deloitte& ToucheLtr M Certified Public Accountants Suite 1800 e 200 South Orange Avenue Orlando, Florida 32801 Telephone:(407) 246-8200 Facsimile:(407) 422-0936 INDEPENDENT AUDITORS' REPORT Commissioners of the Orlando Utilities Commission We have audited the accompanying balance sheets of Orlando Utilities Commission (the " Commission") as of September 30,1996 and 1995, and the related statements of revenues, expenses, and changes in retained earnings and of cash flows for the years then ended. These financial statements are the responsibility of the Commission's management. Our responsibility is to express an opinion on the financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financic! statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall 1 financial statement presentation. We believe that our audits provide a reasonable basis for our opmion. i In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Commission as of September 30,1996 and 1995, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. i In accordance with Government Auditing Standards, we have also issued a report dated November 21, 1996 on our consideration of the Commission's internal control structure and a report dated November 21,1996 on its compliance with laws and regulations. h & d N.5 / A W November 21,1996 DeloitteTouche Tohmatsu Intemational A - 27

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O Seminole Electric l l Cooperative, Inc. Consolidated Financial Statements December 31,1996 l 4 i l i k I i 1 I

suite 2800 Telephone 813 223 7577 400 North Ashley Street P.O. Box 2640 Tampa, FL 33601-2640 Price Waterhouseur Report ofIndependent Certified Public Accountants February 18,1997 To the Board of Trustees Seminole Electric Cooperative,Inc. In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of revenue and expenses and patronage capital and of cash flows presed fairly, in all material respects, the financial position of Seminole Electric Cooperative, Inc. and its subsidiary (the Cooperative) at December 31,1996 and 1995, and the results of their operations and their cash flows for the years then ended in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Cooperative's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards and the financial audit requirements of the govemment auditing standards issued by the Comptroller General of the United States. These 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. \\) /) / -nf AL t' Tampa, Florida l i l

SEMINOLE ELECTRIC COOPERATIVE, INC. CONSOLIDATED BALANCE SHEETS December 31, 1996 1995 ASSETS Utility plant: Plant in service S 844,456,635 S 844,390,584 Construction work in progress 5,721,211 4,825,231 850,177,846 849,215,815 Less accumulated depreciation and amortization (289,660,040) (266,143,311) Utility plant, net 560,517,806 583,072,504 Investments: Investments in associated organizations 15,851,260 16,026,492 Funds held by trustees and special funds 18,396,751 17,683,655 Total investments 34,248,011 33,710,147 Current assets: Cash and cash equivalents 76,732,324 76,308,774 Receivables, principally for sales of electricity 19,351,072 23,081,075 Inventories, at average cost: Materials and supplies 17,333,668 17,515,190 Fuel 21,878,379 22,013,046 Prepayments and other 1,475,370 2,314,034 Total current assets 136,770,813 141,232,119 Deferred charges 71,653,138 79,247,529 S 803,189,768 S 837,262,299 1 i The accompanying notes are an integral part of these financial statements. i

l SEMINOLE ELECTRIC COOPERATIVE, INC. CONSOLIDATED BALANCE SHEETS December 31, 1996 1995 EQUITY AND LIABILITIES Equity: Memberships S 1,100 S 1,100 Patronage capital 64,094,029 63,120,859 Donated capital 31,615 31,615 Total equity 64,126,744 63,153,574 Long-term liabilities: Long-term debt 606,594,101 621,301,089 -Obligations under-capital leases 23,781,729 26,688,718 Other 3,959,791 3,327,382 Total long-term liabilities 634,335,621 651,317,189 Current liabilities: Current portion of: Long-term debt 16,093,306 14,782,255 Obligations under capital leases 2,250,768 1,993,978 Accounts payable 18,616,124 25,211,874 Other accrued liabilities .34,727,423 47,498,796 l b Total current liabilities 71,687,621 89,486,903 Deferred gain on sale-leaseback of plant 18,346,004 19,761,773 Other deferred credits 14,693,778 13,542,860 Commitments and contingencies (Notes 10 and 11) S 803,189,768 S 837,262,299 l i l l l The accompanying notes are an integral part of these financial statements.

.m_.. SEMINOLE ELECTRIC COOPERATIVE, INC. CONSOLIDATED STATEMENTS OF REVENUE AND EXPENSES AND PATRONAGE CAPITAL For the years ended December 31, 1996 1995 Operating revenue $ 554,483,596 $ 535,202,808 Operating expenses: i Operation: Fuel 172,928,294 169,157,667 Other production expenses 34,977,258 32,496,403 Purchased power 197,675,100 182,513,505 Transmission 20,289,623 19,280,492 Administrative and general 17,326,015 18,950.655 Depreciation and amortization 28,985,965 29,093,147 Lease of coal-fired plant 29,098,181 29,461,882 Taxes, primarily property 11,210,528 11,563,941 Write off of deferred charges 5,864,832 877,252 518,355,796 493,394,944 Operating margins before interest charges 36,127,802 41,807,864 Interest expense net of amounts capitalized 40,250,950 41,715,601 l Operating (deficits)/ margins ( 4,123,148) 92,263 l Patronage capital credits 193,402 214,027 Net operating (deficits)/ margins ( 3,929,746) 306,290 j l Nonoperating income: Interest income 5,709,942 4,545,377 Other income, net 758,446 1,410,222 Net margins 2,538,642 6,261,889 Patronage capital, beginning of year 63,120,859 57,804,334 l Patronage capital retirements ( 1,565,472) ( 945,364) Patronage capital, end of year S 64,094,029 63,120,859 ) i Lj' The-accompanying notes are an integral part l of these financial statements.

4 4 4 i SEMINOLE ELECTRIC COOPERATIVE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, 1996 1995 4 Cash flows from operating activities: Net margins S 2,538,642 6,261,889 l 4 l Adjustments to reconcile to cash: Depreciation and amortization 33,364,300 33,388,533 4 Provision for postretirement benefits 524,542 453,596 i Lease expense / lease payment difference 825,389 1,595,056 Write off of deferred charges 5,864,832 877,252 Change in assets and liabilities-Receivables 3,730,003 ( 5,510,000) Inventories 316,189 2,332,759 l Prepayments and other ( 355,470) ( 159,080) Deferred charges ( 565,088) ( 157,155) Other long-term liabilities 107,868 ( 127,111) 1 i Accounts payable ( 6,595,750) 11,421,992 Other accrued liabilities (12,769,091) 7,080,830 1 Total adjustments 24,447,724 51,196,672 Net cash provided by operating activities 26,986,366 57,458,561 Cash flows from investing activities: Utility plant additions ( 4,458,393) ( 4,235,895) Long-term (investments) / liquidations ( 641,665) 228,850 Net cash used in investing activities ( 5,100,058) ( 4,007,045) Cash flows from financing activities: Payments of patronage capital credits ( 1,565,472) ( 945,364) Payments of long-term debt (18,326,016) (13,412,318) Payments of repricing penalties ( 3,851,150) ( 211,079) Proceeds from long-term borrowings 4,930,079 Payments of capital lease obligations ( 2,650,199) ( 1,165,376) Net cash used in financing activities (21,462,758) (15,734,137) i Net increase in cash and cash equivalents 423,550 37,717,379 Cash and cash equivalents, beginning of year 76,308,774 38,591,395 Cash and cash equivalents, end of year S 76,732,324 $ 76,308,774 Supplemental disclosures: Interest paid S 43,035,608 $ 37,867,328 Noncash financing activities: Seminole refinanced certain long-term debt on January 3, 1995. As ~ a result, related prepa ment penalties were deferred and long-term i debt was increased in the amount of $7,406,245. The accompanying notes are an integral part of these financial statements.

SEMINOLE ELECTRIC COOPERATIVE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - THE COOPERATIVE: Seminole Electric Cooperative, Inc. (Seminole) is a generation and transmission cooperative. It is responsible for meeting the electric power and energy needs of its eleven distribution cooperative members operating within the State of Florida. Seminole's rates are established by its Board of

Trustees, which is composed of representatives from each member cooperative.

Seminole constructed and operates two coal-fired generating facilities (Seminole Unit No. 1 and Unit No. 2) near Palatka, Florida with approximately 625 megawatts of net output per unit. These units are connected to the Florida bulk power supply grid through Seminole's 230 kV transmission lines and associated facilities. Both units commenced commercial operation in 1984. At year end 1996, 172 employees or approximately 40% of the total workforce were covered by a three year collective bargaining agreement with Utilities Workers Union of America expiring on June 30, 1999. Seminole holds a 1.6994% undivided ownership interest in the Crystal River Unit No. 3 (CR3) nuclear power plant operated by Florida Power Corporation (FPC). Seminole also owns various transmission facilities connecting Seminole to an Independent Power Producer (IPP) as well as individual members to the Florida bulk power grid. NOTE 2 -

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES: Seminole complies with the Uniform System of Accounts as prescribed by the Rural Utilities Service (RUS), formerly the Rural Electrification Administration. The accounting policies and practices applied by Seminole in the determination of rates are also employed for financial reporting purposes. These policies and practices require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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. The consolidated financial statements include the results of operations and financial position of Seminole and Acuera Corp. (Acuera), a wholly owned subsidiary. All intercompany transactions have been eliminated. I

l Utility Plant Utility plant owned by Seminole is stated at original cost. Such cost includes applicable supervisory and overhead cost, plus net interest charged during construction. The amounts of interest capitalized during 1996 and 1995 were $65,565 and $75,950, respectively..The cost of maintenance and repairs including renewals and replacements of minor items of property, is charged to operating expense. The cost of replacement of depreciable property units, as distinguished from minor items, is charged to utility plant. The cost of units replaced or retired, including cost of removcl, net of any salvage value, is charged to accumulated depreciation. Certain leased transportation equipment is valued at the total net present value of minimum lease payments. Operating Revenue Seminole has wholesale power contracts with each of its members, whereby the members must purchase all electric power and energy which the member shall require for its system within the State of Florida from Seminole to the extent that Seminole shall have such power, energy and facilities available. The only exception relates to contracts between several members and the Southeastern Power Administration, which provides less than 2% of the total energy required by all members. Operating revenue consists primarily of sales of electric power and energy by Seminole and a facilities use charge for Seminole's transmission lines serving a single member cooperative. Member revenues include amounts resulting from a fuel and purchased power adjustment clause which provides for billings to reflect increases or decreases in fuel and fuel related purchased power costs. The levelized adjustment factor is based on costs projected by Seminole for a twelve-month period. Any overrecovery or underrecovery of costs plus an interest factor are to be refunded or billed to the members semi-annually. At the members' option, refunds of overrecoveries may be deferred with interest every six months until such time as the member elects to have the overrecovery including accumulated interest refunded. Net deferred and current balances of these amounts of approximately $5.8 million and $10.6 million at December 31, 1996 and

1995, respectively, are recorded as accrued liabilities until refunded.

Included in operating revenue are approximately $543 million and $523 million of revenue from members for the years ended December 31, 1996 and 1995, respectively, of which approximately $15 million and $19 million are included in receivables at December 31, 1996 and 1995, respectively. l

1 Depreciation and Amortization Seminole provides for depreciation on owned utility plant using composite rates applied annually on a straight-line basis that will amortize the original cost of depreciable property over its estimated useful life. The average rates for 1996 and 1995 were as follows: 1996 1995 Coal-fired production plant 3.10% 3.10% Transmission plant 2.75% 2.75% General plant 7.22% 7.20% Nuclear production plant 4.56% 4.52% Depreciation expense amounted to $24,003,317 and S23,999,980 for 1996 and 1995, respectively. Improvements to the leased coal-fired plant are amortized over the remaining life of the base lease term. The related composite amortization rates were 5.93% and 5.76% for 1996 and

1995, respectively.

Amortization of leased assets under capital leases amounted to $2,081,696 and $1,881,024 in 1996 and 1995, respectively. Amortization of Deferred Gain Deferred gain on sale-leaseback of plant is being amortized on a straight-line basis over the base lease term of 25 years commencing in 1985 and is reflected as a reduction of operating expenses. Deferred Charges At December 31, 1996 and 1995, deferred charges consisted primarily of unamortized debt costs and related prepayment and repricing penalties of approximately $66 million and $65.6

million, respectively.

These deferred charges will be recovered through rates over the remaining lives of the related debt ranging up to twenty-two years. Also included in deferred charges at each year end were costs associated with a load management incentive fee program with an unamortized balance of approximately $4.9 million and $8 million at December 31, 1996 and 1995, respectively. These deferred charges will be recovered through rates over various amortization periods ranging from two to four years. A 1996 amendment to the Load Management Incentive Program Expense Deferral Plan was adopted by the Board of Trustees which reduced the unamortized balance at year end 1996 by $1.5 million. This amount is included in the write off of deferred charges.

l { Deferred charges at December 31, 1995 also included depreciation and interest on certain common transmission lines and production facilities incurred prior to commercial operation of Seminole Unit No. 2. These costs, with an unamortized balance at the end of 1995 of $5.5 million, had been deferred under a plan which was discontinued during 1996. Included in the write off of deferred charges is $4.4 million associated with this discontinuance. Long-Lived Assets Seminole evaluates, on a regular

basis, whether events and circumstances have occurred that indicate the carrying amounts of utility plant and deferred charges may warrant revision or may not be recoverable.

Seminole measures impairment of these long-lived assets based on estimated future undiscounted cash flows from operations. At December 31,

1996, the net utility plant and net unamortized i

deferred charges balances are not considered to be impaired. Deferred Credits At December 31, 1996 and 1995, deferred credits primarily includes deferred lease expense which represents the difference between cash payments and expense recognized on a straight-line basis related to the operating lease of certain generating facilities and a reserve for CR3 decommissioning costs. Cash Equivalents Seminole considers all short-term, highly liquid investments with an original maturity of three months or less to be cash equivalents. Reclassifications Certain reclassifications have been made to the 1995 statements to conform to current classifications. There were no changes in net margins as previously reported.

_ ~ _. -.. -. _. _. i NOTE 3 - UTILITY PLANT: December 31, 1996 1995 Owned property: Coal-fired plant S 591,173,599 $ 591,932,578 Transmission plant 157,115,741 157,106,668 General plant 19,207,105 19,212,972 Nuclear plant, including fuel 19,826,646 19,578,701-787,323,091 787,830,919 Transportation equipment under capital leases 39,365,058 39,365,058 Leasehold improvements of coal-fired plant 17,768,486 17,194,607 i 844,456,635 844,390,584 Construction work in progress 5,721,211 4,825,231 850,177,846 849,215,815 Accumulated depreciation and amortization: Owned property (271,932,154) (251,263,652) Leased transportation equipment ( 13,675,295) ( l',593,599) Leasehold improvements ( 4,052,591) ( 3,286,060) (289,660,040) (266,143,311) 560,517,806 $ 583,072,504 NOTE 4 - INVESTMENTS: December 31, 1996 1995 Investments in associated organizations: National Rural Utilities Cooperative Finance Corporation (CFC) : Membership 1,000 1,000 Capital term certificates 2,325,779 1,976,712 Subordinated term certificates 12,989,419 13,520,077 L Patronage capital certificates 463,878 441,041 Other 71,184 87,662 $ 15,851,260 $ 16,026,492 Funds held by trustees and special funds: Pollution control bond funds $ 15,085,512 $ 15,165,061 Nuclear decommissioning trust fund 2,801,630 2,518,594 Special funds 509,609 $ 18,396,751 $ 17,683,655 l L l' Investments in capital and subordinated term certificates and I patronage capital certificates are considered to be held-to-maturity j ~ j due to their nature and are carried at cost determined by specific identification.

