ML20023D792

Forwards Annual Financial Repts for 1982 for Florida Progress Corp & Cities of Tallahassee,Ocala,Kissimmee & Leesburg,Fl.Comprehensive Financial Info Also Encl

ML20023D792
Person / Time
Site:	Crystal River
Issue date:	05/26/1983
From:	Westafer G FLORIDA POWER CORP.
To:	Harold Denton Office of Nuclear Reactor Regulation
Shared Package
ML20023D793	List: ML20023D792 ML20023D795 ML20023D796 ML20023D798 ML20023D800 ML20023D801
References
NUDOCS 8306030320
Download: ML20023D792 (321)

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>[pyg Florida Power C0 A PQR Af 5ON May 26,1983 3F-0583-18 Mr. Harold R. Denton, Director Office of Nuclear Reactor Regulation U.S. Nuclear Regulatory Commission Washington, D. C. 20555

Subject:

Crystal River Unit 3 Docket No. 50-302 Operating License No. DPR-72 Annual Financial Reports for Florida Power Corporation and Participants

Dear Mr. Denton:

Florida Power Corporation (FPC) hereby submits the 1982 Annual Financial Reports for Florida Power Corporation and Participants (co-owners of Crystal River Unit 3). FPC submits the aforementioned reports in compliance with 10CFR50.71(b) and Regulatory Guide 10.1 " Compilation of Reporting Requirements for Persons Subject to NRC Regulations."

Should you have any questions concerning this submittal, please contact this office.

Sincerely,

/

. R. Westafer Manager Nuclear Licensing and Fuel Management Enclosure l DVH:mm cc: Mr. 3. P. O'Reilly, Regional Administrator Office of Inspection & Enforcement, Region II U. S. Nuclear Regulatory Commission 101 Marietta Street N.W., Suite 2900 Atlanta, GA 30303 L

t \0 8306030320 830526 PDR ADOCK 05000302 PDR I

General Office 32o1 Tnirty-fourth street south . P O Box 14042. st. Petersburg. Florida 33733 e 813-866 5151

GAINESVI'.LE REGIONAL UTILITIES THE COMBINED UTILITY FUNDS OF THE CITY OF GAINESVILI E FLORIDA l'

REPORT ON EXAMINATION OF FINANCIAL STATEMENTS ~AND SUPPLEMENTAL DATA FOR THE YEARS ENDED SEPTEMBER 30, 1982 AND 1981 O

J s

.. CONTENTS

• PAGES AUDITORS' REPORT - 1 FINANCIAL STATEMENTS:

Balance Sheet 2 Statement of Revenue and Expense and-Retained Earnings 3 Statement of Changes in Financial Position 4 Notes to Financial Statements 5-13.

SUPPLEMENTAL DATA:

Auditors' Report on Supplemental Data 14 Schedules of Net Revenues in Accordance with 1

Bond Ordinances:

l

. Combined 15 l

Electric Utility Fund 16

[ _

l Water Utility Fund 17 l-

! Sewer Utility Fund 18 L

E Schedule of Utility Plant Properties 19 Schedule of Accumulated Depreciation and Amortization 20 1

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AuDrroaS' aeroar davis, monk, farnsworth company c ...,o ....

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>e :t '- ' ' ' . Honorable City Commissioners

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Gainesville, Florida 32601

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. We have examined the balance sheet of Gainesville Regional Utilities (the Combined Utility Funds of the

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l City of Gainesville, Florida), at September 30, 1982 and the related statements of revenue and expense and

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retained earnings, and changes in financial position for

' * #'"'  ! the year then ended. Our examination was made in

,,1((,[$ accordance with generally accepted auditing standards

.and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. The

• financial statements of Gainesville Regional Utilities, for the year ended September 30, 1981, were examined by

%p other auditors whose report dated December 11, 1981, expressed an unqualified opinion on those statements.

h _\/> gQ In our opinion, the financial statements referred to above present fairly the financial position of Gainesville Regional Utilities, at September 30, 1982

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and the results of its operations and the changes in its financial position for the year then ended, in

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, conformity with generally accepted accounting principles l ,

applied on a basis consistent with that of the preceding l --4 i - year.

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1. s N, i M d Davis, Monk, Fa~rnsworth Cdopers&L[ rand

& Company

. December 1, 1982 I

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GAINESVILLE REGIONAL UTILITIES BALANCE SHEET SEPTFPP,ER 30, 1982 AND 1981 ASSETS 1981 1982 (AS RESTATED)

UTILITY PLANT Utility Plant in Service S407,844,825 S223,797,979 Construction in Progress 7,375,971 179,385,038 415,220,796 403,183,017

< Less Accumulated Depreciation and Amortization (68,934,097) (60,011,099)

NET UTILITY PLANT 346,286,699 343,171,918 RESTRICTED ASSETS Capital Facilities - Cash and Investments 946,204 843,762 Utility Deposits - Cash and Investments 1,759,980 704,863 Debt Service Fund - Cash and Investments 59,243,424 59,885,775 ,

Construction Trust Funds Cash and Investments 18,104,177 20,399,077 Utility Plant Improvement Fund Cash, Investments and Receivables 472,658 541,447 i Due from Other Funds 424  ;

Materials Inventories 2,773,924 2.573,858 TOTAL RESTRICTED ASSETS 83,300,367 84,949,206 ,

b CURRENT ASSETS ,

Cash 8,700,835 3,831,093 Accounts Receivable (Net of Allowance for Uncollectible Accounts; S368,416 in 1982 and $472,397.in 1981) 12,037,220 9,599,924 Due from Other Funds 4,846,922 1,726,375 Prepaid Expenses 215,361 185,207 Inventories:

Fuel 9,283,800 8,871,424 Materials and Supplies 161,129 146,652 Settlements with Fuel Suppliers 667,441 TOTAL CURRENT ASSETS 35,245,267 25,028,116 DEFERRED CHARGES 6,541,983 3,387,062 R

TOTAL ASSETS S471.374.316 $456.536.302 See accompanying notes.

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LIABILITIES AND FUND EQUITY 1981 1982 (AS RESTATED)

LONG-TERM DEBT AND FUND EQUITY Long-Term Debt:

Utilities System Revenue Bonds Payable $265,000,000 $265,000,000 Bond Anticipation Notes Payable 41,000,000 Less Unamortized Bond Discount (1,933,856) (1,755,750)

Total Long-Term Debt 304,066,144 263,244,250 Fund Equity:

Contributions in Aid of Construction 52,047,128 49,072,321 Retained Earnings 79,178,352 78,174,997 Total Fund Equity - 131,225,480 127,247,318 TOTAL LONG-TERM DEBT AND FUND EQUITY 435,291,624 390,491,568 PAYABLE FROM RESTRICTED ASSETS i

Utility Deposits 1,786,344 1,269,709

, Accrued Interest Payable 12,294,844 11,029,844 i Construction Trust Funds -

Accounts, Contracts and Retainages Payable 2,649,367 1,089,598 Due to Other Funds 636,020 Utility Plant Improvement Fund -

. Accounts Payable and Accrued Liabilities 321,577 455,880 Due to Other Funds 5,031,015 6,67; TOTAL PAYABLE FROM RESTRICTED ASSETS 22,719,167 13,851,70)

CURRENT LIABILITIES ,

Accounts Payable and Accrued Liabilities 9,199,626 5,617.099 Due to Other Funds 2,245,834 Bond Anticipation Notes Expected to be Refinanced 40,000,000 TOTAL CURRENT LIABILITIES 9,199,626 47,862,933 DEFERRED CREDITS 4,163,899 4,330,094 TOTAL LIABILITIES AND FUND EQUITY $471.374.316 $456.536.302

-GAINESVILLE REGIONAL UTILITIES-STATEMENT OF REVENUE-AND EXPENSE AND RETAINED EARNINGS.

YEARS ENDED SEPTEMBER 30, 1982 AND 1981 1981 1982 (AS RESTATED)

OPERATING REVENUES' Sales and Service Charges -$102,017,109 $ 63,609,667 Other Operating Revenue 1,-520,807 1,488,551 TOTAL OPERATING REVENUES 103,537,916 65,098,218 OPERATING EXPENSES Operations and Maintenance 64,153,454 33,751,723 Administrative and General 9,236,725 7,538,830 Depreciation and Amortization 10,639,016 6,260,147 TOTAL OPERATING EXPENSES 84,029,195 47,550,700 OPERATING INCOME 19,508,721 17,547,518 NON-OPERATING REVENUES (EXPENSES) ,

Interest Revenue 10,054,240 12,088,756 <

Interest Expense (22,848,644) (11.272,564) .

TOTAL NON-0PERATING REVENUE (EXPENSES) (12,794,404) 816,192 INCOME BEFORE EXTRAORDINARY ITEM AND OPERATING TRANSFERS 6,714,317 18,363,710 EXTRAORDINARY ITEM - SETTLEMENT OF LITIGATION 3,450,600 INCOME BEFORE OPERATING TRANSFERS 6,714,317 21,814,310 OPERATING TRANSFER TO GENERAL FUND (5,710,962) (4,583,496)

NET INCOME RETAINED 1,003,355 17,230,814 RETAINED EARNINGS, Beginning 78,174,997 60,944,183 RETAINED EARNINGS, Ending $ 79.178.352 $ 78.174.997 e

, See accompanying notes.

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GAINESVILLE REGIONAL UTILITIES

, STATEMENT OF CHANGES IN FINANCIAL POSITION YEARS ENDED SEPTEMBER 30, 1982 AND 1981 1981 1982 (AS RESTATED)

. SOURCE OF WORKING CAPITAL Net Income Before Extraordinary Item S 1,003,355 $ 13,780,214 Items Not Requiring Outlay of Working Capital:

Depreciation and Amortization 10,639,016 6,496,923 Working Capital Provided from Operations Before Extraordinary Item 11,642,371 20,277,137 Extraordinary Item 3,450,600 Working Capital Provided from Operations 11,642,371 23,727,737 Utility Plant Sales and Retirements 2,826,828 Contributions in Aid of Construction 2,974,807 3,938,556 Increase (Decrease) in Payable from Restricted Assets 8,867,460 . (5,127,478)

Increase (Decrease) in Deferred Credits (166,195) 2,309,379 Decrease in Settlements with Fuel Suppliers 704,250 Increase in Long-Term Debt 41,000,000 50,000,000 g

Other (441,252)

TOTAL SOURCE OF WORKING CAPITAL 67,145,271 75,111,192 l USE OF UORKING CAPITAL i

Utility Plant Additions 16,290,426 51,586,346 Increase (Decrease) in Restricted Assets (1,648,839) 13,139,262

• 37,000,000 Payment of Long-Term Liabilities Increase in Deferred Charges 3,206,735 3,027,233 Increase in Unamortized Bond Discount 416,491 343,972

, TOTAL USE OF WORKING CAPITAL 18,264,813 105,096,813 INCREASE (DECREASE) IN WORKING CAPITAL $ 48.880.458 $(29.985.621)

CHANGES IN WORKING CAPITAL BY COMPONENT Current Assets - Increase (Decrease):

e Cash $ 4,869,742 $ 1,561,292 Accounts Receivable 2,437,296 2.987,385 Due from Other Funds 3,120.547 (308,316)

Prepaid Expenses 30,154 182,904 Fuel, Materials and Supplies Inventories 426,853 6,787,236 Settlements with Fuel Suppliers (667,441) (43)~

Current Liabilities - Decrease (Increase):

Accounts Payable and Accrued Liabilities (3,582,527) (1,593,775)

Due to Other Funds 2,245,834 397,636 Bond Anticipation Notes 40,000,000 (40,000,000)

INCREASE (DECREASE) IN WORKING CAPITAL $ 48.880.458 S(29.985.621)

See accompanying notes.

GAINESVILLE REGIONAL UTILITIES NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1982 1 -

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting Gainesville Regional Utilities (GRU) consists of the Combined Utility Funds ,

of the City of Gainesville, Florida, (City). GRU uses the accrual basis of

' accounting and has adopted the uniform system of accounts prescribed by the Federal Energy Regulatory Commission. The electric, water and sewer funds

• are combined along with all restricted asset accounts.

Investments Investments are stated at amortized cost. Premium or discount is amortized over the investment's maturity.

Inventories Inventories are stated at cost. Cost for materials is determined using weighted average unit cost. Cost of fuel is determined using the last-in, j first-out (LIFO) method. Obsolete and unusable items are reduced to i estimated salvage values, t

Utility Plant e

Property and equipment are recorded at cost or estimated original cost where

, applicable. Maintenance and repairs are charged to operating expense as incurred. The average cost of depreciable plant retired is eliminated from the plant accounts, and such cost plus removal expense less salvage is charged to accumulated depreciation.

Depreciation Depreciation of Utility Plant is computed using the straight-line method over the estimated service life of the property. Depreciation was equivalent to 3.25% and 2.87% of average depreciable property for 1982 and ~1981, respectively.

Utility Revenue Recognition Util^ity revenues are recorded as earned. Fuel adjustment revenues are recognized based on the actual fuel costs. Amounts charged based on estimated costs are adjusted monthly for any differences between the actual and estimated costs once actual costs are known. Such differences are recorded as deferred debits or credits until used as adjustments to billings. ,

_5_

NOTES TO FINANCIAL STATEMENTS, CONTINUED 1 -

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES (Concluded)

Interfund Transactions Interfund transactions and contributions are generally made in accordance with budget ordinances. Interfund transactions and balances, except direct billings for utility services (See Note 5) are eliminated for the Combined Utility Funds. Interfund loans do not bear interest.

Allowance for Funds Used During Construction An allowance for interest on borrowed funds used during construction of

$566,000 in 1982 and S10,860,000 in 1981 is included in construction in progress and as a reduction of interest expense. These amounts are computed by applying to the monthly balance of projects under construction the effective interest . rate on the funds borrowed to finance the projects. The effective interest rates ranged f rom approximately 6.4% to 9.8% in 1982 and 5.5% to 9.3% in 1981.

Amortization Bond issuance costs are amortized over the life of the bonds. Other miscellaneous deferred charges with unamortized balances of $290,000 are being amortized over periods from five to ten years.

Reclassifications Certain amoimts for 1981 have been reclassified to conform with the presentation adopted for 1982.

2 - SETTLEMENTS WITH FUEL SUPPLIERS In December, 1977, GRU resolved to pass through to consumers the damages portion of settlements received from certain fuel suppliers. The following amounts, which are included in deferred credits, will be recorded as fuel adjustment revenues as such charges are reduced to consumers.

September 30, 1982 S 650,286 September 30, 1981 $1,172,800

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a NOTES TO FINANCIAL STATEMENTS, CONTINUED 3 - UTILITY SYSTEM REVENUE BONDS

, Operating income before depreciation plus certain interest income is pledged on Utilities System Revenue Bonds. The revenue bond ordinance and trust indenture required the establishment of the following debt service accounts:

B ACCOUNT PURPOSE Interest Account To accumulate sufficient funds to pay all ,

interest coming due on'-the bonds outstanding after allowing credit for any amounts to be transferred- f rom the '

Capitalized Interest account and the Sinking Fund account.

Principal Account To accumulate sufficient funds to* pay principal coming due on serial bonds.

e Sinking Fund Account To accumulate funds for payment of amortization installments coming due on term bonds, 8 i

Reserve Account -To accumulate an amount equal to the ,

uaximum aggregate bond service i 8

requirement coming due on all bonds outstanding during the current or any '

ensuing fiscal year.

Subordinated Bond Account To accumulate funds sufficient to pay the debt service requirements on any subordinated bonds.

l Reserve and Contingency Account To accumulate ~ funds for contingencies in l an amount periodically determined by the consulting engineer of record.

l t

l- Capitalized Interest Account To receive deposits from bond proceeds or the Improvement Account amounting to interest payments due on bonds for a

specified period during construction of a project not to exceed eighteen months following the date of commercial operation of the project. Transfers are made from this account to the Interest Account as interest payments come due. ,

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NOTES TO FINANCIAL STATEMENTS, CONTINUED 3 - UTILITY SYSTEM REVENUE BONDS (Continued)

Balances in the above described accounts which are included in retained earnings at September 30, are as follows:

a

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1982 1981 Interest Account S 9,632,027 $ 9,456,448 Principal Account -

Sinking Fund Account 24,325,494 19,607,495 Reserve Account 21,753,317 21,854,650 Subordinated Bond Account 2,665,467 1,655,904 Reserve and Contingency Account 867,119 686,042 Capitalized Interest Account - 6,625,236 59,243,424 59,885,775 Less Amounts Appropriated for Current Interest Payable (12,294,844) (11,029,844)

$ 46.948.580 $ 48.855.931 i

In addition to the above described accounts, the ordinances and indenture required the establishment of a Revenue Fund to collect revenues and pay '

expenses and an Improvement Account which is to be used to make capital l

improvements to the Utility System. GRU is in compliance at September 30, j 1982, with transfer requirements to the Improvement Account.

l The ordinances and indenture provide that the GRU's gross bond service r'equirement may be reduced by interest income with respect to specified Federal securities that the CRU is unconditionally obligated to acquire at a maximum purchase price under contract (see Note 6), and by amounts of deposits in the Capitalized Interest Account for specified bonds. As of September 30, 1982, future gross and net debt service requirements including interest at 6.4% to 9.2% for Utilities System Revenue Bonds are (000 omitted):

i

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s NOTES TO FINANCIAL STATEMENTS, CONTINUED 3 - UTILITY SYSTEM REVENUE BONDS (Concluded) s .

CAPITALIZED CONTRIBUTIONS INTEREST AND YEAR TO GROSS INVESTMENT NET ENDING SINKING FUND DEBT ACCOUNT DEBT ,

SEPTEMBER 30, PRINCIPAL INTEREST ACCOUNT SERVICE REVENUES SERVICE 1983 19,260 1,959 21.219 2,130 19,089 ,

1984 19.260 3,022 22,282 2,322 19,960 1985 19,260 3,679 22,939 2,596 20,343 4

1986 19.260 4,973 24,233 2,940 21,293.

I 1987 19.260 5,546 24,806 3,383 21,423

• 1988 19,260 6,034 25,294 3,872 21,422 1989 19.260 5,915 25,175 4,423 20,752 1990 3,460 19,260 389 23,109 4,786 18,323 i 1991 3,680 19,034 22,714 4,803 17,911 1992 3,925 18,793 22,718 4,803 17,915

• 1993 4,180 18,530 22,710 4,803 17,907 1994 4,460 18,249 22,709 4,803 17,906 '

1995 4,765 17,945 22,710 4,803 17,907 i 1996 5,080 17,620 22,700 4,803 17,897 1997 5,430 17,270 22,700 4,803 17,897 e 1998 5.810 16,896 22,706 4,803 17,903 1999 6,215 16,'485 22,700 4,803 17,897 2000 6,655 16,044 22,699 4,803 17,896 2001 7,125 15,565 22,690 4,803 17,887 2002 7,645 15,043 22,688 4,803 17,885 2003 8,195 14,483 22,678 4,803 17,875 2004 8,795 13,874 22,669 4,803 17,866 2005 9.440 13,220 22,660 4,803 17,857 ,

2006 10,135 12,518 22,653 4,803 17,850 2007 10,880 11,754 22,634 4,803 17,831 2008* 66,590 10,922 77,512 59,693 17,819 2009 11.345 6,459 17,804 17,804 17,785 2010 12,210 5,575 17,785 2011 13,145 4,621 17,766 17,766 2012 14,160 3,593 17,753 17,753 2013 15,250 2,486 17,736 17,736 2014 16,425 1,289 17,714 17,714 Total Principal $265.000

• Assumes partial optional redemption of 2014 term bonds in 2008, and that early j call provisions of Federal securities and term bonds are not exercised.

NOTES TO FINANCIAL STATEMENTS, CONTINUED 4 - BOND ANTICIPATION NOTES PAYABLE GRU is liable on bond anticipation notes totaling $41,000,000. Such notes are collateralized by a lien on net revenues junior and subordinate to the lien by Utilities System Revenue Bonds, and a first lien on proceeds of future sales of bonds. The notes bear interest at 9.75% and mature on April 1, 1984. ,

5 - INTERFUND DIRECT UTILITY BILLINGS Included in revenues are.the following interfund direct billings for utility services:

1982 1981 Revenues Sales of Electricity $1,392,703 $1,405,528 Sale's of Water 107,722 112,151 Sewer Service Charges 2 ,84, 3 20,231 TOTAL REVENUES St.503.274 S1.537.910 Included in expenses are the following interfund direct billings for utility services:

1982 1981 Expenses Electric Fund $ 223,051 $ 281,502 Water Fund 640,176 614,646 Sewer Fund 640,047 641,762 TOTAL EXPENSES St.503.274 S1.537.93

• 6 - JOINTLY OWNED ELECTRIC PLANT GRU-owned resources for supplying electric power and energy requirements includes its 1.4079% undivided ownership interest in the Crystal River Unit 3 (CR3) nuclear power plant operated by Florida Power Corporation. CR3 revenue and operating and maintenance costs which represent GRU's part of all revenue and expenses attributable to operation of CR3 are properly recorded in accordance with the instructions as set forth in the Uniform System of Accounts. Payments are made to Florida Power Corporation in accordance with the CR3 participation agreement.

NOTES TO FINANCIAL STATEMENTS, CONTINUED 7 - CONTRIBUTIONS IN AID OF CONSTRUCTION >

Contributions in aid of construction are as follows:

1982 1981 Contributions in Aid el Construction:

Utility Plant and Property, Plant and Equipment Contributed by Municipality $ 3,977,801 $ 3,974,496 Federal and State, Grants in Aid of e Const ruction 12,181,631 12,131,631 Contributions from Customers and Developers:

Plant Contributed by Developers 18,622,351 16,970,698 ,

Front Footage, Meter Installation and Other Connection Charges 11,673,029 11.243,556 Capital Facilities Charges 5,592,316 4,751,940 TOTAL CONTRIBUTIONS IN AID OF CONSTRUCTION $52.047.128 S49.072.321 8 - RETAINED EARNINGS ,

Retained earnings reserved for Debt Service and unappropriated are as follows: - e 1981 1 1982 (AS RESTATED)

Reserved for Debt Service (Note 3) $46,948,580 $48,855,931 Unappropriated 32,229,772 29,319,066 ,

TOTAL RETAINED EARNINGS $79.178.352 $78.174.997 9 - RESTATEMENT OF 1981 FINANCIAL STATEMENTS The 1981 financial statements have been restated to correct an error made-when computing accrued interest payable at September 30, 1981. Following is ,

the effect of the error correction:

AMOUNT AS AMOUNT PREVIOUSLY AS REPORTED RESTATED Interest Expense $10,012,564 $11,272.564 Net Income $18,490,814 $17,230,814 Retained Earnings S79,434,997 $78,174,997 Accrued Interest Payable $ 9,769,844 $11,029,844 10 - RETIREMENT PLANS The City sponsors and administers two retirement plans that include GRU employees together with other City employees.

The Employees Pension Plan (" Employees' Plan"), a defined benefit, primary non-contributory pension plan, covers all employees of the GRU except certain managerial personnel who participate only in the Deferred Compensation Plan.

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NOTES TO FINANCIAL STATEMENTS, CONTINUED 10 - RETIREMENT PLANS (Concluded)

The City accounts for and funds the costs of the Employees Plan as they accrue. Such costs are based on contribution rates determined by the most recent actuarial valuation. The total contributions by the City, including amortization of prior service costs, for the years ended September 30, 1982 and 1981 were $957,875 and $774,260, respectively. Of these totals, approximately $570,700 and $412,000 was contributed by Utility Funds in 1982 and 1981, respectively.

The following information for the Employees Plan is as of September 30, 1980, the date of the latest actuarial valuation.

Actuarial present value of accumulated plan S 9,333,483 benefits - Vested Actuarial present value of accumulated plan 445,790 benefits - Nonvested S 9.779.273 Net assets available for benefits $13.379.968 Weighted average assumed rate of return used to determine the actuarial present value of plan benefits 1ql Deferred Compensation Trust Fund - Beginning in 1979, employees in certain management positions are eligible to participate in a defined contribution deferred compensation plan managed by the International City Management Association Retirement Corporation as fiscal agent for the City. Under this plan, the City contributes 6% of an employee's annual salary and employees may contribute either a specified percentage or dollar amount. Total deferred compensation cost for the fiscal years ended September 30, 1982 and 1981, for the utility funds was approximately $25,100 'and S20,000, respectively.

11 - COMMITMENTS AND CONTINGENCIES .

Purchase Commitments As described in Note 3, GRU has contracted to purchase Federal securities of approximately $31,517,000 from its Sinking Fund account on a scheduled basis through 1989.

Contingencies GRU has entered into an agreement with seven other Florida municipalities who operate oil / gas-fired electric generating facilities and who purchase natural gas to operate such facilities from Florida Gas Transmission Company (FGT)

The cities are collectively resisting the imposition of a new "end-use" gas curtailment plan proposed by the Federal Energy Regulatory Commission on the FGT pipeline system. As part of the agreement, the cities have adopted a policy of internal compensation between themselves that amounts to a voluntary gas curtailment plan. The proposed "end-use" curtailment plan would not uniformly affect all of the cities since smaller cities would receive a higher priority for allocation of available gas than larger cities.

i NOTES TO FINANCIAL STATEMENTS, CONCLUDED 11 - COMMITMENTS AND CONTINGENCIES (Concluded)

Therefore, to encourage unity in resisting such a curtailment plan, the larger cities agreed to voluntarily compensate,the smaller cities when the small cities receive less gas currently than they would have received if they

• had allowed the "end-use" plan to go into effect. Gas deliveries resulting in internal compensation are monitored and calculated by an independent consulting engineer. It is anticipated that GRU will make cash payments to smaller cities under the agreement, and such payments would be reflected as a cost of fuel and recovered through fuel adjustment charges. The total amount ultimately to be paid under the terins of the agreement depends on future gas deliveries by FGT and is not determinable. ,

12 - EXTRAORDINARY ITEM - SETTLEMENT OF LITIGATION Included in the statement of revenue and expenses in 1981 is an extraordinary credit of $3,450,600 which represents the net cash settlement reached with Florida Power and Light Company (FPL) .

