COMPREHENSIVE ANNUAL FINANCIAL REPORT

Transcription

1 COMPREHENSIVE ANNUAL FINANCIAL REPORT AS OF AND FOR THE YEARS ENDED SEPTEMBER 30, 2012 AND 2011 NAPLES, FLORIDA NAPLES MUNICIPAL AIRPORT The Best Little Airport in the Country

2 NAPLES, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT AS OF AND FOR THE YEARS ENDED SEPTEMBER 30, 2012 AND 2011 Prepared By: FINANCE DEPARTMENT

3 Comprehensive Annual Financial Report As of and for the Years Ended September 30, 2012 and 2011 TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal Board of Commissioners and Executive Director Certificate of Achievement for Excellence in Financial Reporting Organizational Chart PAGE i vii viii ix FINANCIAL SECTION Independent Auditors Report 1 Management s Discussion and Analysis 3 Financial Statements: Statements of Net Assets 10 Statements of Revenues, Expenses, and Changes in Net Assets 11 Statements of Cash Flows 12 Notes to Financial Statements 14 Supplementary Information: Schedule of Revenues, Receipts, Expenses and Expenditures Non-GAAP Budgetary Basis and Actual 26 STATISTICAL SECTION Changes in Net Assets by Component, Last Eight Fiscal Years 30 Changes in Net Assets, Last Eight Fiscal Years 31 Average Aviation Fuel Margins (Per Gallon) 33 Aviation Fuel Sales (Gallons) 33 Aviation Fuel Sales (Net Revenue) 34 Principal Customers by Gross Sales 35 Principal Customers by Aviation Fuel Gallons 35 Ratios of Outstanding Debt 36 Debt Limitations 36 Pledged-Revenue Coverage 37 Demographic and Economic Statistics 38 Principal Employers 39 Aviation Fuel and Aircraft Operations Statistics 40 Commercial Passenger Statistics 41

4 Full-Time Equivalent Employees by Function 42 Airport Information 43 Capital Contributions 44 COMPLIANCE SECTION Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards 45 MANAGEMENT LETTER Management Letter 47 Response to Management Letter 49

5

6

7

8

9

10

11 City of Naples Airport Authority Cormac J. Giblin Chairman Ernest W. Linneman Vice-Chairman John N. Allen Commissioner Linda C. Flewelling Commissioner Robert J. Sullivan III Commissioner Theodore D. Soliday Executive Director vii

12 viii

13 Administrative Assistant Operations Manager Assistant Operations Manager Security Staff Duty Officers Operations Staff ORGANIZATIONAL CHART Board of Commissioners Executive Director Deputy Executive Director Executive Assistant Administrative Assistant - Human Resouces Director of Operations Director of Finance and Administration Director of Airport Development and Facilities Information Technology Finance and Administration Manager Administrative Assistant Assistant Director of Airport Development and Facilities Accounting Staff Administrative Assistant Maintenance Staff Administrative Staff Custodial Supervisor Custodial Staff ix

14 x

15

16

17 MANAGEMENT'S DISCUSSION AND ANALYSIS The following Management Discussion and Analysis (MD&A) of the City of Naples Airport Authority's activities and financial performance provides the reader with an introduction and overview to the financial statements of the City of Naples Airport Authority (the Authority) for the fiscal years ended September 30, 2012 and 2011, with selected comparative information for the fiscal year ended September 30, The information presented in this MD&A should be considered in conjunction with the accompanying financial statements, notes, and supplementary information found in this report. This information, taken collectively, is designed to provide readers with an understanding of the Authority s finances. Airport Activities and Highlights The Authority operates the Naples Municipal Airport which provides both general aviation and non-scheduled commercial airline service to the public. Major measures of activities of the Naples Municipal Airport are as follows: Aviation fuel gallons sold 5,047,000 4,889,000 4,491,000 % increase (decrease) from prior year 3.2% 8.9% (2.6)% Aircraft operations 87,000 84,000 86,000 % increase (decrease) from prior year 3.6% (2.3)% (23.9)% Enplanements (scheduled) % increase (decrease) from prior year 0.0% 0.0% (100.0)% From 2008 through 2010, the number of aviation fuel gallons sold decreased annually, attributed to the national economic downturn. The increases in gallons sold of 3.2% and 8.9% in 2012 and 2011, respectively, reflect a turnaround in the economy and the travel industry. The number of aircraft operations increased in 2012, after having decreased annually from 2006 through Ramp space and airspace capacity in Southwest Florida are demand-driven and occasionally ramp space is not available during peak season for all aircraft that wish to utilize the airport for short durations regardless of services received. The significant reduction in aircraft operations in 2010 reflects the impact of the national economic downturn. The turnaround in the economy begins to show in the number of operations in 2011 and has continued to improve in Naples Municipal Airport provided scheduled commercial air service to the community for 50+ years. In 2009 the Airport lost all scheduled commercial air service. In order to support the community and provide the level of service they desire, the Authority continues its efforts to bring scheduled commercial air service back to Naples Municipal Airport. 3

