FINANCIAL STATEMENTS. (Unaudited) Six Months Ended. March 31, 2016 and 2015

Transcription

1 FINANCIAL STATEMENTS (Unaudited) Six Months Ended March 31, 2016 and 2015 GREATER ORLANDO AVIATION AUTHORITY Orlando, Florida

2 TABLE OF CONTENTS Page ORLANDO INTERNATIONAL AIRPORT Independent Accountants Review Report 1 Department Financial Statements - Unaudited Statements of Net Position 3 Statements of Revenues, Expenses and Changes in Net Position 5 Statements of Cash Flows 6 Notes to Financial Statements 8 ORLANDO EXECUTIVE AIRPORT Independent Accountants' Review Report 18 Department Financial Statements - Unaudited Statements of Net Position 20 Statements of Revenues, Expenses and Changes in Net Position 22 Statements of Cash Flows 23 Notes to Financial Statements 25

3 Authority Board Orlando International Airport (a Department of the Greater Orlando Aviation Authority) Orlando, Florida INDEPENDENT ACCOUNTANT S REVIEW REPORT We have reviewed the accompanying statements of net position of Orlando International Airport (a department of the Greater Orlando Aviation Authority) as of March 31, 2016, and the related statements of revenues, expenses, and changes in net position, cash flows, and the related notes to the financial statements for each of the six-month periods ended March 31, 2016 and A review includes primarily applying analytical procedures to management s financial data and making inquiries of the management of the Greater Orlando Aviation Authority (the Authority ). A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement whether due to fraud or error. Accountant s Responsibility Our responsibility is to conduct the review engagements in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. Those standards require us to perform procedures to obtain limited assurance as a basis for reporting whether we are aware of any material modifications that should be made to the financial statements for them to be in accordance with accounting principles generally accepted in the United States of America. We believe that the results of our procedures provide a reasonable basis for our conclusion. As discussed in Note 1 of the notes to the financial statements, the financial statements of Orlando International Airport are intended to present the financial position and the changes in financial position, and cash flows of only that portion of the activities of the Authority that is attributable to the transactions of the Orlando International Airport. They do not purport to, and do not, present fairly the financial position of the Authority as of March 31, 2016, and the changes in its financial position and its cash flows for the six-month periods ended March 31, 2016 and 2015 in conformity with accounting principles generally accepted in the United States of America. 1

4 Authority Board Orlando International Airport (a Department of the Greater Orlando Aviation Authority) Accountant s Conclusion Based on our reviews, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in accordance with accounting principles generally accepted in the United States of America. Prior Period Statements of Net Position The statement of net position of the Orlando International Airport as of September 30, 2015, was audited by us, and we expressed an unmodified opinion on that statement in relation to the financial statements of the Authority as a whole in our report dated March 9, 2016, but we have not performed any auditing procedures since that date. MOORE STEPHENS LOVELACE, P.A. Certified Public Accountants Orlando, Florida May 16,

5 ORLANDO INTERNATIONAL AIRPORT STATEMENTS OF NET POSITION - UNAUDITED (in thousands) ASSETS AND DEFERRALS March 31, September 30, Current Assets Cash and cash equivalents $ 143,505 $ 183,122 Restriced cash and cash equivalents 183, ,804 Accounts and grants receivable, less allowance for uncollectibles of $143 and $139, respectively 20,413 14,345 Investments 12,378 - Interest receivable Due from Orlando Executive Airport Due from other governmental agencies Prepaid expenses and inventory 5,195 6,897 Total current assets 365, ,344 Noncurrent Assets Restricted assets: Cash and cash equivalents 311, ,329 Accounts and grants receivable 11,620 9,568 Investments 544, ,975 Interest receivable 1, Due from other governmental agencies 22,640 12,307 Prepaid expenses Total restricted assets 892, ,827 Unrestricted assets: Investments 68,341 63,087 Prepaid expenses Employee postemployment benefits assets 7,088 7,088 Total unrestricted assets 75,740 70,562 Capital assets, net of accumulated depreciation: Property and equipment 1,272,391 1,284,509 Property held for lease 343, ,403 Construction in progress 393, ,128 Total capital assets, net of accumulated depreciation 2,009,554 1,907,040 Total noncurrent assets 2,977,431 2,718,429 Total assets 3,343,236 3,073,773 Deferred outflows of resources 22,854 21,117 (continued) See accompanying independent accountants review report and notes to financial statements. 3

6 ORLANDO INTERNATIONAL AIRPORT STATEMENTS OF NET POSITION - UNAUDITED (in thousands) LIABILITIES, DEFERRALS, AND NET POSITION March 31, September 30, Current Liabilities Accounts payable and accrued liabilities $ 24,603 $ 29,765 Unearned revenue 1,865 2,011 Deposits 6,061 6,298 Advance rent from tenants 7,734 7,155 Due to Orlando Executive Airport 38 - Due to other governmental agencies 4,754 4,248 Accrued airline revenue sharing 11,442 69,551 Payable from restricted assets: Accrued interest 22,698 19,708 Accounts payable and accrued liabilities 77,634 50,695 Due to other governmental agencies Revenue bonds payable, current 83,045 79,355 Total current liabilities 239, ,832 Noncurrent Liabilities Net pension liability 17,124 14,583 Line of credit, long-term 204, ,695 Revenue bonds payable, long-term 912, ,309 Other long-term liabilities 12,333 23,775 Total noncurrent liabilities 1,147, ,362 Total liabilities 1,387,205 1,248,194 Deferred inflows of resources 7,784 8,811 Net Position Net investment in capital assets 1,055, ,470 Restricted for: Debt service 112, ,582 Capital acquisitions and construction 565, ,611 Unrestricted 238, ,222 Total net position $ 1,971,101 $ 1,837,885 See accompanying independent accountants review report and notes to financial statements. 4