Additionally, FPL agreed to establish a $3,000,000 transmission service credit (credit) for GRU. This credit is assignable by GRU and shall be applied against billings from FPL to GRU or its assignee (s) for transmission service. Interest on the remaining credit balance accrues quarterly at the  ?

13-week U.S. Treasury Bill rate and is added to the remaining credit balance. i The $3,000,000 credit plus interest accrued through September 30, 1982 has been recorded as a deferred charge with an offsetting deferred credit. GRU ,

uses the credit as a reduction of their share of the interconnection costs. i a

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gg AUDITORS' REPORT ON SUPPLEMENTAL DATA monk, iarnsworth company Lettrf'ed Publ*C ACCOtsPt8n*,

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. - . 2, i ; ,

Honorable City Commissioners City of Gainesville r Gainesville, Florida 32601

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.. . . ,. : > s s s Our examination was mada- for the purpose of forming an opinion on the basic financial statements, taken as a

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whole. The accompanying schedules of net revenues in

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accordance with bond ordinances for the year ended

._ [. O A,N September 30, 1982 and schedules of utility plant e properties and accumulated depreciation and amortization ,

for the year ended September 30, 1982 are presented for purposes of additional analysis and are not a required part of the basic financial statemente. Su'ch information has been subjected to the auditing procedures applied in the examination of the basic financial statements and, in our opinion, is fairly

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' stated in all material respects in relation to the basic financial statements taken as a whole.

h gQ The accompanying schedules of net revenues in accordance

' ' - ' with bond ordinances for the three years ended September 30, 1980 and the year ended September 30, 1981 were

, .y examined by other auditors whose reports dated December 30, 1980 and December 11, 1981, respectively, expressed

-4 + an unqualified opinion on the basic financial statements.

1 x 4 Co6pers & Fbrand f \ Davis, Monk, Farnsworth

& Company December 1, 1982

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GAINESVILLE REGIONAL UTILITIES SCHEDULES OF COMBINED NET REVENUES IN ACCORDANCE WITH BOND ORDINANCES .

YEARS ENDED SEPTEMBER 30, 1982, 1981, 1980, 1979, AND 1978 1982 1981 GROSS REVENUES .

Sales of Electricity S 92,037,314 S 54,219,805 Other Electric Operating Revenue 1,405,509 1,395,168

~

• Interest Income 3,775,215 2,830,183 Settlement of Litigation 5,000,000 Gross Electric Revenues 97,218,038 63,445,156 Sales of Water 4,671,391 4,698,829

• Other Water Operating Revenue 817,287 1,034,773 Interest Income 139,718 288,538 ,

Gross Water Revenues 5,628,396 6.022,140 Sewer Service Charges 5,308,404 4,691,033 Other Sewer Operating

• Revenue 539,459 863,346 Interest Income 293,138 355,636 Gross Sewer Revenues 6,141,001 5,910,015 TOTAL GROSS REVENUES 108,987,435 75,377,311 .

OPERATING EXPENSES. .

Electric Fund:

Fuel Expense 54,224,930 26,073,656 e Operations and Maintenance 6,380,117 4,302,397 Administrative and General 6,517,020 5,015,152 Settlement of Litigation- ,

Legal Expenses 1,549,400 Electric Fund Expenses 67,122,067 36,940,605

• Water Fund:

Operations and Maintenance 1,689,260 1,644,641 Administrative and General 1: 142,688 1,141,486 Water Fund Expenses 2,831,948 2,786,127 Sewer Fund:

Operation and Maintenance 1,859,147 1,731,029 Administrative and General 1,577,017 1,382,192 Sewer Fund Expenses 3,436,164 3,113,221 TOTAL OPERATING EXPENSES (73,390,179) (42,839,953)

NET REVENUES IN ACCORDANCE Wild BOND ORDINANCES Electric 30,095,971 26,504,551 Water 2,796,448 3,236,013 Sewer 2,704,837 2,796,794 COMBINED NET REVENUES IN ACCORDANCE WITH BOND ORDINANCES l_35.597.256 S 32.537.358 AGGREGATE BOND SERVICE REQUIREMENT S 15,787,520 S 15,111,590 COVERAGE RATIO 2.25 2.15 See Note on Page 18.

- . ~ . _._ _ __ -. _ _ ._

2 1980 1979 1978

$ 46,557,849 $ 34,318,322 $ 33,386,372 1,214,010 1,104,021 985,028 1,426,346 1,377,676 917,608

-0 ___

49,198,205 '36,800,019 35,289,008 4,290,546 4,151,344 4,236,'227 1,048,674 933,316 1,017,303 356,400 234,025 135,544 5,695,620 5,318,685 5,389,074 4,576,134 4,233,476 4,056,051 607,863 629,771 520,789 212,401 177,730 145,197 5,396,398 5,040,977 4,722,037 60,290,223 47,159,681 45,400,119 22,553,810 13,766,590 13,028,275

, 3.455,356 3,367,538 3,145,235 3,747,490 3.599,122 3,596,485

!  ; 20,733,250 19,769,995 29,756,656 1,453,048 1,416,268 1,296,614 1,241,266 1,229,997 1,240,303 2,694,314 2,646,265 2,536,917 1,532,969 1,423,068 1,290,687 1,224,965 1,040,079 1,039,431 2.757,934 2,463,147 2,330,118 (35,208,904) (25,842,662) (24,637,030) 19,441,549 16,066,769 15,519,013

. 3,001,306 2,672,420 2,852,157 2,638,464 2.577,830 2,391,919

$ 25.081.319 S 21.317.019 S 20.763.089

$ 13,014,202 S 11,995,160 $ 10,925,411 1.93 1.78 1.90

GAINESVILLE REGIONAL UTILITIES SCHEDULES OF NET REVENUES IN ACCORDANCE WITH BOND ORDINANCES -

ELECTRIC-UTILITY FUND YEARS ENDED SEPTEMBER 30, 1982 AND 1981 1982 1981 OPERATING REVENUES Sales of Electricity:

Residential Sales $16,323,231 S13,300,674 .

Commercial and General Power 17,170,307 13,429,265 Fuel Adjustment 16,110,650 '22,291,085 Street and Traffic Lighting 807,877 655,456 ,

Sales for Resale 587,094 592,180 Interchange Sales 41,038,155 3,951,145 Total Sales of Electricity 92,037,314  ? 54,219,805 Other Operating Revenues:

Service Charges 468,467 470,437 Utility Surcharges 770,127 734,676 ,

Pole Rentals 143,526 92,956 Settlement of Litigation 5,000,000 Miscellaneous Operating Revenue 23,389 97,099 Total Operating Revenues 1,405,509 6,395,168 l

s Interest Income 3,775,215 2,830,183 TOTAL OPERATING REVENUES 97,218,038 63,445,156 OPERATING EXPENSES ,

Operations and Maintenance:

Fuel Expense 54,224,930 26,073,656 Power Production 4,555,882 2,762,554 Transmission 298,767 274,526 Distribution 1,525,468 1,265,317 ,

Settlement of Litigation - Legal Expenses 1,549,400 Total Operations and Maintenance 60,605,047 31,925,453 Administrative and General:

Customer Accounts 941,162 641,410 Administrative and General 5,575,858 4,373,742 l

j Total Administrative and General 6,517,020, 5,015,152 TOTAL OPERATING EXPENSES 67,122,067 36,940,605 NET REVENUES IN ACCORDANCE WITH BOND ORDINANCES $30.095.971 $26.504.551 See Note on Page 18.

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GAINESVILLE REGIONAL UTILITIES SCHEDULES OF NET REVENUES IN ACCORDANCE WITH BOND ORDINANCES WATER UTILITY FUND YEARS ENDED SEPTEMBER 30, 1982 AND 1981 1982 1981 OPERATING REVENUES Sales of Water:

General Customers $4,018,294 $4,080,587 Fire Protection 570,473 541,798 Generating Station 82,624 76,444 Total Sales of Water 4,671,391 4,698,829 Other Operating Revenues:

Utility Surcharges 96,829 92,963 Miscellaneous 6,513 420 Capital Facilities Charges 350,400 533,053 Front Footage, Meter Installation, and .

Other Connection Charges 363,545 408,337 Total Other Operating Revenues. 817,287 1,034,773

Interest Income 139,718 288,538

. TOTAL OPERATING REVENUES 5,628,396 6,022,140 OPERATING EXPENSES Operations and Maintenance:

Source of Supply Expense 7,213 5,218 Pumping Expense 628,695 634,884 Water Treatment Expense 782,202 715,177 Transmission and Distribution Expense 271,150 289,362 Total Operations and Maintenance 1,689,260 1,644,641 Administrative and General:

. Customer Accounts 273,588 232,150 Administrative and General 869,100 909,336 Total Administrative and General 1,142,688 1,141,486

. TOTAL OPERATING EXPENSES. 2,831,948 2,786,.127 NET REVENUES IN ACCORDANCE WITH BOND ORDINANCES $2.796.448 S3.236.013 See Note on Page 18.

CAINESVILLE REGIONAL UTILITIES SCHEDU'ES OF NET REVENUFS IN ACCORDANCE WITH BOND ORDINANCES -

SEWER UTILITY FUND YEARS ENDED SEPTEMBER 30, 1982 AND 1981 1982 1981 OPERATING REVENUES Sewer Service Charges Sanitary Sewer Billings $5,308,404 $4,691,033 Other Operating Revenues Miscellaneous (Net) 11.956 .

Capital Facilities Charges 458,950 711,338 Front Footage and Other Connection Charges 68,553 152,008 Total Other Operating Revenues 539,459 863,346 ,

Interest Income 293,138 355,636 TOTAL OPERATING REVENUES 6,141,001 5,910,015 OPERATION EXPENSES Operations and Maintenance: ,

Collection Expense 298,428 262,422 Pumping Expense 452,736 458.394 Treatment and Disposal Expense 1,107,983 1,010,213 Total Operations and Maintenance 1,859,147 1,731,029 i Administrative and General:

Customer Accounts 276,321 232,354 .

Administrative and General 1,300,696 1,149,838 ,

Total Administrative and General 1,577,017 1,382,192 TOTAL OPERATING EXPENSES 3,436,164 3,113,221 NET REVENUES IN ACCORDANCE WITH BOND ORDINANCES $2.704.837 $2.796.794_

4 NOTE:

" Net Revenues in Accordance With Bond Ordinance" differs from " Net Income Retained" determined in accordance with generally accepted accounting principles. Following are the more significant differences:

• Interest income does not include interest earned on Construction Trust Funds and on certain debt service accounts which can only be used for certain restricted pdrposes.

• 0perating expenses do not include depreciation, amortization or interest expense.

• 0ther water and sewer operating revenue includes fees for connection, installation, front footage and capital facilities charges. ,

• Does not include transfers to the General Fund.

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GAINESVILLE REGIONAL UTILITIES SCHEDULE OF UTILITY PLANT PROPERTIES COMBINED UTILITY FUNDS SEPTEMBER 30, 1982 UTILITY PLANT PROPERTIES BALANCE ADDITIONS SALES AND BALANCE 9-30-81 (REDUCTIONS) RETIREMENTS 9-30-82 ELECTRIC UTILITY FUND Production Plant $ 57,352,738 S173,380,659 $ 206,545 S 230,526,852 Nuclear Fuel 1,286,516 24,566 1,311,082 Transmission and Distribution Plant 59,109,020 5,359,922 397,616 64',071,326 General and Common Plant 7,254,013 2,717,804 2,888,691 7,083,126 Plant Acquisition Adjustment, 15,213 15,213 TOTAL ELECTRIC UTILITY FUND 125,G17,500 181,482,951 3,492,852 303,007,599 WATER UTILITY FUND Supply, Pumping and ,

Treatment Plant 11,815,578 57,475 3,341 11,869,712 Transmission and Distribution Plant 30,676,227 1,884,516 143,054 32,417,689 General Plant 871,532 . 631,260 232,907 1,269,885 TOTAL WATER UTILITY

, FUND , 43,363,337 _ 2,573,251 379,302 45,557,286 8

SEWER UTILITY FUND Pumping and Treatment

! Plant 20,857,808 916,514 76,003 21,698,'319 Collection Plant 32,914.238 2,859,831 67,243 35,706,826 General Plant 1,645,096 466,946 237,247 1,874,795 TOTAL SEWER UTILITY FUND 55,417,142 ,, 4,243,291 380,493 59,279,940 CONSTRUCTION TRUST FUNDS Construction in Progress for:

Combined Utility Fund 175,386,147 2,727,959 176,098,752 2,015,354 UTILITY PLANT IMPROVEMENT FUND Construction in Progress for:

Electric Utility Fund 1,675,860 7,978,344 5,980,520 3,673,684 Water Utility Fund 971,839 2,630,528 2,676,797 925,570 Sewer Utility Fund 1,351,192 3,642,851 4,232,680 761,363

- TOTAL UTILITY PLANT IMPROVEMENT FUND 3,998,891 14,251,723 12,889,997 5,360,617 TOTALS S403.183.017 $205.279.175 S193.241.396 $415.220.796 l

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GAINESVILLE REGIONAL UTILITIES i SCHEDL'If t'F ACCUMULATED DEPRECIATION AND AMORTIZATION .

COMBINED UTILITY FUNDS SEPTEMBER 30, 1982

~

ACCUMULATED DEPRECIATION AND AMORT 1ZATION DEPRECIATION

-BALANCE AND SALES AND BALANCE

. 9-30-81 AMORTIZATION RETIREMENTS '9-30-82 ELECTRIC UTILITY FUND

~ Production Plant S20,145,585 S 5,468,591 $ 88,569 $25,525,607

' Nuclear Fuel 666,590 219,612 (26,139) '912,341 Transmission and Distri-bution-Plant 13.043,067 1,660,416 392,287 14,311,196 '

General and Common. Plant 2,751,147 335,106 588,470 2,497,783 Plant Acquisition Adjustment 507 - 507 TOTAL ELECTRIC UTILITY FUND 36,606,896 7,683,725 1,043,187 43,247,434-4 WATER UTILITY FUND

• Supply, Pumping and .

Treatment Plant 3,'168,805 332,291 1,916 -3,499,180 ,

Transmission and Distri-bution Plant 8,009,151 742,594 345,138 8,406,607 General Plant 584,032 84,806 (241,979) 910,817' TOTAL WATER UTILITY FUND 11,761,988 1,159,691 105,075 12,816,604 SEWER UTILITY FUND Pumping and Treatment Plant 3,666,550- 676,568 238,286 4,104,832 Collection Plant 6,929,247 670,613 (23,003) 7,622,863 General Plant 1,046,418 158,220 62,274 1,142,364 TOTAL SEWER UTILITY FUND 11,642,215 1,505,401 277,587 12,870,059-TOTALS 1h23011.099 S10_.346.817 St.425.859 S68.934.097 i

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SEBRING UIILITIES COMMISSION SEBRING, FLORIDA FINANCIAL STATENENTS SEPTEMBER 30, 1982 AND 1981 I

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-- . -- - . . . - - - , , , ,. . . _ . . - , . . . - , ~ , , , - - , - - - , - , - - _ . . - - - .

o Certified Public Accountants I

(Wicks, Brown, Williams &Co.)

140 South Comrnerce Avenue. Post Offce Box 587, Sebnng. Florida 33870 (813) 382-1157 I-Charles F. Wicks (Retired) Lake Placid Office J. Richard Brown Frand L. Waharns (813)465-2835 g Constance P. Athos Robert P. Marchewka Avor. Park Off ce (813)453-7525 1 Sebring Utilities Commission j Sebring, Florida We have examined the balance sheets of Sebring Utilities Commission as of

(

September 30, 1982 and 1981, and the related statements of retained earnings, source of t

funds used for construction, and income for the years then ended. Our examinations were l, made in accordance with generally accepted auditing standards and, accordingly, included il such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

1

( In our report dated January 29, 1982, our opinion on the 1981 financial statements I

was qualified as being subject to the ef fects on the 1981 financial statements of such i adjustments, if any, as might have been required had the outcome of the events described in Note 10 - Gas Supplier Recovery been known. The conditions that would have required repayment of the cash settlements were not met, and no liability resulted.

i Accordingly, our present opinion on the 1981 financial statements, as presented here, is different from that expressed in our previous report.

l As discussed more fully in Note 10 to the financial statements, over the next few years the Commission may not be able to comply with certain requirements of the 1981 bond I resolutions.

1 In our opinion, the financial statements examined by us present fairly the financial

position of the Sebring Utilities Commission at September 30,1982 and 1981, and the results of its operations and source of funds used for construction for the years then

' ended, in conformity with generally accepted accounting principles applied on a consistent basis af ter giving retroactive ef fect to the change, with which we concur, in the nethod of capitalizing interest as explained in Note 4.

$U$.*Y .Y $sao 0.

Wicks, Brown, Williams & Co.

March 16, 1983 i

o f

MEMBERS Amencan Institute of C P A *s & Flottda Institute of C P A 's

SESR11C ITTILITIE$ (DiellSSION man aare ggggTS SEPTuttaER 30,1982 AND 1981 1982 1981 ASSETS 1962 1981 LIA8ILITIES AaB CAPITALIZATION PROPERTT, FIMT HD EQUIPIENT, at costs Property, pla st and equipment la service $ 22,012,8 73 $ 21.246,715 CAPITALIZATION:

Lele: Accumulated depreciation 7,913,402 7,180,024 14ag-tern eebt :

Tot al 14.099,471 14.0 H ,691 Revenue boede payable $ 92,715,000 $ 92,750,000 Construction work in progrese 53,634,938 5,308,576 Unamortised discount ( 2,580,669) ( 2,776,240)

Nuclear fuel, at amortised cost 412,542 346,368 Revreue certificate payable 500,000 300,000 Total property, plant and equipannt 65,I44,TTI 19,721,63) Customer deposits 547,822 521,632 Obligation under capital lease 9,343 65,886 RESTE1CTED ASSETS: Ilotes payable , 285,593 -

Bond service fund 13,145,041 10,533.300 23,903,425 Total long-tera debt 91,4c7,129 6 meserve account 10.542.643 Emergency and facilities account 900,000 902,528 Equity:

Construction fund 15,386,738 46,286,152 Contributed h City of Sebring 712,648 712,648 Total restricted assets 39,965,112 51,634,745 Retained en.ainge 7,I68,389 7,017,946 Total equity 7,g74,037 7,730,634 CtrRREart ASSETS: Contributions in aid of cometruction I,Ier,792 vge,gjj Cmh 72,340 26,748 Total capitalisation. 100,625,955, 99,376,745 Accounce receivable, met of allotence for doubtful accounce of $166,478 for 1982 and 459.500 for 1981 1,049.309 1,048,684 LIA8ILITIES FATA412 races asSTRICTED ASSETS:

liventaries of fuel and asteriale 457,077 506,748 Accounto payable 7,215,264 -

Perpaid esponsee 52,248 60,954 Accrued interest 4,948,459 5,775,846 Total current assete 1,630,974 I,643,134 Total liabilities payable from restr16ted assets 12.163,723 5.775,546 DEFERRED Gl4RCES: CURRENT LIABILITIES:

UIasortised bond empense 3,876,704 4,171,904 havenue certificate payable - current portion 50,000 100.000

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Total eeferred charges 3,sro,7o4 4,171.,o4 Obligation i,ader capital lease - current portion 4 ,6 92 35,673 Accounce payable 682,286 8,48,227 Ilotes payable - current portion 42,4M -

= Accrued esponsee 247,656 414,930 Total current liabilities i,cri,1cu z,els, sic TOTAL ASSETS $313,619,781 $107,871,421 TOTAL LIABILITIES AIID CAPITALIZATION $ $ gig

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TI'e notes to the fireacial stateamate are as lategrdt part of this statement, t=

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SEBRING UTILITIES COMMISSION STATEMENTS OF RETAINED EARNINGS FOR TNE YEARS ENDED SEPTEMBER 30, 1982 AND 1981 1982 1981 RETAINED EARNINGS - BEGINNING OF YEAR:

As previously reported $8,474,941 $4,840,170 Cumulative ef fect on prior year of retroactive restatement for accounting change ( 105,234) -

Adjustment (Note 3) ( 1,351,721) -

As restated 7,017,986 4,840,170 Net income .

653,061 2,645,686 Transfers to the City of Sebring:

Cash 250,000 215,000 Receivables forgiven 259,658 252,870

_509,658 467,870 RETAINED EARNINGS - END OF YEAR $7,161,389 $7,017,986 l

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1 The notes to the financial statements are an integral part of this statement.

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l. SEBRING ITTILITIES COMMISSION STATEMENTS OF SOURCE OF FUNDS USED FOR CONST2UCTION FOR THE YEARS ENDED SEPTEMBER 30,1982 AND 1981 1982 1981 SOURCE OF FUNDS:

Funds derived from operations:

Net income $ 653,061 $ 2,645,686 Items included in net income not requiring (providing) funds:

Gain on refunding bonds -

( 2,181,567)

Depreciation 779,417 738,834 I Amortization of nuclear fuel 68,145 84,480 Bond expense and discount amortization 490,771 17,550 Total funds derived from operations 1,991,394 1,304,983 1 (Increase) decrease in net current assets ( 979,570) 21,754 Funds from financing and other sources (uses):

Net proceeds from sale of revenue bonds -

85,801,856 Obligation under capital lease ( 56,503) ( 16,906)

I Bonds redeemed ( 35,000) ( 7,904,067)

Repayment of revenue certificate ( 50,000) -

Decrease in deferred charges '

426,W11 I Net (increase) decrease in net restricted assets 48,057,513 ( 74,671,498)

Payments and commitments to the City of Sebring ( 509,658) ( 467,870)

contributions in aid of construerion 162,959 237,253 Customer deposits 26,190 45,198 Gain on refunding bonds -

2,181,567 Proceeds fran revenue certificate 450,000 -

Proceeds from notes payable 215,596 -

i 48,261,097 5,632,434 FUNDS USED FOR CONSTRUCTION $49,272,921 $ 6,959,171 CHANGES IN NET CURRENT ASSETS:

l Increase (decrease) in current assets:

1 Cash $ 45,592 ($ 87,190)

Accounts receivable 625 144,788 Inventories of i el and materials ( 49,671) 36,814 Prepaid expenses ( 8,706) 8,277 Decrease (increase) in current liabilities :

l Revenue certificate - current portion 50,000 9bligation under capital lease - current porr. ion 30,981 ( 14,075)

Accounts payable 785,941 ( 357,861) l Notes payable - current portion ( 42,466) -

l Accrued expenses 167,274 ( 252,507)

Bond anticipation revenue certificate -

500,000 INCREASE (DECREASE) IN NET CURRENT ASSETS $ 979,570 ($ 21,754) l l

!I Tb. notes to the fin _1a1 st.t_nts are an int.gra1 pam ombis stat. ment.

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I SEBRING ITTILITIES COMMISSION STATEMENTS OF INCOME FOR THE YEARf, ENDED SEPTEMBER 30, 1982 AND 1981 1982 1981 OPERATING REVENUE:

I Sales $ 9,512,701 $ 9,220,4 35 Gas supplier recovery 319,118 137,520 Other 103,100 107,622

-l Total operating revenue 9,934,919 3 9,465,577 OPERATING EXPENSES 8,598,698 8,443,129 OPERATING INCOME 1,336,221 1,022,448 INTEREST INCOME (After credit to construction costs I of $7,896,036 in 1982 and $4,883,256 in 1981) 135,338 96,407 1,471,559 1,118,855 INTEREST EXPENSE (Af ter charge to construction costs of $9,629,388 in 1982 and $4,454,008 in 1981) 818,498 654,736 INCOME BEFORE EXTRAORDINARY ITEM 653,061 464,119 EXTRAORDINARY ITEM Gain on refunding bonds -

2,181,567 NET INCONE $ 653,061 $2,645,686 l

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SEBRING 17tILITIES COMMISSION NOTES TO THE FINANCIAL STATEMENTS I

Note 1 - The Sebring Utilities Commission is an independent specici district that is incorporated under the laws of the State of Florida.

Note 2 - Sunsnary of Significant Accounting Policies:

The financial statements have been prepared on the accrual basis of accounting based upon the Uniform System of Accounts prescribed for electric utilities by the Federal Energy Regulatory Commission and upon the Uniform System of Accounts for l Water Utilities issued by the National Association of Regulatory Utility Commissioners.

Property, plant and equipment are stated ac cost. Construction costs include payroll and the related costs, such as taxes, pensions and other fringe benefits, and allocation of indirect charges for engineering, supervision end transportation expenses. Construction period interest is capitalized. The assets are depreciated I over estimated useful lives ranging from 5 to 50 years, using the straight-line method of depreciation. A summary of property, plant and equipment and accumulated depreciation is included in Note 12.

Maintenance is charged with the cost of repairs of property, and the plant account o are charged with the cost of renewals and replacements.

Nuclear fuel in carried in the electric plant accounts at cost, net of estimated energy consumed. The amount consumed is charged to nuclear fuel expense.

Amortization of energy consumed has been determined by the unit-of production I method, based on engineering estimates. Nuclear fuel expense does not include a provision for salvage value nor a provision for future disposition costs.

Restricted fund investments are carried at cost.

Unbilled utility revenues are accrued based on the estimated usage between the last meter reading dates and year end.

Inventories are stated at the lower of cost or market. Cost is determined generally on an average cost method, except for fuel inventory costs, 5Aich are I determined using the last-in, first-out (LIFO) method. Reusable materials that have been removed from service are included in inventories at the carrying value of similar new materials.

I Issuance discount and expenses related to the bonds payable are deferred and amortized over the life of the bonds on the bonds outstanding method.

Note 3 - Prior Period Adjustment:

In the year ended September 30, 1981, the calculation of interest income I capitalized did not include interest income resulting from accrued interest receivable at the end of the year. Accordingly, interest income was overs tated and construction work in progress was understated by $1,351,721. The financial statement s have been restated to reflect this correction.

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SEBRING UTILITIES COMMISSION I NOTES TO THE FINANCIAL STATEMENTS I

Note 4 - Accounting change:

During the year ended September 30, 1982, the Commission changed the method of capitalizing interest on construction projects. The ef fect of this change was to increase construction work in progress, income before extraordinary item and net income for 1982 by $762,871. The financial statements for 1981 have been I retroactively restated for the change, which resulted in a decrease of construction work in progress, income before extraordinary item and net income for 1981 of S105,234. Retained earnings has been adjusted for the ef fect of retroactive I application of the new method.