J It is not practicable to estimate the fair value of CFC capital term certificates due to the nature and maturity of these investments. Of these investments, $1,460,755 are required as a condition of membership and of loans provided to Seminole by CFC. Of the S2,325,779 and $1,976,712 carrying amounts at December 31, 1996 and 1995, respectively, S63,307 matures in 2075 and $918,124 matures in 2080. Both of these amounts pay 5% annual interest. Additionally, $364,283 matures in 2030 and pays 3% annual interest and $115,041 bears no interest and amortizes through 2019. An additional non-4 interest bearing investment in these certificates maturing in 2005 totaling $865,024 and $576,682 at December 31, 1996 and

1995, respectively, with investments of approximately $144,000 to be made semi-annually through July 2000, relates to an agreement between i

Seminole, CFC and the National Cooperative Services Corporation (NCSC, an affiliate of CFC) (see Note 11). j Investments in CFC subordinated term certificates are required as a { condition of guarantees provided to others by CFC on behalf of i Seminole and are generally priced at market rates at the time of j issuance. These investments bear interest at various rates with a 1 combined average of approximately 9.80% and 9.69% in 1996 and 1995, respectively. At December 31, 1996 and 1995, the estimated fair values of these investments of approximately $17 million and S18 million, respectively, are based on the current rates offered by CFC j for this type of required investment. l Funds held by trustees are recorded at amortized cost and are considered to be held-to-maturity. At December 31, 1996 and 1995, the estimated fair values of funds held by trustees of approximately $18 million and $17 million, respectively, is based on quoted market prices for the securities held by the trustees. Special funds consisted of a deposit, accruing interest at variable rates, made to FPC to secure future transmission services and is scheduled to be refunded in 1999. The deposit's carrying value approximates its fair market value and will be held-to-maturity.

1 I NOTE 5 - LONG-TERM LIABILITIES: Long-Term Debt December 31, 1996 1995 First mortgage notes payable to Federal Financing Bank (FFB), guaranteed by RUS, principal due in various installments through 2020, interest at adjustable and fixed rates, currently 5.418% to 7.612% $ 461,483,447 $ 476,801,681 First mortgage notes payable to RUS, principal due in various installments through 2019, interest at 5% 8,062,252 4,802,589 Pollution control revenue bonds, payable to the Putnam County Development Authority, guaranteed by CFC, principal due in various installments through 2014, interest at adjustable rates, currently 4.15% and 3.80% 144,050,000 146,750,000 First mortgage notes payable to CFC, principal due in various installments through 2019, interest at adjustable rates, currently 6.20% 9,091,708 7,729,074 622,687,407 636,083,344 Less current portion ( 16,093,306) ( 14,782,255) $ 606,594,101 $ 621,301,089 The estimated maturities and annual sinking fund requirements of all long-term debt, at current interest rates for the four years subsequent to December 31, 1997, are presented below: Annual Maturities Year ending and Sinking Fund December 31, Requirements 1998 $ 17,187,264 1999 $ 18,105,466 2000 $ 19,588,377 2001 $ 20,968,808 Substantially all owned assets and leasehold interests are pledged as collateral for the above mentioned debt to the United States of America (RUS and FFB) and CFC. At December 31, 1996 and 1995, the estimated fair values of long-term debt including current portion, are approximately $616 million and $663 million, respectively. For Seminole's long-term debt with interest rates substantially fixed to final maturity, and for that portion that is subject to interest rate adjustment more than six months from year end, fair value is estimated based on the present value of the underlying cashflows. For that portion of long-term debt that reprices to market rates at intervals of six months or less, the carrying amount has been used as a reasonable estimate of fair value. Obligations Under Capital Leases At December 31, 1996, Seminole was obligated under certain capital leases of transportation equipment for which base lease terms expire on various dates through 2005. The following is a schedule of future lease payments under these leases together with the present value of the net minimum lease payments as of December 31, 1996: Year ending December 31, 1997 4,640,640 1998 4,640,640 1999 4,640,640 2000 4,640,640 2001 4,640,640 Thereafter 14,606,740 Total minimum lease payments 37,809,940 Less amount representing interest (11,777,443) Present value of minimum lease payments 26,032,497 Less current principal portion ( 2,250,768) $ 23,781,729 These transportation equipment leases provide for renewals and options to purchase the equipment at fair market value at various dates or upon expiration. Payments under these leases are included as a cost of fuel inventory and expensed based on the tons of coal burned throughout the year. NOTE 6 - NET MARGINS AND EQUITY RESTRICTIONS: Under provisions of the RUS mortgage, until total equity equals or exceeds forty percent of total assets, the distribution of capital contributed by members is limited generally to twenty-five percent of patronage capital and margins of the next preceding year where, after giving effect to such distribution, the total equity will eq1al or exceed twenty percent of total assets. Distributions may be made,

4 ^ l 1 i d however, in such amounts as may be approved by RUS through waiver of I the aforementioned restrictions. Such distributions to members totaled $1,565,472 and $945,364 in 1996 and 1995, representing amounts equal to 25% of 1995 and 1994 net margins, respectively. The RUS mortgage requires Seminole to design its wholesale rates with a view towards maintaining, on a calendar year basis, a Times Interest Earned Ratio (as defined) of not less than 1.0 and a Debt Service Coverage Ratio (as defined) of not less than 1.0. An RUS stipulation arising from the sale of tax benefits requires Seminole to design its l wholesale rates to provide an annual Times Interest Earned Ratio (as i defined) of not less than 1.05. [ In 1996 and 1995, Seminole achieved a Times Interest Earned Ratio (as defined) of 1.06 and 1.14, respectively, and a Debt Service Coverage 3 Ratio (as defined) of 1.27 and 1.35, respectively. i j NOTE 7 - LINES OF CREDIT: Seminole has available uncommitted lines of credit totaling $100 l million of which none were drawn at December 31, 1996. RUS policy j governs use of these funds. NOTE 8 - INCOME TAXES: I i seminole is a non-exempt cooperative subject to federal and state income taxes and files a consolidated tax return. As a cooperative, j Seminole is entitled to exclude patronage dividends from taxable income. In 1996 Seminole's bylaws were revised to require that l Seminole is obligated, effective January 1, 1997, to declare patronage i dividends in an aggregate amount equal to Seminole's federal taxable j income from its furnishing of electric energy and other services to i its members. Seminole's ratemaking methods provide that income taxes are recognized as expense and are recovered through rates when currently payable. i In addition, income tax credits are accounted for as a reduction of ] taxes currently payable in the period utilized. Temporary differences in certain items of income and expense for tax and financial reporting i purposes result primarily from depreciation, amortization and sale-j leaseback of plant. In 1996 and 1995, income tax losses resulted J after the application of net operating loss carryforwards.

However, l

due to the alternative minimum tax (AMT) provisions enacted by the Tax l Reform Act of 1986, Seminole was limited in 1996 and 1995 in using net operating loss carryforwards, which resulted in payments of federal AMT liabilities of approximately $200,000 in both years. AMT j was charged to operations in 1996 and 1995. At December 31, 1996, net i operating losses and income tax credits of approximately $182 million j and $13 million are available to offset future taxable income and tax i liabilities, respectively, expiring in years through 2006. 1 1 1 Seminole has' recorded the following noncurrent deferred tax asset, valuation allowance and noncurrent deferred tax liability in 1996 and 1995: 1996 1995-Noncurrent deferred tax asset $ 172,600,000 $ 180,000,000 Less: valuation allowance ( 82,600,000) ( 13,000,000) Net noncurrent deferred tax asset 90,000,000 167,000,000 Noncurrent deferred tax liability 90,000,000 167,000,000 Net noncurrent deferred tax asset / liability $ $ The noncurrent deferred tax asset reflects deductible temporary differences and net operating loss carryforwards at statutory rates plus l investment tax credits and AMT credits. Based on Seminole's historical transactions resulting in non-member losses and the revised bylaw . provisions regarding patronage dividends effective January 1,

1997, Seminole will not have future taxable income sufficient to fully realize the benefit of the existing tax credits and net operating loss carryforwards at December 31, 1996.

A valuation allowance has been recorded in each year to reduce deferred tax assets relating to tax { credits. In addition, as a result of the bylaw revision, the 1996 valuation allowance was increased by $69.6 million to reduce the deferred tax asset relating to net operating loss carryforwards. For years prior to 1997, Seminole relied upon tax planning strategies to avoid a valuation allowance for the net operating loss carryforwards. The noncurrent deferred tax liability at year end reflects taxable temporary differences at statutory rates as well as a patronage dividend exclusion of $69 million. NOTE 9 - EMPLOYEE BENEFITS: Substantially all' Seminole employees participate in the National Rural l Electric Cooperative Association (NRECA) Retirement and Security Program l (the Program), a defined benefit pension plan qualified under Section 401 and tax exempt under Section 501(a) of the Internal Revenue Code. Seminole had accrued for pension expense amounts equal to the annual contributions to the Program until July 1, 1987, when a moratorium on contributions went into effect due to reaching full funding limitation. This moratorium on employer contributions was discontinued in November 1994 and reinstated in May 1995 and then discontinued again in October '1996. Employer contributions amounted to $597,440 in 1996 and $920,498 in 1995. In this multi-employer plan, which is available to all member cooperatives of NRECA, the accumulated benefits and plan assets are not determined or allocated separately by individual employer. l ' Employees retiring on or after age 55 receive the benefit of being allowed to continue, at their expense, health care coverage under Seminole's group plan. In addition, these retirees may use a portion of their accumulated unused sick pay to apply toward these medical insurance premiums. The following sets forth the plan's funded status reconciled with amounts repor. ni in Seminole's consolidated balance sheets at December 31, 1996 and 1995. Accumulated postretirement benefit obligation (APBO): 1996 1995 Active plan participants not yet fully eligible S 2,648,000 S 2,431,615 Fully eligible active plan participants 474,200 285,559 Retirees and dependents 354,400 67,556 Other plan participants 25,300 13,806 Total APBO $ 3,501,900 S 2,798,536 Unrecognized (loss)/ gain from past experience (104,000) 203,100 Accrued postretirement benefit liability S 3,397,900 S 3,001,636 Net periodic postretirement benefit cost included the following components: Service cost S 277,900 253,900 Interest cost on accumulated benefit obligation 228,700 176,900 Amortization of unrecognized prior service cost Net periodic postretirement benefit cost S 506,600 430,800 An 8.0% increase in the cost of covered health care benefits was assumed for 1996. This rate is assumed to decrease incrementally to 5.5% in 2001 and remain at that level thereafter. The health care cost trend rate assumption has a significant effect on the amounts reported. For example, a 1% increase in the health care trend rate would increase the accumulated postretirement benefit obligation by S316,600 or 9.0% at year-end 1996 and net periodic cost by $48,400 or 9.5% for the year. The weighted average discount rate and rate of compensation increase used in determining the accumulated post-retirement benefit obligation for 1996 were 7.5% and 5.5%, respectively. u NOTE 10 - OPERATING LEASES: At December 31, 1996, Seminole was obligated under certain leases of generating facilities and transportation equipment for which base lease terms expire on various dates through 2009. The lease of the generating facilities contains a variable interest rate component that could affect future lease payments. Base rental obligations under these leases are payable as follows: Year ending December 31, 1c97 39,120,015

498 39,527,743 1999 S

40,240,699 2000 40,744,138 2001 S 40,744,138 Thereafter $ 303,031,522 These leases provide for renewals and options to purchase at fair market value at various dates or upon expiration. Rental payments for these transportation equipment leases totaled 2 $4,557,481 for both 1996 and 1995. These payments were included as a cost of fuel inventory and expensed based on the tons of coal burned throughout the year. NOTE 11 - COMMITMENTS AND CONTINGENCIES: Seminole is purchasing a significant portion of the coal for the plant under a long-term contract expiring in 2010. Contract terms specify minimum annual purchase commitments, subject to force majeure conditions, and prices, which are subject to adjustment for changes in costs. In addition, Seminole has long-term contracts expiring through 2010 for transportation of substantially all coal purchases. Contract terms include a minimum cost as determined by a base quantity of tons shipped and prices, which are subject to adjustment for changes in costs. Total charges under these long-term contracts were approximately $123 million and $116 million in 1996 and

1995, respectively.

Seminole has established an external nuclear decommissioning trust fund (NDTF) in compliance with regulations prescribed by the Nuclear Regulatory Commission. The trust fund balance of approximately $2.8 million represents Seminole's cumulative share at December 31, 1996 of the estimated sinking fund reserve required to decommission CR3. Annual cash deposits will continue to be made to the NDTP representing l Seminole's annual share of the projected sinking fund requirements. These amounts will be recovered from members through rates annually. Based upon a site specific study completed in 1994, Seminole's total share of the projected cost of decommissioning is approximately $6.9 million stated in 1994 dollars, and decommissioning expenditures are expected to occur over a twenty-six year period ending in the year l 2041.

4 l In January 1993, Seminole began purchasing power from an IPP under a twenty year agreement which requires the purchase of 295 megawatts of capacity by Seminole from a generating station that was constructed and is being operated by the IPP on a site leased from Acuera. During the initial ten years of the agreement, Seminole is required to purchase an additional 145 megawatts of capacity to be supplied by the IPP from an existing coal-fired generating facility. Under the terms of the agreement Seminole will receive this capacity on a first call basis, subject to certain restrictions as to its use. Seminole is obligated to make annual "take or pay" capacity payments of approximately $34 million over the remaining six years of the initial ten years and approximately $21 million over the final ten years of the agreement. Total charges under this long-term contract were approximately $48 million and $46 million in 1996 and

1995, respectively.

In 1993, Seminole entered into an agreement with the Jacksonville Electric Authority (JEA) in which JEA will provide Seminole with 52 megawatts of firm capacity from January 1, 1995 through December 31, 2001. This "take or pay" contract obligates Seminole to make annual capacity payments ranging from approximately $1.9 million to S2.6 million over the remaining five years of the contract. Total charges under this long-term contract were approximately $2.0 million in both 1996 and 1995. During 1993, Seminole entered into an agreement with CFC and NCSC whereby, beginning in 1994, Seminole began receiving the periodic net proceeds and certain other rights related to the NCSC refinancing of its debt associated with certain transportation equipment leases with a variable rate financing by CFC. In exchange, Seminole is at risk to make net payments to CFC in the event that the variable rate, currently 6.2%, on the CFC internal funding which has a balance of $20.3 million at December 31, 1996, averages more than 13.8% over the remaining eight year life of the agreement. The periodic net proceeds or payments are credited or recovered through the fuel adjustment clause. In January 1994, Seminole entered into a "take or pay" agreement with the Orlando Utilities Commission (OUC) in which OUC provided Seminole with 75 megawatts of firm capacity during 1996 and will provide 125 megawatts of firm capacity from January 1, 1997 through December 31, 2000 with a minimum annual obligation of approximately S6.7 million. Additionally the contract calls for OUC to provide 75 megawatts of firm capacity from January 1, 2001 through May 31, 2004 with a minimum annual obligation of approximately $4.0 million for 2001 through 2003 and $1.7 million during 2004. Total charges under this long term contract were approximately $5.7 million in 1996. During

1995, Seminole completed the process of obtaining all certifications and permits necessary to construct a 440 MW combined cycle generating facility on a Seminole owned site in Hardee County, Florida.