7 ORLANDO INTERNATIONAL AIRPORT STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - UNAUDITED For the Six Months Ended March 31, (in thousands) (As Restated) Operating Revenues Airfield area $ 22,477 $ 20,418 Terminal area 97,424 88,977 Ground transportation 81,266 75,752 Other buildings and grounds 9,014 8,150 Hotel 22,460 20,524 Total operating revenues 232, ,821 Operating Expenses Operations and facilities 63,003 61,146 Safety and security 16,630 14,211 Administration 23,342 20,248 Hotel 15,877 14,831 Other 4,622 4,765 Total operating expenses 123, ,201 Operating income before depreciation 109,167 98,620 Depreciation (58,764) (58,984) Operating income 50,403 39,636 Nonoperating Revenues (Expenses) Investment income 2,950 1,126 Net increase in the fair value of investments 563 1,522 Interest expense and other financing charges (21,980) (21,678) Participating Airlines net revenue sharing (10,675) (2,169) Passenger facility charges 41,154 36,371 Customer facility charges 13,707 12,521 Federal, state and other grants 1,602 1,724 Other Income before capital contributions 77,735 69,154 Capital Contributions 55,481 9,369 Increase in net position 133,216 78,523 Total Net Position, Beginning of Period-As Restated 1,837,885 1,737,079 Total Net Position, End of Period $ 1,971,101 $ 1,815,602 See accompanying independent accountants review report and notes to financial statements. 5

8 ORLANDO INTERNATIONAL AIRPORT STATEMENTS OF CASH FLOWS - UNAUDITED For the Six Months Ended March 31, (in thousands) (As Restated) Cash flows from operating activities Cash received from customers, tenants, and governmental agencies $ 227,266 $ 210,478 Cash paid to suppliers and governmental agencies (97,523) (85,049) Cash paid to employees for services (31,694) (30,209) Cash paid to airlines (68,784) (56,084) Other income Net cash provided by operating activities 29,290 39,252 Cash flows from noncapital financing activities Operating grants Passenger facility charges Net cash provided by noncapital financing activities Cash flows from capital and related financing activities Proceeds from issuance of bonds 237,052 - Proceeds from line of credit 248,490 25,000 Passenger facility charges - capital 39,453 36,702 Customer facility charges 13,185 11,735 Bond issuance costs 99 - Principal payments - bonds and line of credit (303,545) (73,320) Interest and other financing charges paid (22,310) (23,326) Proceeds from sale of assets 7 6 Acquisition and construction of capital assets (130,191) (61,533) Advance proceeds from FDOT-ITF Grant 30,000 Capital contributed by federal grants and state agencies 34,491 9,026 Net cash provided by (used for) capital and related financing activities 116,731 (45,710) Cash flows from investing activities Purchase of investments (390,922) (107,170) Proceeds from sale and maturity of investments 136, ,799 Interest received 2,649 1,113 Net cash (used for) provided by investing activities (251,848) 56,742 Net (decrease) increase in cash and cash equivalents (104,870) 51,013 Cash and Cash Equivalents, Beginning of Period 743, ,440 Cash and Cash Equivalents, End of Period (1) $ 638,385 $ 614,453 (1) Cash and Cash Equivalents Unrestricted Assets $ 143,505 $ 106,228 Cash and Cash Equivalents Restricted Assets - Current 183, ,850 Cash and Cash Equivalents Restricted Assets - Noncurrent 311, ,375 $ 638,385 $ 614,453 (continued) See accompanying independent accountants review report and notes to financial statements. 6

9 Reconciliation of operating income to net cash provided by operating activities GREATER ORLANDO AVIATION AUTHORITY ORLANDO INTERNATIONAL AIRPORT STATEMENTS OF CASH FLOWS - UNAUDITED For the Six Months Ended March 31, (in thousands) (As Restated) Operating income $ 50,403 $ 39,636 Adjustments to reconcile operating income to net cash provided by operating activities Depreciation 58,764 58,984 Participating Airlines net revenue sharing (10,675) (2,169) Other income (Increase) Decrease in operating assets Accounts and grants receivable (6,062) (4,187) Due from other governmental agencies (42) 121 Prepaid expenses 1,702 1,463 Deferred outlows of resources (3,703) 327 Increase (Decrease) in operating liabilities Accounts payable and accrued liabilities (5,333) 2,208 Due to other governmental agencies 506 (5) Accrued airline revenue sharing (58,109) (53,915) Unearned revenue (146) (1,379) Deposits (237) (254) Advance rent from tenants 579 2,317 Net pension liability 2,541 (3,392) Due from other funds Other liabilities (34) (35) Deferred inflows of resources (1,027) (611) Total adjustments (21,113) (384) Net cash provided by operating activities $ 29,290 $ 39,252 Noncash Investing, Capital and Financing Activities Increase in fair value of investments $ 563 $ 1,522 Capital contributions from other governments $ 20,990 $ 343 Capitalized interest $ 3,735 $ 1,563 Amortization of bond insurance $ (76) $ (104) Amortization of bond premiums/discounts $ 1,483 $ 1,002 Amortization of bond refunding losses $ (1,966) $ (2,437) See accompanying independent accountants review report and notes to financial statements. 7