Note 5 - Long-Term Debt:

1 Revenue bonds outstanding at September 30, are as follows:

1982 1981 1 Series of 1981, 8.25% to 11.25% due in varying amounts from 1981 through 2011 $92,715,000 $92,750,000 In September, 1978, the Commission provided for advance refunding on the Series 1964,1973 and 1975 revenue bonds (Refunded Bonds) by the sale of $8,400,000 Utilities System Revenue Bonds (Series 1978) and Utilities System Special Obligation Bonds (Series 1978A). From the proceeds of the sale of the two issues, i and other sources, sufficient monies were deposited into irrevocable escrow accounts, and invested in United States obligations that will provide suf ficient funds for the payment of the maturing principal and interest on the Series 1964, I 1973 and 1975 outstanding revenue bonds. In March 1981, the Series 1981 Bonds were issued and a portion of the proceeds was used to refund the Series 1978 Bonds in same manner that the 1978 Bonds refunded prior issues, as described above. The I Refunded Bonds have been treated as extinguished debts.

The Utilities System Revenue Bonds (Series 1978) and the Series 1981 Bonds are secured by a pledge of the net revenues of the Commission. The Utilities System I Special Obligation Bonds (Series 1978A) are secured by a pledge of the interest to be paid on the escrow funds.

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I SEBRING ITTILITIES COMMISSION NOTES TO THE FINANCIAL STATEMENTS Note 5 - Long-Term Debt (Continued):

The maturity schedule for the Utilities System Revenue Bonds (Series 1981) is as follows:

Total Year Ending Principal Principal October 1 Amount Interest and Interest 35,000 $ 9,897,000 $ 9,932,000 la 1982 1983 40,000 9,894,000 9,934,000 1984 640,000 9,891,000 10,531,000 1985 695,000 9,837,000 10,532,000 1 1986 755,000 9,775,000 10,530,000 1987 825,000 9,706,000 10,531,000 1988 905,000 9,628,000 10,533,000 1989 990,000 9,541,000 10,531,000 1990 1,090,000 9,443,000 10,533,000 1991 1,200,000 9,333,000 10,533,000 1992 1,320,000 9,210.000 10,530,000 1 1993 1,460,000 9,071,000 10,531,000 1994 1,625,000 8,907,000 10,532,000 1995 1,805,000 8,724,000 10,529,000 1996 2,010,000 8,521,000 10,531,000 1 1997 2,235,000 8,295,000 10,530,000 1998 2,490,000 8,043,000 10,533,000 1999 2,765,000 7,763,000 10,528,000 2000 3,080,000 7,452,000 10,532,000 2001 3,415,000 7,113,000 10,528,000 2002 3,795,000 6,738,000 10,533,000 1- 2003 4,210,000 6,320,000 10,530,000 l 2004 4,675,000 5,857,000 10,532,000 2005 5,190,000 5,343,000 10,533,000 2006 5,760,000 4,772,000 10,532,000 2007 6,395,000 4,138,000 10,533,000 2008 7,095,000 3,435,000 10,530,000

2009 7,875,000 2,654,000 10,529,000 2010 8,745,000 1,788,000 10,533,000 2011 9,595,000 936,000 10,531,000

$92,715,000 $222,025,000 $314,740,000 lE ll i

The revenue certificate is payable $50,000 annually, plus interest at 7.25%. The i

certificate is subordinate to the revenue bonds.

l The bond anticipation revenue certificate was payable March 29, 1981, plus interest at 7%. The certificate was subordinate to the revenue bonds and revenue certificate. Proceeds from the 1981 bond issue were used to redeem the certificate.

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I SEBRING ITTILITIES CDMMISSION NOTES TO THE FINANCIAL STATEMENTS I

Note 6 - Employee Pension Plan:

The Commission has a ptnsion plan covering the majority of its employees. Pens ion expense amounted to $121,390 and $211,173 in 1982 and 1981, respectively, including amortization of prior service costs over forty years. At September 30,1982 and 1981, the actuarial value of assets of the pension fund is in excess of the actuarially computed value of vested benefits. Unfunded prior service cost is approximately $351,114 and $358,700 at September 30, 1982 and 1981, respectively.

l J Ngte 7 - Capital Leases:

During 1981, the Commission leased a word processor under a capital lease which expires in 1985. Following is a schedule of future minimum lease payments for the word processor by years:

Year Minimum Payment 1983 $ 8,858 1984 8,858 l 1985 8,858 Total 20,574 Less: Amount representing interest 12,499 Present value of minimum lease payments $14,075 I

Depreciation of leased property under the capital lease is $1,877 and $626 in 1982 and 1981, respectively, and interest expense is $4,167 for both 1982 I and 1981. The plant account includes $23,458 capitalized cost and $2,502 and $626 accumulated depreciation as of September 30,1982 and 1981, respectively.

l Note 8 - Insurance in Force:

j Coverage Limits Workmen's Compensation & Employer's Liability $ 100,000 t Automobile Bodily Injury - Each Person $1,000,000 l

l - Each Occorrence $1,000,0C0 Property Damage - Each Occurrence $ 100,000 General Liability Bodily Injury - Each Occurrence $1,000,000 Property Damage - Each Occurrence $ 100,000 Fire, Lightning and Extended Coverages l

Listed Items - 80% Co-Insurance $4,626,000 Listed Items - 100% Co-Insurance $2,558,050 l $8,000,000 g Boiler and Machinery - Each Accident l t i

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I SEBRING UTILITIES COMMISSION NOTES TO THE FINANCIAL STATEMENTS Note 9 - Budget Analyses:

1982 1981 Budget Actual Budget Actual Operating revenue $11,303,000 $9,934,919 $9,330,000 9,465,577 Operating expense 7,849,200 7,751,136 6,514,590 7,619,815 Net interest expense 516,000 192,389 613,500 540,779 I Net income before depreciation and amortization $ 2,937,800 $1,991,394 $2,201,910 $1,304,983 Variance over (under) budget ($ 946,406) ($ 896,927)

Note 10 - Contingencies and Commitments:

Gas Supplier Recovery - The Commission, together with seven other municipal utilities, ar.serted a joint claim against a natural gas supplier for damages I resulting from breach of agreements to supply natural gas. The damages were incurred duricg several prior years. As a result of a settlement, the Commission received $319,118 in 1982 and $137,520 in 1981 which is included in income. Under I the settlement agreement, if the supplier provided suf ficient gas deliveries prior to certain dates, the Commission would have been required to repay all or part of the cash received. Gas deliveries were not provided prior to the required dates, accordingly no repayment is required.

Compliance with Bond Resolution - The Commission has covenanted that it will, at all times, establish, fix, prescribe and collect rates and charges for the services and facilities furnished by the Utilities System in accordance with (I

lg specific parameters set forth in the bond resolution. During the year ended September 30, 1982, it became apparent that the Commission may not be able to l comply with these requirements over the next few years.

Note 11 - Rate Revisions:

Water and electric rates were raised ef fective June 1,1981 and October 1,1982 in accordance with adopted rate schedules.

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SUPPLEMENTARY FINANCIAL INFORMATION I

Our examinations were made for the purpose of forming an opinion on the basic financial ctatements taken as a whole. The supplementary schedules of income for the electric and water systems are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the examinations of the basic financial statements and, in our cpinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.

I Nitb8 N 0 Wicks, Brown, Williams & Co.

March 16, 1983

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SEBRING UTILITIES COMMISSION SUPPLEMENTARY SCHEDULES OF INCOME

-l ELECTRIC SYSTEM l FOR THE YEARS ENDED SEPTEMBER 30, 1982 AND 1981 1982 1981

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OPERATING REVENUE:

Sale of electricity $8,337,543 $8,220,880 Interdepartmental sales 106,883 77,990 Cas supplier recovery 319,118 137,520 I Miscellaneous sales and service 99,722 94,575 Total operating revenue 8,863,266 8,530,965 OPERATING EXPENSES:

Generation and transmission:

Fuel 2,251,600 2,087,715 i Purchased power 2,442,691 2,666,394 Operation and maintenance 1,040,241 1,034,273 Transmission system operation and maintenance 374,661 401,466 Distribution system operation and maintenance:

I Operating expenses 80,949 107,158 Maintenance expenses 180,125 193,358 Depreciation 311,834 285,591 General and administrative expenses 1,046,502 836,103 State utility taxes 81,369 98,814 Total operating expenses 7,809,972 7,710,872 OPERATING INCOME $1,053,294 $ 820,093 I

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I SEBRING ITTILITIES COMMISSION SUPPLEMENTARY SCHEDULES OF INCOME WATER SYSTEM I FOR THE YEARS ENDED SEPTEMBER 30, 1982 AND 1981 1982 1981 OPERATING REVENUE:

Sale of water $1,067,195 $921,565 Interdepartmental sales 1,080 900 Miscellaneous sales and service 3,378 12,147 I Total operating revenue 1,071,653 934,612 OPERATING EXPENSES:

i Production operation and maintenance:

Electricity for pumping 106,883 77,990 Operating expenses 41,634 56,707 Maintenance expenses 12,877 12,634 Transmission and distribution operation and maintenance:

Operating expenses 12,877 28,959 Maintenance expenses 67,770 90,258 i Depreciation 163,344 154,070 General and administrative expensee 383,341 311,639 Total operating expensee 788,726 732,257 OPERATING INCOME $ 282,927 $202,355 l

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SEBRING UTILITIES COMMISSION NOTES TO THE FINANCIAL STATEMENTS Note 12 - Property, Plant and Equipment in Service:

I September 30, 1982 1981 Accumulated Accumulated

[ Cost Depreciation Cost Depreciation d Land $ 218,250 S

$ 218,250 5 -

Electric generation plants 7,902,863 3,501,414 7,938,089 3,303,557 I Ziectric transmission system 1,930,173 335,126 2,050,291 270,851 Electric distribution system 6,662,416 1,798,703 6,302,503 1,610,478 I Water system 3,844,129 1,571,189 3,535,279 1,428,661 Equipment 1,175,604 652,688 1,097,865 531,572 Storage buildings -279,438 44,282 104,438 34,905 i $22,012,873 $7,913,402 $21,246.715 $7,180,024_

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CITY OF BUSHNELL, FLORIDA FINANCIAL STATEMENTS AND l

MANAGEMENT LETTER FOR THE YEAR ENDED SEPTEMBER 30, 1982 4

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I CITY OF BUS ilN E LL , FLORIDA

( CITY COUNCIL AND OFFICIALS SEPTEMBER 30, 1982 Mayor Councilman ............................ Joe Strickland, J r.

Councilman .................................. R. J. Eubanks Councilwoman ................................ Nancy Brogden Councilman .................................. Oscar Chenoweth Councilman .................................. C. W. Stover City Attorney ............................... Daniel Moriarty City Clerk .................................. Judith Skipper City Manager ................................ Vicente Ruano t

CITY OF BUSilNELL, FLORIDA ANNUAL FINANCIAL STATEMENTS

- FOR Tile YEAR ENDED SEPTEMBER 30, 1982

, TABLE OF CONTENTS

[ PAGE INTRODUCTORY SECTION NUMBER City Council and Officials Table of Contents

( FINANCIAL SECTION Report of Certified Public Accountants 1 EXilIBIT COMBINED STATEMENTS - OVERVIEW l Combined Balance Sheet - All Fund Types and Account Groups 2 2 Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - All Govern- .,

mental Fund Types 3-3 Combined Statement of Revenues, Expenditures,

• and Changes in Fund Balances - Budget (GAAP Basis) and Actual 4 ,

4 Combined Statement of Revenues, Expenses, and Changes in Retained Earnings - All Proprietary Fund Types 5 5 Combined Statement of Changes in Financial Position - All Proprietary Fund Types 6 Notes to Financial Statements 7 STATEMENT /

SCHEDULE COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS General Fund A-1 Balance Sheet 20 A-2 Statement o f Revenues , Expenditures, and Changes in Fund Balances - Budget (GAAP Basis) ,and Actual 21 1

CITY OF B U S il N E L L , FLORIDA ANNUAL FINANCIAL STATEMENTS

. FOR Tile YEAR ENDED SEPTEMBER 30, 1982 STATEMENT / PAGE S CIIED U L E COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS NUMBER I Federal Revenue Sharing Fund B-1 Balance Sheet 22

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B-2 Statement of Revenues, Expenditures and l Changes in Fund Balance - Budget (GAAP Basis) and Actual 23 Enterprise Funds

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C-1 Combining Balance Sheet 25 C-2 Combining Statement of Revenues, Expenses, and Changes in Retained Earnings (Deficit) 27 C-3 Combining Statement of Changen in Finan-cial Position 28 SUPPLEMENTARY SCHEDULES General Fund Schedule of Expenditures and Other Financing Uses - Budgeted and Actual 29 Senedule of Insurance in Force 32 MANAGEMENT LETTER 33 1

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l F I NANC I AL S E CT IO N Y

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n=1 BROOKS, BROWN & CO.

CERTIFIED PUBLIC ACCOUNTANTS 215 NORTH 3RD STREET LEESBURG. FLORIDA 32748

- 49043 787-0682 49043 748-2488 F

MEMBERS PARTNERS.

F LORID A INSTITUTE OF W THOM AS BROOKS. C P A CE RTIFIE D PUBLIC ACCOUN T AN TS B ALLEN BROWN. JR C P A AMERIC AN INSTITUTE OF C THOM AS WILEY. C P A CE RTIFIED PUBUC ACCOU NTANTS December 10, 1982 The llo no r a b l e City Council City of Bushnell, Florida

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Ue have exanined the combined financial statements of the City of Bushnell and its combining and individual fund financial statements as of and for the year ended September 30, 1982, as listed in the table of contents. Our examination was made in a c.co rd a n c e with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

In our opinion, the combined financial statements referred to above present fairly the financial position of the City of Bushnell at September 30, 1982, and the results of its operations and the changes in financial position of its proprietary fund types for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year.

s Brooks, Brown & Co.

Exhibit I

- CITY OF BUSHNELL, FLORIDA COMBINED BALANCE SHEET - ALL FUND TYPES AND ACCOUNT CROUPS ,

L SEPTEMBER 30, 1982 COVERNMENTAL PROPRIETARY FUND TYPES FUND TYPES AGENCY ACCOUNT CROUPS GENERAL-FIXED CENERAL BAIL ASSETS LONG TOTALS SPECIAL- BOND (RESTATED - TERM (MEMORANDUM CENERAL REVENUE ENTERPRISE FUND NOTE 3) DEBT ONLY)

ASSETS Cash $24,J84 $ 339- $ 79,179 $2,094 $ -

$ - $ 105,996 Investments, at cost (note 1) .

- 1,800 - - - 1,800 Customer accounts receiv-able (net) - -

111.311 - - - 111,311 Accounts receivable (net) 328 - - - - -

328-Accrued interest on invest-ments - - 194 - - - 194-Due from other f unds (note 7) 14,816 - . 3,575~ - - - 18,391 Due from other governtents 1,520 4,503 - - - - 6,023 inventories, at cost (note 1) .

1,272 - 15,981 - - - 17,253' Restricted assets (note 2):

Cash, savings and certi- '

ficates o f deposit - - 219,361 - - - 219,361 Due f rom other fumla (note 7) - - 1,339 - - - 1,339 Accrued interest en investments - - 59 - - -

59 Property and equipment, at cost (net of accumulated

\ depreciat tan) (notes 1 and 3) - - 701,789 -

275.306 - 977,095 Amount to be provided for retirement of general long term debt - - - - - 14,787 34,787 TOTAL ASSETS $42,320 $4,842 - $1,134,5 8 8 $2,094 $27_5,306 $34,787 $1,493,937 LIABILITIES Accounts payable $10.512 $ - $ 77,032 $ - $ -

$ 87,544 Accrued liabilities 4,628 - 4,550 - - - 9,178

' Due to other f unda (rute 7) 1,828 - 17,902 - - - 19,730 Deposits 85 - - 2,094 - - 2,179 Payable from restricted assets:

Customer deposits - - 35,015 - - - 35,085 Accrued interest payable - -

18.230 - - -

18.230 Revenue bonds payable (note 4) .

- - 10,000 - - - 10,000 Long term revenue bonds payable (net) (note'4) - - 433,602 ^ - - - 433,602 Notes payable (note 4) - - - - - 34,787 34,787 TOTAL LIABILITIES 17,053 - 596,331 2,094 -

342 787 650,265 FUND EQUITY cont ributed capit al (rmte 1) - - 341,716 - - - 341,716 Investment in general fixed assets - - - - 275,306 - 275,306 Retained earnings:

Reserved - - 157,514 - - - 157,514 Unreserved - - 39,027 - - - 39,027

, Fund balances Re se rved I,807 - - - - - 1,807 Unreserved 23,460 4,842 ;_ __ - - - 28,302 TOTAL FUND EQUITY 25,267 4,842 538,257 - 275,306 - 843,672 TOTAL LIABILITIES AND. FUND EQULTY $42,3]O S4,842 $1,134,588 $2,094 $275,306 $34,7H7 51,493,937 See Accompanying Notes 2

Exhibit 2 CITY OF BUSHNELL, FLORIDA

. COMBINED STATEMENT Ol' REVENUES , EXPENDITURES. AND CHANGES IN FUND BALANCES - ALL GOVERNMENTAL FUND TYPES

- YEAR ENDED SEPTEMBER 30, 1982 FEDERAL TOTALS 3

REVENUE (MEMORANDUM GENERAL S il ARING ONLY)

Revenues:

[ Taxes $112,664 $ -

$112,664 l Licenses and permits 8,917 -

8,917 Intergovernmental 62,078 18,003 80,081 Charges for services 1,035 -

1,035 Fines and forfeits 17,180 -

17,180 Miscellaneous revenue 7,138 -

7,138 209,012 18,003 227,015 Expenditures:

General government 69,954 3,469 73,423 Public safety 107,844 13,346 121,190 Physical environment 1,368 405 1,773 Transportation 45,427 7,412 52,839 Culture and recreation 13,978 328 14,306 Debt service 19,387 -

19,387 257,958 24,960 282,918 Deficiency of revenues over expenditures ( 48,946) ( 6,957) ( 55,903)

Other financing sources:

Operating transfers in 57,608 -

57,608 Excess (d e f i ci ency) of revenues and other financing sources over expenditures 8,662 ( 6,957) 1,705 Fund balances, beginning of year 16,605 11,799 28,404 FUND BALANCES, END OF YEAR $ 25,267 $ 4,842 $ 30,109 See Accompanying Notes 3

Exhibit 3 CITY OF BUSHNELL, 1LORIDA COMBINED STATEMENT OF REVFNUES , EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET (CAAP bA91S) AND ACTUAL ALL GOVERNMENTAL FUND TiPES YEAR ENDED SEPTEMBER 30, 1982 CENERAL FUND FEDERAL REVENUE SHARING FUND .

VARIANGE VAK1ANCE FAVORABLE FAVORABLE BUDCET ACTUAL (UNFAVORABLE) BUDGET ACTUAL (UNFAVORABLE)

Revenues Taxes $102,410 $112,664 110,254 $ -

Licenses and permits 7,200 8,917 1,717 - - -

Intergovernmental 59,816 62,078 2.262 18,003 18,003 -

Charges for services 1,500 1,035 ( 465) - - -

Fines and forfeits 25,000 17,160 ( 7,820) - - -

Miscellaneous revenue 4,346 7,138 2,792 - - -

200,272 2G9,012 8,740 18,003 18,003 -

Expenditures:

General government 74,924 69,954 4,970 - 3,469 ( 3,469)

Public safety 117,601 107,844 9,757 8,203 13.346 ( 5.143)

Physical environment 1,950 1,368 582 1,8 r r. 405 1,395 Transportation 56,905 '45,427 11,478 7,000 7.412 ( 412)

Cult ure and recreation 10,339 13,978 ( 3,639) 1,000 328 672 Debt se rvice 19,398 19,387 11 - - -

) 281,117 257,958 23.159 18,003 24,960 ( 6,957)

Excess (deficiency) of revenues over expenditures ( 80,845) ( 48,946) 31,899 - ( 6,957) ( 6,957)

Other financing sources:

operating transfers in 70,737 57,608 ( 13,129) - - -

Excess (deficiency) of revenues over expenditures ( 10,108) 8,662 18,770 -

( 6,957) ( 6,957)

Fund balances, beginning of year 16,605 16,605 - 11,799 11,799 -

FUN 3 BALANCES, END OF YEAR $ 6,497 $ 25,267 $18,770 $11,799 $ 4.842 ($6,957)

See Accompanying Notes .

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) Exhibit 4 r CITY OF B U S ilN E L L , FLORIDA L COMBINED STATEMENT OF REVENUES, EXPENSES AND Cll ANG ES IN RETAINED EARNINGS - ALL PROPRIETARY FUND TYPES YEAR bNDED SEPTEMBER 30, 1982 ENTERPRISE FUND TYPES Operating revenues:

Charges for services $934,689 Operating expenses:

Purchased power 647,462 Salaries 89,977 Employee benefits 26,925 Professional services 11,173 Travel and per diem 69 Utility services 7,046 Communications 647 Insurance 3,865 Repairs and maintenance 5,569 Office supplies 213 Operating supplies 11,345 Other current charges 6,952 Books, publications and memberships 3,042 Depreciation (note 1) 33,690 847,975 Operating income 86,714 Non-operating revenue (expense):

Interest earned 21,223 Bond interest expense and fiscal charges ( 36,421)

( 15,198)

Income before transfers 71,516 Operating transfers to general fund 57,608 Net income (loss) 13,908 Retained earnings, beginning of year 182,633 RETAINED EARNINGS END OF YEAR $196,541 See Accompanying Notes l

Exhibit 5

- CITY OF BUSHNELL, FLORIDA COMBINED STATEMENT OF CHANGES IN h!NANCIAL POSITION ALL PROPRIETARY FUND Ti?ES YEAR ENDED SEPTEMBER 30, 1982 ENTERPRISE FUND TYPES Sources of working capital:

Net income $13,908 Residual equity transfer 304 Add: Items not requiring the use of working capital:

Depreciation 33,690 Amortization 1,024 Working capital provided by operations 48,926 Develorer contributions 5,823 Increase in current liabilities payable from restricted assets 3,874 Total sources of working capital 58,623 Uses of working capital:

Residual equity transfer 304 Acquisition of property and equipment 35,126 Decrease in long term revenue bonds payable 10,000 Increase in restricted assets 7,378 Decrease in current liabilities payable from restricted assets 87 Total uses o f wo rking capital 52,895 NET INCREASE IN WORKING CAPITAL (SCHEDULE BELOW) $ 5,728 Elements of net increase (decrease) in working capital:

Cash $22,554 Investments ( 1,800)

Customer accounts receivabic (net) 11,351 Accrued interest on investments ( 3,601)

Due from other funds 3,425 Inventories ( 4,442)

Accounts payable ( 10,772)

Accrued liabilities ( 1,448)

Due to other funds ( 9,539)

NET INCREASE IN WORKING CAPITAL $ 5,728 See Accompanying Notes 6 i

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CITY OF B U S li N E L L , FLORlDA s NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1982 I NOTE 1

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES The City of Bushnell, Florida was incorporated in 1957. The City operates under a council-manager form of government and provides services to its more than 1,000 residents in many areas, including public safety (police and fire), highways and streets, utilities, sanitation, culture-recreation, public improvements, and general administrative services.

The accounting policies of the City of Bushnell conform to generally accepted accounting principles for governmental entities. The following is a summary of significant accounting policies:

1 A. Fund Accounting The accounts of the City are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. The operations of each fund are accounted fo r with a separate set of self-balancing accounts that com-prise its assets, liabilities, fund equity, revenues, and expenditures, or expenses, as appropriato. Government resources are allocated to and accounted for in individual funds based upon the purpose for which they are to be spent and the means by which spending activities are controlled. The City's various funds and account groups are as follows:

Governmental Funds:

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.

Special Revenue Fund - The Special Revenue Fund is used to account for the proceeds of specific revenue sources (other than special assessments, expendable trusts, or for maj o r capital projects) that are legally restricted to expenditures for specific purposes.

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CITY OF BUSIINELL, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1982 l

NOTE 1

SUMMARY

OF SIGNIFICANT ACCOUNTLNG POLICIES (CONTINUED)

(Fund Accounting) l Proprietary Funds:

Enterprise Funds - Enterprise Funds are used to account for the City's ongoing activities which are similar to those found in the private sector. Generally accepted accounting princi-ples in these type funds are similar to private business enterprises where the measurement focus is on determination of net income, financial position and changes in financial position.

Fiduciary Fund:

Agency Fund - An Agency Fund is used to account for assets held in a trustee capacity for others.

Account Groups:

Account groups are not funds and do not reflect available financial resources and related liabilities. The following account groups are maintained by the City:

General Fixed Assets - Accounts for property and equipment not used in proprietary fund operations or accounted for in trust funds.

General Long-Term Debt - Accounts for unnatured principal of long-te rm general obligation indebt-edness that is not a specific liability of a Proprietary or Fiduciary Fund.

B. Fixed Assets and Long-Term Liabilities Governmental fund types (General and Special Revenue) are accounted for on a spending or "finan-cial flow" measurement focus. This means that only current assets and current liabilities are recorded on their balance sheets. The reported fund balances (net current assets) is considered a measure of "availabic spendable resources". Governmental fund operating statements present increases (revenue and other financing sources) and decreases (e xp end i t u re s and other financing uses) in net current assets.

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CITY OF BUSHNELL, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1982 NOTE 1

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(Fixed Assets and Long-Term Liabilities)

Fixed Assets:

Fixed assets purchased in the Governmental Fund Types are recorded as expenditures at the time of purchase. Such assets are capitalized at cost in the General Fixed Assets Account Group. The City's policy is not , report public domain fixed assets such as treets, right-of-ways, sidewalks, drainage systems and similar assets.

Long-Term Liabilities:

Long-term liabilities expected to be financed from governmental funds are accounted for in the General Long-Term Debt Account Group.

C. Basis of Accounting Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements.

Basis of accounting relates to the timing of the measurement made, regardless of the measurement focus applied.

Governmental Funds:

All governmental funds (General and Special Revenue) are accounted for using the modified accrual basis of accounting. Their revenues are recognized when they become measurable and available as net current assets.

Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred. Exceptions to this general rule include: (1) accumulated unpaid vacation, sick pay, and other employee benefit amounts which are not accrued; and (2) principal and interest on general long-term debt which is recognized when due.

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- CITY 10F BUSilNELL, FLORIDA

, NOTES TO FINANCI AL STATEMENTS-SEPTEMBER-30,-1982

NOTE 1

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SUMMARY

OF SIGNIFICANT. ACCOUNTING POLICIES (CONTINUED)

(Basisfof Accounting)

Governmental Fund-Type revenues that are susceptible to accrual include: the. City's share of federal and state revenues for the-period ending September 30.

.The City had no current' property taxes receiv-able as of September 30 and dc 6! nquent property taxes were immaterial.

Proprietary Funds:

Proprietary fund revenues and expenses are recognized on the accrual basis. Revenues of the enterprise funds are recognized on-the basis o f services rendered. Billing cycles of the utility funds which overlap September 30 are pro-rated based upon meter reading dates.

Total unbilled revenues for the combined utility funds amounted to $23,947 at September 30, 1982.

D. Budgets and Budgetary Accounting The City Council follows these procedures in establishing the budgetary data reflected in the financial statements:

1. Prior to October 1, the Department lle ad s submit' 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.

2. Budget workshops are held and public hearings are conducted to obtain taxpayer comments.

3. Prior to October 1, the budget is legally enacted through passage of an ordinance. The ordinance restricts expenditures at the function level within a fund.

4. Any transfers of budgeted amounts between depart-ments within any fund and any revisions that alter the total expenditures of any fund must be approved by the Council.

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CITY OF BUSHNELL, FLORIDA

, NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1982 I

NOTE 1

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(Budgets and Budgetary Accounting)

5. Formal budgetary integration is employed as a management control device during the year for the General, Special Revenue, and Enterprise Funds.

6. Budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP).

7. Budgeted amounts presented agree with the ori-ginally adopted budget. There were no budget amendments made during the year.

E. Accumulated Unpaid Vacation and Sick Pay Benefits Accumulated unpaid vacation benefits are not accrued in the governmental funds (using the modified accrual basis of accounting). At September 30, 1982, unrecorded liabilities f o r unpaid vacation benefits amounted to $2,113. Employees are not paid for unused sick leave upon termination.

During the current year the City accrued a liability for employees unpaid vacation pay (pro-prietary funds only). This accrual is required under Statement of Financing Accounting Standards No. 43, Accounting for Compensated Absences, for fiscal years beginning after December 15, 1980.

The accumulated unpaid vacation pay accrued at September 30, 1982 for the combined utility funds amounted to $2,985. Prior periods have not been restated to reflect this change in accounting policies due to the immateriality of the amounts involved.

F. Investments Investments are comprised of certificates of deposit and savings accounts stated at cost which approximates fair market value.

G. Inventory w.

Inventories held by the utility funds are stated at cost using the weighted average method.

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CITY OF BUSHNELL, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1982

[ NOTE 1 ,

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

H. Amortization Amortization of issue cost and discount rele.ted to the revenue bonds is computed by the straigh;-

line method.

I. Depreciation Depreciation (Proprietary Funds) is computed by the straight- 'ine method over the estimated useful lives of the assets as follows (assets are stated at cost):

Electric Utility Fund Distribution plant 25-40 years Structures and improvements 32 years Equipment 6-12 years Investment in Crystal River

1. 3 Nuclear Plant 28 years Water Utility Fund Distribution plant 25-101 years Building 50 years Equipment 25 years Garbage Fund Equipment 7 years

.1 Cash with Fiscal Agents Utilities revenue certificates maturing on October 1 each year together with interest payments then due are paid to the City's paying agent prior to that date. The aforementioned payment is recorded as an asset as of the balance sheet date and sub-sequently as a reduction of utilities revenue certi-ficates and/or accrued interest payable within the fiscal year of maturity.

K. Grants - Proprietary Funds Unrestricted grants, entitlements or shared revenues received are reported as non-operating rev-enues. Such resources externally restricted for capital acquisitions or construction are reported as contributed capital. Operating expenses include depreciation on all depreciable fixed assets.

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CITY OF BU S ilN ELL , FLORIDA s NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1982 r

NOTE 1

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

L. Water Line Extension Charges Water line extension charges are made to custo-mers 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 its estimated useful life.

M. Residual Equity Transfer The residual equity transfer from the Electric Utility Fund to the Water Utility Fund of $304 represents a non-recurring transfer of the residual balance of a segment of the Electric Utility Fund.

N. Total Columns on Combined Statements - Overview Total columns on Combined Statements - Overview are captioned Memorandum Only to indicate that they are presented only to facilitate financial analysis.

Data in these columns do not present financial position and results of operations in conformity with generally accepted accounting principles.

Neither is such data comparable to a consolidation.

Interfund eliminations have not been made in the aggregation of this data.

NOTE 2 BOND SERVICE REQUIREMENTS / RESTRICTED ASSETS As of September 30, 1982 bond service requirements are current. The following is a summary of the restricted assets related to the Utilities System Revenue Bonds Series 1976.

Revenue Bonds Debt Service - The City deposits cash monthly into a separate account to fund upcoming princi-pal and interest payments in acco rdance with the bond resolution. Such cash and investments are reported as restricted assets.

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CITY OF BUSHNELL, FLORIDA

. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1982 NOTE 2 BOND SERVICE REQUIREMENTS / RESTRICTED ASSETS (CONTINUED)

Renewal and Replacement - The bond resolution requires a l monthly deposit for renewal and replacement (extensions, enlargements or additions to, or the replacement of capital assets of the facilities and emergency repairs thereto or unusual costs of operation and maintenance).

The required monthly contribution is computed at 1/12 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.

Required balance at September 30, 1982 $46,000 Actual assets restricted at September 30, 1982 93,367 Excess $47,367 Customer Deposits have been restricted to indicate the amount is not available for the financing of current utility operations.

NOTE 3 GENERAL FIXED ASSETS A summary of changes in general fixed assets follows:

BALANCE BALANCE 10/1/81 ADDITIONS DELETIONS ADJUSTMENT

• 9/30/82 __

Land S 28,762 5 -

S - $ 68,958 $ 97,720 Buildings 105,513 - -

( 2,173) 103,340 Improvements 119,092 - -

( 118,418) 674 Machinery &

equipment 110,415 25,167 6,636 ( 55,374) 73,572

$363,782 $25,167 $6,636 ($107,007) $275,306

• In prior years detailed property re co rd s were not main-tained. The City has completed an inventory of all general fixed assets and has substantiated carrying value of such.

No cost records wore available for most of the land owned by the City. For this acreage, costs were substantiated by deflating current appraised values to the date of acquisi-tion by comparison with similar property in Bushnell on record in Sumter County. Substantial adjustments in machi-nery and improvements resulted due to items having been incorrectly classified in prior years and dispositions not recorded.

14 l

.. - - _ _ - _ _ _ _ _ _ _ _ _ _ _ - _ _ _ _ _ _ _ _ . _ _ _ _ _ _ _ _ ______________-________________b

CITY O F ' BUSilNELL', FLORIDA

(,

. NOTES TO FINANCI AL STATEMENTS SEPTEMBER 30, 1982

(-

~

NOTE 4 NOTES:AND BONDS: PAYABLE The-following is a' summary-of the bonds' payable- and f~ -

general'long-term debt.

' Utilities System Revenue-Bonds Series 1976 - $500,000-The.1976 b'onds are ~ coupon b'ndso in denomination of

.$5,000-each and are collateralized by-a-pledge of-the gross revenues of the utilities. system. .The bonds were

recorded according to'use.of the original proceeds.as -

follows - Electric Utility Fund 84%; Water Utility Fund 16%. Bond maturities and interest- rates are-as follows:

MATURITY COUPON PRINCIPAL APRIL 1 RATE AMOUNT Serial' Bonds:

1983- 6 .~ 1 % .$15,000

'1984 6 ~. 2. 15,000 1985 6.3 15,000 1986 6.4- -15,000 1987 6.5 '20,000 1988 6 .~ 6 20,000 1989 6.7 20,000- $120,000 Term Bonds:

1999- 7.3 340,000 Total principal balance outstanding 460,000 Less: Unamortized discount ~and issue costs 16,398

$476,398 7

i-l 15

CITY OF BUSHNELL, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1982

[ NOTE 4 NOTES AND BONDS PAYABLE (CONTINUED)

General Long-Term Debt PRINCIPAL BALANCE 9/30/82 Florida Retirement Systems contribution payable for past service, interest at 6.5% $ 4,545 Note payable, collateralized by utility tax revenue, due in monthly payments of $530 including interest at 5% 12,120 Note payable, collateralized by utility tax revenue, due in monthly payments of $1,085 including interest at 5.5% 18,122

$34,787 The following is a summary of changes in long-term debt for the year ended September 30, 1982:

UTILITIES SYSTEM REVENUE BONDS BALANCE PRINCIPAL BALANCE SERIES 1976 - $500,000: 10/01/81 REPAYMENTS 09/30/82 Electric Utility Fund $423,400 $ 8,400 $415,000 Water Utility Fund 46,600 1,600 45,000 Total Principal Balance $470,000 $10,000 $460,000 Total Interest Remaining $393,410 $33,120 $360,290 GENERAL LONG-TERM DEBT: ,

Florida Retirement System Payable (6.5%) $ 5,879 $ 1,334 $ 4,545 Bank Notes Payable 47,552 17,310 30,242 Total General Long-Term Debt $ 53,431 $18,644 $ 34,787 Total Interest Remaining $ 5,012 $ 2,459 $ 2,553 16

CITY OF B U S il N E L L , FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1982

[ NOTE 5 PRIOR PERIOD ADJUSTMENT The beginning retained earnings balance of the Electric Utility Fund was decreased by $10,237 and the beginning retained earnings balance of the Water Utility Fund was increased by $10,237 to reflect accounting changes in reporting debt service. The debt service has been allocated to the Electric and Water Utility Funds in the ratio of 84% and 16% respectively, which represents the use ratio of the original proceeds.

NOTE 6 CRYSTAL RIVER 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 Power Corporation has been appointed by the participants to act as their agent and have sole authority to manage, control, maintain and operate the unit.

Operating costs of the unit, in general, are shared in proportion to each generation entitlement share on a monthly basis. Common and external facilities of the generating unit are solely owned by Florida Power Corporation and participants share in the operation and maintenance expenses of such facilities. Nuclear fuel payments are required of participants in advance.

The participation agreement provides for reversion of the ownership interest of the unit to Florida Power Corporation upon retirement from service. The depreciated cost of the investment included in Utility Plant in Service amounts to $156,152 as of September 30, 1982.

NOTE 7 OTilER DISCLOSURES Excess of expenditures over appropriations in indivi-dual governmental funds:

Federal Revenue Sharing Fund - amount ($6,957) 17

g CITY OF B U S il N E L L , FLORIDA

{ NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1982 f NOTE 7 OTilER DISCLOSURES (CONTINUED)

Deficit retained earnings of individual funds:

Water Utility Fund deficit balance - ($30,201)

Garbage Utility Fund deficit balance - ($796)

Individual fund interfund receivable and payable balances:

INTERFUND INTERFUND FUND RECEIVABLES PAYABLES General Fund $14,816 S 1,828 Electric Utility Fund 4,398 10,616 Water Utility Fund -

7,286 Garbage Utility Fund 516 -

$19,730 $19,730 Allowances for doubtful accounts:

General Fund $ 457 Electric Utility Fund 1,500 Water Utility Fund 100 Garbage Fund 100

$2,157 NOTE 8 SEGMENT INFORMATION FOR ENTERPRISE FUNDS The City maintains three enterprise funds which provide electric, water and garbage services. Segment information as of September 30, 1982 is as follows:

ELECTRIC WATER TOTAL UTILITY UTILITY GARBAGE ENTERPRISE FUND FUND FUND FUNDS Operating revenues 823,504 64,966 46,219 934,689 Depreciation and amortization 26,374 5,913 2,427 34,714 Operating income (loss) 80,545 7,561 ( 1,392) 86,714 -

(Continued on following page) 18

CITY OF BUSHNELL, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1982 NOTE 8 SEGMENT INFORMATION FOR ENTERPRISE FUNDS (CONTINUED)

ELECTRIC WATER TOTAL UTILITY LTf1LITY GARBAGE ENTERPRISE FUND FUND FUND FUNDS Operating transfers to general fund 53,980 3,628 -

57,608 Net income (loss) 16,200 ( 900) ( 1,392) 13,908 Current year capital contributions -

5,292 531 5,823 Property and equip-ment additions 21,659 13,467 -

35,126 Net working capital 93,989 13,978 4,589 112,556 Bonds payable (net payable from operating revenues) 391,842 41,760 -

433,602 Total equity 374,460 157,995 5,802 538,257 s

19

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CE I

C0 M B I N I N G AN D I ND I V 1 D UAL F UND F I NA N C I A L ST AT E M ENT S

.o

+

s G EN E RAL F UN D 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 General Fund directly services general long term debt.

1 Statement A-1 CITY OF BUSIINELL, FLORIDA.

. GENERAL FUND BALANCE S!!EET SEPTEMBER 30, 1982

, ASSETS Cash $24,384~

Account receivable-- 785 Allowance for-doubtful accounts (note 7) ( ~457)

~Due from other funds (note 7) ~

14,816 Due from other gove'rnments 1,520?  ?

Inventories, at cost'(note-1)~ 1,272 -

i

' ~

TOTAL ASSETS $42,320 7 LIABILITIES AND FUND BALANCE Liabilities:

, ' Accounts payable $10,512 Accrued liabilities- 4,628

'Due;to other f und s - (n'o t e 7) 1,828 Deposits 85

. TOTAL LIABILITIES 17,053 Fund balance:

fReserve.for petty cash 535 Reserve for inventories l',272'

,. . Fund balance - unreserved 23,460 TOTAL FUND. BALANCE 25,267 TOTAL LIABILITIES AND FUND BALANCE S42,320 d

i See Accompanying Notes 20 J'

T w

Statement A-2 r

CITY OF BUSHNELL, FLORIDA I

GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET (GAAP BASIS) AND ACTUAL YEAR ENDED SEPTEMBER 30, 1982 VARIANCE FAVORABLE BUDGET ACTUAL (UNFAVORABLE) l Revenues:

Taxes $102,410 $112,664 $10,254 Licenses and permits 7,200 8,917 1,717 Intergovernmental 59,816 62,078 2,262 Charges for services 1,500 1,035 ( 465)

Fines and forfeits 25,000 17,180 ( 7,820)

Miscellaneous revenue 4,346 7,138 2,792 200,272 209,012 8,740 Expenditures:

Gene al government 74,924 69,954 4,970 Public safety 117,601 107,844 9,757

>hysical environment 1,950 1,368 582

-Transportation 56,905 45,427 11,478 Culture and recreation 10,339 13,978 ( 3,639)

Debt service 19,398 19,387 11 281,117 257,958 23,159 Excess (deficicacy) of revenues over expenditures ( 80,845) ( 48,946) 31,899_

Other financing sources:

Operating transfers in:

Electric Utility Fund 64,119 53,980 ( 10,139)

Water Utility Fund 6,618 3,628 ( 2,990) 70,737 57,608 ( 13,129)

Excess (de ficiency) of revenutis and other sources over expenditures ( 10,108) 8,662 18,770 rund balances, beginning of year 16,605 16,605 -

FUND BALANCES, END OF YEAR $ 6,497 $ 25,267 $18,770 See Accompanying Notes 21 l

1 l

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n Statement B-1 CITY OF BUS!!NELL, FLORIDA FEDERAL REVENUE. S!!ARING FUND BALANCE Si!EET SEPTEMBER 30, 1982 ASSETS Cash $ 339 Federal revenue sharing entitlement receivabic 4,503 TOTAL ASSETS $4,847 FUND BALANCE Fund balance $4,842 TOTAL FUND BALANCE $4,842 I

I i

1 See Accompanying Notes 22 I

/

! I

Statement B-2 CITY OF BUSilNELL, FLORIDA FEDERAL REVENUE SilARING FUND STATEMENT OF REVENUES, EXPENDITURES AND

'Cl!ANGES IN FUND BALANCE - BUDGET (GAAP BASIS) AND ACTUAL YEAR ENDED SEPTEMBER 30, 1982 VARIANCE FAVORABLE BUDGET ACTUAL (UNFAVORABLE)

Revenues:

Intergovernmental:

Federal revenue sharing $18,003 $18,003 $ -

Expenditures:

General Government:

Financial and administrative:

Capital outlay -

3,469 ( 3,469)

Public Safety:

Law enforcement:

Capital outlay -

3,800 ( 3,800)

Fire control:

Capital outlay 8,203 9,546 ( 1,343)

Total Public Safety 8,203 13,346 ( 5,143)

Physical Environment:

Garbage / solid waste control services:

Operating expenses 1,800 405 1,395 Transportation:

Road and street facilities:

Operating expenses 7,000 109 6,891 Capital outlay - 7,303 ( 7,303)

Total Transportation 7,000 7,412 ( 412)

, Culture and Recreation:

Parks and recreation:

Operating expenses 1,000 ( 120) 1,120 Capital outlay -

448 ( 448) l Total Culture and recreation 1,000 328 672 l'

(Continued on following page) i See Accompanying Notes 23

Statement B-2 CITY OF BUSHNELL, FLORIDA ,

FEDERAL REVENUE SilARING FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANCES IN FUND BALANCE - BUDGET (GAAP BASIS) AND ACTUAL YEAR ENDED SEPTEMBER 3 0 ', 1982 VARIANCE FAVORABLE BUDGET ACTUAL (UNFAVORABLE)

(Continued)

Total expenditures 18,003 24,960 ( 6,957)

Deficiency of revenue over expenditures -

( 6,957) ( 6,957)

Fund balance, beginning of year 11,799 11,799 -

FUND BALANCE, END OF YEAR $11,799 $ 4,842 ($6,957) s~

See Accompanying Notes 24

ENT ER P R I S E FUND S s

Ente rp rise 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, including depreciation) of providing goods or services to the general public on.a 4

continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that 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.

i

Statement C-1 CITT OF BUSHNELL. FLORIDA ENTERPRISE FUNDS COMBINING BALANCE SHEET SEPTEMBER 30, 1982 ELECTRIC WATER 4* 'UTILITT UTILITY CARBAGE TOTAL

< FUND FUND FUND 1982 ASSETS I

current assets:

Cash .

$ 65,278 $ 13.901 $ -

$ 79.179 Investments, at cost (note 1) 1,800 - - 1,800 Customer accounts receivsble 101,901 6.186 4,924 113,01i

( 100) ( 100) 1,700)

Allowance for doubtful accounts (note 7)% ( 1,500) (

194 Accrued interest on investments 19. - -

Due from other funds (note 7) , 3.059 - 516 3,575 inventories, at cost (note 1) 11,392 4,007. 582 l',981 182.124 23.994 5,922 212.040 1

Restricted assets (note 2):

Debt service .

Cash wLth fiscal agent (note 1) 154 29 - 183 Investments, at cost (note 1) 72.061 13.726 - 85,787 Due from other funds (note t) 27 -- - 27 Renewal and replacement Investments, at cost (note 1) 35.000 - - 35,000

~~ Capital improvement Cash 2.174 1,193 - 3.367 investments, at cost (note 1) 55.000 - - 55,000 customer deposits Cash 5,024 - -

5.024 investments, a* cost (note 1) 35,000 - - 35,000 Due from other funds (note 7) 1,312 - - 1,312 Accrued interest on investments 59 - - 59 205,811 ~l4.948 - 220,759 '

Property and equipment (at cost - notes 1.and 3): 2,300 Land 2,300 - -

Buildings 9.187 14.094 -

23.281

$10,750 231,735 .742,485 Distribution plant .

51.117 18.316 21.302 90,735 Machinery and equipment 193,694 Crystal River Unit #3 (note 6) 193,694 - -

767.048 264,145 21,302 1.052.495 Lesst Accumulated depreciat1Ta ( 241.818) ( 88,799) ( 20.089) ( 350,706) 525.230 175,346 1,213- 701,789 TOTAL ASSETS $913,165 $214,288 3 7.135 $1,134,588

+

i-l L

L See Accompanying Notus 25 t

t

- - - e c -- -, - - - - , - , r,.. e.. - -,,-w -.,,e.. . , - - , , , , . _ - . . , , . , , _..r-ecy.- -

Statement C-1 CITY OF BUSHNELL. FLO RID A ENTERPRISE FUNDS COMBINING BALANCE SHEET S E PT F.M B E R 30 1982 ELECTRIC WATER UT ILITT - UTILITY CARBAGE TOTAL FUND FUND FUND 1982 LIABILITIES Current liabilities:

Accounts payable $ 74.393 $ 1.688 $ 951 $ 77,032 Accrued liabilities-- 3.126 1.042 382 4.550 Due to other funds (note 7) 10.616 7.286 -

17.902 88.135 10.016 1.333 99.484 Current liabilities (payable from restricted assets):

Customer deposits ~ 35.015 - -

35.015 Accrued interest payable 15.313 2.917 -

18.230 Revenue bonds payable 8.400 1.600 -

10.000 58.728 4.517 -

63.245 Long tern liabilities:

Revenue bonds (net) (note 4) 391.842 41.760 -

433.602 TOTAL LIABILITIES 538.705 56.293 1.333 596.331 Fund equity:

Contributed capital (note 1) 146.922 188.196 6.598 3 1.716 Retained earnings (deficit) (note 7):

Reserved 147.083 10,431 -

157.514 Unreserved 80.455 ( 40.632) ( 796) 39.027 227.538 ( 30.201) ( 796) 196.541 TOTAL FUND EQULTY 374.460 157.995 5.802 538.257 TOTAL LIABILITIES AND FUND EQUITY $913.165 $214.288 $11_3 5 $M 3ASM f

i i

See Accompanying Notes 26

Statement C-2 CITT OF BUSHNELL. FLORID A ENTERPRISE FUNDS CONSINING STATEMENT OF REVENUES. EXPENSES. AND CHANGES IN

' RET AINED EARNINGS (DEFICIT)

TEAR ENDED SEPTEMBER 30, 1982 ELECTRIC WATER UTILITY UTILITY CARBACE TOTAL FUND FUND FUND 1982 Operating revenuess Charges for services $823.504 $64.966 346.219 $934.689 Operating expenses:

Purchased power 647.462 - -

647.462 salaries 35.634 27.355 26.988 89.977 Employee benefits 11.057 7.047 8.821 26.925 Professional services 8.092 2.581 500 11.173 Travel and per diem - 69 - 69 L' t i l i t y services 7.046 -

7.046 Communications 647 - - 647 Insurance 1.953 1.000 912 3.865 Re pairs . and maint enance 2.414 1.241 1.914 5.569 Office supplies 213 - - 213 operating supplies 2.562 4.599 4.184 11.345 other current charges 4.431 656 1.865 6.952 Books, publications and memberships 3.042 - - 3.042-25.452 5.811 2.427 33,690 Depreciation (note 1) 742.959 57.405 47,611 847.975 Operating income (loss) 80.545 7,561 ( 1.392) 86.714 Non-operating revenue (expense): 836 21,223 Interest earned 20.387 -

Bond interest expense and fiscal charges ( 30.752) ( 5.669) -

( 36.421)

( 10.365) ( 4.833) -

( 15.198) s incoma before transfers 70.180 2.728 ( 1.392) 71.516 53.980 3.628 - 5's.608 Operating transfers to general fund 16.200 ( 900) ( 1.392) 13.908 Net income (loss)

Retained earnings, beginning of year 221.879 ( 39.842) 596 182.633 Prior period adjustment (note 5) ( 10,237) 10.237 - -

211.642 ( 29.605) 596 182.633 Beginning balances, as restated

( 304) 304 - -

Residual equity transfers R ET AINED EARNINGS (DEFICIT) BALANCES. END OF YEAR $227.538 ($30.201) ($ 796) $196.541 1

i See Accompanying Notes 27

a~

Statement C-3 CITY OF BUSHNELL. FLORIDA

. ENTERPRISE FUNDS ,

COMBINING STATENENT OF CHANCES IN FINANCIAL POSITION YEAR ENDED SEPTENBER 30. 1982 ELECTRIC WATER UTILITY UTILITT CARBACE TOTAL FUND FUND FUND 1982 Sources of working capitals Not income (loss) $16.200 ($ 900) ($1.392) $13.908

- 304 - 304 Residual equity transfer Add 8 Items not requiring the use of working capital Depreciation 25.452 5.811 2.427 33.690 Amortization. 922 102 -

1.024 Working capital provided by operations 42.574 5.317 1.035 48.926 Developer contributions 5.292 531 5.823 increase in current liabilities payable from restricted assets 3,874 - - 3.874 Total sources of working capital 46*.448 10.609 1.566 58.623 Uses of working capitals 304 - - 304 Residual equity transfer Acquisition of property and equipseat 21.659 l'. 467 -

35.126 Decrease in long term revenue bonds payable 8.400 1.600 -

10.000 Increase in restricted assets 5.467 1.911 -

7.378 Decrease in current liabilities payable from

- 87 - 87 restricted assets Total uses of working capital 35.830 17.065 - 52.895 NET INCREASE (DECREASE) IN WORKING CAPITAL $ 5.728 (SCHEDCLE BELOW) $10.618 ($ 6.456) $1.566 Elements of net increase (decrease) in working capitals cash. $20.032 $ 2.522 $ - $22.554 Investarnts ( 1.800) - -

(. 1.800; Customer accounts receivable (net) 10.402 ( 430) 1.379 11.351 Accrued interest on investwents ( 3.601) - -

( 3.601)

Due from other funds 2.909 - 516 3.425 Inventories ( 2.724) ( 2.300) 582 ( 4.442)

Accounts payable ( 8.863) ( 1.380) ( 529) ( 10.772)

. Accrued liabilities ( 563) ( 503) ( 382) ( 1.448)

Due to other funds ( 5.174) ( 4.365) -

( 9.539)

$10.618 ($ 6,456) St.566 $ 5.728 NET INCREASE (DECREASE) IN WOREING CAPITAL

?

i See Accompanying Notes 28

. _ _ , , . .. - . . = . .