18 Financial Highlights and Summary The following is a condensed summary of the Authority s revenues, expenses and changes in net assets at September Total operating revenues, net $ 10,475,000 $ 10,200,000 $ 9,332,000 Total non-operating revenues 325, , ,000 Total revenues 10,800,000 10,725,000 9,620,000 Total operating expenses 10,310,000 9,885,000 9,337,000 Total non-operating expenses 78,000 29,000 30,000 Total expenses 10,388,000 9,914,000 9,367,000 Income before capital contributions 412, , ,000 Capital contributions 384,000 2,366,000 3,666,000 Increase in net assets 796,000 3,177,000 3,919,000 Beginning net assets 64,965,000 61,788,000 57,869,000 Ending net assets $ 65,761,000 $ 64,965,000 $ 61,788,000 Operating revenues for 2012 increased $275,000 over the prior year. This 2.7% increase is attributed largely to a $60,000 or 58.3% increase in user fees for U.S. Customs and Border Protection services (2012 was the first full year the facility was in operation). Building and land rental revenue increased 6.5% due to increased tenancy. While not a significant percentage increase, net fuel sales increased $71,000 or 1.1% over the prior year. Hangar/T-shelter/tiedown revenues increased by $54,000 or 3.2% related to increased tenancy. Operating revenues for 2011 increased $868,000 over the prior year. This 9.3% increase is attributed to a 10% increase each in fuel sales, concession fees from rental car companies, and ramp fee revenues. While at a lesser percentage increase of 6.7%, hangar/t-shelter/tiedown revenues increased by $105,000. Another significant contributing factor was the opening of the U.S. Customs and Border Protection operations in December 2010, which generated $103,000 in revenues for the ninemonth period. Non-operating revenues for 2012 decreased $200,000 from the prior year. This 38.1% decrease is because in 2011 non-operating revenue included grant revenues of $229,000, which were final settlement for damages incurred from Hurricane Wilma in An increase in Customer Facility Charges of $21,000, related to increased car rental activity, partially offsets this decrease. The recognized reduction in the unrealized loss on investment with the Local Government Surplus Funds Trust Fund s Fund B in 2012 is $51,000, an increase of 30.8% from Non-operating revenues for 2011 increased $237,000 over the prior year. This 82.3% increase is attributed to the receipt of grant revenue; an increase in interest revenue related to the increase in cash balances; an increase in Customer Facility Charges related to increased car rental activity; 4

19 and receipt of a Workers Compensation policy dividend, offset by a decrease on the Authority s unrealized gain on investments. Operating expenses in 2012 were $425,000 greater than This 4.3% increase is attributed to small increases in the cost of personnel and insurances, as well as expenses of hosting the Florida Airport Council annual conference. The operating expenses of the U.S. Customs and Border Protection operation decreased by $43,000 or 4.2% from 2011 because there were one-time startup costs in Depreciation expense increased 13.4% over the prior year due to the completion of the Runway 5-23 pavement rehabilitation project and other assets. Maintenance and repair expenses in 2012 were 7.6% less than in the prior year, as 2011 included several large one-time expenses for swale maintenance. Operating expenses in FY 2011 were $548,000 greater than in FY This 5.9% increase is attributed to increased cost of personnel as well as expenses of operating the new U.S. Customs and Border Protection operation. Depreciation expense increased 6.4% over the prior year due to the addition of the Customs Building and other assets. Maintenance and repair expenses in FY 2011 were 43.0% less than in the prior year, as FY 2010 included several large one-time expenses for swale maintenance and repairs to the Executive Hangar II (see Introductory Section). In 2012, non-operating expenses increased by $49,000, reflecting the cost of water utility infrastructure that was built as part of a 2012 capital construction project and immediately transferred to the City of Naples. In 2011, non-operating expenses decreased $1,000, reflecting the imputed non-cash interest expense on advance rental credits for Braniff Plan lease. In 2012, capital contributions for construction projects total $384,000, with $235,000 coming from a grant from the Federal government for the final expenditures for Runway 5-23 rehabilitation and $147,000 for the initial costs of the new water management improvement and Taxiway A extension project. The FDOT also contributed $2,000 for this project. In 2011, capital contributions of $2.4 million were received, with $1.7 million in the form of a grant from the Federal government for specific capital improvement projects and $642,000 in the form of a hangar that was acquired through the termination of a tenant s lease. The following chart shows the major sources of operating revenue as a percentage of total operating revenues for the year ended September 30, Other 0.2% U.S. Customs & Border Protection 1.6% Fuel Sales (net) 62.2% Line services 4.0% Building and land rent 9.7% Hangar/Tshelter/tiedown 16.4% Concession fees 5.9% 5

20 The following is a summary of the Authority s operating revenues at 30 September Operating revenues: Fuel sales (net) $ 6,512,000 $ 6,441,000 $ 5,860,000 Concession fees 623, , ,000 Hangar/T-shelter/tiedown 1,718,000 1,664,000 1,559,000 Building and land rent 1,020, , ,000 Line services 423, , ,000 U.S. Customs & Border Protection 163, ,000 - Other 16,000 17,000 35,000 Total operating revenues $ 10,475,000 $ 10,200,000 $ 9,332,000 The following chart shows the major sources of operating expense before depreciation as a percentage of total operating expenses before depreciation for the year ended September 30, U.S. Customs & Border Protection 4.2% ATCT, ARFF and police service 9.8% Utilities and environmental 3.8% Insurance 6.8% Communications 1.4% Maintenance and repair 6.0% Other 2.7% Professional fees 6.3% Personnel 59.0% The following is a summary of the Authority s operating expenses before depreciation at September Operating expenses: Personnel $ 4,219,000 $ 3,992,000 $ 3,742,000 Professional fees 452, , ,000 Communications 102, ,000 62,000 Insurance 480, , ,000 Utilities and environmental 274, , ,000 ATCT, ARFF and police service 697, , ,000 U.S. Customs & Border Protection 299, ,000 - Maintenance and repair 427, , ,000 Other 196, , ,000 Total operating expenses before depreciation $ 7,146,000 $ 7,094,000 $ 6,713,000 6