10 ORLANDO INTERNATIONAL AIRPORT NOTES TO FINANCIAL STATEMENTS - UNAUDITED For the Six Months Ended March 31, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Purpose: The Orlando International Airport (OIA) functions as a self-supporting department operated by the Greater Orlando Aviation Authority (the Authority) and uses the accrual method of accounting. The Authority also operates Orlando Executive Airport (OEA). The department financial statements of OEA are presented separately. Basis of Presentation and Accounting: The accompanying unaudited department financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal, recurring accruals) considered necessary for a fair presentation have been included. Prior period amounts have been reclassified to conform to the current period presentations. Operating results for the six-month period ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending September 30, For further information, refer to the Authority s financial statements and footnotes thereto included in the Comprehensive Annual Financial Report (CAFR) for the year ended September 30, Implementation of New Accounting Standards: The GASB issued Statement Number 68, Accounting and Financial Reporting for Pensions (as amended by GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date), effective for fiscal year ended September 30, These statements replace the requirements of Statement No. 27 and No. 50 related to pension plans that are administered through trusts and equivalent arrangements, and establish standards for measuring and recognizing liabilities, deferrals, and expenses. The requirements of GASB No. 68 and 71 require an adjustment to eliminate the net pension asset and recognition of a net pension liability for the defined pension plan. This statement includes the prior period adjustment of beginning net position as of March 31, 2015 of ($6,620) to record the Net Pension Liability and related adjustments of expenses, pursuant to GASB No. 68, (in thousands): As Originally Shown As Restated March 31, March 31, 2015 Net Change 2015 Safety and security $ 14,603 $ (392) $ 14,211 Beginning net position $ 1,743,699 $ (6,620) $ 1,737,079 Net income $ 78,131 $ 392 $ 78,523 Ending net position $ 1,821,830 $ (6,228) $ 1,815,602 All firefighters employed by the Authority at OIA participate in the Florida Retirement System (FRS), a cost-sharing, multiple-employer defined benefit public retirement plan. For fiscal year 2015 the Authority, using a measurement date of June 30, 2015, estimated its net pension liability, pension expense, related deferrals and proportionate share based on an actuarial valuation as of July 1, 2015 with information provided in the fiscal year 2015 Comprehensive Annual Financial Statement of the Florida Retirement System Pension Plan. The Authority believes its method of estimating its proportionate share of the net pension liability, pension expense, and related deferrals is not materially different from those calculated by the Florida Retirement System. 8

11 ORLANDO INTERNATIONAL AIRPORT NOTES TO FINANCIAL STATEMENTS - UNAUDITED For the Six Months Ended March 31, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Information for the measurement date of June 30, 2016 (which will be included in the Authority s financial statements for fiscal year ended September 30, 2016) will not be available for the Authority to record its share of the net pension liability or related transactions as of March 31, 2016 for its Multi- Employer Defined Benefit Plan. Therefore, these amounts are not included in the March 31, 2016 financial statements. 2. CASH DEPOSITS AND INVESTMENTS The Authority s cash and cash equivalents balances include amounts deposited with commercial banks in interest-bearing and non-interest bearing demand deposit accounts, as well as the Florida State Board of Administration s Local Government Surplus Investment Pool (LGIP). The commercial bank balances are entirely insured by federal depository insurance or by collateral pursuant to the Florida Security for Public Deposits Act of the State of Florida (the Act). The Act establishes guidelines for qualification and participation by banks and savings associations, procedures for the administration of the collateral requirements and characteristics of eligible collateral. Under the Act, the Authority s deposits in qualified public depositories are considered totally insured. The qualified public depository must pledge at least 50% of the average daily balance for each month of all public deposits in excess of any applicable deposit insurance. Additional collateral, up to a maximum of 125%, may be required, if deemed necessary under the conditions set forth in the Act. Obligations pledged to secure deposits must be delivered to the State of Florida s Chief Financial Officer (State s CFO) or, with the approval of the State s CFO, to a bank, savings association, or trust company, provided a power of attorney is delivered to the State s CFO. In accordance with generally accepted accounting principles, the Authority adjusts the carrying value of investments to fair value to be presented as a component of investment income. The fair value of investments is based on available market values. The LGIP operated by the Florida State Board of Administration is a 2a-7-like pool and is also presented in accordance with generally accepted accounting principles; therefore, it is not presented at fair value but at its actual pooled share price which approximates fair value. At March 31, 2016 and September 30, 2015, the fair value of all securities, regardless of the statements of net position, classification, was as follows (in thousands): March 31, 2016 September 30, 2015 U.S. Treasury and government agency securities $ 616,132 $ 339,294 Commercial paper 22,970 23,978 Corporate securities 20,710 6,789 Local government investment pool Money market funds 287, ,992 Total securities $ 947,473 $ 621,688 9