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- CITY OF BUSHNELL, FLORIDA

^~

GENERAL FUND SCHEDULE OF EXPENDITURES AND OTHER FINANCING USES BUDGETED AND. ACTUAL YEAR ENDED SEPTEMBER 30, 1982

' VARIANCE.

FUNCTION / ACTIVITY /- FAVORABLE.

SUBACTIVITY/0BJECT BUDGETED ACTUAL (UNFAVORABLE)

General Government Services Legislative: .

City' council: .

. Personal services $__ 71 $ 1,426 ($ 1,355)

Total Legislative 71 1,426 ( 1,355).

Finance and Administrative:

Personal services' 42,894 45,348 ( 2,454)

Operating expenses 25,359 18,500 6,859

Total Finance and Administrative 68,253' 63,848 4,405 .

. Legal Counsel:

City attorney's office:

Operating expenses 6,600 4,680 1,920 Total Legal Counsel 6,600 4,680 1,920 Total General Government Services ~ 74,924 69,954 4,970 Public Safety Police Department:

Personal services 74,439 68,926~ 5,513 Operating expenses 19,550 20,393 ( 843)

Capital outlay 3,900 780 3,120 Total Police Department 97,889 90,099_ 7,790 Fire Department:

) Operating expenses 12,501 13,458 ( 957)

Capital outlay 4,000 1,057 2,943 Total Fire Department- 16,501 14,515 1,986 (Continuedon following page) 29

CITY OF BUSHNELL, FLORIDA-GENERAL FUND SCHEDULE OF EXPENDITURES AND OTHER FINANCING USES BUDGETED'AND ACTUAL YEAR ENDED SEPTEMBER 30, 1982 VARIANCE FUNCTION / ACTIVITY / FAVORABLE-SUBACTIVITY/0BJECT' BUDGETED ACTUAL (UNFAVORABLE)

Public Safety (Continued)

Protective Iispections: .

Personal services S 3,211 $ . 3,230 ($ 1_9 )

Total Protective Inspections 3,211 3,230 -( 19)

Total Public Safety 117,601 107,844 9,757 Physical Environment Cemeteries:

Operating expenses 1,950 1,368 582 Total Cemeteries 1,950 1,368 582 Total Physical Environment . 1,950 1,368 582 Transportation-Road and Street Facilities:

Personal services 30,311 19,757 10,554 Operating expenses 24,894 25,670 ( 776)

Capital outlay 1,700 - -1,700 Total Road and Street Facilities 56,905 45,427 11,478 Total Transportation 56,905 45,427 11,478 Culture and Recreation Libraries:

Operating expenses 2,500 2,371 129 Total Libraries 2,500 2,371 129 (Continued on following page) 30 e, - , -

,- :m,--,-e

CITY OF BUSHNELL, FLORIDA GENERAL FUND SCllEDULE OF EXPENDITURES AND OTHER FINANCING USES BUDGETED AND ACTUAL YEAR ENDED SEPTEMBER 30, 1982 VARIANCE FUNCTION / ACTIVITY / FAVORABLE S UB ACTIVITY /0 BJ ECT BUDGETED ACTUAL (UNFAVORABLE)

Culture and Recreation (Continued)

Parks and Recreation:

Personal services S 4,794 $ 5,407 ($ 613)

Operating expenses 3,045 6,200 ( 3,155)

Total' Parks and Recreation 7,839 11,607 ( 3,768)

Total Culture and Recreation 10,339 13,978 ( 3,639)

TOTAL EXPENDITURES 261,719 238,571 23,148 Other Financing Uses Redemption of debt 19,398 19,387 11 TOTAL OTHER FINANCING USES 19,398 19,387 11 TOTAL EXPENDITURES AND OTHER FINANCING USES $281,117 $257,958 $23,159

\

31

CITY OF BUSHNELL, FLORIDA SCHEDULE OF INSURANCE IN FORCE AS OF SEPTEMBER 3', 1982 ANUNT OF INSURANCE OF LIMIT ANNUAL POLICY # COMPANY OF LIABILITY TERM OF P01.!CY PREMILH TYPE OF INS 1*RANCE 650-978E271 Travelers $300,000 Liability 10/1/81-82 $4,649 Fire, EC & VMM on

$708.100 Property Schedule, Building Crime $4,000 & Contents, Crime &

Public Liability 650-162A447 Travelers 100/300/50 Liability 10/1/81-82 $4,331 Comprehensive Auto 15/30 l'oinsured Mot. Liability & Scheduled Physical Damage Physical Damage UB365F111 Travelers Statuatory '10/1/81-82 $5,861 Worker's Compensation RN4363386 Hartford $5,000 11/1/81-82 $ 50 Fidelity Bond for Tax Collector CP26647 International $1,000,000 11/16/81-82 $ 592 Public Liability &

Surplus Employees Liability

.BT11118R Travelers $20,000 11/8/81-82 $ 100 Accidental Death on Policemen VP101433 Hartford $10,000 Death 12/4/81-82 $ 307 Accidental Death &

$80 Weekly Inc. Loss of Income on Firemen 6012136 tiart ford $25,000 1/6/82-83 $ 250 Bond for City Clerk PEBSC9203 Hartford $5,000 2/8/82-83 $ 153 Bond for City Employees DFCC9203 Hartford $2,000 2/10/82-83 $ 39 Depositor's Forgery Bond CLA216232 National $1,000,000 7/7/82-9/30/82 $ 133 Ambulance Drivers Indemnity Liability 4

32

BROOKS, BROWN & CO.

, CERTIFIED PUBLIC ACCOUNTANTS 2tS NORTH 3RD STREET LEESBURG. FLORIDA 32748

'(904) 787-8682 19043 748 2488 MEMIERS PARTNERS.

FLCQlOA INSTITUTE OF W. THOM AS B ROOKS. C P A. '

CE371FIED PUBLIC ACCOUNTANTS . B AiiEN B ROW N. JR.. C.P A.

AMERICAN INSTITUTE OF C. THOM AS WILEY. C P. A.

CESTIFIED PUBLIC ACCOUNTANTS

. December 10, 1982 Honorable City Council

. City.of Bushnell, Florida We have examined the financial statements of the City of Bushnell for the year ended September 30, 1982, and have issued our report thereon dated December 10, 1982. As part-of our examination, we made a study and evaluation'of the City's system of internal accounting control to the extent we considered necessary to evaluate the system as required by generally accepted

~

auditing standards. .The purpose of our study and evaluation was to determine the nature, timing, and extent of the auditing procedures necessary for expressing'an. opinion on the City's financial statements. Our study and evaluation was more limited

-than would be necessary to express an opinion on the system of internal accounting control'taken as a whole.

The management of the City of Bushnell is responsible for establishin'g and maintaining a system of internal accounting con-trol. 'In fulfill'ing this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of control procedures. The objectives of a system are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against lo's s from unauthor--

ized use or disposition, and that transactions are executed in accordance with managemen- a authorization and recorded properly to permit the preparation of financial statements in a c co rd an c e with generally accepted accounting principles.

Because of inherent limitations in any system of internal

.7 accounting control, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the system to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the' degree of compliance with the procedures may deteriorate.

Our. study'and evaluation made for the limited purpose described in the first paragraph would not necessarily disclose all material weaknesses in the system. Accordingly, we do not express an opinion on the system of internal accounting control of.the-City of Bushnell taken as a whole.

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.However, our s tudy and evaluation disclosed the following conditions that we believe result in more than a relatively low risk that errors or irregularities in amounts that would be material in relation to the financial statements of the. City of Bushnell.may occur and not be detected within a timely period.

.These' material' weaknesses are as follows:

I. UTILITYTBILLING SYSTEM The. City's staff does not reconcile the customer account balance totals to the computerized general ledger control account.

We recommend that the detailed accounts receivable subsidiary ledger be reconciled to the general ledger control account monthly.

-I I . PAYROLL / PERSONNEL FILES In.several instances it was noted that-the federal withholding did not agree with the signed W-4 form in the personnel files. Also, the City did not receive the revised Circular E (effective July 1, 1982) therefore, withholding was. incorrectly calculated for the fourth quarter.

We recommend that all outdated W-4 forms be r6placed with current authorized withholding rates. Since discovery of the outdated-Circular E, the City is using the correct

. wit hho lding tables.

III. PROPERTY AND EQUIPMENT It is the City's policy not to record depreciation expense on current. year acquisitions within the Electric Utility. Fund.

In accordance with generally accepted accounting prin-ciples, depreciation should be recorded from the date the assets are placed in service.

The foregoing conditions were considered in determining the nature, timing, and extent of the audit tests to be applied in

{ our examination of the 1982 financial statements, and this report does not affect our report on these financial statements dated December 10, 1982.

The following comments are not regarded as material internal control weaknesses but are offered for your consideration and to meet requirements of Chapter 10.5 - Rules of the Auditor General.

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I. ANNUAL FINANCIAL REPORT The ' annual financial report filed with the Department of Banking and Finance agrees in all material respects with the financial statement contained'herein.

II.. PRIOR YEAR FINDINGS The-comment made in the prior year management letter which has not been resolved is as follows:

Utility customer accounts receivable account balance totals are not being reconciled to the computerized general ledger control account.

III. REPLY TO AUDITOR'S COMMENTS A written statement of explanation or rebuttal by the

, Chief Executive Officer concerning the auditor's comments, including corrective action taken must be filed with the Council'and with the Auditor General within 20 days after delivery of this report.

Respectfully submitted,

&nka,tkam. t es .

Brooks, Brown & Co.

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JAudited Financial Statements

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' 'Orlando Utilities Comrnissio'n

- Septembe'r 30,.1982:

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Audited Financial Statements ORLANDO UTILITIES COMMISSION September 30, 1982 L

-Audited Financial Statements

' Auditors' Report . . . .. ... . .. .. .. .. . . . . . ... . 1 Balance Sheets . . . . .. . ... . . . ... .. . . . . . .. . . 2 Statements' of Income and Accumulated Retained Earnings . . . . . - . . 4 Statements of Changes in Financial Position. . . . ... .. .... . 5 Notes to Financial Statements. . . .. . .... .. . .. . .. . . 6

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Ernst &Minney c riiri a embiic acco aiamis 332 serib uasaeiia av..

P.O. Box 3426 Orlando, Florida 32802 j 305/841-2050 I

Orlando Utilities Commission Orlando, Florida l

l We have examined the balance sheets of the Orlando Utilities Commission as of September 30, 1982 and 1981, and the related statements of income and accumulated retained earnings and changes in financial position for the years then ended. Our examinations were made in accordance with gen-l erally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we consi-dered necessary in the circumstances.

In our opinion, the financial statements referred to above present fairly the financial position of the Orlando Utilities Commission at September 30, 1982 and 1981, and the results of its operations and the changes in its financial position for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis.

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November 23, 1982 L

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BALANCE SHEETS ORLANDO UTILITIES COMMISSION September 30 1982 1981 ASSETS UTILITY PLANT In service:

Electric $ 321,692,109 $ 216,841,255 Water 56,880,014 53,848,282 Common 12,580,922 12,317,926 Allowances for depreciation and amortization (deduction) (112,121,659) (104,184,584) 279,031,386 178,822,879 Construction work in progress--Note E 95,132,120 153,946,609 374,163,506 332,769,488 RESTRICTED ASSETS--Note B Debt service funds 53,480,147 54,334,539 Construction and related funds 32,042,131 42,936,030 85,522,278 97,270,569 CURRENT ASSETS Cash 910,585 3,000 Pooled investments 16,599,104 7,820,485 Customer accounts receivable, less allowance for doubtful accounts (1982--$259,581; 1981--$133,306) 11,284,147 6,561,868 10,832,068 6,143,180

)

Accrued utility revenues Fuel for generation 14,789,471 18,366,038 Materials and supplies 3,900,126 3,841,038 Accrued interest receivable 40,387 712,088 MJ.scellaneous receivables and prepaid expenses 378,647 300,049 ]

54,464,335 48,017,946 J OTHER ASSETS Deferred charges--Note E 17,244,433 6,535,107 )

5 S 531.394.532 S 484.593.110

September 30 1982 1981 CAPITALIZATION AND LIABILITIES CAPITALIZATION Equity:

Accumulated retained earnings:

Appropriated for debt service $ 41,466,326 $ 42,399,266 Invested in or appropriated for utility plant and working capital 100,652,390 95,391,645 142,118,716 137,790,911 Contributed capital--Note A 11,701,499 9,672,507 153,820,215 147,463,418 Long-term debt--Note C:

Bond principal 222,980,000 224,185,000 Bond anticipation notes ,

105,000,000 80,000,000 Revenue notes 16,800,000 Unamortized discount and expense (deduction) (1,486,471) (1,811,070) 343,293,529 302,373,930 497,113,744 449,837,348 CURRENT LIABILITIES--payable from restricted assets Accrued interest payable on long-term debt 10,808,821 10,790,273 Current portion of long-term debt--Note C 1,205,000 1,145,000 Accounts payable--construction funds 120,352 j

12,134,173 11,935,273 CURRENT LIABILITIES--payable from current assets Accounts payable and accrued expenses 10,819,198 12,538,687 r Customer meter deposits and interest thereon 3,142,662 2,582,902 L Collections on behalf of state and political subdivisions 3,260,820 2,505,805

- Due to the General Fund of the City of Orlando 1,823,377 2,311,867 19,046,057 19,939,261

, OTHER LIABILITIES Customer water and electric line extension deposits 3,100,578 2,881,228 r COMMITMENTS AND CONTINGENT LIABILITIES--Note E l

$531.394.552 $ 484.593.110

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See notes to financial statements.

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STATEMENTS OF INCOME AND ACCUMULATED RETAINED EARNINGS ,

ORLANDO UTILITIES COMMISSION -

1. 4 Year Ended September 30 -

. 1982 1981 Operating revenues $155,611,612 $157,916,484

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Operating expenses:

Production 99,459,729 104,965,536 -

Transmission and distribution 7,508,227* 6,729,704 Depreciation '* . 8,606,296 8,146,306 Customer accounting 2,985,251 2,615,933 General and administrative 6,912,204 5,733,134 State utilities tax 1,924,160 1,745,393 Consumer education 215,969 174,242 .

Payments to the General Fund of the City of Orlando 5,109,598 4,752,657 132,721,434 134,862,905 OPERATING INCOME 22,896,178 23,053,579 Interest and~othe'r income 13,994,921 14,938,743

- 36,891,099 37,992,362 Other deductions--principally interest 25,050,294 21,371,087 NET INCOME 11,840,805 16,621,275 Accumulated retained earnings at beginning of year 137,790,911 128,131,636 149,631,716 144,752,911 Less transfers to the General Fund of the City of Orlando (7,513,000) (6,962,000)

ACCUMULATED RETAINED EARNINGS AT END OF YEAR S142.118.716 $137. 790J11 See notes to financial statements.

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STATEMENTS OF CllANGES IN FINANCIAL POSITION ORLANDO UTILITIES COMMISSION

, Year Ended September 30

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1982 1981 SOURCE OF FUNDS Net income. $11,840,805 $ 16,621,275 Charges,to operations not requiring current outlay Df working capital:

Depreciation and amortization 9,141,116 8,655,263 Amortization of bond discount and expenss 430,342 330,743 TOTAL FROM OPERATIONS 21,412,263 25,607,283 Proceeds from sales of bond anticipation and reyenue notes 41,800,000 80,000,000 Contributed capital 2,028,992 1,955,999 Increase in restricted liabilities 198,900 4,228,849 Increase in other liabilities 219,350 382,440 Decreace in restricted assets 11,748,291 2,135,746 77,407,796 114,310,317 v

APPLICATION OF FUNDS .

Additions to utility plant--net 50,535,134 103,883,119 Transfers to the General Fund of the City of Orlando 7,513,000 6,962,000 ge

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Decrease in long-term debt 1,205,000 1,145,000 Increase in other assets 10,709,326 5,190,183 Expenses a,ttributable to sale of bond anticipation notes 105,743 933,265 ,

70,068,203 118,113,567 INCREASE (DECREASE) IN WORKING CAPITAL S 7.339.593 $ (3.803.250)

CilANGES IN COMPONENTS OF WORKING CAPITAL Increase (decrease) in current assets:

Cash -

$ 907,585 $ (1,041,258) l Pooled investments 8,778,619 (5,120,750) l Customer accounts receivable 452,079 -

(239,456) l Fuel for generation (3,576,567) 2,678,374 l Accrued interest receivable (671,701) 472,171 Miscellaneous receivables and other accounts 556,374 1,050,525 6,446,389 (2,200,394)

Increase (decrease) in current liabilities:

Accounts payable and accrued expenses. (1,719,489) (402,296)

Customer meter deposits and interest thereon 559,760 461,695 Collections on behalf of state and political subdivisions 755,015 222,000 Due to the General Fund of the City of Orlando (488,490) 1,321,457 (893,204) 1,602,856 INCREASE (DECREASE) IN WORKING CAPITAL $ 7.339.593 S (3.803.250)

Sea notes to financial statements.

NOTES TO FINANCIAL STATEMENTS ORLANDO UTILITIES C01211SSION September 30, 1982 NOTE A--SUlefARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Orlando Utilities Commission are presented in conformity with generally accepted accounting principles and represent General Purpose Financial Statements as defined in Statement 1 - Governmental Account-ing and Financial Reporting Principles promulgated by The National Council on Governmental Accounting. The statements are substantially in conformity with accounting principles and methods prescribed by the Federal Energy Regulatory Commission and other regulatory authorities except for the method of accounting for contributed capital described below.

Utility Plant - Utility plant is stated at original cost which includes cost of contract work, labor, materials and allocated indirect charges for equipment, supervision and engineering and labor related costs. The Commission charges the cost of repairs and minor replacements to maintenance expense. The cost of pro-perty retired or otherwise disposed of, together with removal costs less salvage, is charged to accumulated depreciation at such time as property is removed from service. Also see Rates and Revenues which follows.

Depreciation - The 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 economical useful lives of the assets. Depreciation of transportation and construction equipment is charged to departmental operating expenses or construction work in progress. Amounts for all other assets are charged to depreciation expense.

Undivided Interest in Joint Projects - The Commission accounts for its undivided ownership interest in electric generating facilities owned with other utilities (See Note D) based on the Commission's pro-rata share of the project's construc-tion costs and operating expenses.

Pooled Investments - The Commission maintains a pooled investment account which includes all investments (restricted and unrestricted) except those in the In-vestment Account described in Note C. The investments consist mainly of direct obligations of the U.S. Government, debt instruments of federal agencies, and securities held under repurchase agreements. These investments, at cost (app rox-imate market value of $85,791,000 and $86,925,000 at September 30, 1982 and 1981, respectively) were classified as follows:

4 September 30 1982 1981 Restricted assets $69,549,689 $83,994,578 Current assets 16,599,104 7,820,485 TOTALS $86.148.793 $91.815.063 l

NOTES TO FINANCIAL STATEMENTS--CONTINUED ORLANDO UTILITIES COMMISSION NOTE A--

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES--CONTINUED Customer Accounts Receivable - The Commission bills customers monthly on a cyclical basis and accrues revenues at the-end of the fiscal year for energy and water sold but not billed. The Commission also acts as the billing and collection agency for the City of Orlando's Sewer System Fund and Refuse Col-lection System Fund and for certain_ sewer customers of Orange County. Amounts billed by the Commission are remitted to the City and County on a monthly

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basis. The Commission charges the City and the County for these services based on a fixed fee or number of services billed.

Fuel for Generation and Materials and Supplies - Fuel oil inventories and materials and supplies are stated at the lower of average cost or market.

Nuclear fuel is classified as utility plant and amortized over the estimated life of the fuel.

Contributed Capital - The Commission considers amounts received from customers and others for construction of utility plant as capital contributions. Accord-ingly, these capital contributions are considered a component of equity and are not offset against utility plant; depreciation provided for the related utility plant is charged against income.

Debt Discount and Expenses - Debt discount and issue expenses are deferred and

. amortized to operations over the lives of the related issues using che bonds I outstanding method of amortization.

1 Rates and Revenues - Each year,^the Orlando Utilities Commission performs a rate adequacy study to determine the electric and water revenue requirements for the ensuing year. Based on this study, current cost of service studies and regulations of the Florida Public Service Commission regarding electric

" rate structure", the Commission develops its electric and Water rate schedules.

The Commission makes its determination of revenue requirements using the rate base method and 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 uced during construction (AFUDC) in determining revenue requirements. Since the Commissioii's level of revenue requirements and subsequent revenue is determined without regard to AFUDC, the Commission does not capitalize interest on construction work in progress.

Payments and Transfers to the City of Orlando - The Commission makes payments to the General Fund of the City of Orlando based on gross revenues derived from sales of electricity and water to customers within the bcundaries of the City. This amount is considered an operating. expense for financial reporting and rate making purposes. In addition, the Commission transfers monies to the General Fund of the City of Orlando based on the Commission's ,

net income.

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NOTES TO FINANCIAL STATDIENTS--CONTINUED

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ORLANDO.. UTILITIES COMMISSION i 1

l NOTE A--

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIEsECONTINUED

_ Reclassifications - For comparability purposes, certain reclassifications have

-been made to the 1981 financial statements to conform with the 1982 financial statement presentation.

NOTE L--nZSTRICTED ASSETS Restricted assets consist of the following funds:

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September 30 1982 1981 Sinking Funds - lote C:

, Investment Account $14,174,439 $11,183,396 Principal and Interest Accounts 21,641,834 26,257,645

. 35,816,273 37,441,041 Debt Service Reserve Account 17,663,874 16,893,498 Renewal and Replacement Fund 9,437,623 8,027,460 Construction Funds 22,604,508 34,913,570 TOTALS $85.522.278 $97.270.569 The above funds are classified in the balance sheet as:

Debt service funds $53,480,147 $54,334,539 l Construction and related funds 32,042,131 42,936,030 1-

- TOTALS $85.522.278 $97.270.569 The funds consist of:

Cash $ 1,466 $ 1,251 United States Treasury securities--

at cost (approximate market value:

1982--$10,770,000; 1981--$6,439,000) 13,737,034 10,839,965 Pooled investments--Note A 69,549,689 83,994,578 Interest receivable 2,234,089 2,434,775 TOTALS $85.522.278 $97.270,569 i

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NOTES TO FINANCIAL STATEMENTS--CONTINUED i

ORLANDO UTILITIES COMMI5FION

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NOTE C--LONG-TERM DEBT During 1978, the Commission orovided for the advance refunding of all of its; water and electric revenue bonds outstanding at April 1,1978 in the

, aggregate principal amount, of $123,325,000 (Refunded Bonds) by the sale of $120,330,000 Water and Electric Revenue Refunding and Improvement Bonds, Series 1978 and $94,650,000 Special Obligation Bonds, Series 1978. From the proceeds of the sale of the two issues, monies were invested in United

& States obligations in an irrevocable Escrow Deposit Trust Fund. Such Unf.ted States obligations will mature at such time and in such amounts so as to provide sufficient fundtc for the payment of maturing principal and interest on the Refunded Bonds. All interest earned or accrued on the United States obligations has been pledged and will be used for the payment of the principal and interest on the Specisi Obligation Bonds, Series,1978.

The Refunded Bonds are treated as extinguished debts in the accompanying financial statements even though the Pefunded Bonds do not have a provision for defeasance. The transaction,has beEn accounted for in the same manner as a defcased transaction because the o6 ligation of the Commission for the Refunded Bonds has been satisfied in su6 stance although not in form.

In 1979 and 1980 the Commission issued the btlance of the authorized Water and Electric Refunding and Improvement Bonds as Series 1978A and 1978B in the amount of $40,000,000 and $75,000,000, respectively.

The Series 1978, 1978A and 19783 bonds are payable"from 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 investment income earned on monies and obligations in certain sinking fund accounts.

Bonds outstanding as of September 30 are as follows:

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1982 1981

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'l,' 1978 series, 5.8%-6.375%, due serially f 1994 to 2008 e< $110,330l000 $110,330,000

,, 1978A series, 5.6%-6.4%, due, serially 1993 to 2008 t, 40,000,000 40,000,000 1978B series, 6.25%-8.0%, due serially 1982 to 2003 73,855,000 75,000,000 5 224,185,000 225,330,000

Less current portion of long-term debt 1,205,000 1,145,000

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TOTALS $222.980.000 1224.185.000

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NOTES TO FINANCIAL STATEMENTS--CONTINUED

'ORLANDO UTILITIES COMMISSION r

NOTE C--LONG-TERM DEBT--CONTINUED The resolution dated April 18, 1978 authorizing the.$225,330,000 Water and Electric Revenue Refunding and Improvement. Bonds, as amended, requires the establishment -of a Sinking 1 Fund and certain accounts to be maintained

therein. The accounts presently.in-use are the Interest Account, Principal Account, Investment . Account and Debt Service Reserve Account. The Principal-Account shall be used to provide'for'the retirement of the Serial Bonds as they become due. The Investment Account shall be used to accumulate monies for.the retirement of $61,740,000 of Term Bonds, _ Series 1978 that: are due in12008. Monies in the Investment Account are required to be used to purchase Investment Account Securities as defined in the resolution which E

shall be held in trust separate from other investments.

By. resolution. dated May 13, 1980, supplementing the resolution dated April 18, 1978, the Commission authorized the issuance of $110,000,000 Water and. Electric Revenue Bonds, Series 1980, to finance the cost of.the acquisition of an undivided interest as tenant in common in a joint owner-

' ship project, the St. Lucie Unit No. 2 nuclear power plant. These-bonds have-not been issued. To meet cash needs the Commission sold $80,000,000 of Bond Anticipation Notes, Series 1980 on November 18, 1980. The Notes

.a re secured by a lien on the_ net revenues of the Commission (as defined in the Resolution) which lien is junior, inferior and subordinate in all respects'to.the Outstanding Bonds and the Payments and Transfers to the City of Orlando.

' On No rember 6, .1981, the Commission issued $23,000,000 of Bond Anticipation Notes, Series.1981 to provide the funds necessary to complete the financing of the' Commission's portion of the costs of St. Lucie Unit No. 2. These

~ Notes are: subordinate in all respects to the Bond Anticipation Notes,.

, Series _1980 and'are secured by a lien on the proceeds of the 1980 Bonds (authorized but not issued) and net revenues of the Commission (as defined

-in the resolution).