21 The following is a condensed summary of the Authority s net assets at September Current and other assets $ 16,658,000 $ 16,489,000 $ 15,278,000 Capital assets (after depreciation) 51,298,000 51,583,000 48,533,000 Total assets 67,956,000 68,072,000 63,811,000 Current liabilities 1,968,000 2,658,000 1,617,000 Noncurrent liabilities 227, , ,000 Total liabilities 2,195,000 3,107,000 2,023,000 Net assets: Invested in capital assets, net 51,298,000 51,583,000 48,533,000 Restricted 648, , ,000 Unrestricted 13,815,000 12,911,000 12,967,000 Net assets $ 65,761,000 $ 64,965,000 $ 61,788,000 Total assets decreased by $116,000 or 0.2% in Cash and cash equivalents, accounts receivable and funds due from governmental agencies together increased by $269,000, but those increases only partially offset the $373,000 increase in accumulated depreciation. Total liabilities decreased by $912,000 or 29.4% due to a decrease in accounts payable related to capital projects and an increase in deferred revenue. In 2011, total assets increased by $4.3 million or 6.7% over This increase is attributed to the large amount of capital improvement projects during the year accomplished with a Federal grant. Total liabilities increased by $1.1 million or 53.6% over 2010 due to an increase in accounts payable related to capital projects. The Authority s total assets exceeded liabilities by $65.8 million and $65.0 million in 2012 and 2011 respectively. The largest portion of the Authority s net assets each year (78.0% of total net assets for 2012) represents its investment in capital assets (e.g. land, infrastructure, buildings, improvements, intangible assets and equipment). Restricted net assets consist of the accumulated balance of Customer Facility Charges collected by car rental companies. The money is available for car rental facility improvements. The remaining $13.8 million of net assets (21.0% of total net assets for 2012) may be used to meet any of the Authority s ongoing obligations. A comparison of the Authority's current assets to current liabilities (current ratio) is a way to analyze the Authority's ability to satisfy short-term obligations as they become due. A low ratio may indicate an inability to meet its short-term debts in an emergency. A high ratio is considered favorable to creditors, but may indicate excessive investment in working capital items. The decrease in the Authority s current ratio from 9.22 for 2010 to 6.06 for 2011 is attributed to the increase in accounts payable related to capital projects. The increase in the Authority s current ratio to 8.24 in 2012 is attributed to the influx of cash and receivables from operating activities during the year which exceeded the payment of 2011 s outstanding accounts payable and 2012 investment in capital assets. The Authority s net assets increased $3.2 million in 2011 over 2010, and further increased $796,000 in

22 The following is a summary of the major sources and uses of cash and cash equivalents for the past three years. Cash Equivalents are considered cash-on-hand, bank deposits and highly liquid investments with a maturity of three months or less when purchased Cash flows from: Operating Activities $ 3,514,000 $ 3,011,000 $ 2,657,000 Non-Capital Financing Activities - 229,000 - Capital and Related Financing Activities (3,616,000) (2,323,000) (2,100,000) Investing Activities 109, , ,000 Net increase in Cash and Cash Equivalents 7,000 1,058, ,000 Cash and Cash Equivalents: Beginning of Year 15,012,000 13,954,000 13,253,000 End of Year $ 15,019,000 $ 15,012,000 $ 13,954,000 The Authority s available cash and cash equivalents was $15.0 million at the end of 2011 and An increase of $7,000 in cash and equivalents in 2012 is attributed to an increase in net operating revenues offset by payment of 2011 s accounts payable. The increase in cash and cash equivalents of $1.1 million in 2011 is attributed to increased net operating revenues. The Authority does not have a written investment policy as defined by Florida Statute , and therefore its investment options are limited. Authority investments are held in the Local Government Surplus Funds Trust Fund Investment Pool Fund B administered by the State Board of Administration. Fund B consists of restructured or defaulted securities and it is uncertain if the Authority will recover the total amount of these funds upon maturity. As of September 30, 2012, $209,000 was invested in Fund B, as compared to $254,000 at the end of Based on information provided to the Authority by the State Board of Administration, the Authority recognized two years of unrealized losses totaling $186,000, and has recognized unrealized gains of $51,000, $32,000 and $93,000 in 2012, 2011 and 2010 respectively. Capital Acquisitions and Construction Activities At the end of 2012, the Authority had $51.3 million, net of accumulated depreciation, invested in a broad range of capital assets, including its terminal and office buildings, aircraft hangars, fuel facilities and equipment, runways and taxiways, and buildings and equipment for fire/rescue, air traffic control, and U.S. Customs. This amount represents a net decrease of $285,000 or 0.6% from the prior year. For most of 2012 the Authority was between major construction projects and the increase in accumulated depreciation was greater than the additions to capital assets. During 2012, completed projects totaling $6.9 million were closed from construction-in-progress to their respective capital asset accounts. The major completed projects were: Displaced Thresholds & Environmental Assessment $3,254,000 Runway 5-23 Rehabilitation 2,385,000 GAT Restroom Expansion 351,000 8