At December 31, 1996 approximately S3.6 million is included in Construction Work in Progress related to this facility. This project, once scheduled to go in service in 1999, was postponed for three years by Seminole's Board of Trustees as a result of a new agreement with FPC. Under this agreement, FPC will supply Seminole with additional electric power for three years beginning in 1999. On July 15, 1996 Seminole issued a Request For Proposals to solicit purchase power proposals from other power suppliers in order to determine whether a more viable option exists to either the extension of the FPC agreement or the construction of the Hardee facility beginning in 2002. A significant number of proposals were received from a large number of bidders. Bids are currently being evaluated. It is expected that a decision will be made during 1997. In the normal course of business Seminole has ongoing disputes with some of its power suppliers. Additionally, some of the billings received by Seminole for purchased power are subject to adjustment based on the actual costs of the seller. During 1996 several disputes were settled resulting in a refund relating to purchased power costs recorded in prior periods in the amount of approximately $3 million not including interest. Also during 1996 refunds were received in the aggregate amount of approximately $1.3 million not including interest for adjustments to reflect actual costs related to power billings from prior periods. These amounts have been recorded in 1996 as reductions to purchased power expenses. Seminole is a party to litigation involving various claims arising in the normal course of business. In the opinion of management, the ultimate resolution of these matters will not materially affect Seminole's financial statements.

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FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT CITY OF BUSIINELL, FLORIDA SEPTEMBER 30,1996 I l l i i

FINANCIAL STATEMENTS AND i INDEPENDENT AUDITORS' REPORT i CITY OF BUSIINELL, FLORIDA l SEPTEMBER 30,1996 i CONTENTS i Page City Council and Officials 1 l Independent Auditors' Report 2 General Purpose Financial Statements Combined Balance Sheet - All Fund Types and Account Groups 3-4 l 4 2 Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types 5 Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - I All Governmental Fund Types 6 Combined Statement of Revenues, Expenses and 4 Changes in Retained Earnings / Fund Balance - Proprietary Fund Types and Similar Trust Funds 7 Combined Statement of Cash Flows - Proprietary Fund Type - Enterprise Funds 8 Notes to Financial Statements 9-31 Accompanying Information Combining and Individual Fund Statements and Schedules General Fund Balance Sheet 32 Statement of Revenues, Expenditures and Changes in Fund Balance 33 Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual 34 Statement of Revenues - Budget and Actual 35-36 Statement of Expenditures - Budget and Actual 37-38 E J

FINANCIAL STATEMENTS AND. INDEPENDENT AUDITORS' REPORT CITY OF BUSIINELL, FLORIDA SEPTEMBER 30,1996 l CONTENTS (Concluded) Page i Combining and Individual Fund Statements and Schedules (Concluded) Special Revenue Funds Combining Balance Sheet 39 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 40 Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - CDBG 41 Enterprise Funds Combining Balance Sheet 42-43 i Combining Statement of Revenues, Expenses and Changes in Retained Earnings 44 .1 Schedule of Revenues, Expenses and Changes in Retained Earnings - Budget and Actual - Electric Utility Fund 45 Schedule of Revenues, Expenses and Changes in Retained Earnings - Budget and Actual - Water Utility Fund 46 Schedule of Revenues, Expenses and Changes in Retained Earnings - Budget and Actual - Sanitation Fund 47 Pension Trust and Agency Funds Combining Balance Sheet 48 Combining Statement of Revenues, Expenses and Changes in Fund Balances - Pension Trust Funds 49 Statement of Changes in Assets and Liabilities - Agency Funds 50 Supplemental Schedules Comparative Summary of Revenues By Source and Expenses By Type - General Employees' Retirement Fund Si Comparative Summary of Revenues By Source and Expenses By Type - Police Officers' Retirement Fund 52 W

2 l 4 l 4 t i CITY COUNCIL AND OFFICIALS CITY OF BUSHNELL, FLORIDA SEPTEMBER 30,1996 i i Mayor-Councilman.................................... Joseph P. Strickland, Jr. Vice-Mayor-Councilwoman..................................... Margaret Theis Councilman................................................. Dale Swain Councilman........................................... Billy Williams Councilman................................................. James Holt City Manager............................................. Vicente Ru ano City Clerk................................................ J oy Coleman . City Attorney ............................ James E. Wade, III 1

Purvis Gray & Company INDEPENDENT AUDITORS' REPORT Honorabh Mayor and Council Members City of Bu;hnell Bushnell, Florida We have audited the accompanying general purpose financial statements of the City of Bushnell, Florida as of and for the year ended September 30, 1996, as listed in the table of contents. These general purpose financial statements are the responsibility of the City of Bushnell, Florida's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards; Government Auditing Standards, issued by the Comptroller General of the United States; and the provisions of Office of Management and Budget (OMB) Circular A-128, Audits of State and Iocal Governments. Those stand:rds and OMB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the general purpose financiti statements referred to above present fairly, in all material respects, the financial position of the City of Bushnell, Florida as of September 30,1996, and the results of its operations and changes in cash flows of its proprietary fund types for the year then ended in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the general purpose financial statements taken as a whole. The combining and individual fund and account group statements and schedules listed as accompanying information in the table of contents are presented for purposes of additional analysis and are not a required part of the general purpose financial statements of the City of Bushnell, Florida. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued a report dated January 3,1997, on our consideration of the City of Bushnell, Florida's internal control structure and a report dated January 3,1997, on its compliance with laws and regulations. O al F rd 4 MI j Certified Public Accountants P.O. Box 23999

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FAX (904) 385-9801 MLMBER5 OF AMERICAN AND FLORIDA INSTITUTE 5 OF CERTIFIED Pv6LIC ACCOUNTANT 5 MEMB[R OF AMIRICAN INSTITUTE OF CIRTIFl[D PUSLIC ACCOUNTANTS PRfVATE (.OMPANIES AND 5 t C. PRACTICE SECTIONS 2

COM21NED CALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUPS SEP'ITAfBER 30,1996 CITY OF BUSHNELL, FLORIDA 1 Proprietary. Fiduciary Account Groups Governmental Fund Types Fund Type Fund Type - General O m eral Totals Special Fixed Img-Term (Memmrandum Only) General Revenue Enterprise Agency Assets Debt 1996 1995 Assets Cash aml Cash Equivalents 701,473 $ 8,441 $ 544,039 l$ 3,316 $ 1,257,269 $ 1,014,144 Investments 341,000 70,277 411,277 355,059 Receivables: Accounts (Net of Allowance For Uncollectibles of $2,000) and Unbilled Revenue 50,897 400,069 450,966 373,057 Due From Other Funds 1,000 16,782 17,782 10,238 Due From Other Governments 91,185 12,483 103,668 12,937 i inventories, at Cost 136,828 136,828 114,058 Restricted Assets Cash and Cash Equivalents 479,036 479,036 452,805 i Property, Plant and Equipment - Cost Less Accumulated Depreciation For Proprietary Fund Types; Cost For General Fixed Assets Account Group 2,610,802 $ 1,776,964 4,387,766 4,262,002 Other Assets 10,543 10,543 11,360 Amount to be Provided For Retirement of $ 267,054 267,054 279,782 General Long-Term Debt Total Assets 844,555 $ 361,924 $ 4,198,099 $ 73,593 $ 1,776,964 $ 267,054 $ 7,522,189 $ 6,885,442 i s See accompanying notes. 3 1

CONCINED CALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUPS SEPTENCER 30,1996 CITY OF EUSHNELL, FLORIDA (Concluded) Proprietary hisciary Account Groups Governmental Fund Types Fund Type Fund Type General General Totals Special Fixed Lons-Term (Memorandum Only) General Revenue Enterprise Agency Assets Debt 1996 1995 Liabilities and Fund Equity Llabilities Accourns Payable 5 98,453 5 12,483 5 123,400 5 234,336 5 162,851 Other Accrued Expenses 18,434 15,622 34,056 21,026 Due to Other Punds 7,62G 1,000 9,156 17,782 10,238 Deferred Revenue / Deferred Credits 3,417 22,623 26,040 22,689 Deposits 1,235 1,725 2,960 5,319 Payable Prom Restricted Assets: Customer Deposits 68,860 68,860 63,847 Accmed Irserest Payable 4,927 4,927 6,205 Revenue Bonds Payable 40,000 40,000 35,000 CR-3 Decommissioning Deferred Credit 67,055 67,055 60,743 Revenue Bonds Payable - Series 1976 (Net of Discount and Portion Payable Prom Restricted Assets) 92,529 92.529 131,704 Notes Payable 534,424 5 123,422 657,846 776,351 Compensated Absences Payable 43,959 59,375 103.334 85,456 Deferred Compensation Payable 5 70,277 70,277 40,059 84,257 34.257 95,141 Obligations Under Capital Lease Total Liabilities 125.748 18,625 1,022,555 70,277 5 0 267,054 1,504,259 1,516,629 Fund Equity Contributed Capital 1,192,157 1,192,157 1,190,970 investmers in General Fixed Assets 1,776,964 1,776,964 1,587,164 Retained Earnice,s: Reserved 297.962 297,962 347,753 Unreserved 1,685,425 1,685,425 1,385,572 Pund Balances: Reserved 13,728 339,275 3,316 356,319 326,778 Unreserved 705,079 4.024 709,103 530,576 Total Fund Equity 718.807 343,299 _ 3,175,544 3,316 1,776.964 0 6.017,930 5,368,813 Total Liabilities and Fund Equky 5 844,555 5 361,924 5 4,198,099 5 73.593 5 1,776.964 5 267,054 5 7,522,189 5 6,885.442 See accompanying notes. 4

COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ) 4 ALL GOVERNMENTAL FUND TYPES FOR THE YEAR ENDED SEPTEMBER 30,1996 CITY OF BUSHNELL, FLORIDA Governmental Fund Types Totals Special (Memorandum Only) General Revenue 1996 1995 Revenues Taxes $36,217 $ 0$ 536,217 $ 504,851 Licenses and Permits 21,940 0 21,940 18,748 Intergovernmental 387,764 0 387,764 381,085 Grant Revenue' 77,160 41,916 119,076 0 Charges For Services 750 0 750 1,787 Fines and Forfeitures 37,014 0 37,014 19,134 Interest and Miscellaneous 109,559 40,447 150,006 79,900 i Total Revenues 1,170,404 82,363 1,252,767 1,005,505 Expenditures Current: General Government 317,049 0 317,049 280,284 Public Safety - 439,703 0 439,703 425,897 Physical Environment 6,374 55,643 62,017 20,534 Transportation 208,376 0 208,376 214,868 Economic Environment 12,250 0 12,250 12,000 Culture and Recreation 225,620 0 225,620 134.779 (Total Expenditures) (1,209,372) (55,643) (1,265,015) (1,088,362) (Deficiency) Excess of Revenues (Under) Over Expenditures (38,968) 26,720 (12,248) (82,857) Other Financing Sources Operating Transfers in 217,000 0 217,000 217,000 Excess of Revenues and Other Financing Sources Over Expenditures 178,032 26,720 204,752 134,143 y Fund Balances, Beginning of Year 540,775 316,579 857,354 723,211 Fund Balances, End of Year 718,807 $ 343,299 $ 1,062,106 $ 857,354 \\ See accompanying notes. 5

--.._p CHANGES IN FUND CALANCES - EUDGET AND ACTUAL ALL GOVERNMENTAL FUND TYPES FOR THE YEAR ENDED SEI9 EMBER 30,1996 CITY OF BUSHNELL, FLORIDA - General Fund Special Revenue Funds Totals (Memorandum Only) Variance Variance Variance i Favorable Favorable Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) Budget Actual (Unfavorable) Cevenues Taxes S 504,605 5 536.217 5 31,612 5 0 $ 0 $ 0 $ 504,605 $ 536,217 5 31,612 [ Licenses and Permits 17,060 21,940 4,880 0 0 0 17.060 21,940 1 4,880 Intergovernmental 365,934 387,764 21,830 0 0 ) 365,934 387,764 21,830 Grad Revenue 99,999 77,160 (22,839) 500,000 41,916 'F ,84) 599,999 119,076 (480,923) Charges For Services 1,700 750 (950) 0 0 0 1,700 750 (950) Fines and Forfeitures 18,100 37,014 18,914 0 0 0 18,100 37,014 18,914 Imerest anxi Miscellaneous 31,500 109,559 78,059 0 40,447 40,447 31,500 150,006 118,506 Total Revenues 1,038,898 1,170,404 131,506 500,000 82,363 (417,637) 1,538,898 1,252,767 (286,131) Expendkures General Government 329,486 317,049 12,437 0 0 0 329,486 317.049 12,437 Public Safety 454,746 439,703 15,043 0 0 0 454.746 '439,703 15.043 Physical Environment 7,900 6,374 1,526 500,000 55,643 444,357 507,900 62,017 445,883 Transportation 223,503 208,376 15.127 0 0 0 223,503 208,376 15.127 Econoruic Environment 13,000 12,250 750 0 0 0 13,000 12,250 750 Culture and Recreation 286.334 225,620 60,714 0 0 0 286,334 225,620 60,714 (Total Expenditures) (1,314,969) (1,209,372) 105,597 (500,000) (55,643) 444,357 (1,814,969) (1,265,015) 549,954 (Deficiency) Excess of Revenues (Under) Over Expenditures (276,071) (38,968) 237,103 0 26,720 26,720 (276,071) (12,248) 263,823 Other Financing Sources Operating Transfers In 217,000 217,000 0 0 0 0 217,000 217,000 0 Excess of Revenues and Other i Haancing Sources C,er Expenditures 5 (59,071) 178,032 3 237,103 5 0 26.720 $ 26,720 $ (59,071) 204,752 5 263,823 l Fund Balances, Beginning of Year 540,775 -~ 316,579 857,354 Fund Balances, Und of Year J 718,807 5 343,299 5 1,062.106 I h See accompanying notes. 6 i

COMBINED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS / FUND BALANCE PROPRIETARY FUND TYPES AND SIMILAR TRUST FUNDS FOR THE YEAR ENDED SEPTEMBER 30,1996 l CITY OF BUSHNELL, FLORIDA Proprietary Fiduciary Fund Types Fund Types Totals i Pension (Memorandum Only) Enterprise Trust 1996 1995 Operating Revenues Charges For Services 2,257,950 $ 0 $ 2,257,950 $ 1,996,405 Contributions 0 3,316 3,316 0 Total Operating Revenues 2,257,950 3,316 2,261,266 1,9 %,405 Operating Expenses Demand and Energy Charges 908,187 0 908,187 817,965 CR 3 Operations and Maintenance 74,180 0 74,180 50,031 s Salaries 218,573 0 218,573 205,115 Employee Benefits 99,984 0 99,984 92,175 Professional Services 67,571 0 67,571 57,823 i Operating Supplies 41,664 0 41,664 82,760 j Other Current Charges 81,554 0 81,554 83,877 Depreciation 182,300 0 182.300 166,119 Landfill 108,672 0 108,672 101,111 (Total Operating Expenses) (1,782,685) 0 (1,782,685) (1,656,976) Operating Income 475,265 3,316 478,581 339,429 Nonoperating Revenues (Expenses) laterest Income 26,289 0 26,289 33,239 i i Interest Expense (34,492) 0 (34,492) (42,662) Total Nonoperating Revenues (Expenses) (8,203) 0 (8,203) (9,423) Net Income Before Transfers 467,062 3,316 470,378 330,006 Other Financing (Uses) Operating Transfers Out (217,000) 0 (217,000) (217,000) Net Income 250,062 3,316 253,378 113,006 Retained Earnings / Fund Balances, Beginning of Year 1,733,325 0 1,733,325 1,620,319 Retained Earnings / Fund Balances, End of Year 1,983,387 $ 3,316 $ 1,986,703 $ 1,733,325 i See accompanying notes. 7 1