EBond anticipation notes outstanding as of September 30 are as follows:

1982 1981

1980 series, 8.4%, due October 1, 1983- $ 80,000,000 $80,000,000

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1981 series, interest ranging from 5.0%

to.70% of the prime rate limited to 13%, due November'5,~1982 and

{ November 5; 1983 25,000,000 -

TOTALS $105.000.000 $80.000.000

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' NOTES LTO FINANCIAL' STATEMENTS--CONTINUED ORLANDO UTILITIES COMMISSION

NOTE C--LONG-TERM--CONTINUED Subsequent to' September 30, 1982, the Commission redeened $11,875,000 of _

the Series 1981 Notes which were due November 5,1982 through the issuance of an equivalent amount of revenue notes.

_ During the current fiscal year, the Commission initiated a revenue note program to. finance the pre-construction costs of the Curtis H. Stanton Energy Center Unit No. 1 project '(See Note E). ~

In connection with this program, the Commission entered into a Revolving Credit Agreenent with Mo,rgan Guaranty Trust Company of New York (the -Bank). Under the terms of the Revolving' Credit Agreement, the- Bank has agreed to loan the Commission :

up to $50,000,000 to pay the principal and interest (ni maturing revenue -

notes. The revenue notes bear interest at current market rates which have ranged from 4% to 7%, but not to exceed 15%. The bank loan is payable on the Revolving Credit Agreement termination date, September 15, 1985.

-Although the revenue notes mature within one year, the notes have been classified as long-term debt based upon~ the maturity date of the. Bank Revolving Credit . agreement.

Annual maturities of long-term debt outstanding as of September- 30,1982 for the next five years are as follows:

o Fiscal Year 1983 $ 1,205,000' 1984 .81,270,000 1985 43,140,000 1986 1,415,000 1987 1,495,000-NOTE D--PARTICIPATION AGREEMENTS Y

, On June 6, 1980 the Commission entered into a Participation Agreement' with Florida Power and Light Company (FPL) to purchase a 6.08951% undivided'own-ership . interest in St. Lucie Unit No. 2 nuclear. powered electric' generating facility:being constructed by.FPL. This unit is presently' rated at 802 net MW and is anticipated to .lua in commercial operation in 1983. The cost.

to the Commission is currently estimated to be. $89 million.

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 u

' has a 40% interest in a 334 net -MW refuse and coal-fired steam generating

[ unit. (McIntosh Unit No. 3), which began commercial operation September 1,

~1982. 'The remaining construction costs are approximately $4 million.

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= NOTES TO FINANCIAL STATEMENTS--CONTINUED

.ORLANDO UTILITIES COMMISSION NOTE D--PARTICIPATION ~ AGREEMENTS--CONTINUED -

Since 1975, the Commission has owned a 1.6015% undivided interest in Florida Power Corporation's nuclear powered electric generating plant designated Crystal River Unit No. 3. This ownership interest was acquired under the terms of a

' Participation Agreement with Florida Power Corporation and ten other Florida utilities. The Unit is rated at.806 net MW and provides the Commission with

approximately 13 MW of energy.

NOTE E--COMMITMENTS AND CONTINGENT LIABILITIES

1. Deferred charges consist of costs associated with a proposed 415 net FM coal-fired electric generating plant, the Curtis'H. Stanton Energy Center Unit No. 1 (SEC 1).

Millions Engineering fees $12.0 Land 2.7 Contract payments 1.6 Other expenses .9

$17.2

, These costs have been financed by the issuance of revenue notes (See Note C).

The Commission has awarded contracts totaling approximately $166 million in connection with SEC 1. It is estimated that by December 1, 1982 an additional $1 million will have to be paid on the contracts j bringing,the total paid at that time to approximately $2.6 million.

l l The need for this size plant, the zoning and the land use but not the site, has been approved by the necessary regulatory authorities.

l Site certification is expected in early December 1982 or mid-January 1 1983. Since final site approval for the plant has not been obtained,-

consideration has been given to the Commission's cost liability in the event the contracts have to be cancelled. It is estimated that the Commission's cost liability as.of December 1, 1982 will.be approxi-mately $13 million.

t j On April 6, 1982, the Commission adopted a resolution authorizing up to $700,000,000 Water and Electric Revenue Bonds, Series 1982 for the purpose of funding the construction of SEC 1. These bonds were

NOTES TO FINANCIAL STATEMENTS--CONTINUED OP1ANDO UTILITIES COMMISSION NOTE E--COMMITMENTS AND CONTINGENT LIABILITIES--CONTINUED validated by the Orange County Circuit Court on June 14,.1982.

A suit has been instituted by an individual contesting the validation on various grounds. Legal counsel for the Commission believes that the grounds cited are not well founded and expect the validation to be upheld.

2. At September 30, 1982 the Commission had a number of construction contracts in progress estimated to cost approximately $25 million to complete. This includes $4 million for the Commission's 40%

interest in McIntosh Unit No. 3 generating plant built by the City of Lakeland and $17 million for the Commission's interest in St. Lucie Unit No. 2 (see Note D).

3. The Commission is defending a lawsuit brought by a bonding company seeking damages in connection with alleged contractual liability arising out of a construction project on one of the Commission's power plants. Trial has been completed but the court has not ruled.

The maximum liability is estimated at approximately $1,100,000.

Legal counsel for the Commission is of the opinion that this suit is not well founded and that the Commission's counterclaim for

$2,500,000 is well founded although not necessarily fully collectible.

4. The Environmental Protection Agency has proposed to issue a permit for the Commission's Indian River electric generating plant which allows the Commission to utilize at such plant the present cooling system instead of an off-stream cooling water system as originally required by such agency. The issuance of the permit may be subject to further considerations of the Agency. If construction of off-stream cooling facilities were begun now, it is estimated that they would cost in excess of $25,000,000.

5. The Commission has adopted a plan of paying employees having at least two years of employment a portion of their unused sick leave accumulated at the date they terminate or retire. The maximum estimated liability, calculated on the basis of unused sick leave for eligible employees at September 30, 1982 is approximately

$1,105,000. It is the policy of the Commission to record the costs of the plan only as benefits are paid. Benefit payments for the years ended September 30, 1982.and 1981 were $74,759 and $76,754, respectively.

NOTES TO FINANCIAL STATEMENTS--CONTINUED ORLANDO UTILITIES COMMISSIO5

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NOTE E--COMMITMENTS AND CONTINGENT LIABILITIES--CONTINUED

-In.1969, the Orlando Utilities' Commission pledged $480,000 of its en--

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nual revenues in connection with the issuance'by the City of Orlando.

. of $5,500,000 Improvement Revenue . Bonds. This' pledge is for a period of 22 years-from the date of issuance by the City of the Improvement Revenue Bonds'or such longer period as shall be required to pay and retire all principal and interest on said bonds. This lien on the revenues derived from the utilities shall be junior and s,ubordinate-to the lien of holders of any obligations of the Commission' outstand-ing or pari passu obligations hereinaf ter issued for purposes of the Commission, but shall be prior and superior to any lien, pledge.or encumbrance hereafter made of such revenues for any purposes other than said obligations of the Commission for: water or electric purposes.

NOTE F--PENSION PLAN .

The Orlando Utilities Commission has a defined benefit pension plan covering substantially-all employees. The total pension expense for the years-1982 and 1981 was $2,259,311 and $1,893,133, respectively, which includes normal costs plus amortization of past service costs over a period of approximately 30 years.

Accumulated plan benefit information, as estimated by consulting actuaries, and. plan net assets are:

September 1 1982 1981 Actuarial present value of accumulated plan benefits:

Vested. $18,842,725 $16,949,929 Nonvested 782,958 Not available

$19.625.683 Net assets available for benefits $22.404.163 $19.632.920 The-assumed rate of return used-in' determining the actuarial present value of. accumulated plan benefits'was 6% for both 1982 and 1981.

' NOTE G--REGULATION According to existing laws of the State of Florida, the five members of the Orlando Utilities Commission act as the regulatory authority for the establish-ment of electric and water ' rates. The Florida Public Service Commission'(FPSC) has authority to regulate the electric " rate structures" of municipal utilities in Floridai 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.

9 m.-___ ._ m. _ _ . _ _ . _ _ _ _

NOTES TO FINANCIAL. STATEMENTS--CONTINUED-ORLAND0'. UTILITIES' COMMISSION NOTE G--REGULATION--CONTINUED

. Prior to implementation of any rate change,.the Commission 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 Energy Efficiency and Conservation Act has given the.FPSC exclu-sive authority to approve the construction of new power. plants under the Florida Electrical Power Plant Siting Act. The FPSC also exercises jurisdiction under the National Energy Act, including oil and electric use

. conservation programs.

, Fuel Use Act of 1978 - The Commission is subject to . the provisions of' the Fuel Use Act of 1978. Under the original terms of this act the Commission

.is severely restricted in the use of natural gas as a fuel. Effective August- 13, 1981,- the Omnibus Budget Reconciliation Act of 1981 amended the Fuel Use Act. The amendment essentially eliminated the prohibition against burning natural gas, subject to the requirement that the utilities submit conservation plans. The Commission has submitted its plan.to the Department of Energy and anticipates approval for the plan and the burning of natural gas.

Environmental and Other Regulations - Operations of the Commission are 'suoject to environmental regulation by. Federal, State and local authorities and to zoning regulations by local authorities. Federal and State standards and procedures that govern control of the environment can change. These changes can 'arise from continuing legislative, regulatory, and judicial action respecting the standards.and procedures. Therefore, there is no assurance-that the units in operation, under construction, or contemplated will always remain subject to the regulations currently in effect, or will always be in compliance with future regulations.

An-inability to comply with environmental standards <nc 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.

-NOTE H--BUSINESS SEGMENTS The Commission operates in two business segments; the generation, trans-( - mission and . distribution of electricity and the production, treatment, transmission and distribution of water. A summary of the segment information is:

l

m NOTES TO FINANCIAL STATEMENTS--CONTINUED ORLANDO UTILITIES COMMISSION NOTE H -BUSINESS SEGMENTS--CONTINUED Electric Water. Administration Total Year Ended

-September 30, 1982 Operating revenues $145,188,343 .$10,429,269 LS155,617,612 0perating income 20,218,719 2,677,459 . .

22,896,178 Identifiable' assets 438,922,164 57,440,476 $35,031,912' 531,394,552 Depreciation 7,366,245 -1,240,051 .8,606,296 Capital expenditures 45,830,799 4,704,335 50,535,134 Year Ended September 30, 1981 Operating revenues $147,335,228 $10,581,256 $157,916,484 Operating income - 19,814,,510 3,239,069 23,053,579 Identifiable assets 417,628,951 47,872,153 $19,092,006 484,593,110

. Depreciation 6,982,676 1,163,630 8,146,306 Capital expenditures 99,354,942 4,528,177 103,883,119 There were no sa~.es to any single customer in excess of 10% of operating revenues for the years 1982 and-1981.

NOTE I--INCOME TAXES It is the opinion of the Commission and its counsel, that the' Orlando Utilities Commission is exempt from federal and state income taxes.

UTILITIES COMMISSION CITY OF NEW SMYRNA BEACH, FLORIDA GENERAL PURPOSE Financial Statements I

and Auditors' Report SEPTEMBER 30,1982 AND 1981 "EEI#lulW"

J UTILITIES COMMISSION CITY OF NEW SMYRNA BEACH,-FLORIDA FINANCIAL STATEMENTS AND AUDITORS'~ REPORT

. September 30, 1982 and 1981

-0FFICIALS i-Richard M. Canfield, Chairman Paul D. Roche, Vice-Chairman Barbara L. Bidwell, Secretary-Treasurer James A. Pence, Assistant Secretary-Treasurer John J. Hill, Commissioner i

DIRECTOR OF UTILITIES CONTROLLER R. Ronald hagen Valois Pagan, CPA ATTORNEY John F. Bolt, Esquire INDEPENDENT AUDITORS Brent Millikan &.Co., P.A.

Certified Public Accountants L

i

UTILITIES COMMISSION CITY OF NEW SMYRNA BEACH, FLORIDA TABLE OF CONTENTS REFERENCE PAGE INTRODUCTORY SECTION Title Page'................................................ 1 Certificate of Conformance ................................ iii FINANCIAL SECTION AUDITORS' REPORT .......................................... 1 BASIC GENERAL PURPOSE FINANCIAL STATEMENTS:

Compara tive Bal ance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Statement 1 2-3 Statement of Revenues, Expenses and Changes in Retained Earnings ..................................... Statement 2 4 Statement of Changes in Financial Position . . . . . . . . . . . .~. . Statement 3 5-6 Notes to the Firiancial Statements ....................... 7-20 f.

a ii

UTILITIES COMMISSION CITY OF NEW SMYRNA-BEACH, FLORIDA-CERTIFICATE OF CONFORMANCE-for the year ended September 30, 1981 A Certificate of Conformance .is awarded by the Municipal Finance Officers Association of the United States and Canada only to the governmental units whose financial report is judged to conform substantially to the high standards for financial reporting established by the Association.- These standards are contained in publications of the National Council on Governmental Accounting. It is management's belief that the financial statements contained herein continue to conform with these standards.

i S

, nv-e-o-- ,m , -- - ~ ---

erti::1cate of Con:!ormance In Financia.

Reporting Presented to Utilities Commission, City of New Smyrna Beach, Florida For its Comprehensive Annual l

Financial Report for the Fiscal Year Ended September 30,1981 A Certificate of Conformance in Financial Reporting is presented by the Municipal Finance Officers Association of the United States and Canada to govemmental units and public employee retirement systems whose comprehensive annual financial reports (CAFR's) are judged to substantially conform to program standards.

g; g ac. WaA President 5cmwna n

% ...i . .ect.r iii

a

,- A i

. FINANCIAL SECTION.

This'section is composed of the following two' parts:

AUDITORS' REPORT BASIC GENERAL PURPOSE FINANCIAL. STATEMENTS

) .

AUDITORS' REPORT -

)-

l

3-J L_ __ L lJ J . '. , . .

QM!LoL ers wEueEns OF 206 MAGNOUA STREET POST OFF.CE BOX 1226 NEW SMYRNA BEACH. FLORIDA 32069 TELEPHONE (904) 427-1333 PRfvATE COMPANIES PRACTICE SECTION AMElWCAN INSTITUTE OF CPA15 FLORIDA INSTITUTE OF CPAll l Utilities Commission City of New Smyrna Beach, Florida New Smyrna Beach, Florida AUDITORS' REPORT We have examined the balance sheets of the Utilities Commission, City of New Smyrna Beach, Florida, as of September 30, 1982, and 1981, and the related statements of revenues, expenses and changes in retained earnings, and changes in financial position for the years then ended appearing on pages 2 through 20. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

In our opinion, the financial statements referred to above present fairly the financial position of the Utilities Commission, City of New Smyrna Beach, Florida, as of September 30, 1982, and 1981, and the results of its operations and the changes in its financial position for the years then ended in conformity with generally accepted accounting principles applied on a consistent basis.

A _. .

New Smyrna Beach, Florida February 9,1983 1

UTILITIES COMMISSION Stat 2 ment 1 CITY OF NEW SMYRNA BEACH, FLORIDA COMPARATIVE BALANCE SHEETS September 30, 1982 and 1981 ASSETS 1982 1981 UTILITY PLANT:

In Service:

Electric system $22,290,857 -$20,505,788 Water system 8,680,095 6,474,029 Pollution control system 6,789,331 4,301,497 537,760,283 531,281,314 Less: Allowance for depreciation and amortization 11,438,355 10,481,736 526,321,928 320,799,578 Construction work in progress 2,507,348 6,848,554 UTILITY PLANT-NET $28,829,276 $27,648,132 .

RESTRICTED ASSETS:

Debt service funds $ 2,692,583 $ 2,192,090 Renewal and replacement funds 358,492 282,838 Construction funds 7,143,247 3,384,921 Customers' deposits 779,964 648,912 TOTAL RESTRICTED ASSETS $10,974,286 $ 6,508,761 CURRENT ASSETS:

Cash $ 413,496 $ 559,037 Investment 500,000 -

Accounts receivable (net of allowance of $87,063 and $92,219 for doubtful accounts) 877,821 887,895 Unbilled accounts receivable 521,489 655,747 Due from other governments 34,646 538,979 Notes receivable 8,315 3,996 Inventory:

Materials and supplies 580,586 550,193 Fuel oil 392,323 379,352 Prepaid expenses and other assets 31,105 67,889 Accrued interest receivable - other 95,065 23,643 Assessments receivable 145,411 22,171 TOTAL CURRENT ASSETS $ 3,600,257 $ 3,688,902 DEFERRED CHARGES AND OTHER ASSETS:

Unamortized debt expense $ 461,484 $ 333,836 Deferred charges and other assets 42,266 46,570 Loan to the City Library fund 12,000 16,000 Notes receivable - noncurrent 3,903 8,133 Assessments receivable - noncurrent 1,138,843 72,965 TOTAL DEFERRED CHARGES AND OTHER ASSETS $ 1,658,496 $ 477,504 TOTAL ASSETS $45,062,315 $38,323,299 The accompanying notes are an integral part of the financial statements.

s

LIABILITIES AND UTILITY EQUITY 1982 1981 UTILITY ECUITY:

Retainec. Earnings:

Reserved for net restricted assets $ 8,176,177 $ 4,447,022 Unreserved 2,460,364 5,942,101 TOTAL UTILITY EQUITY $10,636,541 $10,389,123 LONG-TERM' DEBT:

Revenue certificates payable (net of current portion) $31,330,000 $25,485,000 Less: Unamortized debt discount 718,153 554,915 TOTAL LONG-TERM DEBT $30,611,847 $24,930,085 DEFERRED CREDIT:

Reserve for nuclear re-fueling and maintenance outage $ 31,402 $ -

CURRENT LIABILITIES:

Accounts payable $ 599,029 $ 641,374 Accrued liabilities 259,582 193,822 Due.to other governments 125,805 107,156 5 984,416 5 942,352 CURRENT LIABILITIES (Payable from restricted assets):

$ 1,743,847 $ 1,147,324

~

. Accounts payable Customers' deposits 709,262 589,415 Revenue certificates payable (current portion) 345,000 325,000-5 2,798,109 5 2,061,739

~

TOTAL CURRENT LIABILITIES $ 3,782,525 $ 3,004,091 TOTAL LIABILITIES $34,425,774 $27,934,176 1.

TOTAL LIABILITIES AND UTILITY EQUITY $45,062,315 .$38,323,299 3

UTILITIES COMMISSION Statement 2 CITY OF NEW SMYRNA BEACH, FLORIDA STATEMENT.0F REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS For the Fiscal Years Ended September 30, 1982 and 1981 1982 1981 OPERATING REVENUES:

Sales $13,644,748 $11,894,457 Other revenues 74,693 91,331 TOTAL OPERATING REVENUES $13,719,441 $11,985,788 OPERATING EXPENSES:

Production expenses $ 7,297,762 $ 5,744,288 Transmission, distribution and collection 1,409,742 1,113,301 Customer accounting 315,595 304,241 Administrative and general 1,739,054 1,612,993 Required payments to the City of New Smyrna Beach 826,719 705,868 State utilities ta,t 84,350 57,196 Depreciation 1,090,243 1,008,326 TOTAL.0PERATING EXRENSES $12,763,465 $10,546,213 OPERATING INCOME $ 955,976 $ 1,439,575 ADD: NON0PERATING REVENUE:

Interest earnings $ 1,111,615 $ 1,010,548 Other income 100,499 222,106 Gain on disposal of fixed assets 6,394 -

TOTAL NON0PERATING REVENUE $ 1,218,508 $ 1,232,654 TOTAL INCOME $ 2,174,484 $ 2,672,229 LESS: NON0PERATING EXPENSES:

Interest and debt expense $ 1,927,066 $ 1,527,731 Loss on retirement of fixed assets - 210,995 TOTAL NON0PERATING EXPENSE $ 1,927,066 $ 1,738,726 NET INCOME $ 247,418 $ 933,503

)

9,455,620 RETAINED EARNINGS - Beginning of year 10,389,123

! RETAINED EARNINGS - End of year $1Qa6]Q,541 $19a]@912] 3 f

The accompanying notes are an integral part of the financial statements.

4

UTILITIES COMMISSION Statement 3 CITY OF NEW SMYRNA BEACH, FLORIDA- Page 1 of 2 STATEMENT OF CHANGES IN FINANCIAL POSITION For the Fiscal Years Ended September 30, 1982 and 1981

~1982 1981

' SOURCES OF WORKING CAPITAL:

. Operations:

Net income $- 247,418 $ 933,503 Items not requiring working . capital: .

. Depreciation and amortization 1,189,024 1,086,631 Unfunded nuclear re-fuel and outage . reserve 31,402- -

(Gain) Loss on retirement of utility plant- (- 6,394) 210,995 TOTAL FROM OPERATIONS $ 1,461,450 $ 2,231,129 Proceeds from' sale of revenue certificates- 6,190,000 -

Contributions in aid of' construction 2,731,377 3,931',424 Decraase in restricted assets:-

Construction funds -

4,029,103 Increase in other liabilities payable from restricted assets .

716,370 326,784 Proceeds from sale of utility; plant.. .6,394 6,406 Decrease in'other assets 8,304 4,000 TOTAL SOURCES OF WORKING CAPITAL $11,113,895 $10,528,846 USES OF WORKING CAPITAL:

Additions to utility plant $ 5,090,354 $ 9,509,131

Increase in. restricted assets:

Debt service funds .500,493 24,538 Renewal and-replacement funds 75,654 106,371 Construction funds 3,758,326 --

Customers' deposits 131,052 283,482 Increase in noncurrent receivables 1,061,648 78,925 Reduction of long-term debt- 325,000 -

Increase in unamortized revenue bond discount and debt issue costs 302,077 -

-Increase in deferred charge ' -

160 luTAL USES OF WORKING CAPITAL $11,244,604 $10,002,607

)-

NET INCREASE (DECREASE) IN WORKING CAPITAL }{_,Q,ZQ2)),,_jgg,g}g

          -The accompanying notes are an integral part of the financial statements.

5

UTILITIES COMMISSION Statement 3 CITY OF NEW SMYRNA BEACH, FLORIDA Page 2 of 2 STATEMENT OF CHANGES IN FINANCIAL POSITION For the Fiscal Years Ended September 30, 1982 and 1981 1982 1981 Increase Increase (Decrease) (Decrease) ELEMENTS OF NET INCREASE (DECREASE) IN WORKING CAPITAL: Cash $( 145,541) $ 108,454 Investments 500,000 - Accounts receivable (net) ( 10,074) ( 181,508) Unbilled accounts receivable ( 134,258) 154,723 Notes receivable 4,319 939 Inventory 43,364 58,310 Prepaid expenses ( 36,784) ( 6,174) Accrued interest receivable 71,422 - 23,643 Assessments receivable (current) 123,240 6,842 Due from other governments ( 504,333) 157,158 Cash overdrafts - 354,605 Accounts payable 42,345 ( 55,517) Accrued liabilities ( 65,760) ( 103,605) Due to other governments ( 18,649) 8,369 NET INCREASE IDECREASE) IN WORKING CAPITAL ${,_1}0,Z02)$__=52Q,2}2 Financing and Investing Activities not Affecting Working Capital: 1981 Decrease in deferred charges of $35,625 and a corresponding decrease of $35,625 in deferred liabilities. The accompanying notes are an integral part of the financial statements. 6

NOTES TO THE FINANCIAL STATEMENTS

l UTILITIES COMMISSION CITY OF NEW SMYRNA BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS September 30, 1982 Page 1 of 14

1.

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the Utilities Comission conform to the generally accepted accounting principles as promulgated by the American Institute of Certified Public Accountants, the Financial Accounting Standards Board, the Federal Energy Regulatory Comission, and the National Council on Governmental Accounting. The following is a summary of the significant policies: A. Reporting Entity The Utilities Commission, City of New Smyrna Beach, Florida, was created in 1967 through the passage of Chapter 67-1754, Laws of Florida, Special Acts of 1967 ~(House Bill 1669) which amended the Charter of the City of New Smyrna Beach, Florida, to create the Utilities Commission,-City of New Smyrna Beach. The special act was approved by a referendum vote of the people. Pursuant to Chapter 67-1754, the Commission has full and exclusive authority to the extent permitted by law over the management, operation and control of the City's electric, water and pollution control utilities system. B. Fund Accounting On May 28, 1975, the Utilities Commission, City of New Smyrna Beach, Florida, passed Resolution Number 16-75, which established the electric, wate'/ and pollution control systems as a single utility fund. This utility fund is accounted for as an enterprise fund. Enterprise funds are used to account for operations that are financed and operated in a manner where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges. C. Basis of Accounting Basis of accounting refers to when revenues and expenses are recognized in the - accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied. The Utilities Commission, City of New Smyrna- Beach, utilizes the accrual basis of accounting. By utilizing this method, revenues are recognized when they are earned, and expenses are recognized as 'they are incurred. Unbilled electric, wt.ter and polluticn control utility service receivables are recorded at year end so as to provide a better matching of service revenues and the costs of providing the service. 4 D. Budget and Budgetary Accounting ' An annual budget was adopted for the electric, water and pollution control utility systems. The budget was prepared on the accrual basis for the period beginning October 1, and ending September 30. By use of the accrual method of budgeting, revenues and expenses are budgeted for specific periods of time and are recorded as incurred, along with acquired assets, without regard to the date of receipts, or payment of cash. Budget appropriations are prepared by the administrative staff and authorized by resolution by the Utilities Commission. Budgetary control is exercised at the departmental level. During the fiscal year ended September 30, 1982, the Utilities Commission, City of 7

UTILITIES COMMISSION CITY OF NEW SMYRNA BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS September 30, 1982 Page 2 of 14

1.