23 Road Construction (APF III) 311,000 Observation Area 161,000 Small projects and equipment 441,000 $6,903,000 At the end of 2012 major projects within construction-in-progress consisted of the following: Water Management Improvements/Taxiway A $ 164,000 West Quad Detention Pond 46,000 Pavement Improvements Design 71,000 North Quad Infrastructure R/W 30,000 Small projects 28,000 $ 339,000 Capital asset acquisitions and improvements are funded using a variety of financing techniques, including Federal and State grants, airport funds, and airport revenues. Additional information on the Authority s capital assets and commitments can be found in Notes 3 and 13, of the notes to the financial statements. Debt In January 2006, the Authority paid off its outstanding debt. No new debt has been issued in fiscal years 2007 through Information about the Authority's previous loans and debt capacity is provided in the Statistical Section of this Comprehensive Annual Financial Report. Economic Factors and Future Impacts The Authority financially supports itself directly from airport user fees and indirectly by airport user taxes. No local, state or federal general taxes, such as property, utility, sales, intangible property or income taxes directly support the Authority. The Authority receives, for certain capital projects, state and federal financial grants from trust funds established largely from aviation fuel taxes and airline ticket taxes. The Authority is dedicated to supporting our community and providing the level of air service they desire. In order to entice air carriers to the Naples Municipal Airport, the Authority will continue to waive rents and fees, provide marketing support and complete ground handling support services, and provide complete personnel support and related equipment to scheduled air carriers providing a minimum of twelve months continuous service to a major hub from Naples Municipal Airport. Contacting the Authority's Financial Management This financial report is designed to provide a general overview of the Authority's finances and to demonstrate the Authority's accountability for the money it receives. If you have questions about this report or require additional financial information, please contact the Authority's Director of Finance at 160 Aviation Drive North, Naples, Florida,

24 STATEMENTS OF NET ASSETS September 30, ASSETS CURRENT ASSETS Cash and cash equivalents $ 14,371,000 $ 14,541,000 Restricted cash 648, ,000 Accounts receivable (net) 503, ,000 Inventories 429, ,000 Due from governmental agencies 149,000 47,000 Prepaid expenses 111, ,000 Total current assets 16,211,000 16,104,000 NONCURRENT ASSETS Investment 198, ,000 Other asset 249, ,000 Capital assets (net) 51,298,000 51,583,000 Total noncurrent assets 51,745,000 51,968,000 LIABILITIES Total assets 67,956,000 68,072,000 CURRENT LIABILITIES Accounts payable 518,000 1,675,000 Deferred revenue 950, ,000 Compensated absences 444, ,000 Accrued expenses and other liabilities 46,000 44,000 Advance rental credits 10,000 16,000 Total current liabilities 1,968,000 2,658,000 NONCURRENT LIABILITIES Compensated absences 227, ,000 Advance rental credits - 10,000 Total noncurrent liabilities 227, ,000 Total liabilities 2,195,000 3,107,000 NET ASSETS Invested in capital assets 51,298,000 51,583,000 Restricted for rental car facility improvements 648, ,000 Unrestricted 13,815,000 12,911,000 Total net assets $ 65,761,000 $ 64,965,000 The notes to the financial statements are an integral part of this statement. 10

25 STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS Years Ended September 30, OPERATING REVENUES Fuel sales (net) $ 6,512,000 $ 6,441,000 Concession fees 623, ,000 Hangar/T-shelter/tiedown 1,718,000 1,664,000 Building and land rent 1,020, ,000 Line services 423, ,000 U.S. Customs and Border Protection user fees 163, ,000 Other 16,000 17,000 Net operating revenues 10,475,000 10,200,000 OPERATING EXPENSES Personnel 4,219,000 3,992,000 Professional fees 452, ,000 Communications 102, ,000 Insurance 480, ,000 Utilities and environmental 274, ,000 Office/postage/printing 35,000 37,000 ATCT, ARFF and police service 697, ,000 U.S. Customs and Border Protection 299, ,000 Dues/subscriptions/fees 35,000 37,000 Auto gas and diesel fuel 71,000 53,000 Pilot services 55,000 51,000 Maintenance and repair 427, ,000 Depreciation and amortization 3,164,000 2,791,000 Total operating expenses 10,310,000 9,885,000 Operating income 165, ,000 NON-OPERATING REVENUES (EXPENSES) Customer facility charges 207, ,000 Interest revenue 64,000 75,000 Unrealized gain on investments 51,000 32,000 Grant revenue - 229,000 Advance rental credit expense (28,000) (29,000) Contribution of capital asset to government agency (50,000) - Gain on disposal of capital assets 3,000 3,000 Total non-operating revenues (expenses) 247, ,000 Income before capital contributions 412, ,000 Capital contributions 384,000 2,366,000 Change in net assets 796,000 3,177,000 Total net assets - beginning 64,965,000 61,788,000 Total net assets - ending $ 65,761,000 $ 64,965,000 The notes to the financial statements are an integral part of this statement. 11

26 STATEMENTS OF CASH FLOWS Years Ended September 30, CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 27,321,000 $ 25,384,000 Cash payments to suppliers for goods and services (19,663,000) (18,491,000) Cash payments for personnel services (4,174,000) (3,899,000) Other operating revenues 16,000 17,000 Net cash provided by operating activities 3,500,000 3,011,000 CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Operating grants received - 229,000 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Customer facility charges 207, ,000 Acquisition and construction of capital assets (4,094,000) (4,236,000) Capital contributed 282,000 1,724,000 Proceeds from sale of capital assets 3,000 3,000 Net cash used in capital and related financing activities (3,602,000) (2,323,000) CASH FLOWS FROM INVESTING ACTIVITIES Interest and dividends on investments 64,000 75,000 Increase in cash equivalents for transfer from SBA Fund B investments 45,000 66,000 Net cash provided by investing activities 109, ,000 Net increase in cash and cash equivalents 7,000 1,058,000 CASH AND CASH EQUIVALENTS, beginning of year 15,012,000 13,954,000 CASH AND CASH EQUIVALENTS, end of year $ 15,019,000 $ 15,012,000 RECONCILIATION OF CASH AND CASH EQUIVALENTS Restricted cash $ 648,000 $ 471,000 Unrestricted cash and cash equivalents 14,371,000 14,541,000 $ 15,019,000 $ 15,012,000 12