12 ORLANDO INTERNATIONAL AIRPORT NOTES TO FINANCIAL STATEMENTS - UNAUDITED For the Six Months Ended March 31, CASH DEPOSITS AND INVESTMENTS (continued) These securities are classified on the statements of net position as follows (in thousands): March 31, 2016 September 30, 2015 Current Assets Cash and cash equivalents $ 143,505 $ 183,122 Restricted cash and cash equivalents 183, ,804 Investments 12,378 - Noncurrent Assets Restricted assets: Cash and cash equivalents 311, ,329 Investments 544, ,975 Unrestricted assets: Investments 68,341 63,087 Total cash, cash equivalents and investments 1,263,500 1,113,317 Less cash on deposit (316,027) (491,629) Total securities, at fair value $ 947,473 $ 621,688 The Authority is authorized to invest in securities, as described in its investment policy and in each bond resolution. As of March 31, 2016, the Authority held the following investments, as categorized below, in accordance with generally accepted accounting principles: Investment Maturities (in thousands) at March 31, 2016 Investment Type Less than 1 Year 1 to 5 Years 6 to 10 Years 11 to 15 Years Total U.S. Treasury and government agency securities $ 315,872 $ 283,732 $ 4,603 $ 11,925 $ 616,132 Commercial paper 22, ,970 Corporate securities - 20, ,710 Local government investment pool Money market funds 287, ,025 Total securities $ 626,503 $ 304,442 $ 4,603 $ 11,925 $ 947,473 As of March 31, 2016, the Authority had $0.6 million of OIA funds invested in the State Board of Administration (SBA) LGIP Fund A. Interest Rate Risk: As a means of limiting its exposure to fair value losses arising from rising interest rates, the Authority generally holds investments to maturity. The Authority s investment policy requires the investment portfolio to be structured to provide sufficient liquidity to pay obligations as they become due. To the extent possible, investment maturities match known cash needs and anticipated cash flow requirements. Investments under the Bond Resolution shall mature no later than needed, except for 1) investments in the Debt Service Reserve Account which shall mature not later than fifteen years (unless such investment is redeemable at the option of the holder, in which event the maturity shall not exceed the final maturity date of the Bonds secured by such investment), 2) investments in the Operation and Maintenance Fund and Operation and Maintenance Reserve Account shall mature within twelve months, and 3) investments in the Capital Expenditure Fund, the Renewal and Replacement Fund, Improvement and Development Fund, and the Discretionary Fund shall mature within five years. Investments under the Subordinated Bonds Resolution shall mature no later than needed, except for investments in the 10

13 ORLANDO INTERNATIONAL AIRPORT NOTES TO FINANCIAL STATEMENTS - UNAUDITED For the Six Months Ended March 31, CASH DEPOSITS AND INVESTMENTS (continued) Reserve Fund which shall mature not later than fifteen years from the date of such investment. Investments under the Secondary Subordinated Bonds Resolution and Surplus Cash shall mature no later than the dates on which such funds are needed. The Authority portfolio holds a number of callable securities. The schedules above present the maturity date of the securities. Credit Risk: The Authority s general investment policy is to apply the prudent-person rule: Investments are made as a prudent person would be expected to act, with discretion and intelligence, to seek reasonable income, preserve capital, and in general, avoid speculative investments. Authority policy limits the purchase of certain investments to specific rating requirements. Investment in commercial paper is limited to AAA and rated A-1, P-1, or F1 for short-term investments by two of the three rating agencies: S&P, Moody s and Fitch (without regard to gradation). Investment in dollar denominated Corporate securities is limited to companies in the United States which are rated A or better by two of the three rating agencies (without regard to gradation). Investments held in the portfolio as of March 31, 2016 were rated consistent with the Authority s investment policy and bond resolutions. Funds invested in money market funds and the LGIP Fund A are rated AAAm by S&P. Custodial Credit Risk: For an investment, custodial risk is the risk that, in the event of the failure of the counterparty, the Authority will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. All of the Authority s investments are either held in the name of the Authority or held in trust under the Authority s name. Concentration of Credit Risk: Concentration of credit risk is the inability to recover the value of deposit, investment, or collateral securities in the possession of an outside party caused by a lack of diversification. The authority mitigates its concentration of credit risk by diversifying its investment portfolio. At March 31, 2016, the Authority held investments exceeding 5 percent of the total investment portfolio (including cash and cash equivalents) with only two issuers; Federal National Mortgage Association (9.78%) and U.S. Treasury (31.37%). At September 30, 2015, the Authority held investments exceeding 5 percent of the total investment portfolio (including cash and cash equivalents) with only three issuers; Federal National Mortgage Association (12.42%), Federal Home Loan Bank (5.74%) and Federal Home Loan Mortgage Corporation (5.18%). Standard practice limits the maximum investment in any one issuer of commercial paper to $5 million. 3. RESTRICTED ASSETS The Bond Resolution and the Master Indenture of Trust authorizing the issuance of the revenue bonds for OIA require segregation of certain assets into restricted accounts. The composition of restricted accounts is as follows: Restricted Assets (in thousands) March 31, 2016 September 30, 2015 Debt Service Accounts $ 154,532 $ 179,700 Capital Acquisition Accounts 274, ,562 Bond Construction Accounts 283,245 88,879 Passenger Facility Charges Account 245, ,257 Customer Facility Charges Account 77,149 89,152 Operating Reserve Account 40,609 39,081 Total Restricted Assets $ 1,075,560 $ 890,631 11