-= COMBINED STATEMENT OF CASH Fli)WS PROPRIETARY FUND TYPE - ENTERPRISE FUNDS FOR THE YEAR ENDED SEPTEMBER 30,1996 { CITY OF BUSHNELL, FLORIDA Total (Memorandum t Only) 1996 1995 Cash Hows From Operating Activities Operating Income 475,265 $ 339,429 Adjustments tu Reconcile Operating Income to Net Cash Provided By Operations: Depreciation of Plant 182,300 166,119 i d Change in Current Assets - (Increase) Decrease: Accounts Receivable and Unbilled Revenue (67,674) (7,973) Due From Other Funds 828 7,232 Other Assets 817 242 J Inventory (22,770) (37,154) Change in Current Liabilities - Increase (Decrease): Accounts Payable and Other Accrued Expenses (489) 19,345 Other Accrued Expenses 2,721 (2,401) Due to Other Funds (5,161) (7,232) Accrued Compensated Absences 7,078 9,343 Deferred Credit 527 22,096 Customer Delmsits 5,013 (2,588) Net Cash Provided By Operating Activities $78,455 506,458 Cash Flows From Noncapital Financing Activities Operating Transfers Out to Other Funds (217,000) (217,000) Cash Hows From Capital and Related Financing Activities Acquisition and Construction c,f Capital Assets (118,264) (318,162) Principal Payments and Bonds (133,724) (80,929) Proceeds From Note 0 150,000 Interest Paid (35,770) (43,940) Contributed Capital 1,187 58,833 NO Cash (Used In) Capital and Related Financing Activities (286,571) (234,198) Cash Flows From Investing Activities Interest Received 26,289 33,239 NQ Increase in Cash and Cash Equivalents 101,173 88,499 Cash and Cash Equivalents, Beginning of Year 921,902 833,403 Cash and Cash Equivalents, End of Year $ 1,023,075 $ 921,902 Presented in the Accompanying Financial Statements as: Unrestricted Cash 544,039 $ 469,097 Restricted Cash 479,036 452,805 Total Cash $ 1,023,075 $ 921,902 - See accompanying notes. 8

l. L NOTES TO FINANCIAL STATEMENTS F CITY OF BUSHNELL, FLORIDA. E 1. Note 1 - Summary of Significant Accounting Policies 1 1 The City of Bushnell, Florida (the City) was incorporated in 1911. The City operates under a council-manager form of government and provides services to its residents in many areas, ~ including public safety (police and fire), highways and streets, utilities, sanitation, culture and ' recreation, public improvements, and general administrative services. l i lf The financial statements of the City have been prepared in conformity with generally accepted l accounting. principles (GAAP) as' applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reponing principles. The more significant of the i . City's accounting principles are described below: Reporting Entity ' i In evaluating how to define the City for financial reporting purposes, management has considered all potential component units. The decision to include a potential component unit . in the reporting entity was made by applying the criteria set forth in GASB Statement No.14, 7he Financial Reponing Entity. The definition of the reporting entity is based primarily on the concept.of; financial accountability. The City is financially accountable for the j organizations that make up its legal entity. It is also financially accountable for legally 1 , separate organizations if its officials appoint a voting majority of the organization's governing - body and either it is able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits to, or to impose specific financial burdens on, the City. The City may also be financially accountable for governmental organizations ' that are fiscally dependent upon the City. Based upon the application for these criteria, the Evergreen Cemetery was considered a component unit of the City. m Evergreen Cemetery Fund A Board of Trustees was created by City ordinance and is appointed by the City Council to administer the affairs of Evergreen Cemetery. One member of the City Council must be on the Board of Trustees. The Board of Trustees is authorized to sell cemetery lots and to invest proceeds which are legally restrictut by ordinance. The principal is not subject to expenditure and the interest can be used only for operations, maintenance and improvement of the cemetery. The Evergreen Cemetery is a blended component unit and' is included in the City's reporting entity as a special revenue fund. j Fund Accounting, ) The City uses funds and account groups to report on its financial position and the results of i its ' operations. Fund accounting is designed to demonstrate legal compliance and to aid - financial management by segregating transactions related to certain government functions or activities, j A fund is a separate accounting entity with a self-balancing set of accounts. Funds are classified into three categories: governmental, proprietary and fiduciary. Each category, in turn, is divided into separate " fund types." 9 i i

NOTES TO FINANCIAL STATEMENTS CITY OF BUSHNELL, FLORIDA (Condnued) Note 1 - Summary of Significant Accounting Policies (Condnued) Fund Accounting (Concluded) Gcvernmental funds are used to account for all or most of a government's general activities. Governmental funds of the City are as follows: a General Fund - The general fund is the general operating fund of the City. It is used to account for all financial resources, except those required to be accounted for in another fund. m Special Revenue Funds - The special revenue funds are used to account for the proceeds of specific revenue sources (other than expendable trusts, or for major capital projects) that are legally restricted to expenditures for specific purposes. The City operates two special revenue funds (the Evergreen Cemetery and Community Development Block Grant funds). Proprietary funds are used to account for activities similar to those found in the private sector, where the determination of net income ;is necessary or useful to sound financial administration. Proprietary funds of the City are as follows: a Enterprise Funds - The enterprise funds are used to account for activities that are operated in a manner similar to private businesses where the cost of providing goods and services are primarily recorded through user charges. The City operates electric, water and sanitation enterpilse funds. Fiduciary funds are used to account for assets held on behalf of outside parties, including other governments, or on behalf of other funds within the government. Agency Funds - The agency funds generally are used to account for assets that the m government holds on behalf of others as their agent. The City operates pension trust funds and deferred compensation agency funds. An account group, unlike a fund, is a financial reporting device designed to provide accountability for certain ' assets and liabilities that are not recorded in the funds because they do not directly affect net expendable available financial resources. Account groups maintained - by the City are as follows: General Fixed Assets - Account for property and equipment not used in proprietary fund a type operations or accounted for in trust funds. General Long-Term Debt - Accounts for unmatured principal of long-term general e obligation indebtedness that is not a specific liability of a proprietary or fiduciary fund type. 10

~ NOTES TO FINANCIAL STATEMENTS CITY OF BUSHNELL, FLORIDA ~ (Continued) Note 1 - Summary of Significant Accounting Policies (Continued) Basis of Accounting and Measurement Focus The accounting and financial reportmg treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenses and other financing uses) in net current assets. All proprietary fund types are accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and all liabilities associated with the operation of these funds are included on the balance sheet. Fund equity (i.e., net total assets) is segregated into contributed capital and retained earnings components. Proprietar,5 fund type operating statements present increases (e.g., revenues) and decreases (e.g., expenses) in net total assets. The modified accrual basis of accounting is used by all governmental fund types and agency funds. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). " Measurable" ~ means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The following revenues are considered to be susceptible to accrual: Cigarette Tax Property Taxes State Revenue Sharing Proceeds Franchise Taxes Mobile Home License Tax Utility Service Taxes Alcoholic Beverage License Tax Interest Revenue Half-Cent Sales Tax Expenditures are recorded when the related fund liability is incurred. Principal and interest on general long-term debt are recorded as fund liabilities when due. The accrual basis of accounting is utilized by proprietary fund types. Under this method, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. Pursuant to GASB Statement No. 20, the City has elected not to apply all Financial Accounting Standards Board (FASB) Statements and Interpretations issued after November 30, 1989, for proprietary fund type activities. Billing cycles of the proprietary funds which overlap September 30 are prorated based upon meter reading dates. The City reports deferred revenue on its combined balance sheet. Deferred revenues arise when a potential revenue does not meet both the " measurable" and "available" criteria for recognition in the current period. Deferred revenues also arise when resources are received 11

NOTES TO FINANCIAL STATEMENTS CITY OF BUSHNELL, FLORIDA (Continued) Note 1 - Summary of Significant Accounting Policies (Continued) Basis of Accounting and Measurement Focus (Concluded) by the government before it has a legal claim to them, as when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the government has a legal claim to the resources, the liability for deferred revenue is removed from the combined balance sheet and revenue is recognized. Budgets Budgets are adopted on a basis consistent with generally accepted accounting principles, except that the provision for depreciation expense is not included in the budget of the proprietary funds. Annual appropriated budgets are adopted for the general fund. Annual appropriations lapse at fiscal year end. The 1996 annual operating budget was prepared for all funds, except the following: Evergreen Cemetery Fund - This fund was not budgeted for in 1996 by the City Council. a Encumbrance accounting, under which purchase orders, contracts, and other commitments are recorded as expenditures in order to reserve that portion of the applicable appropriation, is not employed by the City for budgetary purposes. Cash and Cash Equivalents Cash includes amounts in demand deposits, as well as short-term investments with a maturity date within three months of the date acquired by the City. Short-Term Interfund Receivables /Payables During the course of operations, numerous transactions occur betweep individual funds for goods provided or services rendered. These receivables and payables are classified as "due to/from other funds" on the balance sheet. Inventory Inventories held by the enterprise funds are stated at cost or market, whichever is lower. ] Prepaid Items Payments made to vendors for service that will benefit periods beyond September 30,1996, are recorded as prepaid items. Property, Plant and Equipment Property, plant and equipment used in governmental fund type operations are accounted for in the general fixed assets account group, rather than in governmental funds. No depreciation has been provided on such property, plant and equipment. All property, plant and equipment are valued at historical cost or estimated historical cost, if J actual historical cost is not available. Donated property, plant and equipment are valued at 1 their estimated fair value on the date donated. 12 i l I

NOTES TO FINANCIAL STATEMENTS CITY OF BUSHNELL, FLORIDA (Continued) l Note 1 - Summary of Significant Accounting Policies (Continued) l Property, Plant and Equipment (Concluded) The City has adopted the accounting policy of not capitalizing " infrastructure" general fixed assets (road, bridges, curbs and gutter, streets and sidewalks, drainage system, lighting i systems and similar assets that are immovable and of value only to the City). I Depreciation is provided in the enterprise funds in amounts sufficient to relate the cost of the j depreciable assets to operations over their estimated service lives on the straight-line basis. The service lives by type of asset are as follows: Useful Lives In Years Electric Utility Fund Distribution Plant 25-40 Years Structures and Improvements 32 Years i Equipment 6-12 Years Investment in Crystal River #3 Nuclear Plant 28 Years Water Utility Fund Distribution Plant 25-101 Years Building 50 Years Equipment 25 Years Sanitation Fund - Equipment 7 Years Bond Discounts and Issuance Costs Bond discounts and issuance costs for proprietary fund types are deferred and amortized over the term of the bonds using the straight-line amortization method which produces a result not significantly different from the interest method. Bond discounts are presented as a reduction of the face amount of bonds payable, whereas issuance costs are recorded as deferred charges. Compensated Absences Vested or accumulated vacation leave that is expected to be liquidated with expendable available financial resources is reported as an expenditure and a fund liability of the governmental fund that will pay it. Amounts of vested or accumulated vacation leave that are not expected to be liquidated with expendable available financial resources are reported in the general long-term debt account group. No expenditure is reported for these amounts. Vested or accumulated vacation leave of proprietary funds is recorded as an expense and liability of those funds as the benefits accrue to employees. In accordance with the provision of Statement of Financial Accounting Standards (SFAS) No. 43, Accountingfor Compensated Absences, no liability is recorded for nonvesting accumulating rights to receive sick pay benefits. However, a liability is recognized for that portion of accumulating sick leave benefits that is estimated will be taken as " terminal leave" prior to retirement. 13 i i J .s.

NOTES TO FINANCIAL STATEMENTS CITY OF BUSHNELL, FLORIDA (Continued) Note 1 - Summary of Significant Accounting Policies (Concluded) Interfund Transactions Quasi-external transactions are accounted for as revenues, expenditures or expenses. Transactions that constitute reimbursements to a fund for expenditures / expenses initially made from it that are properly applicable to another fund, are recorded as expenditures / expenses in the reimbursing fund and as reductions of expenditures / expenses in the fund that is reimbursed. All other interfund transactions, except quasi-external transactions and reimbursements, are reported as transfers. Nonrecurring or nonroutine permanent transfers of equity are reported as residual equity transfers. All other interfund transfers are reported as operating transfers. Grants - Proprietary Funds Unrestricted grants, entitlements or shared revenues received are reported as ronoperating revenues. Such resources externally restricted for capital acquisitions or construction are reported as contributed capital. Operating expenses include depreciation on all depreciable fixed assets (including those financed by grants). Water Line Extension Charges l Water line extension charges are made to customers to cover the full cost of the addition. Such charges are recorded as an equity contribution. Costs of the extension are reported as property and equipment and depreciated over the estimated useful life of the asset. 1 Fund Equity Contributed capital is recorded in proprietary funds that have received capital grants or j contributions from developers, customers or other funds. Reserves represent those portions of fund equity not appropriable for expenditures or legally segregated for a specific future 4 use. l Total Columns on Combined Statements - Overview Total columns on the combined statements - overview are captioned " Memorandum Only" to indicate they are presented only to facilitate financial analysis, Data in these columns are not comparable to a consolidation. Interfund transactions are not eliminated. Comparative Data Comparative total data for the prior year have been presented in the accompanying financial ] statements in order to provide an understanding of changes in the City's financial position and operations. However, comparative data have not been present-d in all statements because their inclusion would make certain statements unduly complex and difficult to understand. 14

NOTES TO FINANCIAL STATEMENTS CITY OF BUSHNELL, FLORIDA { (Continued) Note 2 - Legal Compliance - Budgets l Prior to October 1, the City Manager submits to the City Council a proposed operating budget for the fiscal year commencing October 1. The operating budget includes proposed expenditures and the means of financing them. After submission of the proposed operating l-budget, workshops are held and public hearings are conducted to obtain taxpayer comments. Prior to October 1, the budget is legally enacted through passage of a resolution. Any transfers of budgeted amounts between departments within any fund and any revisions that alter the total expenditures of any fund must be approved by the City Council. Budgeted amounts presented agree with the original adopted budget as amended during the year by the City Council, i Note 3 - Deposits and Investments Deposits and ti.e bank i At year end, the carrying amount of the City's cash deposits was $2,077,305 . balance was $2,131,247. All cash deposits were held in qualified public depositories and were covered by federal depository insurance or by a state collateral insurance pool in accordance with Chapter 280, Florida Statutes, All cash deposits were classified as category J one credit risk, which means they were insured or collateralized. i Investments The City's investments are categorized as either (1) insured or registered for which the securities are held by the City or its agent in the City's name; (2) uninsured and unregistered for which the securities are held by the broker's or dealer's trust department or agent in the City's name; or (3) uninsured and unregistered for which the securities are held by the broker or dealer, or by its trust depanment or agent, but not in the City's name. Investments in the deferred compensation plan are not classified as to credit risk because they are held in mutual funds. Other City investments are limited to certificates of deposit and are classified as cash deposits in the preceding paragraph. Note 4 - Property Taxes Under Florida law, the assessment of all properties and the collection of all county. municipal and school board property taxes are consolidated in the offices of the County Property Appraiser and the County Tax Collector. The laws of the state regulating tax assessment are also designed to assure a consistent property valuation method statewide. Florida Statutes permit municipalities to levy property taxes at a rate of up to 10 mills. The millage rate assessed by the City for the fiscal year ended September 30,1996, was 2.70. 15