27 STATEMENTS OF CASH FLOWS (Continued) Years Ended September 30, RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating income $ 164,000 $ 315,000 Adjustments to reconcile operating income to net cash provided by operating activities Depreciation and amortization 3,164,000 2,791,000 Revenue recognized from advance rental credits (44,000) (44,000) Revenue recognized from land lease (55,000) (55,000) Changes in net assets and liabilities (Increase) decrease in accounts receivable (160,000) 16,000 Decrease (increase) in inventories 45,000 (140,000) (Increase) decrease in prepaid expenses 117,000 (8,000) Increase (decrease) in accounts payable 130,000 (98,000) Increase in compensated absences 43,000 68,000 Increase in accrued expenses and other current liabilities 2,000 24,000 Increase in deferred revenue 94, ,000 Total adjustments 3,336,000 2,696,000 NET CASH PROVIDED BY OPERATING ACTIVITIES $ 3,500,000 $ 3,011,000 NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES Contribution of hangar $ - $ 642,000 Transfer of capital asset to other unit of government $ (50,000) $ - Unrealized gain (loss) on investment activities $ 51,000 $ 32,000 13

28 NOTES TO FINANCIAL STATEMENTS September 30, 2012 and 2011 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting entity The City of Naples Airport Authority (the Authority ) was created under Laws of Florida , as amended, as an independent authority responsible for the operation of the airport located in Naples, Florida, or any other airport in Collier County, Florida, which the Authority may contract to operate. The City of Naples, recognizing the benefits of an authority type management concept, established the Authority in 1969 for the purpose of enhancing service to users, improving the community gateway image and eliminating financial subsidies by City taxpayers. Commissioners of the Authority are appointed by the Naples City Council. (Also see Note 11 - Related Party Transactions). Governmental Accounting Standards Board (GASB) Statement Number 14, Financial Reporting Entity, as amended, requires the financial statements of the Authority (the primary government) to include its component units, if any. A component unit is a legally separate organization for which the officials of the primary government are financially accountable. Based on the criteria established in GASB Statement Number 14, there are no component units required to be included in the Authority s financial statements. B. Basis of presentation The Authority uses enterprise fund accounting to report its activities. An enterprise fund is a proprietary fund used to account for business-like activities provided to the general public. These activities are financed primarily by user charges and the measurement of financial activity focuses on net income measurement similar to the private sector. C. Measurement focus The Authority is accounted for on an economic resources measurement focus. Accordingly, all assets and liabilities are included on the statement of net assets, and the reported net assets (total reported assets less total reported liabilities) provides an indication of the economic net worth of the Authority. The operating statement reports increases (revenues) and decreases (expenses) in total economic net worth. D. 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 Authority is accounted for by using the accrual basis of accounting. Under this method, revenues are recognized when they are earned; expenses are recognized when they are incurred. 14

29 NOTES TO FINANCIAL STATEMENTS September 30, 2012 and 2011 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Basis of accounting (continued) Pursuant to GASB Statement Number 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting, the Authority has elected not to apply accounting standards issued after November 30, 1989 by the Financial Accounting Standards Board. E. Budgetary process The budget is adopted by Resolution of the Board of Commissioners and amendments, if any, are approved by the Board of Commissioners. The budget is adopted consistent with Generally Accepted Accounting Principles (GAAP) except that in order to clarify the Authority s intent for total expenses and expenditures, capital projects and principal payments on notes payable are included as expenditures and depreciation and amortization are excluded. Expenditures cannot legally exceed the total amount of budgeted expenditures. Appropriations lapse at the fiscal year-end. F. Use of estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management's knowledge of current events and actions it may undertake in the future, they may differ from actual results. G. Assets, liabilities and net assets Cash and investments Investments are funds invested with the State Board of Administration of Florida in the Fund B Surplus Funds Trust Fund, a fluctuating net asset value (NAV) money market investment pool. These funds are recorded at their fair value. For purposes of the statements of cash flows, the Authority considers all highly liquid investments (including restricted cash assets) with a maturity of three months or less when purchased to be cash equivalents. The Authority s investment in the Fund B Surplus Funds Trust Fund Investment Pool is not considered a cash equivalent and is reported as a noncurrent asset on the statement of net assets. When both restricted and unrestricted resources are available, restricted resources will be used first for eligible incurred expenses, and then unrestricted as needed. 15

30 NOTES TO FINANCIAL STATEMENTS September 30, 2012 and 2011 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) G. Assets, liabilities and net assets (continued) Accounts receivable The Authority s accounts receivable are recorded net of allowance for doubtful accounts. Inventories Inventories, consisting of aviation fuel and other petroleum products, are stated at the lower of cost (first-in, first-out method) or market. Capital assets Capital assets include property, plant, equipment, infrastructure and intangible assets. Infrastructure assets are defined as public domain capital assets such as roads, drainage systems, lighting systems, runways, and similar assets that are immovable and of value only to the government unit. Intangible assets are without physical substance that provide economic benefits through the rights and privileges associated with their possession. Intangible assets may be classified as identifiable or unidentifiable and externally acquired or internally developed. The threshold for capitalization is $2,000. Capital assets purchased for use in the operations of the Authority are recorded at cost. Interest on borrowed funds for construction projects is capitalized as part of the cost of construction along with all other direct construction costs. Contributed property and equipment are recorded at fair market value at the date of contribution. Expenditures for maintenance, repairs, and minor renewals are expensed as incurred. Major renewals and enhancements are capitalized. The cost of assets retired or sold, together with the related accumulated depreciation, is removed from the accounts, and any gain or loss on disposition is credited or charged to earnings. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets. The estimated useful lives are determined based upon the Authority s experience with similar assets and its planned use of those assets. The ranges of the estimated useful lives are as follows: Assets Years Infrastructure Buildings & Improvements Equipment 3 30 Improvements other than buildings 5 15 Vehicles 5 10 Intangible 3 7 Furniture and office equipment