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES: (continued) New Smyrna Beach, did not incur any operating expenses in excess of authorized appropriations. E. Utility Plant Utility plant is stated at original cost. The costs of additions, replacements, and renewals of units of property are added to utility plant. The cost (estimated, if not known) of units of property retired, less net salvage, is charged to accumulated depreciation and the appropriate asset account. Maintenance and repairs of property and replacements and renewals of items determined to be less than units of property, are charged to operating expenses--maintenance. Depreciation is provided for by utilization of the straight-line method calculated on a service-life basis to amortize the cost over the assets' economic estimated useful lives which are as follows: Electric System: Production plant: Steam production 20-35 years Nuclear production 22 years Diesel production 25-35 years Transmission plant 24-33 years Distribution plant: Underground conduit 60 years Other distribution plant 19-33 years General plant: Structures and improvements 50 years Other general plant 10-36 years Water System: Source of supply plant 50 years Pumping plant 25-33 years Water treatment plant 50 years Transmission and distribution plant: Transmission and distribution plant 50-67 years Meters and meter installations 25 years General plant: Structures and improvements 50 years Other general plant 6-25 years Pollution Control System: Collection plant 25-50 years Pumping plant: Structures and improvements 50 years Pumping equipment 25 years Treatment and disposal plant 25 years General plant 10-12 years 8

UTILITIES COMMISSION CITY OF NEW SMYRNA BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS September 30, 1982 Page 3 of 14

1.

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES: (continued) Depreciation expense for the year, net of amortization of contributed capital of $196,628 and $37,930 in 1982, and 1981, was as follows: Year Ended 9-30-82 9-30-81 Electric system $ 820,847 $ 762,319 Water system 159,216 134,598 Pollution control 110,180 111,409 TOTAL DEPRECIATION EXPENSE }},ggggggg }},QQQ3??Q F. Capitalized Interest It is the policy of the Utilities Commission to capitalize construction period interest in accordance with Financial Accounting Standards Board Opinion No.

34. During the year, interest and debt expense totaling $2,107,692 was incurred by the Utilities Commission of which $180,626 was appropriately capitalized as construction period interest.

G. Contributions in Aid of Construction Contributions in aid of electric plant construction have been credited to the electric plant accounts in accordance with accepted industry practice established by the Federal Energy Regulatory Commission (formerly the Federal PowerCommission). Water and pollution control contributions in aid of construction, including connection fees and tap charges, are also treated as reductions to plant accounts. The following is a summary of the contributions credited to the fixed asset accounts: Contributions Original In Aid of Net Cost Construction Cost Utility Plant in Service Electric $22,555,018 $ 264,161 $22,290,857 Water 10,262,954 1,582,859 8,680,095 Pollution control 15,637,949 8,848,618 6,789,331 548,455,921 $10,695,638 537,760,283 Construction Work in Progress Electric $ 2,140,834 $ - $ 2,140,834 Water 270,559 -

                                                                                                               -      270,559 Pollution control                                                 95,955              -       95,955
                                                                                     $ 2,507,348 $             -  5 2,507,348 GRAND TOTAL                                               jgg,ggggggg }}Q,ggg,ggg jgggggZ,gg}

H. Investments Investments are stated at amortized cost. 9

        - - - - - _ _ _ .          _ _ _ _ _ - _ _ __                                                                            \

_ . .- -- - - . - -. . . _ . . ._.n. . _ - - . - - .

UTILITIES COMMISSION CITY OF NEW SMYRNA BEACH, FLORIDA 5 NOTES T0'THE FINANCIAL STATEMENTS September- 30, 1982 Page 4 of-14 l 1.

SUMMARY

0F SIGNIFICANT ACCOUNTING POLICIES: (continued)- I. Inventory .. . _ The inventory is priced at cost by the. use- of the "first-in, first-out"' method L of_ accounting._

                          ' Electric line' transformers, electric meters, water meters a'nd replacement units for.the steam and diesel generating plants are classified as utility 4

plant in accordance with accepted industry practices set forth by the-National Association of Regulatory Utility Comissions. i

                    .J.        Unamortized Debt Discount and Issue Costs Bond -issue costs relating. to the issuance of Utilities Systems Revenue Refunding and Improvement Certificates,' Series 1978, and Series 1982, are 1-                          being amortized using the bonds outstanding method.

4 K. Rates ~, Revenues and Fuel Expenses _ Revenues- are recognized based on monthly cycle billings to customers. The i- rate schedules are approved bylthe Utilities Commission. The electric rate schedule contains a fuel-adjustment clause which reflects-the cost of fuel as

well .as the energy and fuel components of purchased power. Generally, the effects are reflected in customer billings about two months after the charges

[- occur. .The cost of. nuclear 1 fuel is amortized to fuel expense based on the

quantity of heat produced for generation of electric energy in relation to the -

1 quantity of heat expected to be produced over the life of the nuclear-fuel core.  : L. Reserves b Funded- reserves are used to record.a portion of retained earnings which must be segregated for some future use and which are, therefore, not available for further appropriation or expenditure. The~ reserve for nuclear re-fueling and maintenance outage is an unfunded: reserve established'to account for the estimated charges to be incurred for the removal and installation of nuclear fuel assemblies.- Charges are made against the reserve at the-time the actual re-fueling takes place. M. Compensated Onployee Absences Accumulated unpaid vacation and other employee benefit amounts, except for sick pay,'are accrued when the expense is incurred.. The commitment .for accumulated ~ unpaid sick pay is not recorded as incurred since the Commission does not provide for the employees' vesting of accumulated sick pay benefits.

2. LONG-TERM' DEBT On August 29, 1978, the Utilities Commission provided for the advance refunding of the following revenue certificates / bonds which will be referred to-thereafter as refunded revenue bonds:

10

                                                ,7 m

UTILITIES COMMISSION s CITY OF NEW SMYRNA BEACH, FLORIDA 1 NOTES T0 THE FINANCIAL STATEMENTS S:ptember 30, 1982 Page 5-of 14

2. LONG'-TERM DEBT: (continued)

Watierworks and Electric: Series 1955 - 3.75% due serially to 1993 Series 1962 refunding - 3.5% due serially to 1987 and $35,000 in 1999 Series 1962 - 3.9% to 4.2% due serially to 2000 Series 1965 - 4.2% and 4.25% due serially to 2004 Sewer: Series S - 1963 - 3.9% due serially to 2002 - Series T.- 1963 - 4.0% due in 2003 Series B - 1965 - 3.7% to 4.1% due serially to 2003 Utilities: Series 1975 - 3.75% to 6.2% due serially to 2004 Series 1975A - 5.0% to 6.6% due-serially to 2005 Series 1976 - 4.5% to 5.3% due serially to 1986 Water and Sewer Revenue General Obligation Bonds: Series 1976 - 4.5% to 6.2% due serially to 2001 The refunding of the refunded revenue bonds was provided for by the sale of

     $25,810,000 Utilities System Revenue- Refunding and Improvement Certificates.-

Series 1978 (1978 Certificates) and $22,335,000'Special Obligation Certificates, Series 1978. From the proceeris of the sale of the two issues, sufficient monies were' deposited into an irrevocable escrow account to be invested in Unitsd States obligations that, together 'with the interest earned thereon, will provide sufficient, funds . for the payment of maturin9 principal and ~ interest on the 1978 Certificates and the $22,335,000 Special 05 ligation Certificates, Series' 1978. The proceeds-of the bond sale also provided for the funding of the reserve funds, an amount which equaled the maximum annual debt service requirement and provided over six million dollars for the acquisition, construction, additions and ! improvements to the utility system. In accordance with generally accepted accounting principles the $22,335,000 Special Obligation Certificates, Series 1978, which were issued as a part of the advance refunding are not-a . liability of the Utilities Commission because the interest and orincipal payments will be serviced by the First National Bank of Florida, Tampa, Florida, from the earnings an'd ~ proceeds of the advance refunding which were placed in irrevocable trust funds. In May, 1982, the Utilities Commission issued $6,190,000 of Utilities System Revenue' Improvements Certificates, Series 1982c (1982 Certificates) to provide the financing for improvements to the' electric, water and collutioq control systems. -The 1982 x CerMficates rank on a parity with the 1978 Certificates and any additionalfparitytobligations which may be subsequently issued.

                              . ~ , . .

The authorization for the:1978 Certificates and the 1982 Certificates provides that the Utilities Commission will not issue additional obligations except for - the construction and acquisition of additions, extensions and improvements to the system or for refunding purposes and except upon the condit)om provided in the authorizing resolution. 1s

                                             ~,

a --

                      .                          +

                            .':                                                                                      l n                                                                                             ,

UTILITIES COMMISSION I CITY OF.NEW SMYRNA BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS S ptember 30, 1982 Page 6 of 14

2. LONG-TERM DEBT: (continued)

The 1978 Certificates'and the 1982 Certificates are payable _from and . secured by a

 ~

first lien upon and pledge of the net revenues derived from the operation of the system. The 1978' Certificates and the 1982 Certificates do not constitute-general indebtedness of the Commission or the City within the meaning of any constitutiona? or statutory provision or limitation, and the City is not s obligated to levy any taxes for the payment thereof.

                    'The 1978 Certificates and the 1982 Certificates were issued as coupon bonds, in the denominatifon of $5,000 each, registrable as to principal only. Semi-annual 3"                   , principal and interest (April 1 and October 1) are payable at the principal office of the First National             Bank of Florida , Tampa, Florida.           The 1978
                   - Certificates and 1987. Certificates are subject to redemption prior to maturity, commencing October' 1, 1988, and April 1, 1992, respectively.                       The 1978 1

Certificates consisted of $5,400,G00 in 5.35% to 6.40% serial bonds maturing in

      "              various amounts from April 1,1982, through October 1, 1993; $9,075,000 in 7.00%

term certificates due October 1, 2003, and $11,335,000 in 7.125% term The 1982 Certificates consisted of $6,190,000 certificates due October 1, 2010. in 12.625% serial bonds maturing in various amounts from-April 1, 2012 through April 1, 2016.

                    .Under the terms .of the long-term debt agreements, the Utilities Commission has
   %                " agreed to maintain certain restricted funds (see Note 3) and to comply with the covenants contained in such agreements. Certain of these agreements contain the

{ollowing provision ~ relating to the rights of the obligation holder:

                             "Any holdere of; certificates or any coupons appertaining thereto issued under the provision hereof or any trustee acting for the
               ~

holders 'of such ' certificates may by suit, action, mandamus or other proceedings in any court of competent jurisdiction, protect and enforde anf and all rights, including the right to the appointment of a receiver',' existing under the laws of the State of Florida, or granted and' contained herein, and may enforce and compel the performance of all duties herein requi red or by any applicable statutes to be performed by the Commission or by any officer thereof. Nothing herein, however, shall be construed to grant to any holder of tne certificates any lien on any real property of the Commission or the City." Revenue ce'r{ificates/ bonds outstanding at September 30, 1982, and 1981, are as N follows: _S s A'.' Quasi-defeased debt funded from the earnings and proceeds of the advance refunding: -

           "+.
               ~                                                12 X        ..                     _    --    -_     _ -       --
                                                                                                  ._.- ~      __   _

_m

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UTILITIES COMMISSION CITY OF NEW SMYRNA BEACH, FLORIDA - NOTES TO THE FINANCIAL STATEMENTS September 30, 1982 Page 7 of 14

2. LONG-TERM DEBT: (continued)

Balances Due at , 9-30-82 9-30-81 u Waterworks and Electric: (000 omitted) L Series 1955 - 3.75% due 1993 - Outstanding principal $ 1,002 $ 1,031 Less amounts to be retired by Trustee (1,002) $ _(1,031) $ Series 1962 Refunding - 3.5% due serially to 1987 and $35,000 in 1999 Outstanding principal

                                                                                                      ~
                                                       $    358                 $    428 Less amounts to be retired by Trustee      ( 358) ,$'            ( 428)   $             ..

Series 1962 - 3.9% to 4.2% due ' serially to 2000 Outstanding principal $ 1,970 $ 2,005 Less amounts to be retired by Trustee (1,970) $ , (2,005) $ Series 1965 - 4.2% and 4.25% due serially to 2004 Outstanding principal $ 2,060 $ 2,085 i Less amounts to be retire'd by Trustee (2,060) $ (2,085) $ Sewer: Series S - 1963 - 3.9% due l serially to 2002 Outstanding principal $< 435 $ 450 . Less amounts to be retired by Trustee ( 435) $ ( 450) $ } Se' ries T - 1963 - 4.0% due 2003 Outstanding principal $ 978 $ 1,008 . Less amounts to be retired by Trustee ( 978) $ (1,008) $ Series B - 1965 - 3.7% to 4.1% due serially to 2003 BPN Outstanding principal $ 545 $ 560 Less amour.ts to be retired by Trustee ( 545) $ ( 560) $ e Utilities. Series 1975 - 3.75% to 6.2% due serially to 2004 Outstanding _ principal $ 2,780 , $ 2,830 Less anounts to be retired by Trustee (2,780) $ (2,830) $ > Series 1975A - 5.0% to 6.6% due serially to 2005 Outstanding principal $ 3,690 $ 3,775 Less amounts to be retired by Trustee (3,690) $ (3,775) $ Series 1976 - 4.5% to 5.3% due serially to 1986 Outstanding principal $ 260 $ 340 Less amounts to be retired by Trustee ( 260) $ ( 340) $ 13

UTILITIES COMMISSION CITY OF NEW SMYRNA BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS September 30, 1982 Page 8 of 14

2. LONG-TERM DEBT: (continued)

Balances Due at 9-30-82 9-30-81 Water and Sewer Revenue General (000 omitted) Obligation Bonds:

              ~ Series 1974 - 7.2% to 7.5% due serially to 2004 Outstanding principal                    $ 5,975                 $ 6,090 Less amounts to be retired by Trustee      (5,975)   $        (6,090)   $                   Series 1976 - 4.5% to 6.2% due serially to 2001
      ,           Outstanding principal                    $ 5,975                 $ 6,090 Less amounts to be retired by Trustee      (5,975)   $        (6,090) $                    TOTAL                                                ),;Q;                  j,;Q; B. Long-term debt to be     financed from revenues derived from the operation of the utilities systems.

Balances Due at 9-30-82 9-30-81 Utilities System Revenue Refunding and (000 omitted) Improvement Certificates, Series 1978: Outstanding principal $25,485 $25,810 Utilities System Revenue Improvement Certificates, Series 1982: Outstanding principal 6,190 - TOTAL }}},QZQ jgg,Qlg The current maturities of long-term debt at September 30, were as follows: September 30, 1982 1981 Utilities System Revenue Refunding and Improvement Certificates, Series 1978 $345,000 $325,000 Utilities System Revenue Improvement Certificates, Series 1982 - - TOTAL $]$5,QQQ $]?!,QQQ The schedule of debt service requirements to maturity on the $25,810,000 Utilities System Revenue Refunding and Improvement Certificates, Series 1978, is as follows: Payment Coupon Total Date Principal Rate Interest Requirements 04-1-83 $ 170,000 5.450% $ 874,339 $ 1,044,339 10-1-83 175,000 5.450 869,707 1,044,707 04-1-84 175,000 5.550 864,938 1,039,938 10-1-84 180,000 5.550 860,082 1,040,082 14

UTILITIES COMMISSION CITY OF NEW SMYRNA BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS September 30, 1982 Page 9 of 14

2. LONG-TERM DEBT: (continued) e Payment Coupon Total Date Principal Rate Interest Requirements 04-1-85 $ 185,000 5.650% $ 855,087 $ 1,040,087 10-1-85 195,000 5.650 849,861 1,044,861 04-1-86 200,000 5.750 844,352 1,044,352 10-1-86 205,000 5.750 838,602 1,043,602 04-1-87 210,000 5.900 832,708 1,042,'08 10-1-87 215,000 5.900 826,513 1,041,513 04-1-88 220,000 6.000 820,171 1,040,171 10-1-88 230,000 6.000 813,571 1,043,571 04-1-89 235,000 6.100 806,671 1,041,671 10-1-89 245,000 6.100 799,503 1,044,503 04-1-90 250,000 6.200 792,031 1,042,031 10-1-90 260,000 6.200 784,281 1,044,281 04-1-91 265,000 6.300 776,221 1,041,221 10-1-91 275,000 6.300 767,873 1,042,873 04-1-92 285,000 6.350 759,211 1,044,211 10-1-92 290,000 6.350 750,162 1,040,162 04-1-93 300,000 6.400 740,954 1,040,954 10-1-93 310,000 6.400 731,354 1,041,354 04-1-94 320,000 7.000 721,434 1,041,434 10-1-94 130,000 7.000 710,234 1,040,234 04-1-95 345,000 7.000 698,684 1,043,684 10-1-95 355,000 7.000 686,609 1,041,609 04-1-96 370,000 7.000 674,184 1,044,184 10-1-96 380,000 7.000 661,234 1,041,234 04-1-97 395,000 7.000 647,934 1,042,934 10-1-97 410,000 7.000 634,109 1,044,109

04-1-98 425,000 7.000 619,759 1,044,759 10-1-98 435,000 7.000 604,884 1,039,884 04-1-99 455,000 7.000 589,659 1,044,659 10-1-99 470,000 7.000 573,734 1,043,734 04-1-00 485,000 7.000 557,284 1,042,284 10-1-00 500,000 7.000 540.309 1,040,309 04-1-01 520,000 7.000 522,809 1,042,809 10-1-01 540,000 7.000 504,609 1,044,609 04-1-02 555,000 7.000 485,709 1,040,709 10-1-02 575,000 7.000 466,285 1,041,285 04-1-03 595,000 7.000 446,160 1,041,160 10-1-03 615,000 7.000 425,335 1,040,335 - 04-1-04 640,000 7.125 403,810 1,043,810 10-1-04 660,000 7.125 381,010 1,041,010 04-1-05 685,000 7.125 357,497 1,042,497 10-1-05 710,000 7.125 333,094 1,043,094 04-1-06 735,000 7.125 307,800 1,042,800 10-1-06 760,000 7.125 281,616 1,041,616 04-1-07 790,000 7.125 254,541 1,044,541 10-1-07 815,000 7.125 226,397 1,041,397 04-1-08 845,000 7.125 197,363 1,042,363 15 l

UTILITIES COMMISSION CITY OF NEW SMYRNA BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS September 30, 1982 Page 10 of 14

2. LONG-TERM DEBT: (continued)

Payment Coupon Total Date Principal Rate Interest Requirements 10-1-08 $ 875,000 7.125 $ 167,259 $ 1,042,259 04-1-09 905,000 7.125 136,088 1,041,088 10-1-09 940,000 7.125 103,847 1,043,847 04-1-10 970,000 7.125 70,359 1,040,359 10-1-10 1,005,000 35,803 1,040,803 TOTAL $gQ33QQ3QQQ }}[3QQ53Q}$ $[Q3}ZQ3Q}{ The schedule of debt service requirements to maturity on the $6,190,000 Utilities System Revenue Improvement Certificates, Series 1982, is as follows: Payment Coupon Total Date Principal Rate Interest Requirements 04-1-83 $ - 12.625% $ 390,744 $ 390,744 10-1-83 - 12.625% 390,744 390,744 04-1-84 - 12.625% 390,744 390,744 10-1-84 - 12.625% 390,744 390,744 04-1-85 - 12.625% 390,744 390,744 10-1-85 - 12.625% 390,744 390,744 04-1-86 - 12.625% 390,744 390,744 10-1-86 - 12.625% 390,744 390,744 04-1-87 - 12.625% 390,744 390,744 10-1-87 - 12.625% 390,744 390,744 04-1-88 - 12.625% 390,744 390,744 10-1-88 - 12.625% 390,744 390,744 04-1-89 - 12.625% 390,744 390,744 10-1-89 - 12.625% 390,744 390,744 04-1-90 - 12.625% 390,744 390,744 10-1-90 - 12.625% 390,744 390,744 04-1-91 - 12.625% 390,744 390,744 10-1-91 - 12.625% 390,744 390,744 04-1-92 - 12.625% 390,744 390,744 10-1-92 - 12.625% 390,744 390,744 04-1-93 - 12.625% 390,744 390,744 10-1-93 - 12.625% 390,744 390,744 04-1-94 - 12.625% 390,744 390,744 10-1-94 - 12.625% 390,744 390,744 04-1-95 - 12.625% 390,744 390,744 10-1-95 - 12.625% 390,744 390,744 04-1-96 - 12.625% 390,744 390,744 10-1-96 - 12.625% 390,744 390,744 04-1-97 - 12.625% 390,744 390,744 10-1-97 - 12.625% 390,744 390,744 04-1-98 - 12.625% 390,744 390,744 10-1-98 - 12.625% 390,744 390,744 04-1-99 - 12.625% 390,744 390,744 l l 16

UTILITIES COMMISSION CITY OF NEW SMYRNA BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS September 30, 1982 Page 11 of 14

2. LONG-TERM DEBT: (continued)

Payment Coupon Total Date Principal Rate Interest Requirements 10-1-99 $ - 12.625% $ 390,744 $ 390,744 04-1-00 - 12.625% 390,744 390,744 10-1-00 - 12.625% 390,744 390,744 04-1-01 - 12.625% 390,744 390,744 10-1-01 - 12.625% 390,744 390,744 04-1-02 - 12.625% 390,744 390,744 10-1-02 - 12.625% 390,744 390,744 04-1-03 - 12.625% 390,744 390,744 10-1-03 - 12.625% 390,744 390,744 04-1-04 - 12.625% 390,744 390,744 10-1-04 - 12.625% 390,744 390,744 04-1-05 - 12.625% 390,744 390,744 10-1-05 - 12.625% 390,744 390,744 04-1-06 - 12.625% 390,744 390,744 10-1-06 - 12.625% 390,744 390,744 04-1-07 - 12.625% 390,744 390,744 10-1-07 - 12.625% 390,744 390,744 04-1-08 - 12.625% 390,744 390,744 10-1-08 - 12.625% 390,744 390,744 04-1-09 - 12.625% 390,744 390,744 10-1-09 - 12.625% 390,744 390,744 04-1-10 - 12.625% 390,744 390,744 10-1-10 - 12.625% 390,744 390,744 04-1-11 - 12.625% 390,744 390,744 10-1-11 - 12.625% 390,744 390,744 04-1-12 960,000 12.625% 390,744 1,350,744 10-1-12 - 12.625% 330,144 330,144 04-1-13 1,085,000 12.625% 330,144 1,415,144 10-1-13 - 12.625% 261,653 261,653 04-1-14 1,220,000 12.625% 261,653 1,481,653 10-1-14 - 12.625% 184,641 184,641 04-1-15 1,375,000 12.625% 184,640 1,559,640 10-1-15 - 12.625% 97,844 97,844 04-1-16 1,550,000 12.625% 97,844 1,647,844 TOTAL $Q,12Q,yQQ $26,QQ2,352 $)Q,222,$52 The aggregate annual debt service requirements for the certificates in each of the next five years are as follows: 1 1983 $2,87,0,534 1984 2,861,503 1985 2,866,436 1986 2,869,442 1987 2,865,709 17

UTILITIES COMMISSION CITY OF NEW SMYRNA BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS September 30, 1982 Page 12 of 14

3. RESTRICTED ASSETS Restricted assets consist of the following:

September 30, 1982 Accrued September Interest 30, 1981 Cash Investment Receivable Total Total Utilities System Revenue Refunding and Improvement Certificates, Series 1978 Fund: Sinking fund $ 31,025 $ -

                                                                                       $    31,025 $     31,036 Reserve fund                               20,077    2,580,898     53,531    2,654,506 2,161,054 Renewal and replacement fund                        153,842       200,000     4,650      358,492     282,838 Construction fund                         112,223     1,988,092    40,391    2,140,706 3,384,921
                                                  $   317,167 $ 4,768,990 $ 98,572 $ 5,184,729 $5,859,849 Utilities System Revenue Improvement Certificates, Series 1982 Fund:

Sinking fund $ 7,052 $ -

                                                                            $       - $      7,052 $          -

Construction fund 34,497 4,800,000 168,044 5,002,541 -

                                                  $    41,549 $ 4,800,000 $168,044 S 5,009,593 $              -

Customers' deposits $ 39,163 $ 702,554 $ 38,247 $ 779,964 $ 648,912 TOTAL RESTRICTED ASSETS $ _ gg?,gZg $}Q,g?},ggj $ggggggg $lg,glg,ggg $g,ggg3?g}

4. REQUIRED PAYMENT TO THE CITY OF NEW SMYRNA BEACH, FLORIDA The legislation that created the Utilities Commission requires the Commission to pay to the general fund of the City of New Smyrna Beach, Florida, a sum equal to six percent (6%) of the gross revenues from utilities under Commission control.

This payment is subordinate to the debt service requirement of all utilities revenue certificates. Amounts paid to the City totaled $826,719 and $705,868 for the years ended September 30, 1982, and 1981, respectively.

5. SEGMENT INFORMATION The Utilities Commission provides electric, water and pollution control services to the public. In accordance with NCGA Interpretation No. 2, the following is a summary of the segment information for the electric, water and pollution control systems.

18

UTILITIES C0W41SSION CITY OF NEW SMYRNA BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS September 30, 1982 Page 13 of 14

5. SEGMENT INFORMATION: (continued)

Pollution Electric Water Control System System System Total Operating revenue $11,152,100 $1,456,125 $1,111,216 $13,719,441 Depreciation 820,847 159,216 110,180 1,090,243 Operating income 793,051 121,084 41,841 955,976 Required payments to City of New Smyrna Beach 673,927 85,551 67,241 826,719 Net income (loss) 249,124 ( 63,855) 62,149 247,418 Contributions in aid of construction 264,161 1,582,859 8,848,618 10,695,638 Utility plant acquisitions 2,997,232 940,775 1,152,347 5,090,354 Utility plant retirements 20,058 67,306 133,850 221,214 Revenue certificates payable 15,076,297 9,840,026 6,758,677 31,675,000 Utility Equity 5,188,228 3,262,049 2,186,264 10,636,541

6. EMPLOYEES' PENSION PLAN The Utilities Commission, City of New Smyrna Beach, Florida, has provided a pension plan for all its employees which assets are included in the Florida Retirement System of the State of Florida. The funding methods and determination of benefits payable are provided in the various acts of the Florida Legislature, which created the fund, including subsequent amendments thereto. In previous years, these acts provided, in general, that funds were to be accumulated from employee contributions, employer contributions and income from the investment of accumulated funds. Subsequent amendments require that the plan be non-contributory for the employees. The act also provides that, should the accumulated funds in the fund at any time be insufficient to meet and pay the benefits due, the Commission shall supplement the funds by an appropriation from current funds, or from any revenues which may lawfully be used for said purposes, in an amount sufficient to make up the deficiency.