NOTES TO FINANCIAL STATEMENTS CITY OF BUSHNELL, FLORIDA (Continued) Note 4 - Property Taxes (Concluded) 4 All property is assessed according to its fair market value on January 1 of each year. Each assessment roll is submitted to the Executive Director of the Florida Department of Revenue for review to determine if the rolls meet all of the appropriate requirements of Florida Statutes. l The current year taxes for the fiscal year, beginning October 1, are billed in the month of November and are due no later than March 31. On April 1, all unpaid amounts become delinquent and are subject to interest and penalties. Discounts are allowed for early payment as follows: November 4% December 3% January 2% February 1% March 0% Delinquent taxes on real property bear interest of 18% per year. On or prior to June 1 of the following tax year, certificates are sold for all delinquent taxes on real property. After sale, tax certificates bear interest of 18% per year or at any lower rate bid by the buyer. Application for a tax deed on any unredeemed tax certificates may be made by the certificate holder after a period of two years. Delinquent taxes on personal property bear interest of 18% per year until the tax is satisfied either by seizure and sale of the property or by the five-year statute of limitations.- The amount of delinquent or uncollected property taxes at year end was immaterial. The City's tax calendar is as follows: Valuation Date: January 1 Levy Date: November 1 Due Date: March 31, Succeeding Year Lien Date: April 1, Succeeding Year Note 5 - Bond Service Requirements / Restricted Assets Nuclear Decommissioning The Florida Public Service Commission requires utilities to set aside monies to pay the estimated future cost of dismantling or decommissioning nuclear power plants. The City has set aside such monies in the custody account with a third party trustee. 16

NOTES TO FINANCIAL STATEMENTS CITY OF BUSHNELL, FLORIDA l (Condnued) Note 5 - Bond Service Requirements / Restricted Assets (Concluded) Utilities System Revenue Bonds, Series 1976 As of September 30, 1996, bond service requirements are current. The following is a summary of the restricted assets related to the. Utilities System Revenue Bonds, Series 1976. 4' m Revenue Bonds Debt Service - The City deposits cash monthly into a separate account to fund upcoming principal and interest payments in accordance with the bond resolution. Such cash and investments are reported as restricted assets. 1 e Renewal and Replacement - The bond resolution requires a monthly deposit for renewal l and replacement (extensions, enlargements or additions to, or the replacement of capital j assets of the facilities and emergency repairs thereto or unusual costs of operation and l maintenance). The required monthly contribution is computed at one-twelfth of 9% of the prior year's gross revenue; however, no further deposits are required when the balance on hand equals 10% of the outstanding principal balance of the revenue bonds. ) Customer Deposits ,j Customer deposits have been restricted to indicate the amount is not available for the - j financing of current utility operations. Note 6 - Property, Plant and Equipment ' A summary of changes in general fixed assets follows: Balance Balance 10/1/95 Additions (Disposals) 9/30/96 Land 436,413 $ 57,150 $ (6,777) $ 486,786 Buildings 173,247 0 0 173,247 Improvements. 316,172 88,854 0 405,026 Machinery and Equipment 661.332 53,594 (3,021). 711,905 Total $ 1,587,164 $ 199,598 $ (9,798) $ 1,776,964 '1 A summary of proprietary fund type property and equipment at September 30,1996, follows: i Electric Water .l Utillty. Utility

Sanitation Fund Fund Fund Total Land 2,300 $

-18,090 $ 0$ 20,390 Distribution Plant 1,163,976 973,581 ,0 2,137,557 - Buildings 217,044 - 134,436 0 351,480 i Equipment 231,581 781,374 206,225 1,219,180 Crystal River III Investment 327,673 0 0 327,673 1,942,574 1,907,481 206,225 4,056,280 (Accumulated Depreciation) (765,489) (544.142) (135,847) (1,445,478) Total $ 1,177,085 $ 1,363,339 $ 70,378 $ 2,610,802 17 1 r +-

NOTES TO FINANCIAL STATEMENTS CITY OF BUSHNELL, FLORIDA (Continued) N:te 7 - Long-Term Debt i The following is a summary of the bonds payable and general long-term debt: a i i 4 - Proprietary Fund Long-Term Debt m Utility System Revenue Bonds, Series 1976 - $500,000 The 1976 bonds are coupon bonds in denominations of $5,000 each and are collateralized by a pledge of the gross revenues of the utilities system. 2 The bond liability is recorded according to use of the original proceeds as follows: 4 Electric Utility Fund 86 % Water Utility Fund 14 % Combined bond maturities and interest rates are as follows: Electric Water Total l 5 hiaturity Coupon Utility Utility Principal April 1 Rate Fund Fund Amount Term Bonds 1997 7.3 % 34,400 $ 5,600 $ 40,000 1998 7.3 % 38,700 6,300 45,000 1999 7.3 % 43,000 7,000 50.000 Total Principal Balance Outstanding 116,100 18,900 135,000 (Unamortized Discount and Issue Costs) (2,127) (345) (2,472) Total $ 113,973 $ 18,555 $ 132,528 Total Remaining Interest 13,341 $ 2.172 $ 15,513 The term bonds due in 1999 are subject to mandatory redemption by lot in the amounts listed above. m Water Fund - Florida Municipal Power Agency (FMPA) -Initial Pooled Loan Project The City has entered into a financing agreement with the FMPA. Interest is payable monthly at a variable rate (currently 4.0% plus a 1.15% administration fee) and principal is due as follows: 18

l NOTES TO FINANCIAL STATEMENTS l CITY OF BUSHNELL, FLORIDA (Continued) Note 7 - Long-Term Debt (Continued) Proprietary Fund Long-Term Debt (Continued) a Water Fund - Florida Municipal Power Agency (FMPA) - Initial Pooled Loan Project (Concluded) Electric Water Year Ending Utility _ Utility Total 9/30 Fund Fund Principal 1997 26,205 13,795 40,000 1998 26,205 13,795 40,000 1999 26,205 18,795 45,000 2000 30,573 19,427 50,000 2001 30,573 19,427 50,000 2002 11,001 3,999 15,000 2003 15,000 15,000 2004 20,000 20,000 2005 20,000 20,000 2006 20,000 20,000 2007 20,000 20,000 2008 25,000 25,000 2009 25,000 25,000 2010 25,000 25,000 2011 26,000 26,000 Total 150.762 $ 285,238 436,000 m Water Fund Note Payable - AmSouth Bank of Florida During the 1994-95 fiscal year, the City borrowed $150,000 from AmSouth Bank of Florida to finance construction of 5,800 feet of water main extension along State Road 48. This note is uncollateralized with monthly payments of principal and interest beginning on July 2,1995, and ending on June 2,2005 (120 payments). The interest rate on the note is fixed at 5.98% per annum, with total monthly payments being $1,663.82. The City made a $50,000 early payment on the note principal in March 1996. Annual requirements for the note are as follows: Principal Interest Total 1997 15,572 4,394 $ 19,966 1998 16,499 3,467 19,966 1999 17,482 2,484 19,966 2000 18,524 1,442 19,966 2001 16,541 361 16,902 Total 84,618 $ 12,148 $ %,766 19

NOTES TO FINANCIAL STATEMENTS CITY OF BUSHNELL, FLORIDA (Continued) Note 7 - Long-Term Debt (Continued) Proprietary Fund Long-Term Debt (Concluded) a Sanitation Fund Loan - First Union National Bank During the 1993-94 fiscal year, the City borrowed $40,000 from First Union National Bank to purchase a garbage truck. This loan is collateralized by the garbage truck and has a fixed interest rate of 4.83% per annum. Monthly payments of $751.74 began on May 8, 1993, and end on April 8,1998 (60 payments). Annual requirements for the loan are as follows:

^

Principal Interest Total 1997 8,546 474 9,020 1998 5,260 64 5,324 Total 13,806 538 $ 14,344 a l General Long-Term Debt Principal Balance 9/30/96 Note Payable - Bank, Unsecured, Due in Monthly Payments of $1,597 including Interest at 5% 123,422 Accumulated Unpaid Vacation and Sick Pay Accrual 59,375 Capital Lease Obligation, Collateralized By a Fire Truck (With a Cost Carrying Value of $123,000), Due in Semiannual Installments of $8,771 Which Includes Interest at 7.2% 84,257 Total General Long-Term Debt 267,054 During the year ended September 30,1996, the following changes occurred in the liability reported in the general long-term debt account group: Balance Balance 10/1/95 Additions (Reductions) 9/30/96 Note $ 136,066 $ 0$ (12,644) $ 123,422 Accumulated Uni; aid Vacation and Sick Pay Accrual 48,575 10,800 0 59,375 Capitalized Lease Obligations 95,141 0 (10,884) 84,257 Total $ 279,782 $ 10,800 $ (23,528) $ 267,054 20

NOTES TO FINANCIAL STATEMENTS CITY OF BUSHNELL, FLORIDA (Continued) Note 7 - Long-Term Debt (Concluded) General Long-Term Debt (Concluded) The following is a schedule of the maturity of the note payable - bank: Year Ending Total 9/30 Principal Interest Payments 1997 13,291 5,867 19,158 1998-13,971 5,187 19,158 1999 14,686 4,472 19,158 2000 15,437 3,721 19,158 2001 16,227 2,931 19,158 2002 17,057 2,101 19,158 2003 17,930 1,228 19,158 2004 14,823 325 15,148 Total 123,422 25,832 149,254 The following is a schedule of maturity of capital leases entered into by the City: Year Ending Total 9/30 Principal Interest Payments 1997 11,681 5,860 17,541 1998 12,538 5,003 17,541 1999 13,456 4,085 17,541 2000 14,443 3,098 17,541 2001 15,501 2,040 17,541 2002 16,638 903 17,541 Total 84,257 20,989 105,246 1 Note 8 - Compensated Absences Accumulated unpaid vacation and sick pay benefits are accrued when incurred in proprietary funds. Such amounts are not accrued in governmental funds. At September 30,1996, the general long-term debt group of accounts included $59,375 vacation and sick pay. Accumulated unpaid vacation and sick pay in enterprise funds are as follows at September 30: 1996 ~1995 Electric Utility Fund 23,277 $ 19,652 Water Utility Fund 16,689 14,229 Sanitation Fund 3,992 3,000 Total 43,958 $ 36,881 21

p 1 ) NOTES TO FINANCIAL STATEMENTS. CITY OF BUSHNELL, FLORIDA l (Condnued) i 3 a j Note 8 - Compensated Absences (Concluded). City policy as of September 30,1996, is to vest up to a maximum accumulation of 1,040 i. hours of sick leave. Upon voluntary termination,50% of the accumulated hours are paid to L the employee (75% for long-term employees with twenty oi more years of full-time service). j The City accrues 100% of unpaid vacation pay and 50% of accumulated unpaid sick pay at the employee's current pay rate. i Note 9 - Electric Power Agreements Crystal River Power Unit #3 Participation Agreement. The City is a participant in an agreement with Florida Power Corporation, which was entered into on July 31,'1975. Under terms of the agreement, the City acquired a 0.0388% ownership interest and generation entitlement share in the nuclear steam electric generating unit.. Participants are entitled to energy output of the unit based upon their respective generation entitlement share. Florida Municipal Power Agency (FMPA) The City is a member of the FMPA, which is a joint action agency formed by a number of Florida municipalities for the purpose of providing electric power alternatives for its members. FMPA is a nonprofit, joint action agency formed pursuant to Florida Statutes. FMPA has' the authority to undertake joint power supply projects and to issue tax-exempt bonds or other obligations to finance or refinance the costs of such projects. Due to the diverse needs of Florida's municipal electric systems, FMPA was established as a project-oriented agency. Under this structure, each member has the option whether or not to participate in a project. Members may choose to participate in more than one project; however, each of the FMPA's five projects is independent from the other, and no revenues or funds available from one project can be used to pay the costs of any.other project. The City has elected to participate in the "All Requirements Project," which supplies all the City's power requirements. In addition, the City has elected participation in the " Pooled Loan Project" in which FMPA issues debt, then loans the money to individual systems to finance utility-related projects. i j N:te 10 - Defined Benefit Pension Plans. Florida State Retirement System All full-time employees of the City employed prior to January 1,1996, participate in the State of Florida Retirement System (the System), a rnultiple-employer Public Employee Retirement System (PERS). 22

~. .. ~.- - - _ - - ^ NOTES 'ID FINANCIAL STATEMENTS CITY OF BUSHNELL, FLORIDA (Condaued) Note 10 - Defined Benefit Pension Plans (Condaued) Florida State Retirement System (Condaued) l . The System provides retirement, disability, or death benefits to numerous retirees statewide - ] - and has many members. The summary plan description of the System should be referred to ' for a complete plan description. The payroll for employees covered by the System for the year ended September 30,1996, was approximately $559,248; the City's total payroll was approximately $577,130. Regular class employees, which includes all employees except law enforcement officers and firefighters who have attained age 62, completing 10 or more years of service, or regardless of age, completing 30 years of service, are eligible for retirement benefits. The calculation i of monthly benefits is based on average final compensation (AFC) as defined in the plan. i t Retirement benefits range from 1.60% of AFC per year of service to 1.68% of AFC based ' l' upon retirement age or length of service. Special risk class employees,.which includes law ~ enforcement officers and firefighters who l have attained age 55, completing 10 years of special risk service, or age 52 with 25 years j special risk service, or 25 years continuous special risk service regardless of age, or 30 years of any creditable service regardless of age are eligible for retirement benefits. The calculation of monthly benefits is based on AFC and range from 2.00% per year of service to 3.00% of ' AFC based upon service period. j i Active employees who become disabled and have completed the length of service as defined t in the plan receive a minimum benefit of 42% of AFC for in-the-hne-of-duty and 25% of l AFC for regular disability. ) v If an active ~ employee dies in the line-of-duty, a member's spouse will receive a monthly l benefit of one-half the member's monthly salary at death for his/her lifetime until remarriage. If the spouse dies without remarrying, the benefit will continue to the member's children until the youngest reaches age 18, or until married, if earlier. If employee is terminated by death ! other the in-line-of-duty before completion of 10 years of service, the designated beneficiary will receive a refund of any retirement contributions. If the member has 10 or more years of service, the surviving spouse or eligible beneficiary may receive a refund of contributions . paid by the member or a lifetime monthly benefit calculated as though the member had retired j ~ on the date of death. j r I a i t 5 23 b ~

-~ 1 NOTES TO FINANCIAL STATEMENTS l CITY OF BUSHNELL, FLORIDA 4 (Continued) 4 Note 10 - Defined Benefit Pension Plans (Continued) Florida State Retirement System (Concluded) The City was required by Florida Statute to contribute 27.49% for special risk employees, 17.57% for regular members, and 24.54% for senior management through December 31, 1995. Effective January 1,1996, the rates increased to 27.50% for special risk employees, ) 17.66% for regular employees and 24.80% for senior management through Jm.e 30,1996. j Effective July 1,1996, the rates decreased to 27.10% for special risk employees,17.43 % for regular employees, and 22.24% for senior management. The contribution requirement for the year ended September 30,1996, was $115,281 for all employees. The " pension benefit obligation" is a standardized disclosure measure of the present value of pension benefits, adjusted for the effects of projected salary increases and step-rate benefits, estimated to be payable in the future as a result of employee service to date. The measure, i which is the actuarial present value of credited projected benefits, is intended to help users assess the System's funding status on a going concern basis, assess progress made in i accumulating sufficient assets to pay benefits when due, and make comparisons among PERS and employees. The System does not make special measurements of assets and pension benefit obligation for individual employers. The pension benefit obligation at June 30,1995, i for the System as a whole, determined through an actuarial valuation performed as of that date, was $47.3 billion. The System's net assets available for benefits on that date (valued at cost and at market) were $37.5 billion and $45.2 billion, respectively, leaving an unfunded pension benefit obligation at cost and market of $9.8 and $2.1 billion, respectively. The City's 1996 contribution represented less than 1% of total contributions required of all participating entities. Ten-year historical trend information showing the System's progress in accumulating sufficient assets to pay benefits when due is not presently available. However, historical trend i information commencing with 1986-87 is present in the System's June 30, 1995, annual financial report and will become more informative as data is developed and presented for each subsequent year. Florida State Retirement System Opt-Out in December 1995, the City Council approved opting out of the Florida State Retirement System effective with all new employees hired after January 1,1996. City employees covered under the System at December 31,1995, will continue to participate in the System and the i I City will continue to make contributions on their behalf. Plan Descriptly in January 1996, the City adopted two separate single-employer pension plans, one for police officers and a general employees' retirement plan that covers substantially all full-time City employees employed after January 1,1996, pursuant to the City's opt out of the Florida Retirement System. Th:se plans are maintained as pension trust funds and included as part of the City's reporting entity. City ordinance and state law requires contributions to 'ge i determined by actuarial studies every two years. Both plans had actuarial studies performed on a pro forma basis immediately prior to plan adoption. i 24 d