31 NOTES TO FINANCIAL STATEMENTS September 30, 2012 and 2011 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) G. Assets, liabilities and net assets (continued) Compensated absences Employees accrue vacation time for each week of service. The amount of time accrued by each employee varies with length of employment and whether they are full-time or part-time employees. The Authority allows employees to carryover into subsequent fiscal years up to 340 hours of vacation time. Upon leaving the employ of the Authority, employees are paid 100% of their accrued vacation time. Employees receive up to 10 sick days per year depending on whether they are full-time or part-time employees. The Authority allows employees to carryover into subsequent fiscal years up to 600 hours of sick time. Employees exceeding 600 hours will be paid 50% of the sick hours exceeding the 600 hours annually. Upon leaving the employ of the Authority, employees with at least seven years of service will be paid 50% of their available sick hours. In accordance with GASB Statement Number 16 Accounting for Compensated Absences, benefits under these policies, plus their related tax and retirement costs, are classified as compensated absences and are accrued for as incurred. Deferred revenue The Authority offers a reduced fuel price to customers who pay for aviation fuel in advance. The prepayments are recorded as a liability when received and the liability is reduced as the associated revenues are earned. Net assets Net assets are categorized as invested in capital assets (net of related debt), restricted and unrestricted. Restriction of net assets indicates amounts that are limited for a specific purpose. Restricted for debt service is used to segregate resources accumulated for current or future debt service payments. Restricted for rental car facilities improvements is used to segregate resources accumulated for certain projects. H. Revenues and expenses Operating revenues and expenses Operating revenues and expenses for enterprise funds are those that result from providing services and producing and delivering goods. It also includes all revenue and expenses not related to capital and related financing, noncapital financing, or investing activities. 17

32 NOTES TO FINANCIAL STATEMENTS September 30, 2012 and 2011 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) H. Revenues and expenses (continued) Non-operating revenues and expenses Non-operating revenues and expenses represent revenue and expense items that are not incurred from the normal user activity of the Authority. This classification includes revenue received from operating grants, passenger and customer facility charges, surcharges for specific capital improvement expenditures, interest earned on bank accounts and notes receivable, interest paid on debt service, finance charge revenue, noncash interest expense related to an advance rental credit agreement, and the gain or loss on the sale or disposal of Authority property. I. Capital contributions Capital contributions consist primarily of grants and contributions from federal and state governmental agencies. Capital contributions are recognized as earned as related project costs are incurred. Donated property is recognized when received. NOTE 2 - CASH AND INVESTMENTS Deposits Custodial credit risk is the risk that in the event of a bank failure, the Authority s deposits may not be returned to it. In accordance with its policy, all Authority depositories are banks designated by the Florida State Chief Financial Officer (CFO) as qualified public depositories. Chapter 280 of the Florida Statutes Florida Security for Public Deposits Act provides procedures for public depositories to ensure public monies in banks and saving and loans are collateralized with the CFO as agent for the public entities. Chapter 280 defines deposits as demand deposit accounts, time deposit accounts, and nonnegotiable certificates of deposit. Financial institutions qualifying as public depositories shall deposit with the CFO eligible collateral having a market value equal to or in excess of the average daily balance of public deposits times the depository collateral pledging level required pursuant to Chapter 280 as computed and reported monthly or 125 percent of the average monthly balance, whichever is greater. The Public Deposit Security Trust Fund has a procedure to allocate and recover losses in the event of a default or insolvency. When public deposits are made in accordance with Chapter 280, no public depositor shall be liable for any loss thereof, and therefore, the Authority is not exposed to custodial credit risk. With the nonnegotiable certificate of deposit, there is no document that, if lost or stolen, would affect the Authority s rights to its assets. 18

33 NOTES TO FINANCIAL STATEMENTS September 30, 2012 and 2011 NOTE 2 - CASH AND INVESTMENTS (Continued) Investments The Authority limits its investments to those allowed under Section (17)(a) (d), Florida Statutes, which include: the Local Government Surplus Funds Trust Fund administered by the State Board of Administration (SBA), SEC registered money market funds, interest-bearing time deposits, savings accounts and nonnegotiable certificates of deposits, and direct obligations of the U.S. Treasury. The Authority does not have a policy related to credit risk or interest rate risk. Investments are primarily in the SBA Fund B Surplus Funds Trust Fund with a maturity greater than three months and are carried at fair value. The SBA Fund B is accounted for as a fluctuating net asset value (NAV) pool. Fund B is not rated by any nationally recognized statistical rating agency. The fair value factor for Fund B for September 30, 2012 and 2011 was.949 and.757, respectively. The weighted average life (WAL) of Fund B as of September 30, 2012 and 2011 was 4.08 years and 4.82 years, respectively. However, because Fund B consists of restructured or defaulted securities there is a considerable uncertainty regarding the weighted average life. Fund B has not participated in a securities lending program in the fiscal year ending September 30, The Authority s investment in Fund B is reported as a noncurrent asset on the statement of net assets. The fair value of the investment in Fund B as of September 30, 2012 and 2011 was $198,000 and $192,000, respectively. 19