The actual contributions and contribution rates in effect for the year ended September 30, 1982, were as follows: Employer's contributions $277,786 Regular Special Risk Employees Employees Percent of employee's gross ' earnings Normal cost 6.17% 9.82% Past service cost 4.76 4.09 TOTAL }Q2}} 3 }}32}} 19

1 l UTILITIES COMMISSION CITY OF NEW SMYRNA BEACH, FLORIDA NOTES TO THE FINANCIAL STATEMENTS September 30, 1982 Page 14 of 14

6. EMPLOYEES' PENSION PLAN: (continued)

The most recent actuarial information concerning the statewide Florida Retirement System is set forth below: Most recent valuation date July 1, 1980 Actuarial cost method used Entry age-normal cost Unfunded prior service cost $4,323,005,000 Period of amortization 30 years Interest rate used in determining costs 8.5% Total assets of pension fund $3,867,514,000 Valuation basis of assets Bonds - amortized cost Stocks - market value

7. COMPENSATED EMPLOYEE ABSENCES It is the Utilities Commission's policy to grant employees annual vacation leave and compensated sick leave. As of September 30, 1982, the Utilities Commission had a potential commitment for accumulated sick pay benefits of $355,466 and has accrued $91,547 for unused annual vacation leave benefits earned by employees.

8. LEGAL MATTERS The Utilities Commission is engaged in routine litigation incidental to the conduct of its municipal utilities affairs. In the opinion of the Counsel to the Commission, no legal proceedings are pending against the Commission not covered by insurance which would inhibit the Commission's ability to perform its operations or materially affect its financial condition.

9. CGMMITMENTS Construction Work in Progress: As of September 30, 1982, approximately S1,905,000 of construction work in progress consisted of the costs associated with the new diesel fuel generation at Swoope Number Two. Costs associated with the expansion and upgrading of the current water system were approximately

        $174,000 for water mains and te South Berkshire pumping station storage reservoir. As a result of these construction activities, the Utilities Commission has unrecognized construction contract commitments of approximately
        $2,184,000 (water), $282,000 (electric) and $137,940 (pollution control) of which $24,797 are reimbursable by E.P.A. for pollution control.

t J 20

                                                                    ~~~~ ~ ~

Coo 3ers

            &Ly3 rand

~ r L Board of Trustees Seminole Electric Cooperative, Inc.: We have examined the balance sheets of Seminole Electric Cooperative, Inc. as of December 31, 1982 and 1981, and the related statements of revenue and expenses, changes in patronage capital and other margins and equities (deficits), and changes in financial position for the years then ended. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tescs of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the financial statements referred to above present fairly the financial position of Seminole Electric Cooperative, Inc. as of December 31, 1982 and 1981, and the results of its operations and the changes in its financial position for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis. CWW L p b Tampa, Florida March 4, 1983 f 1

u _ - e .. . -.

  ~

C0NTENTS Pages E Accountants' Report 1 , Financial Statements: Balance Sheets 2 Statements of Revenue and Expenses 3 Statements of Changes in Patronage Capital and Other Margins and Equities (Deficits) 4 Statements of Changes in Financial Position 5 Notes to Financial Statements 6-14 E l m F NM E M

  ~

b b M --__--

                                                                                                                                                ...o           -- - - -
                                                                                                                                                                        ;e I

i

                                                                                                                                                                             .)

SFMINnLE ELECTRIC ConPERATIVE, INC. l BALANCE SHEETS, December- 31, 1982 and 1981 ' l l Assets 4942 1981 EQuirT AND LIABILITIES 1982 1981 Utility plant, at original cast: Equity plant in service $ 69,592,765 $ 12,302,625 Const ruc t ion work in progrees 60A 206,898 366.569,553 677,799,66) 378,A72,478 Memberships $ 1,200 $ I 200 Lese accumulated depreciation (2,095,092) (l.598,236) patronage capital 686,237 686,237 Acquisit ion adjustment, less amortisation 438,438 459,803 Other margins and equities (deficite) (299,343) (12,293) Donated capital 17,919 17,919 676,143,009 377,740,743 Nuc lear f eel, tese amort isation 514,763 827,724 Total equity 336,083 623.063 Nuclear fuel in process of refinement and enrichment 1,031,42A 908,516 Lons-tern liabilities: Utility plant, net 6 7 7,6 A9,200 379,476,983 Const ruc t ion payables 83,895,945 74,060,429 lavestment s, at coat t Long-term debt 678,068,602 400,381,047 Investment e in associated oraanisatione 1,656,679 387,136 761,964,547 474,441,476 Cash investments restricted for perment of lona-tern liabilities 23,297,946 - Current liabilities: pottution control funds held by trustee including accrued interest of pnte payable 6,770,500 2,206,763

        $3,694,008 in 19A2 and $ 3.575,565                                              Account o payable                          4,819,962        6,436,443 in 1943                                 65, A 32,085   ,,93,545,180             Tance, other than income, and interest 90,7A6,710        93,932,316                 accrued                                  989,526       1,523,599 Other current and accrued liabilities         695,725         204,958 Current assets:

Cash 36,106 16,835 Total current liabilities 13,205,713 9,971,763 Receivables, principally for sales of electricity 3,000,232 2,904,402 Unbilled revenues 2,804,532 2,259,307 Inventories, at cost: Deferred gain on sale of tan benefits 19,303,595 - Materiale and supplies 2,308,363 239,184 Fuet 7,672,920 - prepayments and other 801,929 914.097 Total current assete 15,917,082 6,333,825 Commitmente (Notes 6 and 14) Deferred charges 10,416,876 5,293,178

                                              $794.A09.R64      $4A5.036.102                                                   $794.R09.868     $485.036.302 See acenapanying notes.

2

y -m u - _..~._ =.- z . . _ . .waxa >ve ~ - STATEMENTS OF REVENUE AND EXPENSES for the years ended December 31, 1982 and 1981 1982 1981 ~ Operating revenue S 40,805,308 $35,259,725 ~ Operating expenses: Operation: Fuel 317,841 214,892 Other production expenses 1,109,023 970,816 Purchased power 35,865,563 31,099,961 Transmission 482,966 453,419 Administrative and general 1,253,109 1,015,543 Depreciation and amortization 447,806 370,322 Taxes other than income 209,098 195,457 Write-off of deferred charges 332,429 - Other 16,526 18,846 40,034,361 34,339,256 Operating margins before interest charges 770,947 920,469 Interest charges: Long-term obligations 70,422,565 25,796,529 Current obligations 1,590,018 230,473 Less interest charged to construction (70,766,717) (25,106,631) 1,245,866 920,371 Operatin.2 margins (deficits) (474,919) 98 Patronage capital credits 101,812 18,426 Net operating margins (deficits) (373,107) 18,524 Non-operating margins, net 86,057 62,922 Net margins (deficits) $ (287,050) S 81,446 See accompanying notes. 3

l N STATEMENTS OF CHANGES IN PATRONAGE CAPITAL AND OTHER MARGINS AND EQUITIES (DEFICITS) for the years ended December 31, 1982 and 1981 L Other Margins and Patronage Equities Capital (Deficits) Total Balance, December 31, 1980 $ 597,713 $ (75,215) $ 522,498 a Net margias, 1981 18,524 62,922 81.446 Balance, December 31, 1981 616,237 (12,293) 603,944 Net deficits, 1982 - (287,050) (287,050) Balance, December 31, 1982 S 616,237 $(299,343) $ 316,894 See accompanying notes. 4

a-p STATEMENTS OF CHANGES IN FINANCIAL POSITION for the years ended December 31, 1982 and 1981 a

.-                                                                                                   1982           1981 Funds provided by:
 ^d              Operations:

Net margins (deficits) $ (287,050) $ 81,446 Add (deduct) items not affecting working capital: Depreciation and amortization of plant 447,806 370,322 "~ Amortization of nuclear' fuel 312,960 212,836 Write-of f of deferred charges 332,429 - ~ Amortization of deferred gain on sale of tax benefits (53,770) - Total funds provided by operations 752,375 664,604

]                Increase in long-term debt                                                     277,728,000    324,016,000
. ,J             Proceeds from sale of tax benefits, net                                         19,357,365           -

Increase in construction payables 9,835,516 58,131,485 Decrease in investments 3,145,606 - Decrease in working capital - 4,953,742

                                                                                              $310,818,862   $387,765,831 Funds used for:

Utility plant additions, including net interest charged to construction $298,972,983 $290,143,094 increase in investments - 93,676,071 Increase in deferred charges 5,456,127 3,942,066 Payments on long-term debt 40,445 4,600 Increase in working capital 6,349,307 -

                                                                                              $310,818,862   $387,765,831 Changes in components of working capital:

Increase (decrease) in current assets: Cash and temporary cash investments S 19,271 S (2,342,996) Receivables 95,830 1,464,089 Unbilled revenues (154,775) 771,881 Inventories 9,735,099 107,516 Prepayments and other (112,168) 769,074 9,583,257 769,564 Increase (decrease) in current liabilities: Note payable 4,563,737 2,206,763 Accounts payable (1,616,481) 2,747,397 Taxes, other than income, and interest accrued (204,073) 656,576 Other current and accrued liabilities 490,767 112,570 3,233,950 5,723,306 Increase (decrease) in working capital S 6,349,307 S (4,953,742) See accompanying notes. 5

NOTES TO FINANCIAL STATEMENTS

1. The Cooperative:

l_ , Seminole Electric Cooperative, Inc. (Seminole) is a generation and

 ~j             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, w             At the present time, the Seminole-owned resources for supplying its members' electric power and energy requirements are its 1.6994%
 - "           undivided ownership interest in the Crystal River Unit No. 3 (CR3)
 ~

nuclear power plant operated by Florida Power Corporation, and various transmission lines connecting individual members to other power suppliers. The balance of its members' needs are supplied by wholesale l purchases of electricity from other power suppliers, w In order to supply a larger share of its members' projected needs,

 ']            Seminole is constructing two coal-fired generating facilities (Seminole J             Unit No. I and Unit No. 2) near Palatka, Florida, with approximately 600 megawatts of output per unit. These units will be connected to
 -n            the Florida bulk power supply grid through several 230 kv transmission l         lines and associated facilities, also being constructed by Seminole.
  ~"

Unit No. I is in the start up phase and is scheduled for commercial operation in June 1983. Unit No. 2 is scheduled for commercial operation in January 1985. a

2. Summary of Significant Accounting Policies:

m Seminole maintains its accounts in accordance with policies prescribed or permitted by the Rural Electrification Administration (REA). The

 -q            more significant accounting policies are as follows:

p~" Utility Plant - Utility plant is stated at original cost. Such cost includes applicable supervisory and overhead cost, plus net interest charged during construction. The cost of maintenance and

      ]

g repairs, including renewals of minor items of property, is charged to l 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 l removal, net of any salvage value, is charged to a: cumulated depreci-H ation. Income taxes related to capitalized income derived from investment of unexpended construction funds have been charged to e] construction work in progress. L'] y Operating Revenues - Seminole has wholesale power contracts with each of its members, whereby the members must purchase all electric r power and energy which the member shall require for its system within the State of Florida to the extent that Seminole shall have such power and energy and facilities available; provided, however, that I the member shall have the right to continue to purchase power under (Continued) h '

p , -- =:x.---- . - ;=; - ; - - - - - --

                                                                                         -..u       ~ -

pl NOTES TO FINANCIAL STATEMENTS, Continued

2. Summary of Significant Accounting Policies, continued:

any existing contract with a supplier other than Seminole during the remainder of the terms of these existing contracts or until such time as Seminole requests these contracts be terminated. Payments received and disbursed by Seminole on behalf of its members under these existing contracts are not recognized either as revenue or expense. If wholesale power purchases and corresponding revenues were recorded in the accompanying financial statements, total operating revenues would have been $223,571,000 and $224,157,000 in 1982 and 1981, respectively. Effective in January 1983, the aforementioned existing contracts were assigned to Seminole by its members. Commencing with commercial operation of Unit No. 1, Seminole will begin revenue and expense recognition for wholesale power purchased under these assigned contracts. Operating revenues currently consist of billings for sales of electric power by Seminole to its members, a member adjustment factor, and a facilities use charge for Seminole's transmission lines servicing a single member cooperative. Revenue is accrued to match costs incurred in generation at CR3 and transmission line ownership or billings received for purchased power. Depreciation - Seminole provides for depreciation using the straight-line method at annual composite rates which will amortize the M original cost of depreciable property over its estimated useful service life. The rates for 1982 and 1981 were as follows: 1982 1981 Nuclear production plant 3.6% 3.6% Transmission plant 2.75% 2.75% General plant 13.4% 13.1% The nuclear production plant rates include an estimated negative salvage value of 12%, representing estimated cost of removal and disposal. Amortization of Nuclear Fuel - The cost of nuclear fuel is amortized to fuel expense based on the quantity of heat produced for generation of electric energy in relation to the quantity of

;                   heat expected to be produced over the life of the nuclear fuel Core.

Although there is no facility presently in operation to process spent nuclear fuel and it may be necessary to store spent nuclear fuel for an indefinite period, no provision has been made in the accompanying financial statements for these costs. (Continued) 7

r_ _ _ _ .,..., , - NOTES TO FINANCIA1. STATEMENTS, Continued

  ~

2. Summary of Significant Accounting Policies, continued:

1 d Capitalization of Interest - In accordance with procedures permitted under the Uniform System of Accounts prescribed by the REA, a portion of interest on borrowed funds, at average rates of approximately 12.8% and 11.8% for 1982 and 1981, respectively, is capitalized as a component of the cost of construction work _, in progress, and is reflected as a reduction of interest expense. Interest earned on unexpended construction funds (net of related

  ~]                        income taxes) is credited to construction work in progress.

Reclassifications - Certain reclassifications have been made to J ' the 1981 statements to conform to current classifications. There were no changes in net margins as previously reported.

3. Utility Plant:

The original cost of utility plant at December 31, 1982 and 1981, _l LJ was as follows: 1982 1981 m Ownership (1.6994%) in nuclear plant S 7,736,047 $ 7,661,473 Transmission plant 53,075,676 4,128,617

  -q                        General plant                                  8,781,042         512,535 1                                                                 69,592,765      12,302,625 Construction work in progress                608,206,898     366,569,553
                                                                        $677,799,663    S378,872,178 in

4. Investments in Associated Organizations:

m Investments in associated organizations at December 31, 1982 and 1981, consisted of the following: m 1982 1981 I Florida Rural Electric Cooperative Association S 10,017 S 10,786 National Rural Utilities Cooperative Finance Corporation (CFC):

  'n                          Membership                                          1,000       1,000

_] Capital Term Certificates (CTC) Subordinated Term Certificates (STC) 436,750 972,986 224,150 Patronage Capital Certificates 206,723 145,055 Other 29,203 6,145

                                                                           $1,656,679      $387,136 (Continued) l N

N l l NOTES TO FINANCIAL STATEMENTS, Continued 1 4. Investments in Associated Organizations, continued: Seminole is obligated to purchase CTC's issued by CFC through 1984. Based on anticipated reve.'ues, Seminole's future obligation for purchase of CTC's will be D.46,000 and $1,497,000 for 1983 and 1984, respectively. These certificates mature beginning in 2025 and bear interest at the rate of 3% annually. The STC's, equal to approximately 5% of the proceeds from the sale of tax benefits, were an investment purchase required as a part of the CFC indemnification guarantee and bear interest at the rate of 3% annually. The STC's mature at various dates through 2012. H 5. Long-Term Liabilities: Construction Payables - Construction payables consisted of unsecured obligations due vendors and contractors, accrued interest payable on loan advances used in construction, a portion of the note payable to CFC and income taxes payable. Such amounts are generally financed through long-term borrowings; accordingly, construction payables are classified as long-term liabilities. Long-Term Debt - At December 31, 1982 and 1981, long-term debt

  .                 consisted of:

1982 1981 First mortgage note payable to Federal Financing Bank (FFB), guaranteed by REA, due 2011, interest payable in quarterly installments of approximately

                       $199,600 including interest at 7.442% to 8.215%, $64,677 of principal due in 1983                                   S 8,931,000 S 8,931,000 First mortgage note payable to REA, due 2008, payable in quarterly installments of approxi-mately $4,400 including interest at 5%,
                       $5,078 of principal due in 1983                                                  255,413      260,247 First mortgage note payable to REA, due 2014, interest payable quarterly at 5%,

S50,480 of principal due in 1983 3,693,389 3,729,000

   .                 First mortgage note payable to FFB guaranteed by REA, interest payable quarterly at 8.925% to 16.245%, due 1983 through 2016 (See below.)                                                    464,890,000 262,162,000 First mortgage note payable to REA, due 2015, interest payable quarterly at 5%, first principal payment due in 1983                                                     50,000       50,000 (Continued) 9

ls_ NOTES TO FINANCIAL STATEMENTS, Continued y

 -         5. Long-Term Liabilities, continued:

1982 1981

 --+~         Pollution control revenue bonds, Series
~

1981M, payable to the Putnam County Development Authority, guaranteed by CFC, due June 15, 1984, interest payable semi-annually at 9.25% $ 75,000,000 $ 75,000,000 Pollution control revenue bonds, Series 9 1981V, payable to the Putnam County J Development Authority guaranteed by CFC, due October 1, 1984, interest payable semi-annually at 11.5% . 50,000,000 50,000,000 Pollution control revenue bonds, Series 1982P, payable to the Putnam County Development Authority guaranteed by CFC, due April 1, 1985, interest payable semi-annually at 10.625% 75,000,000 - Advances from members, unsecured, with no interest or due date 248,800 248,800

                                                                                      $678.068.602 S400.381.047 In September 1979, Seminole received a commitment from FFB and REA for a loan in the amount of $1,104,388,000 to be used for long-term financing of the Seminole Unit No. 1, Unit No. 2 and related trans-mission facilities. The loan is guaranteed by REA.

Under the terms of the Loan Commitment Agreement , dated August 14, 1974, between FFB and REA, all advances are subject to the approval of REA. The maturity date of each advance may be not less than two years, nor more than seven years, af ter the date of the advance; provided, however, at the option of the borrower, such maturity dates may be extended for a period of 34 years from the end of the year in which advances were made. Interest on each advance shall be the respective rate established at the time of the advance, or upon extension shall be the rate established at that time. The scheduled maturities of the $464,890,000 advanced from FFB at December 31, 1982, are as follows: 1983 $ 70,946,000 1984 S330,908,000 2014 S 14,867,000 2016 S 48,169,000 It is anticipated that the amounts due in 1983 and 1984, together with future additional borrowings from FFB, will be extended to the maximum maturity dates. (Continued) 10

                                                    -                                                                  i

                                                                            ' NOTES TO FINANCIAL STATEMENTS, Continued u         5. Long-Term Liabilities, continued:

The Putnam County Development Authority (Florida) issued three series of Pollution Control Revenue Bonds amounting to $200,000,000 for use by Seminole to finance the construction of certain pollution control facilities at Seminole Units No. I and No. 2. Seminole is required to pay an amount equal to the interest and principal amounts, when due, relating to the issues. Under the terms of the Trust Indenture relating to the bonds, the proceeds from the issues are deposited with the Trustee, who disburses amounts as the various pollution control projects are constructed. During 1982 and 1981 interest income of approximately $13 million and $7 million was earned on the unexpended proceeds of the pollution control revenue bonds and has been recorded (net of related incone taxes) as a reduction of construction work in progress. Pollutio'n control revenue bonds, Series 1981V and 1982P have been called. See Note 16, " Subsequent Financing Transactions". The maturities of all long-term debt, after giving effect to the maximum extensions under current financing agreements for the five years subsequent to December 31, 1982, are presented below: Year ending December 31, Annual Maturities 1983 $ 120,395 1984 $125,162,393 1985 S 75,174,108 1986 S 186,708 1987 $ 373,409 Substantially all assets are pledged as collateral for the above mentioned debt to the United States of America (REA and FFB) and CFC.

6. Net Margins and Equity Restrictions:

Under provision of the agreements relating to the REA mortgage notes, until the total of equities and margins 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 equal or exceed twenty percent of total assets. The REA mortgage requires Seminole to maintain, 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 thaa 1.0, in each case using an average of the two best years of the last three. An REA stipulation arising from the sale of tax benefits requires Seminole to maintain an annual Times Interest Earned Ratio (as defined) of not less than 1.05 beginning in 1984. 11

l r-l w NOTES TO FINANCIAL STATEMENTS, Continued

7. Note Payable - CFC Line of Credit:

m ' At December 31, 1982, there was $24,003,900 drawn under one of two d lines of credit with CFC which together totaled $125,500,000. The portion of the note that will be refunded with long-term debt was

                 $17,334,400, and was included in construction payables. The interest rate is approximately the prime rate, as defined. Use of these funds is governed by REA policy.

8. Other Production Expenses:

Other production expenses consist of CR3 operating and maintenance

 -- a            costs, which represent Seminole's portion of all expenses incurred by I        Florida Power Corporation attributable to the operation of CR3 and properly recordable in accordance with the operating expense instruc-u, m              tions and in appropriate accounts as set forth in the Uniform System
        )        of Accounts. These payments are made to Florida Power Corporation in p J               accordance with the Crystal Rive- Unit No. 3 Participation Agreement.

9. State and Federal Income Taxes:

~']

 ^^d             In previous years Seminole was exempt from Federal income taxes under the provisions of Section 501(c)(12) of the Internal Revenue
  ]J             Code. In 1981 Seminole became subject to State and Federal income taxes because of the amount of nonmember income earned. Income taxes of $1,962,000 ar! $785,000 for 1982 and 1981, after the bq                application of investment tax credits of $1,225,000 and $394,000,

[ ~j have been charged to construction work in progress. Such taxes have [ reduced the interest earned on investments which was credited to L construction work in progress. U 10. Deferred Charges:

   .-q           At December 31,1982 and 1981, deferred charges included approximately y;                $3,721,000 and $2,721,000 of unamortized debt expenses. Additional charges include amounts expended for generation planning, preliminary rvey and investigation of future power sources and other miscellaneous

"~l 1 deferrals. "-" In 1982, Seminole terminated negotiations concerning the possible purchase of a 6% ownership interest in the St. Lucie Unit No. 2 nuclear electric generating plant and has written off deferred charges of $332,429 incurred for feasibility and engineering studies. l

-^'          11. Retirement Plan:

y Substantially all employees are covered by a pension plan which is l funded through participation in a National Rural Electric Cooperative

   'l            Association group plan. Pension costs were approximately $503,000

_ .; and $233,000 for the years ended December 31, 1982 and 1981, respec-tively. Information with regard to Seminole's portion of actuarial present value of vested and nonvested accumulated plan benefits and plan net assets available for benefits is not available. l 12 1

 . t_.

1 NOTES TO FINANCIAL STATEMENTS, Continued u

12. Sale of Tax Benefits:

V a In December 1982, Seminole sold the tax benefits related to certain transmission lines and coal handling facilities pursuant to the Economic Recovery Tax Act of 1981. Proceeds of the sale, net of

               $440,000 of related expenses, amounted to $19,357,000 and are being amortized over the thirty year lease period. During 1982, $53,770 was amortized to non-operating margins. The net proceeds from the sale are restricted to the retirement of long-term debt and the purchase of Subordinated Term Certificates.

Under the terms of the sale, CFC has guaranteed Seminole's indemni-fication of the buyer over the term of the lease for losses of tax benefits purchased.

13. Leases:

Seminole has entered into leveraged lease agreements to finance the acquisition of marine and rail transportation equipment amounting to approximately $55 million. Lease terms are for 18 to 22-1/2 years and expire in 2001 through 2005. The leases provide for renewals and options to purchase the equipment at fair market value upon expiration. Rent costs are being capitalized and will be charged to operations af ter Seminole Unit No. I begins commercial operation. During 1982 lease payments amounted to $529,000. The following is a schedule by years of future minimum lease pay-ments together with the present value of the minimum lease payments as of December 31, 1982: Year ending December 31: 1983 $ 3,020,000 1984 5,296,000 1985 -5,296,000 1986 5,296,000 1987 5,296,000 Later years 103,881,000 Total minimum lease payments 128,085,000 Less amount representing interest (72,985,000) Present value of minimum lease payments S 55.100.000

14. Commitments:

Seminole is purchasing coal and limestone for the plant under long-term contracts expiring in 2010. Contract terms specify minimum annual purchase commitments and prices, which are subject to adjustment for changes in costs. In addition, Seminole has long-term contracts for coal transpor-tation from the mine sites to the plant. Contract. terms include a (Continued) 13 l

y <n =-ww.u...:~-.-------------- . - _ _ ~

                                                                                                        ~..
 ,,   . a.

I NOTES TO FINANCIAL STATEMENTS, Continued

14. Commitments, continued:

minimum cost as determined by a base quantity of tons shipped and prices, which are subject to adjustment for changes in costs. At December 31, 1982, the aggregate amount of paywents required for the co4 transportation is as follows: 1983 $ 47,117,000 1984 67,950,000 1985 102,387,000 1986 106,547,000 1987 109,424,000 Later years 2,450,287,000 Total $2.883.712.000 Seminole is required to pay additional amounts on actual quantities shipped and on cost escalations as determined from the contracts. Total charges under the agreements were $5,872,000 in 1982. Seminole has commitments for completion of Units 1 and 2 amounting to approximately $258,473,000 for 1983 and $103,211,000 for 1984 through completion. In addition, Seminole anticipates the expenditure of approximately

                   $8.7 million during 1983 for transmission facilities to meet the needs of its member systems and serve to connect the proposed generating units to the Florida bulk power supply grid.

15. Litigation:

Certain lawsuits are pending against Semincle. In the opinion of management, all such matters are without merit or involve such amounts as would not have a materially adverse effect on the accom-panying financial statements.

16. Subsequent Financing Transactions:

On January 26, 1983, Seminole sold $28,400,000 of pollution control revenue commercial paper bonds Series 1983A, which are guaranteed by CFC. The maximum principal amount that can be issued under Series 1983A is $125,000,000. On March 3, 1983, Seminole sold S51,800,000 of pollution control revenue bonds Series 1983C, which are guaranteed by CFC, for the purpose of refunding the pollution control revenue bonds Series 1981V. The refunding will have no effect on 1983 net margins. 14

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