14 4. CAPITAL ASSETS GREATER ORLANDO AVIATION AUTHORITY ORLANDO INTERNATIONAL AIRPORT NOTES TO FINANCIAL STATEMENTS - UNAUDITED For the Six Months Ended March 31, 2016 A summary of capital asset activity for the six months ended March 31, 2016 is as follows (in thousands): Balance Additions Balance October 1, and Reclass- March 31, 2015 ifications Deductions 2016 Property and Equipment Capital Assets not Depreciated Land $ 260,522 $ - $ - $ 260,522 Assets Held for Future Use 78, , , ,743 Other Property and Equipment Buildings 272,182 2, ,299 Improvements 1,798,776 26, ,825,238 Equipment 239,440 2, ,854 Motor vehicles 22,524 (107) ,128 2,332,922 31, ,363,519 Accumulated Depreciation Buildings 154,724 4, ,910 Improvements 1,087,901 32, ,120,243 Equipment 126,269 5, ,951 Motor vehicles 18, ,767 1,387,156 43, ,429,871 Net Property and Equipment 1,284,509 (12,107) 11 1,272,391 Property and Equipment - Held for Lease Capital Assets not Depreciated Land 4, ,473 Other Property and Equipment Buildings 897,679 2, ,394 Improvements 79,470 1,286-80,756 Equipment 8, , ,923 4, ,286 Accumulated Depreciation Buildings 569,021 13, ,227 Improvements 60,288 1,652-61,940 Equipment 6, , ,993 15, ,498 Net Property and Equip - Held for Lease 354,403 (11,142) - 343,261 Construction Work in Progress Capital Assets not Depreciated Construction Work in Progress 268, ,473 33, ,902 Net Capital Assets $ 1,907,040 $ 136,224 $ 33,710 $ 2,009,554 12

15 5. NONCURRENT LIABILITIES GREATER ORLANDO AVIATION AUTHORITY ORLANDO INTERNATIONAL AIRPORT NOTES TO FINANCIAL STATEMENTS - UNAUDITED For the Six Months Ended March 31, 2016 A summary of noncurrent liability activity for the six months ended March 31, 2016 is as follows (in thousands): Balance October 1, Balance March 31, Amounts Due Within Amounts Due After 2015 Additions Deductions 2016 One Year One Year Airport Facilities Revenue Bonds Senior Lien Bonds Series 1998 $ 2,540 $ - $ 1,215 $ 1,325 $ 810 $ 515 Series 2007A 110,995-11,180 99,815 11,740 88,075 Series 2008A 107,540-29,880 77,660 20,430 57,230 Series 2009A 98,550-7,730 90,820 10,250 80,570 Series 2009B 1,995-1, Series 2009C 79,710-1,725 77,985 1,795 76,190 Series 2010A 78,610-1,140 77,470 2,020 75,450 Series 2010B 27,625-2,490 25,135 5,645 19,490 Series 2011A 5, , ,095 Series 2011B 70, ,040-70,040 Series 2011C 37,785-1,375 36,410 1,420 34,990 Series 2011D 65, , ,100 Series 2012A 37, ,065-37,065 Series 2013A 46,915-2,655 44,260 2,745 41,515 Series 2013B 30,245-5,730 24,515 14,245 10,270 Series 2015A - 214, ,450 2, ,200 Subordinated Indebtedness Series 1998C Gulf Breeze 2,945-2, Special Purpose Facilities Bonds Series 2009CFC 25,840-8,220 17,620 8,590 9,030 Total Revenue Bonds 829, ,450 79, ,870 83, ,825 Add unamortized premiums and (discounts) 9,889 22,602 1,483 31,008-31,008 Net Revenue Bonds 839, ,052 80, ,878 83, ,833 Net Pension Liability Net Pension Liability 14,583 2,541-17,124-17,124 Total Net Pension Liability 14,583 2,541-17,124-17,124 Line of Credit Line of Credit 180, , , , ,995 Line of Credit 180, , , , ,995 Other Liabilities Compensated Absences(1) 4, ,823 3,168 1,655 Pollution Remediation Liability(1) 2, , ,475 FDOT Payable-ITF Grant 20,611-11,408 9,203-9,203 Total Other Liabilities 27, ,061 16,008 3,675 12,333 Total Noncurrent Liabilities $ 1,062,370 $ 488,724 $ 317,089 $ 1,234,005 $ 86,720 $1,147,285 (1) Compensated absences and pollution remediation liabilities due within one year are included in current accounts payable and accrued liabilities on the statement of net position.. 13

16 5. NONCURRENT LIABILITIES (continued) GREATER ORLANDO AVIATION AUTHORITY ORLANDO INTERNATIONAL AIRPORT NOTES TO FINANCIAL STATEMENTS - UNAUDITED For the Six Months Ended March 31, 2016 A schedule of debt maturities is as follows (in thousands): Fiscal Year Principal Interest Total Revenue Bonds 2016 $ - $ 22,277 $ 22, ,045 43, , ,800 39, , ,530 35, , ,705 32, , , , , ,330 77, , ,295 49, , ,560 28, , ,570 10,771 68, , ,617 Total Revenue Bonds 964,870 $ 459,089 $ 1,423,959 Add unamortized premiums and discounts 31,008 Net Revenue Bonds $ 995,878 Line of Credit 2017* $ 134, ,000 Total Line of Credit $ 204,995 * The line of credit due in fiscal year 2017 was excluded from current liabilities, as this debt will be refinanced with long-term debt. 6. CAPITAL CONTRIBUTIONS Grants and other contributions used to acquire capital assets are classified as capital contributions. Capital contributions consisted of the following for the six months ended March 31 (in thousands): Federal Grants $ 8,770 $ 1,325 State Grants 43,834 7,860 Other 2, Total Capital Contributions $ 55,481 $ 9, OUTSTANDING CONTRACT COMMITMENTS As of March 31, 2016, the Authority had entered into contracts related to OIA totaling approximately $1.34 billion for construction, engineering services and equipment, approximately $677.1 million of which remains unincurred. Grants and passenger facility charges will be utilized to fund a portion of these projects. 14