34 NOTES TO FINANCIAL STATEMENTS September 30, 2012 and 2011 NOTE 3 - CAPITAL ASSETS A summary of changes in capital assets for the years ended September 30 were as follows: Fiscal Year 2012 Beginning Ending Balance Increases Decreases Balance Capital Assets not being depreciated: Land $ 2,974,000 $ - $ - $ 2,974,000 Construction in progress 4,362,000 2,880,000 6,903, ,000 Total capital assets not being depreciated 7,336,000 2,880,000 6,903,000 3,313,000 Capital Assets being depreciated: Infrastructure 36,828,000 6,327,000-43,155,000 Buildings 20,958, ,000-21,342,000 Equipment 6,362, , ,000 6,311,000 Improvements other than buildings 4,002, ,002,000 Vehicles 912, ,000 Intangibles 1,147,000-28,000 1,119,000 Furniture and office equipment 406,000 43,000 11, ,000 Total capital assets being depreciated 70,615,000 6,903, ,000 77,279,000 Less accumulated depreciation for: Infrastructure 13,676,000 1,724,000-15,400,000 Buildings 6,616, ,000-7,230,000 Equipment 3,313, , ,000 3,545,000 Improvements other than buildings 1,404, ,000-1,542,000 Vehicles 561, , ,000 Intangibles 538,000 90,000 28, ,000 Furniture and office equipment 260,000 59,000 11, ,000 Total accumulated depreciation 26,368,000 3,164, ,000 29,294,000 Total capital assets being depreciated, net 44,247,000 3,739,000 1,000 47,985,000 Total capital assets, net $51,583,000 $6,619,000 $6,904,000 $51,298,000 Fiscal Year 2011 Beginning Ending Balance Increases Decreases Balance Capital Assets not being depreciated: Land $ 2,974,000 $ - $ - $ 2,974,000 Construction in progress 2,044,000 5,061,000 2,743,000 4,362,000 Total capital assets not being depreciated 5,018,000 5,061,000 2,743,000 7,336,000 Capital Assets being depreciated: Infrastructure 37,737, ,000 1,202,000 36,828,000 Buildings 18,591,000 2,367,000-20,958,000 Equipment 6,126, ,000-6,362,000 Improvements other than buildings 4,002, ,002,000 Vehicles 888,000 24, ,000 Intangibles 632, ,000-1,147,000 Furniture and office equipment 318,000 88, ,000 Total capital assets being depreciated 68,294,000 3,523,000 1,202,000 70,615,000 Less accumulated depreciation for: Infrastructure 13,476,000 1,402,000 1,202,000 13,676,000 Buildings 6,051, ,000-6,616,000 Equipment 2,857, ,000-3,313,000 Improvements other than buildings 1,246, ,000-1,404,000 Vehicles 461, , ,000 Intangibles 479,000 59, ,000 Furniture and office equipment 209,000 51, ,000 Total accumulated depreciation 24,779,000 2,791,000 1,202,000 26,368,000 Total capital assets being depreciated, net 43,515, ,000-44,247,000 Total capital assets, net $48,533,000 $5,793,000 $2,743,000 $51,583,000 20

35 NOTES TO FINANCIAL STATEMENTS September 30, 2012 and 2011 NOTE 4 - ADVANCE RENTAL CREDITS In 1980, the Authority entered into two Braniff Plan leases. Under the Braniff Plan arrangement, the lessee constructed buildings and other related improvements at their own expense. Upon completion, the improvements became property of the Authority, free of all liens, in exchange for a lease that provides for reduced rent occupancy for the duration of the lease term. The reduced rent partially amortizes construction costs plus interest on the declining balance, and the unamortized portion was recorded as a capital contribution. The lessees cost of improvements conveyed to the Authority during 1980 was $669,000. In order to reflect the imputed interest costs associated with the lessee financings, the lease rents provide for non-cash interest charged to the Authority at a factor of 8%. With the sale of the Naples Air Center hangar and related improvements in February 2000, only one "Braniff Plan" lease remains in effect, and that lease terminates in Rental credits of $44,000, recorded as non-cash rent revenue, and non-cash interest expense of $28,000, are reflected in the current year under the remaining lease. Advance Rental Credits were comprised of the following at September 30: year lease, beginning March , monthly lease payments of $3,600, with interest imputed at 8%. $ 10,000 $ 26,000 Less current portion (10,000) (16,000) $ 0 $ 10,000 NOTE 5 - CHANGES IN NONCURRENT LIABILITIES A summary of changes in noncurrent liabilities for the years ended September 30 were as follows: Beginning Ending Current Fiscal Year 2012 Balance Increases Decreases Balance Portion Compensated absences $ 627,000 $ 70,000 $ (26,000) $ 671,000 $ 444,000 Advance rental credits 26,000 - (16,000) 10,000 10,000 Total noncurrent liabilities $ 653,000 $ 290,000 $ (263,000) $ 681,000 $ 454,000 Beginning Ending Current Fiscal Year 2011 Balance Increases Decreases Balance Portion Compensated absences $ 559,000 $ 288,000 $ (220,000) $ 627,000 $ 188,000 Advance rental credits 41,000 - (15,000) 26,000 16,000 Total noncurrent liabilities $ 600,000 $ 288,000 $ (235,000) $ 653,000 $ 204,000 21