NOTES TO FINANCIAL STATEMENTS CITY OF BUSHNELL, FLORIDA (Continued) Note 10 - Defined Benefit Pension Plans (Continued) r Plan Description (Continued) - The General Employees' Retireuent Plan covers all full-time employees, except for police officers. The plan is noncontributory, and the City provides the full contribution to fund the plan. The annual pension cost related to the plan includes amortization, over a thirty-year period, or a prior service cost established October 13, 1995. The Police Officers' Retirement Plan covers all full-time police officers. The plan is f contributory and requires participants to contribute 1% of their salary to the plan. The City provides the balance of contributions required after the participants' contrzibutions. In addition, state funds collected under Florida Statutes Chapter 175 and 185 are contributed to the plan. The pension cost of the Police Officers' Retirement Plan includes the amortization, over a thirty-year period, of prior service costs reestablished October 13, 1995. Substantially all full-time City employees hired on or after January 1,1996, are eligible to participate in their respective plans. At October 13,1995 (the date of the initial actuarial report), the plans had no membership. Benefits vest after ten years of credited service for all employees. For the year ended September 30,1996, the General Employees' Retirement Plan had two nonvested participants and the Police Officers' Retirement Plan had one nonvested participant. Normal service retirement for employees is age 62 with ten years of creditable service for j general employees or 30 years of service, but no later than age 55 and ten years of creditable j service for police officers or 25 years of service. The normal service retirement allowance per annum is 1.6% of final monthly compensation multiplied by credited service. If the member has completed more than 30 years of credited service or is older than age 62 at the time of retirement, the applicable benefit rate for all years of credited service shall be as follows: Age 63 or 31 Years of Credited Services: 1.63 % Age 64 or 32 Years of Credited Services: 1.65 % Age 65 or 33 or More Years of Credited Services: 1.68 % The normal service retirement allowance per annum is 3.0% of final monthly compensation - multiplied by credited service for police officers. Final monthly compensation is equal to average monthly compensation for the five plan years which produce the highest average. Credited service is years and completed months of service from date of employment to termination. 1 3

- ~ NOTES TO FINANCIAL STATEMENTS CITY OF BUSHNELL, FLORIDA l (Continued) Note 10 - Defined Benefit Pension Plans (Condnued) Plan Description (Concluded) The plan provides for a death benefit prior to a participant's normal retirement date. The deceased participant's beneficiary shall receive a death benefit of either 1) ; refund of member contributions, or 2) an immediate or defined monthly benefit computed based on the assumption that the member retired on the date of death and elected the 100% Joint and survivor annuity. A joint annuitant is a spouse, dependent child, or any person receiving 50% or more of their support from the member. The plan provides for a disability benefit pior to a participant's normal retirement date. The totally and permanently disabled part',:ipant shall receive a disability benefit which equals 100% of the participant's accrued benefit multiplied by the actuarial equivalent factor which has the effect of reducing the accrued benefit to reflect the commencement of the benefit prior to the participant's normal retirement date. The disability benefit is payable for the life of the participant or until the participant's recovery from the disability before the participant's normal retirement date. l The City is obligated to contribute to the plans pursuant to the City Code Section 18-4. The amount of the contributions are certified by the consulting actuary. Plan Assets Plan assets are invested in bank deposit accounts. Investment decisions are made by the trustee with direction from the Board of Trustees. Funding Status and Progress A consulting actuary estimates the actuarial present value of accumulated plan benefits. This is the liability that results from applying actuarial assumptions to adjust the accumulated benefits earned by the participants to reflect the time value of money (through discounts for interest) and the probability of payment (by means of decrements such as for death, disability, withdrawal or retirement) between the valuation date and the expected date of payment. Significant actuarial assumptions used to compute the pension benefit obligations follow: Actuarial Assumptions Used in Valuation General Employees Police Interest to Be Earned 8% Compounded Annually 8% Compounded Annually By Fund Salary lacrease Factors 6% Per Year 6% Per Year (Actuarial Report Does Not Distinguish Between inflation, Merit and Seniority) leading None Service Retirement Liabilities are leaded By 1% to Account For Unused Sick leave 26

i NOTES TO FINANCIAL STATEMENTS CITY OF BUSHNELL, FLORIDA i (Continued) Note 10 - Defined Benefit Pension Plans (Condnued) Funding Status and Progress (Concluded) These actuarial assumptions are based on the presumption that the plans will continue. If the plans were to terminate, different actuarial assumptions and other factors might be applicable in determining the actuarial present value of accumulated plan benefits. No pension benefit obligation information is available for the fiscal year ended September 30, 1996, as this is the year the plans were implemented and all actuarial assumptions were made based on estimated demographics. Net assets available for benefits at market value for the general employees' and police officers' pension plans at September 30,1996, were $879 and $2,437, respectively. Actuarially Determined Contributions Required and Contributions Made Periodic employer contributions to the pension plans are determined on an actuarial basis using the entry age normal method. Pension cost is funded as accrued. Periodic contributions for both normal cost and amortization of the unfunded actuarial accrued liability were determined as a level amount of each participant, to fund the participant's projected retirement benefit. The effect of this cost method is to allocate the actuarial present value of the retirement benefits on a level basis over the period of the participant's employment. The funding strategy for normal cost should provide sufficient resources to pay employee pension benefits on a timely basis. Significant assumptions used to compute contribution requirements are the same as those used to compute the pension benefit obligation. General Police Employees Officers Actuarially Determined Employer Contribution Requirement As a Percent of Payroll Normal Cost 8.8 % 21.5 % As a Dollar Amount Normal Cost 877 $ 2,153 General Police Employees Officers Contribution Sources As a Percent of Payroll City 8.8% 20.5 % State .0% .0% Employee .0 % 1.0% Total 8.8% 21.5 % 27 P

1 ) NOTES TO FINANCIAL STATEMENTS CITY OF BUSliNELL, FLORIDA (Continued) i Note 10 - Defined Benefit Pension Plans (Continued) i Actuarially Determined Contributions Required and Contributions Made (Concluded) Contribution Sources (Concluded) As a Dollar Amount City 877 $ 2,131 State 0 0 I Employee 0 22 i Total 877 $ 2,153 Payroll Characteristics Annual Payroll of Active Employees 10,000 $ 10.000 Total contributions for the general employees and police officers' pension plans was $879 and $2,437, respectively, for the year ended September 30.1996. Total fiscal year 1996 payroll for the City was $577,130. Payroll in 1996 for employees covered by the plan was $9,985 for general employees and $12,182 for police officers. j The pension benefit obligation (PBO) is computed biennially by the City's actuary. To assist in the understanding of the progress being made in the funding of the City's pension - obligations, the following three-year schedules for which PBO information is available will be presented in future years. As noted previously, fiscal year ended September 30,1996, was the first year of the two plans and, therefore, no historical trend information on the pension benefit obligation is available for the current year. However, these schedules will expand and become more informative in future years as more data becomes available. Trend Information In the supplemental schedules section is the required ten-year historical trend information which provides further information about progress being made in accumulating assets to pay benefits when due. Certain of the required schedules are presented for the years for which the pension benefit obligation is currently available. These schedules will expand in comparable years as more information becomes available. 28

NOTES TO FINANCIAL STATEMENTS CITY OF BUSHNELL, FLORIDA (Condnued) Note 10 - Defined Benefit Pension Plans (Concluded) Deferred Compensation Fund The City offers its employees _a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all City employees, permits deferral of a portion of their salary until future years. A number of investment options (common stock balanced with corporate bonds and government securities, guaranteed interest, or a combination) are available to employees. The deferred compensation is not available to employees until termination, retirement, death or an unforeseen nonreimbursed emergency. The City matches 10% of employee contributions for all employees. Total City and employee contributions to the plan were $2,195 and $26,816, respectively, for the year ended September 30,1996. i All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights are (until paid or made available to the employee or other beneficiary) solely the property and rights of the - . City (without being restricted to the provisions of benefits under the plan), subject only to the claims of the City's general creditors; Participants' rights under the plan are equal to those of general creditors of the City in an amount equal to the fair market value of the deferred account for each participant. The deferred compensation fund is classified as an agency fund. The assets are stated at market value. It is the opinion of the City Attorney that the City has no liability for losses under the plan. City management believes that it is unlikely that assets will be used to satisfy the claims of general creditors in the future. Note 11 - Other Disclosures Segment Information For Enterprise Funds The City maintains three enterprise funds which provide electric, water and sanitation services. Segment information as of September 30,1996, is as follows: Electric Water . Utility Utility Sanitation Fund Fund Fund Total Operating Revenues $ 1,652,681 $ 366,672 $ 238,597 $ 2,257,950 Depreciation 104,550 60,936 16,814 182,300 Operating income 310,805 130,517 33,943 475,265 ~ Operating Transfers (Out) (187,000) (20,000) (10,000) (217,000) Net income 130,844 95,235 23,983 250,062 Current Year Capital Contributions 525 0 0 525 Total Assets 2,372,517 1,621,896 1%,314 4,190,727 Net Working Capital 532,381 182,474 103,985 818,840 Bonds Payable - Long-Tenn Portion 79,573 12,956 0 92,529 Notes Payable - Long-Term 124,557 340,489 5,260 470,306 Total Equity 1,801,247 1,205,194 169,103 3,175,544 Total Retained Earnings 1,624,340 219,393 139,654 1,983,387 29

NOTES TO FINANCIAL STATEMENTS CITY OF BUSHNELL, FLORIDA (th~tinued) Note 11 - Other Disclosures (Concluded) Interfund Receivables and Payables Interfund receivables and payables at September 30,1996, are as follows: Interfund Interfund Receivables Payables CDBG 03 1,000 General 1,000 7,626 Sanitation 847 0 Water Utility Fund 11,856 0 Electric Utility Fund 4,079 9,156 Total Interfund Receivables and Payables 17,782 $ 17,782 Interfund Transfers In (Out) Interfund transfers in (out) at September 30,1996, are as follows: Interfund Interfund Transfers Transfers In (Out) General Fund 217,000 $ 0 Electric Utility Fund 0 (187,000) Water Utility Fund 0 (20,000) Sanitation Fund 0 (10,000) Total Interfund Transfers In (Out) 217,000 $ (217,000) Allowances For Doubtful Accounts Allowances for doubtful accounts at September 30,1996, are as follows: Electric Utility Fund 1,000 Water Utility Fund 500 Sanitation Fund 500 Total Allowances For Doubtful Accounts 2,000 Excess of Operating Expenses Over Budgeted Operating Expenses in Individual Funds Excess of operating expenses over appropriations in individual funds are as follows at September 30,1996: Operating Expenses in Excess of Budgeted Budget Actual Operating Expenses Electric Utility Fund $ 1,194,391 $ 1,341,876 (147,485) Water Utility Fund 164,626 236,155 (71,529) Sanitation Fund 182,774 204,654 (21,820) 30

NOTES TO FINANCIAL STATEMENTS j CITY OF BUSHNELL, FLORIDA (Concluded) Note 12 - Risk Management' The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters.' The City transfers risk of loss through the purchase of commercial insurance from the Florida League of Cities, Inc. [ and independent agencies. Insurance against losses are provided for the following types of risk: a Workers' Compensation and Employer's Liability a Employees' Health Insurance a General and Automobile Liability i a Real and Personal Property Damage a Public Officials Liability e Accidental Death and Disability l The City's coverage for workers' compensation is under a m ospectively rated policy. j Premiums are accrued based on the ultimate cost to date of the City's experience for this type of risk. J W I 1 1 ii 31

f I i ACCOMPANYING INFORMATION

l 1 4 I 1 COMBINING AND INDIVIDUAL FUND STATENENTS AND SCHEDULES

GENERAL FUND The general fund is used to account for resources traditionally associated with governments which are not required to be accounted for in another fund. The general fund receives a greater variety and number of taxes than any other fund. The City of Bushnell, Florida's general fund directly services general long-term debt. I

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BALANCE SifEET GENERAL FUND SEPTEMBER 30,1996, WITH COMPARATIVE TOTALS FOR SEPTEMBER 30,1995 CITY OF BUSHNELL, FLORIDA 1996 1995 Assets Cash $ 701,473 $ 539,349 Utility Taxes and Franchise Fees Receivable 50,122 40,662 Due From Other Governments 91,185 12,937 Due From Other Funds 1,000 0 Other Receivables 775 0 Total Assets 844,555 592,948 Liabilities and Fund Balance LI:bilities Due to Other Funds 7,626 0 Accounts Payable 98,453 38,% 2 Other Accrued Expenses 18,434 11,418 ' Deposits 1,235 1,200 Deferred Revenue 0 593 i Total Liabilities 125,748 52,173 .l Fund Balance Reserve For Drug Interdiction 13,728 13,728 Fund Balance: 4 Unreserved 705,079 527,047 Tctal Fund Balance 718,807 540,775 Tctal Liabilities and Fund Balance $ 844,555 $ 592,948 i 32

STATEMENT OF REVENUES, EXPENDITURES AhD CHANGES IN FUND BALANCE GENERAL FUND FOR THE YEAR ENDED SEPTEMBER 30,1996, WITH COMPARATIVE TOTALS FOR SEPTEMBER 30,1995 CITY OF BUSHNELL, FLORIDA 1996 1995 Revenues Taxes - $ 536,217 $ 504,851 Licenses and Permits 21,940 18,748 Intergovernmental 387,764 381,085 Grant Revenue 77,160 0 Charges For Services 750 1,787 Fines and Forfeitures 37,014 19,134 In'.erest and Miscellaneous 109,559 48,288 'li,?st Revenues 1,170,404 973,893 Expenditures General Government 317,049 280,284 Public Safety 439,703 425,897 Physical Environment 6,374 7,219 Transportation 208,376 214,868 Economic Environment 12,250 12,000 i Culture and Recreation 225,620 134,779 (Total Expenditures) (1,209,372) (1,075,047) (Deficiency) of Revenues (Under) Expenditures -(38,%8) (101,154) Other Financing Sources Operating Transfers in: Electric Utility Fund 187,000 187,000 Water Utility Fund 20,000 20,000 Sanitation Fund 10,000 10,000-Total Other Financing Sources 217,000 ~217,000 Excess of Revenues and Other Financing Sources Over Expenditures 178,032 115,846 Fund Balance, October 1 540,775 424,929 Fund Balance, September 30 $ 718,807 $ 540,775 33