17 8. CONTINGENT LIABILITIES GREATER ORLANDO AVIATION AUTHORITY ORLANDO INTERNATIONAL AIRPORT NOTES TO FINANCIAL STATEMENTS - UNAUDITED For the Six Months Ended March 31, 2016 Grants: The Authority receives grants from federal and state assistance programs. Amounts received or receivable under these programs are subject to audit and adjustment. The amount, if any, of disallowed costs, including amounts already collected, cannot be determined at this time, although the Authority expects such amounts, if any, to be immaterial. Construction Disputes: The Authority is aware of a dispute with a contractor arising from the construction of improvements at OIA. The contractor has filed a delay and impact claim against the Authority in the aggregate amount of approximately $13.1 million in addition to a separate delay claim in the amount of approximately $96,000. The Authority vigorously contests both claims and is negotiating a resolution with the contractor. Additionally, it is too early to evaluate any potential loss arising from the claims. As a result, no amounts arising from these claims have been recognized in the financial statements. 9. PLEDGED REVENUES The Authority has pledged future airport revenues, net of specified operating expenses, to repay $947.3 million in Airport Facilities Revenue Bonds issued from 1998 to Proceeds from the bonds provided financing for various airport capital projects and refundings for previously issued debt. The bonds are payable solely from the airport system revenues and are payable through the year The Authority has agreed to maintain rates and charges each year to provide net revenues, as defined in the applicable bond agreements, equal to at least 1.25 times the sum of the aggregate debt service on senior lien bonds each fiscal year and at least 1.00 times on all other debt. Total principal and interest remaining on the bonds as of March 31, 2016 is $1.4 billion, with annual requirements ranging from $21.8 million in 2016 to $13.6 million in the final year, with the highest requirement of $117.6 million in fiscal year For the six-month period ended March 31, 2016, principal and interest requirements were $59.6 million and total airport net revenues pledged for the year were $134.0 million. The Authority has pleadged future customer facility charges revenue to repay $17.6 million in Special Purpose Facilities Revenue Bonds issued in Proceeds from the bonds provided financing for designing, construction, and relocation of automobile rental facilities. The bonds are payable solely from the Customer Facility Charges and are payable through the year Total principal and interest remaining on the bonds as of March 31, 2016 is $19.0 million with annual requirements ranging from $0.5 million in 2016 to $9.3 million in the final year, with the highest requirement of $9.3 million in fiscal year For the six-month period ended March 31, 2016, principal and interest requirements were $8.9 million. 10. BOND ISSUANCES On October 20, 2015, the Authority issued $214.5 million in Airport Facilities Revenue Bonds, Series 2015A (AMT) (the Series 2015A Bonds ), with a true interest rate of 4.05%. The Series 2015A Bonds were issued for the purpose of providing funds for various capital improvements (the 2015A Project), refinancing on a current basis, certain draws on the lines of credit the Authority has outstanding, paying capitalized interest on the 2015A Bonds, and paying certain costs of issuance of the Series 2015A Bonds. 15

18 11. LINE OF CREDIT INDEBTEDNESS GREATER ORLANDO AVIATION AUTHORITY ORLANDO INTERNATIONAL AIRPORT NOTES TO FINANCIAL STATEMENTS - UNAUDITED For the Six Months Ended March 31, 2016 On December 18, 2009, the Authority entered into an agreement and on July 31, 2015 executed an amendment with Wells Fargo Bank, N.A. to provide the Authority with a $250 million line of credit. The line of credit is to be used as interim financing for capital projects in anticipation of the issuance of long-term bonds and/or receipt of grants, PFCs, CFCs, Authority funds and other permanent funding sources. The term of the line of credit expires on June 29, Annual fees for the unused portion of the line of credit are 25 basis points; payable quarterly. Draw fees are also payable quarterly, with taxable draws calculated based on the London Interbank Offered Rate (LIBOR) plus 100 basis points, and fees for taxexempt draws calculated at 70% of LIBOR plus 65 basis points. As of March 31, 2016, the Authority has a $70.0 million outstanding balance on the Wells Fargo line of credit. On May 22, 2013, the Authority entered into an agreement and on March 31, 2016 executed an amendment with Bank of America, N.A. to provide the Authority with a $200 million line of credit. The line of credit is to be used as interim financing for capital projects in anticipation of the issuance of longterm bonds and/or receipt of grants, PFCs, Authority funds and other permanent funding sources. The term of the line of credit expires on April 1, Annual fees for the unused portion of the line of credit are 25 basis points; payable quarterly. Draw fees are also payable quarterly, with taxable draws calculated based on LIBOR plus 100 basis points, and fees for tax-exempt draws calculated at 70% of LIBOR plus 65 basis points. As of March 31, 2016, the Authority has a $105.0 million outstanding balance on the Bank of America line of credit. On November 6, 2015, the Authority entered into an agreement with PNC Bank, N.A. to provide the Authority with a $100 million line of credit. The line of credit is to be used as interim financing for capital projects in anticipation of the issuance of long-term bonds and/or receipt of grants, PFCs, Authority funds and other permanent funding sources. The term of the line of credit expires on November 6, Annual fees for the unused portion of the line of credit are 10 basis points; payable quarterly. Draw fees are payable monthly, with taxable draws calculated based on the LIBOR plus 65 basis points, and fees for tax-exempt draws calculated at 70% of LIBOR plus 42 basis points. As of March 31, 2016, the Authority has a $30.0 million outstanding balance on the PNC line of credit. 12. ENVIRONMENTAL LIABILITIES The Authority has certain polluted sites primarily from chemical and fuel spills, asbestos, and former landfills, whereas the Authority is named or will be named a responsible or potentially responsible party or where pollution remediation has already commenced, with monitoring being completed as necessary. The Authority recorded a pollution remediation liability as of October 1, 2008, measured at $2.2 million, using the expected cash flow technique. Under this technique, the Authority estimated a reasonable range of potential outlays and multiplied those outlays by their probability of occurring. This liability could change over time due to changes in costs of goods and services, changes in remediation technology, or changes in laws and regulations governing the remediation efforts. 16