STATEMENT OF REVENUES, EXPENDITURES CHANGES IN FUND BALANCE - BUDGET AND ACTUAL' GENERAL FUND FOR THE YEAR ENDED SEPTEMBER 30,1996, WITH COMPARATIVE ACTUAL AMOUNTS FOR SEPTEMBER 30,1995 CITY OF BUSHNELL, FLORIDA 1996 1995 Variance . Favorable Budget Actual (Unfavorable) Actual Revenues Taxes 504,605 ~ $ 536,217 $ 31,612 $ 504,851 Licenses and Pennits 17,060 21,940 4,880 18,748 Intergovernmental 365,934 387,764 21,830 381,085 Grant Revenue 99,999 77,160 (22,839) O Charges For Services 1,700 750 (950) 1,787 Fines and Forfeitures 18,100 37,014 18,914 19,134 Interest and Miscellaneous 31,500 109,559 78,059 48,288 Total Revenues - 1,038,898 1,170,404 131,506 973,893 Expenditures General Government 329,486 317,049 12,437 280,284 Public Safety 454,746 439,703 15.043 425,897 Physical Environment 7,900 6,374 1,526 7,219 Transportation 223,503 208,376 15,127 214,868 Economic Environment 13,000 12,250 750 12,000 Culture and Recreation 286,334 225,620 60,714 134,779 (Total Expenditures) (1,314,969) (1,209,372) 105,597 (1,075,047) (Deficiency) of Revenues (Under) Expenditures (276,071) (38,968) 237,103 (101,154) Other Financing Sources Operating Transfers In: Eh;ctric Utility Fund 187,000 187,000 0 187,000 Water Utility Fund 20,000 20,000 0 20,000 Sanitation Fund 10,000 10,000 0 10,000 Total Other Financing Sources 217,000 _ 217,000 0 217,000 Excess of Revenues and Other Financing Sources Over Expenditures (59,071) 178,032 237,103 115,846 i Fund Balance, October 1 540,775 540,775 0 424,929 Fund Balance, September 30 481,704 $ 718,807 $ 237,103 $ 540,775 34-

STATEMENT OF REVENUES - BUDGET AND ACTUAL GENERAL FUND - FOR THE YEAR ENDED SEPTEMBER 30,1996, WITH COMPARATIVE ACTUAL AMOUNTS FOR SEPTEMBER 30,1995. 1 CITY OF BUSHNELL, FLORIDA i 1996 1995 Variance Favorable Budget Actual (Unfavorable) Actual Taxes Ad Valorem 92,229 $ 94,340 $ 2,111 $ 92,993 Sales Use and Gas Taxes 130,539 149,952 19,413 131,076 Franchise Fees: Telephone 1,750 2,197 447 1,786 Electric 50,011 50,790 779 48,616 Cable TV 5,500 5,631 131 5,394 Utility Service Taxes: Telephone 52,250 62,929 10,679 51,018 Gas 13,750 14,259 509-13,449 Electric 59,780 57,513 (2,267) 55,590 City Utility Tax 98,796 97,811 (985) 99,484 City Utilities Surcharge 0 795 795 5,445 Total Taxes 504,605 536,217 31,612 504,851 Licenses and Permits Occupational Licenses 4,800 4,941 141 5,926 Building Pumits 12,250 16,999 4,749-12,822 Other 10 0 (10) 0 Total Licenses and Permits 17,060 21,940 4,880 18,748 Intergovernmental Revenue Two-Cent Cigarette Tax 18,009 18,502 493 18,874 State Revenue Sharing 51,813 55,363 3,550 56,246 Mobile Home Licenses 5,250 6,398 1,148 5,382 Alcoholic Beverage License 528 514 (14) 528 Seven-Cent Sales Tax 63,087 62,672 (415) 67,879 l County Fire Fee 48,487 48,487 0 47,249 Share of County Occupational License 2,800 2,596 (204) 2,677 Rebate on Municipal Vehicles 0 190 190 '328 Sumter County Two-Cent Gas Tax 175,960 193.042 17,082 181,922 Total Intergovernmental Revenue 365,934 387,764 21,830 381,085 Grant Revenue FRDAP Grant 99,999 77,160 (22,839) 0 Charges For Services Mowing Fees 1,700 750 (950) 1,787 35

STATEMENT OF REVENUES - BUDGET AND ACTUAL GENERAL FUND FOR THE YEAR ENDED SEPTEMBER 30,1996, WITH COMPARATIVE ACTUAL AMOUNTS FOR SEPTEMBER 30,1995 CITY OF BUSHNELL, FLORIDA (Concluded) 1996 1995 Variance Favorable Budget Actual (Unfavorable) Actual Revenues (Concluded) l Fines and Forfeitures Fines and Forfeitures 17,500 $ 35,942 $ 18,442 $ 18,504 i Police Education 600 1,072 472 630 Total Fines and Forfeitures 18,100 37,014 18,914 19,134 Interest and Miscellaneous Interest Earned 11,500 12,728 1,228 13,075 Rent 5,000 5,129 129 5,935 Miscellaneous 15,000 24,122 9,122 25,808 Sale of Assets 0 67,580 67,580 3,470 TotalInterest and Miscellaneous 31,500 109,559 78,059 48,288 Total Revenues $ 1,038,898 $ 1,170,404 $ 131,506 $ 973,893 l I 36

P STATEMENT OF EXPENDITURES - 1 BUDGET AND ACTUAL. l GENERAL FUND FOR THE YEAR ENDED SEPTEMBER 30,1996, WITH COMPARATIVE ACTUAL AMOUNTS FOR SEPTEMBER 30,1995 CITY OF BUSHNELL, FLORIDA 1996 1995 Variance j Favorable Budget Actual (Unfavorable) Actual ] Expenditures General Governnent ) Legislative: Personnel Expenses 16,200 $ 16,200 $ 0' $ 14,475 Operating Expenses 4,840 4,927 (87) 3,739 Grants and Aids 1,650 1,500 150 1,500 Total legislative 22,690 22,627 63 19,714 Financial and Administrative: Personnel Expenses 151,851 131,539 20,312 ' 148,231 Operating Expenses 49,750 56,933 (7,183) 44,457 i Capital Outlay 62,000 64,153 (2,153) 0 Debt Service 18,500 19,158 (658) I1.456 Total Financial and Administrative 282,101 271,783 10,318 204,144 legal Counsel: Operating Expense 24,695 22,639 2,056 56,426 Total General Government 329,486 317,049 12,437 280,284 Public Safety Police Department: Personnel Expenses 251,908 261,904 (9,996) 261,574 Operating Expenses 59,351 57,323 2,028 53,180 Capital Outlay 16.120 18,838 (2,718) 20,196 Total Police Department 327,379 338,065 (10,686) 334,950 Fire Department: Personnel Expenses 20,732 18.055 2,677 8,227 Operating Expenses 29,805 20,759 9,046-21,609 Capital Outlay 24,378 9,285 15,093 12,878 Debt Service 17.542 17.542 0_ 17.541 Total Fire Department 92,457 65,641 26,816 60,255 P silding Department: Personnel Expenses 29,600 29,846 (246) 26,952 Operating Expenses 5,310 6,151 (841) 2,076 Debt Service 0 0 0 1,664 Total Building Department 34,910 35,997 (1,087) 30,692 Total Public Safety 454,746 439,703', 15,043 425.897 l 37

STATEMENT OF EXPENDITURES - BUDGET AND ACTUAL GENERAL FUND FOR THE YEAR ENDED SEPTEMBER 30,1996, WITH COMPARATIVE ACTUAL AMOUNTS FOR SEPTEMBER 30,1995 CITY OF BUSHNELL, FLORIDA (Concluded) 1996 1995 Variance Favorable Budget Actual (Unfavorable) Actual Expenditures (Concluded) Physical Environment Cemetery: Operating Expenses 5,500 $ 3,024 $ 2,476 $ 4,919 Grants and Aid 2,400 2,400 0 2,300 Capital Outlay 0 950 (950) 0 Total Physical Environment 7,900 6,374 1,526 7,219 Transportation Road and Street Department: Personnel Expenses 75,189 62,971 12,218 62,259 Operating Expenses 72,564 114,468 (41,904) 73,715 Capital Outlay 75,750 30,937 44,813 78,894 Total Transportation 223,503 208,376 15,127 214,868 Economic Environment Grants and Aid 13,000 12.250 750 12,000 Culture and Recreation Library: Operating Expenses 900 1,732 (832) 620 Grants and Aid 7,500 7,500 0 6,000 Total Library 8,400 9,232 (832) 6,620 Parks and Recreation: l Personnel Expenses 51,806 46,853 4,953 29,704 Operating Expenses 38,549 44,063 (5,514) 42,392 Capital Outlay. 34,667 2,190 32.477 30,074 FRDAP Grant - Capital Outlay 133,332 102,845 30,487 0 Debt Service 0 0 0 7,702 Total Parks and Recreation 258,354 195,951 62.403 109,872 Special Events: Operating Expenses 19,580 20,437 (857) 18,287 Total Culture and Recreation 286,334 225,620 60,714 134,779 Total Expenditures $ 1,314,969 $ 1,209,372 $ 105,597 $ 1,075,047 38

l P t i t SPECIAL REVENUE FUNDS Evergreen Cemetery Fund - To account for the proceeds and expenditures generated to maintain the i City's cemetery. Ccmmunity Development Block Grant (CDBG) Fund - To account for the receipts awarded and expenditures made in compliance with grant requirements to develop the City's downtown area.

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\\ \\ COMBINING BALANCE SHEET ' SPECIAL REVENUE FUNDS SEPTEMBER 30,1996, WITH COMPARATIVE TOTALS FOR SEPTEMBER 30,1995 CITY OF BUSHNELL, FLORIDA Evergreen CDBG Totals . Cemetery Grant 1996 1995 Assets Current Assets Cash 4,024 $ 4,417 $ 8,441 $ 3,529 Investments 341,000 341,000 315,000 l Receivables: j Due From Other Governments 12,483 12,483 0 Total Assets 345,024 16,900 361,924 318,529 Liabilities and Fund Baances Liabilities Accounts Payable 12,483 12,483 0 Advance From Other Funds 1,000 1,000 0 Deferred Revenues 3,417 3,417 0 Deposits 1,725 1,725 1,950 Total Llabilities 1,725 16,900 18,625 1,950 Fund Balances Reserved For Perpetual Care 339,275 339,275 313,050 Unreserved 4,024 4.024 3,529 Total Fund Balances 343,299 0 343,299 316,579 Tetal Liabilities and Fund Balances $ 345,024 $ 16,900 $ 361,924 $ 318,529 39

COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CIIANGES IN FUND BALANCES SPECIAL REVENUE FUNDS FOR TIIE YEAR ENDED SEPTEMBER 30,1996, WITil COMPARATIVE TOTALS FOR SEPTEMBER 30,1995 CITY OF BUSIINELL, FLORIDA Evergreen CDBG Totals - Cemetery Grant 1996 1995 Revenues Contributions 8,200 $ 0$ 8,200 $ 8,213 j Sale of Cemetery Lots 14,200 0 14,200 6,800 Interest 16,977 0 16,977 16,129 Memorials and Gifts 1,070 ~0. 1,070 470 Grant Revenue 0 41,916 41,916 0 Total Revenues 40,447 41,916 82,363 31,6[2, Expenditures Operating Expenses (13,727) (41,916) (55,643) (13,315) I Excess of Revenues Over Expenditures 26,720 0 26,720 18,297 Fund Balance, October 1 316,579 0 316,579 298,282 Fund Balance, September 30 $ 343,299 $ 0 $_343,299 $ 316,579 i i 40

t 4 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL SPECIAL REVENUE FUND - CDBG FOR THE YEAR ENDED SEPTEMBER 30,1996, WITH COMPARATIVE ACTUAL AMOUNTS FOR SEPTEMBER 30,1995 CITY OF BUSHNELL, FLORIDA 1996 1995 Variance Favorable Budget Actual (Unfavorable) Actual Revenues Grant Revenues $ 500,000 $ 41,916 $ (458,084) $ 0 Expenditures . Operating and Maintenance 95,000 41,916 53,084 0 Capital Outlay 405,000 0 405,000 0 (Total Expenditures) (500,000) (41,916) 458,084 0 Excess of Revenues Over Expenditures 0 0 0 0 Fund Balance, October 1 0 0 0 0 Fund Balance, September 30 0$ 0$ 0$ 0 i i 41

._m .m._ l i l l l ) 'l l i ENTERPRISE FUNDS L Enterprise funds are used to account for operations (a) that are financed and operated in a manner similar to private business enterprises, where the intent of the governing body is that the costs (expenses, l including depreciation) of providing goods or services to the general public on a continuing basis be-l financed or recorded primarily through user charges; or (b) where the governing body has decided that l . periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. Certain administrative expenses are paid by the general fund. l j I I i l l l I l I j J.

COMBINING T2ALANCE SHEET ENTERPRISE FUNDS SEPTEMBER 30,1996, WITH COMPARATIVE TOTALS FOR SEPTEMBER 30,1995 CITY OF BUSHNELL, FLORIDA Electric Water Utility Utility - Sanitation Totals Fund Fund Fund 1996 1995 Assets Current Assets Cash and Cash Equivalents 318,705 $ -127,756 $ 97,578 $ 544,039 $ 469,097 Customer Accounts Receivable 297,258 75,953 28,858 402,069 334,395 Allowance For Doubtful Accounts (1,000) (500) (500) (2,000) (2,000) Due From Other Funds 4,079 11,856 847 16,782 10,238 inventories, at Cost i10,006 26,822 136.828 114.058 Total Current Assets 729,048 241,887 126,783 1,097,718 925,788 Restricted Assets Cash and Cash Equivalents: Nuclear Decommissioning 67,055 67,055 60,743. Debt Service 82,319 13,401 95,720 93,940 Renewal aml Replacement 247,171 247,171 234,275 Customer Deposits ' 68,860 68,860 63,847 Other 230 230 0 Totel Restricted Assets 465,635 13,401 0 479,036 452,805 Property and Equipment Utility Plant in Service 1,942,574 1,907,481 206,225 4,056,280 3,943,770 (Accumulated Depreciation) (765,489) (544,142) (135,847) (1,445,478) (1,268,932) Total Property and Eg_4M - Cost I2ss Accumulated Depreciation 1,177,085 1,363,339 70,378 2,610,802 2,674,838 Other Assets i-Loan Cost (Net) 4,828 5,715 0 10,543 11,360 Total Assets $ 2,376,5% $ 1,624,342 $ 197,161 $ 4,198,099 $ 4,064,791 l 42

ENTERPRISE FUNDS SEPTE5EER 30,1996,. WITH COMPARATIVE TOTALS FOR SEPTEhCER 30,1995 CITY OF BUSHNELL, FLORIDA (Concluded) Electric Water Utilky Utility Sanitation Totals Fund Fund Fund 1996 1995 Liabilities and Fund Equity Current Liabilities Accounts Payable 104,7% $ 9,775 $ 8,829 $ 123,400 $ 123,889 Other Accrued Expenses 10,610 3,582 1,430 15,622 9,608 Due to Other Funds 9,156 9,156 10.238 Deferred Credit 22,623 22,623 22,096 Current Portion of Note Payable 26,205 29,367 8,546 64,118 54,734 Compensated Absences Payable 23,277 16,689 3,993 43,953 36,881 Total Current Liabilities 1%,667 59.413 22,798 278.878 257,446 Current Liabilities (Payable From Restricted Assets) Customer Deposits 68,860 68,860 63.847 Accrued Interest Payable 4,237 690 4,927 6,205 Current Portion of Bonds M yable 34,400 5,600 40,000 35,000 Total Current Liabiliti,Poyable From Restricted Assets) 107,497 6,290 0 113,787 105,052 Long-Term Liabilities Long-Term Portion Dr;.rred Credit - CR-3 Decommissioning 67,055 67,055 60,743 Revenue Bonds, Sc 4 D76 (Net of Current Portion and Discount) 79,573 12,956 92,529 131,704 Long-Term Portior af Note Payable 69,046 5,260 74,306 149,551 Note Payable - Floriaa Municipal Power Agency 124,557 271,443 3 %,000 436,000 Total lmng-Tenn IJabilities 271,185 353,445 5.260 629,890 777,998 Total Liabilities 575.349 419.148 28,058 1,022,555 1,140,4 % Fund Equity Contributed Capital 176,907 985,801 29,449 1.192,157 1,190,970 Retained Earnings: Reserved 290,852 7,110 297, % 2 347,753 Unreserved 1.333,488 212.283 139,654 1,685,425 1,385,572 Total Retained Earnings 1,624,340 219,393 139,654 1,983.387 1,733,325 Total Fund Equity 1,801,247 1,205.194 169,103 3,175,544 2,924,295 Total Liabilities and Fund Equity $ 2,376,596 $ 1,624,342 $ 197.161 $ 4,198,099 $ 4,064,791 43 + .m ..u. .m. - m.. 2. m m r --.--- m m m. m -m