19 ORLANDO INTERNATIONAL AIRPORT NOTES TO FINANCIAL STATEMENTS - UNAUDITED For the Six Months Ended March 31, ENVIRONMENTAL LIABILITIES (continued) The possibility of recovery of some of these costs from outside governmental funding or other parties exists; however, the Authority only recognizes these recoveries in the financial statements as they become probable. The summary of the environmental activity for the six months ended March 31, 2016 related to OIA is as follows (in thousands): Balance 10/1/15 Additions or Adjustments Payments Current Year Balance 3/31/16 Pollution Remediation Liability $ 2,073 $ 114 $ (205) $ 1,982 Net Pollution Remediation Liability Recorded $ 2,073 $ 114 $ (205) $ 1,982 Reported as follows (shown in Accounts Payable and Accrued Liabilities and Other Long-Term Liabilities) Due within one year $ 564 $ 148 $ (205) $ 507 Due after one year 1,509 (34) - 1,475 $ 2,073 $ 114 $ (205) $ 1,982 The Authority has certain land sites that are being evaluated for potential remediation, in accordance with generally accepted accounting principles, or are in the post-remediation stage with monitoring being completed, as necessary, at OIA. In addition, the Authority has a polluted site from chemical and fuel spills, whereas the Authority is involved in litigation at OIA. The liabilities associated with these sites cannot be reasonably estimated and, as such, are not recorded in the financial statements. 13. RATES BY RESOLUTION On October 16, 2013, GOAA s Board approved a Resolution relating to airline rates and charges, and airline operating terms and conditions for the use of facilities and services at OIA. It was effective on November 1, The new Rate and Revenue Sharing Agreement provides for the sharing of net revenues that exceed a certain amount after the payment of debt service and other fund deposit requirements. Participating airlines that have executed a Rate and Revenue Sharing Agreement will share in net revenues that exceed $45.0 million in fiscal year 2014, $50.0 million in fiscal year 2015, and $55.0 million in fiscal year As of March 31, 2016, a liability has been recognized of $11.4 million for net revenues in excess of $55.0 million. 17

20 Authority Board Orlando Executive Airport (a Department of the Greater Orlando Aviation Authority) Orlando, Florida INDEPENDENT ACCOUNTANT S REVIEW REPORT We have reviewed the accompanying statements of net position of Orlando Executive Airport (a department of the Greater Orlando Aviation Authority) as of March 31, 2016, and the related statements of revenues, expenses, and changes in net position, cash flows, and the related notes to the financial statements for each of the six-month periods ended March 31, 2016 and A review includes primarily applying analytical procedures to management s financial data and making inquiries of the management of the Greater Orlando Aviation Authority (the Authority ). A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement whether due to fraud or error. Accountant s Responsibility Our responsibility is to conduct the review engagements in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. Those standards require us to perform procedures to obtain limited assurance as a basis for reporting whether we are aware of any material modifications that should be made to the financial statements for them to be in accordance with accounting principles generally accepted in the United States of America. We believe that the results of our procedures provide a reasonable basis for our conclusion. As discussed in Note 1 of the notes to the financial statements, the financial statements of Orlando Executive Airport are intended to present the financial position and the changes in financial position, and cash flows of only that portion of the activities of the Authority that is attributable to the transactions of the Orlando Executive Airport. They do not purport to, and do not, present fairly the financial position of the Authority as of March 31, 2016, and the changes in its financial position and its cash flows for the six-month periods ended March 31, 2016 and 2015 in conformity with accounting principles generally accepted in the United States of America. 18

21 Authority Board Orlando Executive Airport (a Department of the Greater Orlando Aviation Authority) Accountant s Conclusion Based on our reviews, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in accordance with accounting principles generally accepted in the United States of America. Prior Period Statements of Net Position The statement of net position of the Orlando Executive Airport as of September 30, 2015, was audited by us, and we expressed an unmodified opinion on that statement in relation to the financial statements of the Authority as a whole in our report dated March 9, 2016, but we have not performed any auditing procedures since that date. MOORE STEPHENS LOVELACE, P.A. Certified Public Accountants Orlando, Florida May 16,

22 ORLANDO EXECUTIVE AIRPORT STATEMENTS OF NET POSITION - UNAUDITED (in thousands) ASSETS AND DEFERRALS March 31, September 30, Current Assets Unrestricted: Cash and cash equivalents $ 6,100 $ 6,151 Accounts and grants receivable Investments 1,502 2,497 Interest receivable 14 3 Due from Orlando International Airport 38 - Due from other governmental agencies 476 1,195 Prepaid expenses Total current assets 8,204 9,920 Noncurrent Assets Restricted: Cash and cash equivalents Total restricted assets Unrestricted assets: Investments 5,495 4,506 Employee postemployment benefits assets Total unrestricted assets 5,677 4,688 Capital assets, net of accumulated depreciation: Property and equipment 29,044 29,583 Property held for lease 7,232 7,343 Construction in progress Total capital assets, net of accumulated depreciation 36,292 37,265 Total noncurrent assets 42,647 42,583 Total assets 50,851 52,503 Deferred outlows of resources (continued) See accompanying independent accountants review report and notes to financial statements. 20