COMDINING STATEMENT OF REVENUES EXPENSES AND 3 CHANGES IN RETAINED EARNINGS ENTERPRISE FUNDS FOR THE YEAR ENDED SEITEMBER 30,1996, WITH COMPARATIVE TOTALS FOR SEPTEMBER 30,1995 CITY OF BUSHNELL, FLORIDA. Electric Water Utility Utility Sanitation - Totals Fund Fund Fund 1996 1995 Operating Revenues Charge For Services $ 1,652,681 $ 366,672 $ 238.597 $ 2,257,950 $ 1,996,405 Operating Expenses Demand and Energy Charge 908,187 0 0 908,187 817,%5 CR-3 Operations and Maintenance 74,180 0 0 74,180 50,031 Salaries 109,767 72,295 36,511 218,573 205,115 Employee Benefits 44,467 33,919 21,598 99,984 92,175 Professional Services 29,568 34,843 3,160 67,571 57,823 Operating Supplies 36,086 1,101 4,477 - 41,664 82,760 _ Other Current Charges 35,071 33,061 13,422 81,554 83,877 ' Depreciation 104,550 60,936 16,814 182,300 166,119 imidfill 0 0 108,672 108,672 101,111 (Total Operating Expenses) (1,341,876) (236,155) (204,654) (1,782,685) (1,656,976) Operating Income 310,805 130,517 33,943 475,265 339,429 Nonoperating Revenues (Expenses) Interest income 22,771 2,543 975 25,289 33,239 Interest Expense (15,732) (17,825) (935) (34,492). (42,662) Total Nonoperating Revenues (Expenses) 7,039 (15,282) 40 (8,203) (9,423) Net income Before Transfers 317,844 115,235 33,983 467,062 330,006 Operating Transfers (Out) (187,000) (20,000) (10,000). (217,000) (217,000) Net income 130,844 95,235 23,983 250,062 113,006 Retained Earnings, October 1 1,493,4 % 124,158 115,671 1,733.325 1,620,319 Retained Earnings, September 30 $ 1,624,340 $ 219,393 $ 139,654 $ 1,983,387 $ 1,733,325 M

l SCliEDULE OF REVENUES, EXPENSES AND i CIIANGES IN RETAINED EARNINGS - BUDGET AND / CTUAL l ELECTRIC UTILITY FUND FOR TIIE YEAR ENDED SEPTEMBER 30,1996, WITil COMPARATIVE ACTUAL AMOUNTS FOR SEPTEMBER 30,1995 l CITY OF BUSHNELL, FLORIDA l 1996 G Variance i i Favorable Budget Actual (Unfavorable) Actual l Operating Revenues l Residential Electric Sales 552,747 $ 618,109 $ 65,362 $ 573,399 Conunercial Demend Sales 391,446 414,527 23,081 413,270 i Commercial Nondemand Sales 456,920 588,661 131,741 474,042 Private Area Light Sales 14,471 14.113 (358) 14,198 Miscellaneous 15,400 17,271 1,871 19,191 Total Operating Revenues 1,430,984 1,652,681 221,697 1,494,100 Operating Expenses Demand and Energy Charge 888,570 908,187 (19,617) 817,965 CR-3 Operations and Maintenance 71,604 74,180 (2,576) 50,031 Salaries 97,051 109,767 (12,716) 101,711 Employee Benefits 40,297 44,467 (4,170) 42,661 Professional Services 35,905 29,568 6,337 31,893 Operating Supplies 5,000 36,086 (31,086) 67,302 Other Current Charges 55,964 35,071 20,893 40,928 Depreciation 0 104,550 (104.550) 97,463 (Total Operating Expenses) (1,194.391) (1,341,876) (147,485) (1,249,954) Operating Income 236,593 310,805 74,212 244,146 Nonoperating Revenues (Expenses) Interest Income 20,500 22,771 2,271 29,737 Interest Expense (17,276) (15,732) 1,544 (20,657) Total Nonoperating Remnues (Expenses) 3,224 7,039 3,815 9,080 Net income Before Transfers 239,817 317,844 78,027 253,226 l Operating Transfers (Out) (187,000) (187,000) 0 (187,000) Net income 52,817 130,844 $ 78,027 66,226 Retained Earnings, October 1 1,493,496 1,427,270 Retained Earnings, September 30 $ 1,624,340 $ 1,493,496 45 j l

- - - _. = i l SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS - BUDGET AND ACTUAL WATER UTILITY FUND FOR THE YEAR ENDED SEPTEMBER 30,1996, l WITH COMPARATIVE ACTUAL AMOUNTS FOR SEPTEMBER 30,1995 CITY OF BUSHNELL,' FLORIDA l 1996 1995 Variance Favorable Budget ~ Actual (Unfavorable) Actual I ~ Operating Revenues Residential Water Sales 126,953 $ 126,874 $ (79) $ 122,911 Conunercial Water Sales 131,930 147,408 15,478 131,671 Penalties and Reconnections 16,000 15,724 (276) 15,784 Water Connection Fees 11,374 5,867 (5,507) 4,548 ) Capacity Reservation Charges 16,151 59,289 43,138 10,383 Miscellaneous 8,100 11,510 3,410 470 Total Operating Revenues 310,508 366,672 56,164 285,767 Operating Expenses Salaries 73,746 72,295 1,451 74,995 I Employee Benefits 30,600 33,919 (3,319) 31,526 Professional Services 23,940 34,843 (10,903) 20,184 j Operating Supplies 7,500 1,101 6,399 9.154 Other Current Charges 28,840 33,061 (4,221) 30,805 Depreciation 0 60,936 (60,936) 53.704 (Total Operating Expenses) (164,626) (236,155) (71,529) (220,368) Operating Income 145,882 130,517 (15,365) 65,399 Nonoperating Revenues (Expenses) Interest income 2,000 2,543 543 2,334 l Interest Expense (26,850) (17,825) 9,025 (20,946) Total Nonoperating Revenues (Expenses) (24,850) (15.282) 9,566 (18,612) Net Income Before Transfers 121,032 115,235 (5,797) 46,787 Operating Transfers (Out) (20,000) (20,000) 0 (20,000) 1 Net income 101.032 95,235 $ (5,797) 26,787 Retained Earnings, October 1 124.158 97,371 Retained Earnings, September 30 219,393 $ 124,158 46

1 l i SCIIEDULE OF REVENUES, EXPENSES AND CIIANGES IN RETAINED EARNINGS - BUDGET AND ACTUAL SANITATION FUND FOR Tile YEAR ENDED FEPTEMBER 30,1996, WITII COMPARATIVE ACTUAL AMO3?N FOR SEPTEMBER 30,1995 CITY OF BUSIINELi., FLORIDA l 1996 1995 l Variance l Favorable Budget Actual (Unfavorabic) Actual Operating Revenues Residential Garbage 104,283 $ 109,681 $ 5,398 $ 100,896 Commercial Garbage 114,579 128,510 13,931 114.557 l Miscellaneous 844 406 (438) 1.085 Total Operating Rs.nues 219,706 238,597 18,891 216,538 Operating Expenses Salaries 33,444 36,511 (3,067) 28,409 Employee Benefits 21,337 21,598 (261) 17,988 Professional Services 4,150 3,160 990 5,746 ] Operating Supplies 9,000 4,477 4,523 6,304 Other Current Charges 14,348 13,422 926 12,144 Depreciation 0 16,814 (16,814) 14,952 Landfill 100,495 108,672 (8,177) 101,111 i (Total Operating Expenses) (182,774) (204,654) (21,880) (186,654) Operating Income 36,932 33,943 (2,989) 29,884 N:noperating Revenues (Expenses) Interest Income 1,200 975 (225) 1,168 Interest Expense (711) (935) (224) (1,059) Total Nonoperating Revenues (Expenses) 489 40 (449) 109 l l Net Income Before Transfers 37,421 33,983 (3,438) 29,993 Operating Transfers (Out) (10,000) (10,000) 0 (10,000) N;1 Income 27,421 23,983 $ (3,438) 19,993 Retained Earnings, October 1 115,671 95.678 Retained Earnings, September 30 139,654 $ 115,671 47 l \\

1 l PENSION TRUST AND AGENCY FUNDS General Employees' Retirement Fund - To account for the accumulation of resources to be used for retirement annuity payments at appropriate amounts and times in the future and also the administrative. costs of the system. Resources are contributed by the general and enterprise funds at amounts determined by biennial actuarial studies. Police Officers' Retirement Fund - To account for the accumulation of resources to be used for retirement annuity payments at appropriate amounts and times in the future and also the administrative costs of the system. Resources are contributed by the state and plan participants, with additional funds j needed to meet actuarially determined amounts provided by the general fund. Employees' Deferred Compensation Fund - This fund is used to account for assets held for employees in accordance with the provisions of Internal Revenue Code Section 457. Ball Bond Fund - To account for the bond monies held by the City. During the current fiscal year, monies held in the bond fund were determined to be unclaimable and consequently transferred to the i general fund. j i I ) i i 1 1 i

COM;INING CALANCN' SHEET PENSION TRLWF AND AGENCY FUNDS SEPTEMBER 30,1996, WITH COMPARATIVE TOTALS FOR SEFFEMBER 30,1995 CITY OF BUSHNELL, FLORIDA - Pension Trust Funds Agency Funds General Police Employees' Employees' Omcers' Bail Deferred Retirement Retirement Bond Compensation Totals Fund Fund Fund Fund 1996 1995 Assets Cash 879 $ 2,437 3,316 $ 2,169 Investments 70,277 70,277 40,059 Total Assets 879 - 2,437 $ 0 70,277 73,593 42,228 Liabilities and Fund Equity Liabilities Deposits 0 - 2,169 Deferred Compensation Payable 70,277 70,277 40,059 Total Liabilities 0 0 0 70,277 70,277 42,228 Fund Equity Reserved For Retirement Benefits 879 2,437 0 0 3,316 0 Total Liabilities and Fund Equity 879 $ 2,437 $ 0$ 70,277 $ 73,593 $ 42,228 48 =

CONCINING STATEMENT OF REVENUES, EXPEMES AND CHANGES IN FUND CALANCES PENSION TRUST FUNDS FOR THE YEAR ENDED SEFFEMBER 30,1996, WITH COMPARATIVE TOTALS FOR SENMBER 30,1995 CITY OF BUSHNELL, FLORIDA General Police Employees Ofrurrs' Retirement Retirement Totals Fund Fund 1996 1995 Revenues Contributions: Employer 879 $ 2,437 $ 3,316 $ 0 Employee 0 0 0 0 State 0 0~ 0 0 Total Revenues 879 2,437 3,316 0 Operating Expenses Pension Benefit Payments 0 0 0 0 General and Administration 0 'O O O (Total Operating Expenses) 0 0 0 0 Met Income 879 2,437 3,316 0' Fund Balances, October 1,1995 0_ 0 0 0 Fund Balances, September 30,1996 879 $ 2,437 $ 3,316 $ 0 i 49

STATEMENT OF CifANGES IN ASSETS AND LIABILITIES AGENCY FUNDS SEITEMBER 30,1996 CITY OF BUSIINELL, FLORIDA Balance Ealance October 1, September 30, i 1995 Additions (Deletions) 1996 Deferred Compensation Fund Assets a Investments 40,059 $ 31,149 $ (931)$ 70,277 Liabilities Deferred Compensation Payable 40,059 $ 31,149 $ (931)$ 70,277 c Ball Bond Fund Assets Cash 2,169 $ 0$ (2,169) $ 0 Liabilities Deposits 2,169 $ 0$ (2,169) $ 0 50

t lJ l. l 4 r l i l 1 SUPPLEMENTAL SCHEDULES The following supplemental schedules present trend information regarding the City's general employees' { and police officers' pension plans. This information is not necessary for a fair presentation in conformity J with generally accepted accounting principles. l 1 l i 4 4 l. r 4 i

1 J l COMPARATIVE

SUMMARY

OF REVENUES BY SOURCE AND EXPENSES BY TYPE l GENERAL EMPLOYEES' RETIREMENT FUND REQUIRED SUPPLEMENTAL INFORMATION LAST FISCAL YEARS CITY OF BUSilNELL, FLORIDA l REVENUES BY SOURCE

Employer Contributions Percentage Fiscal of Annual Investment Year Amount Covered Payroll Income Total 1996 879 8.80 %

0 879 i EXPENSES BY TYPE

Fiscal Administrative Year Benefits Expenses Total 1996 0

0 0 ANALYSIS OF FUNDING PROGRESS" As of October 1 (6) (4) Unfunded Pmsion (1) (2) (3) Unfunded (Assets in (S) Benent Obligation Net Assets Pension Percentage Excess of) Pension Annual as a Percentage fiscal Available Benent Funded Benent Obligation Covered of Covered PayroII Year For Benefits Ohligation (1)/(2) (2)-(1) Payroll (4)/(5) Only one year of supplemental information is available with respect to revenues by source and expenses by type. As information becomes available, these schedules will be appropriately expanded. No supplemental information is available with respect to pension benefit obligation. As information i becomes available, these schedules will be appropriately expanded. I f f 51 l

4 COMPARATIVE

SUMMARY

OF REVENUES BY SOURCE AND EXPENSES BY TYPE ] POLICE OFFICERS' RETIREMENT FUND l REQUIRED SUPPLEMENTAL INFORMATION ' LAST FISCAL YEARS I CITY OF BUSIINELL, FLORIDA 4 ) i REVENUES BY SOURCE

i Percentage Fiscal Employee City and State of Annual Investment Year Contribution Contributions Covered Payroll Income Total 1996 0 $

2,437 20.00 %

0. $

2,437 EXPENSES BY TYPE

l 1

Fiscal Refunds & Administrative i Year Benefits Expenses Total i 1996 0 0 0 i ANALYSIS OF FUNDING PROGRESS ** i As of October I (6) (4) Unfunded Pension (1) (2) (3) Unfunded (Assets in (5) Benent Obligation Net Assets Pension Percentage Excess of) Pension Annual as a Perrentage Fiscal Available Benefit Ihnded Benefit Obligation Covered of Covered Payroll Year l'or Benefits Obligation (1)/(2) (2)-(l) PayroH (4)/(5) Only one year of supplemental information is available with respect to revenues by source and expenses by type. As information becomes available, these schedules will be appropriately expanded. No supplemental information is available with respect to pension benefit obligation. As information becomes available, these schedules will be appropriately expanded. 52 l l ,}}

ML20138H165

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