23 ORLANDO EXECUTIVE AIRPORT STATEMENTS OF NET POSTION - UNAUDITED (in thousands) LIABILITIES, DEFERRALS, AND NET POSITION March 31, September 30, Current Liabilities Accounts payable and accrued liabilities $ 417 $ 553 Unearned revenue - 14 Advance rent from tenants, current Due to Orlando International Airport Due to other governmental agencies Total current liabilities 843 1,387 Noncurrent Liabilities Net pension liability Advance rent from tenants, long-term 1,268 1,364 Other long-term liabilities Total noncurrent liabilities 1,796 1,841 Total liabilities 2,639 3,228 Deferred inflows of resources Net Position Net investment in capital assets 36,292 37,265 Restricted for: Capital acquisitions and construction Unrestricted 11,334 11,378 Total net position $ 48,304 $ 49,273 See accompanying independent accountants review report and notes to financial statements. 21

24 ORLANDO EXECUTIVE AIRPORT STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - UNAUDITED For the Six Months Ended March 31, (in thousands) Operating Revenues Airfield area $ 93 $ 75 Terminal area Commercial property 978 1,027 Other airport related Total operating revenues 1,447 1,465 Operating Expenses Operations and facilities Safety and security Administration Other Total operating expenses 1,508 1,402 Operating (loss) income before depreciation (61) 63 Depreciation (1,044) (988) Operating loss (1,105) (925) Nonoperating Revenues Investment income Net increase in the fair value of investments 8 2 Federal and state grants Other - 5 Loss before capital contributions (987) (829) Capital Contributions Decrease in net position (969) (173) Total Net Position, Beginning of Period-As Restated 49,273 48,355 Total Net Position, End of Period $ 48,304 $ 48,182 See accompanying independent accountants review report and notes to financial statements. 22

25 ORLANDO EXECUTIVE AIRPORT STATEMENTS OF CASH FLOWS - UNAUDITED For the Six Months Ended March 31, (in thousands) Cash flows from operating activities Cash received from customers, tenants, and governmental agencies $ 1,306 $ 1,332 Cash paid to suppliers and governmental agencies (1,248) (957) Cash paid to employees for services (547) (520) Other income - 5 Net cash used for operating activities (489) (140) Cash flows from noncapital financing activities Operating grants Net cash provided by noncapital financing activities Cash flows from capital and related financing activities Acquisition and construction of capital assets (364) (116) Capital contributed by federal grants and state agencies Net cash provided by (used for) capital and related financing activities 354 (87) Cash flows from investing activities Purchase of investments (4,985) (2,000) Proceeds from sale or maturity of investments 5,000 - Interest received Net cash provided by (used for) investing activities 27 (1,990) Decrease in cash and cash equivalents (3) (2,063) Cash and Cash Equivalents, Beginning of Period 6,781 5,119 Cash and Cash Equivalents, End of Period $ 6,778 $ 3,056 (1) Cash and Cash Equivalents Unrestricted Assets $ 6,100 $ 2,334 Cash and Cash Equivalents Restricted Assets $ 6,778 $ 3,056 (continued) See accompanying independent accountants review report and notes to financial statements. 23

26 ORLANDO EXECUTIVE AIRPORT STATEMENTS OF CASH FLOWS - UNAUDITED For the Six Months Ended March 31, (in thousands) Reconciliation of operating loss to net cash used for operating activities Operating loss $ (1,105) $ (925) Adjustments to reconcile operating loss to net cash used for operating activities Depreciation 1, Other income - 5 (Increase) Decrease in operating assets Accounts and grants receivable (39) (8) Prepaid expenses Deferred outflows of resources (78) 6 Increase (Decrease) in operating liabilities Accounts payable and accrued liabilities (136) (42) Unearned revenue (14) - Due to other governmental agencies - 3 Advance rent from tenants (96) (106) Net pension liability 51 (69) Due to other funds (139) (27) Deferred inflows of resources (16) (4) Total adjustments Net cash used for operating activities $ (489) $ (140) Noncash Investing, Capital and Financing Activities Increase in fair value of investments $ 8 $ 2 Capital contributions from other governments $ (700) $ 627 See accompanying independent accountants review report and notes to financial statements. 24

27 ORLANDO EXECUTIVE AIRPORT NOTES TO FINANCIAL STATEMENTS - UNAUDITED For the Six Months Ended March 31, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Purpose: The Orlando Executive Airport (OEA) functions as a self-supporting department operated by the Greater Orlando Aviation Authority (the Authority), and uses the accrual method of accounting. The Authority also operates Orlando International Airport (OIA). The department financial statements of OIA are presented separately. Basis of Presentation and Accounting: The accompanying unaudited department financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal, recurring accruals) considered necessary for a fair presentation have been included. Prior period amounts have been reclassified to conform to the current period presentations. Operating results for the six-month period ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending September 30, For further information, refer to the financial statements and footnotes thereto included in the Comprehensive Annual Financial Report (CAFR) for the year ended September 30, Implementation of New Accounting Standards: The GASB issued Statement Number 68, Accounting and Financial Reporting for Pensions (as amended by GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date), effective for fiscal year ended September 30, The Authority implemented these standards effective March 31, These statements replace the requirements of Statement No. 27 and No. 50 related to pension plans that are administered through trusts and equivalent arrangements, and establish standards for measuring and recognizing liabilities, deferrals, and expenses. The requirements of GASB No. 68 and 71 require an adjustment to eliminate the net pension asset and recognition of a net pension liability for the defined pension plan. (The remainder of the page is intentially left blank) 25