36 NOTES TO FINANCIAL STATEMENTS September 30, 2012 and 2011 NOTE 6 - RENTAL REVENUE UNDER OPERATING LEASES The Authority subleases land and leases certain buildings and office space to various tenants. Certain leases include both fixed minimum rentals and contingent rentals based on gross receipts. Minimum future rentals under non-cancelable operating leases as of September 30, 2012 are as follows: Year Ending September 30 Amount 2013 $ 679, , , , , ,979, ,682, ,724, , ,000 Total $11,460,000 The contingent rentals for the year ended September 30, 2012 and 2011 were $541,000 and $516,000, respectively, and were reported as concession fees in the statement of revenues, expenses and changes in net assets. Following is a summary of assets on lease for the years ended September 30: T-Hangars $9,458,000 $8,678,000 Other buildings 3,073,000 3,073,000 Total cost 12,531,000 11,751,000 Less accumulated depreciation (5,588,000) (5,205,000) Net carrying amount $6,943,000 $6,546,000 Depreciation for the assets on lease was $370,000 and $351,000 for the years ended September 30, 2012 and 2011, respectively. 22

37 NOTES TO FINANCIAL STATEMENTS September 30, 2012 and 2011 NOTE 7 - OTHER ASSET In April 2008, the Authority entered into a long-term land lease with the sole respondent to a Request for Proposal issued by the Authority for the development of an aircraft storage area. Under the lease, the tenant is required to construct specific infrastructure improvements outside of the leasehold and to convey these improvements to the Authority upon completion. In exchange for these improvements, rent payments will be abated for the first nine (9) years and eleven (11) months. The terms were amended in 2011 to reduce the rent abatement period by two (2) years in exchange for the completion of a portion of the infrastructure improvements in December 2011 at the Authority s expense. The lease requires the tenant to complete the infrastructure improvements within four (4) years. The Authority records non-cash rent revenue during the infrastructure construction period based on the current published land rent rate set by the Authority. Upon transfer of the completed improvements to the Authority, the Authority will recognize the balance of the value of the rent abatement as a liability. The value of the improvements in excess of the value of the remaining rent abatement will be recorded as contributed capital. Non-cash rent revenue was $55,000 and $55,000 for the years ended September 30, 2012 and 2011, respectively. The value of the infrastructure improvements to be transferred to the Authority upon completion is estimated to be $1,199,000. The total amount of rent abatement under the lease is estimated to be $437,000. Contributed capital at the time of completion is estimated to be $762,000. Public utilities constructed by the tenant will be transferred directly to the City of Naples. The value of these public utilities is estimated to be $262,000, including the water utility with an estimated value of $50,000 transferred in fiscal year The minimum future rental under this lease is included in Note 6. NOTE 8 - PENSION PLAN The City of Naples Airport Authority ICMA Retirement Corporation Governmental Money Purchase Plan and Trust is a defined contribution pension plan for the benefit of its employees. The plan is for full-time employees and has eligibility provisions with required retirement funding percentages applied to the salaries of those participating. Pension expense for the years ended September 30, 2012 and 2011 was $207,000 and $190,000, respectively. The Authority has reserved the right to establish and amend all plan provisions. The contribution requirements of plan members and the Authority are established and may be amended by the Authority. The Authority s total salaries and wages on September 30, 2012 and 2011 were $3,181,000 and $2,993,000, and its covered payroll was $2,948,000 and $2,735,000, respectively. The plan has fewer than 100 participants and does not issue a separate audited financial report. 23

38 NOTES TO FINANCIAL STATEMENTS September 30, 2012 and 2011 NOTE 9 - RISK MANAGEMENT The Authority is exposed to various risks of loss related to torts; theft, damage, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. Insurance coverage for such losses is purchased from commercial insurance companies. The financial impact of the Authority s risk management activities are reported in the accompanying financial statements. For the years ended September 30, 2012 and 2011, the Authority paid $480,000 and $443,000, respectively, in premiums for policies to insure for these risks. No accrual has been provided for claims and incidents not reported to insurers. All known claims have been reported to the insurers. Claims made have not exceeded the insurance coverage for any of the past three fiscal years. NOTE 10 - CUSTOMER FACILITY CHARGE (CFC) A $2.50 per day CFC was approved by the Board of Commissioners effective September 1, The CFC collection is limited to seven days per rental contract. For the years ended September 30, 2012 and 2011, the Authority collected $207,000 and $186,000, respectively. In 2012, the Authority contracted for the refurbishment of gasoline piping at the Rental Car Wash Facility at a cost of $29,000 and the CFC was used to reimburse the Authority. There was a balance of $648,000 and $471,000 in 2012 and 2011 respectively. NOTE 11 - RELATED PARTY TRANSACTIONS The Airport is located on an area of approximately 732 acres of which 640 acres is leased land. The Authority holds a ninety-nine year lease from the City of Naples, which allows the Authority to use and sublet the land. The lease requires annual payments of one dollar. The lease expires in The Authority prepaid this lease in January The City provides certain services to the Authority including fire fighting personnel, fire truck maintenance, police services and utilities. Total expense incurred by the Authority during the years ended September 30, 2012 and 2011 for these services were $652,000 and $665,000, respectively. The City leases 16 +/- acres of an old landfill site from the Authority to use as a garbage collection and recycle transfer facility. In lieu of rent, the City provides recycle material collection services and post-disaster recovery assistance. The Authority maintains a portion of its deposits with Northern Trust Bank. An Authority Commissioner was an officer of Northern Trust Bank during the fiscal year ended September 30, The Authority s deposits at Northern Trust Bank at September 30, 2012 were $7,630,

39 NOTES TO FINANCIAL STATEMENTS September 30, 2012 and 2011 NOTE 12 - CAPITAL CONTRIBUTIONS Since its inception, the Authority has received capital contributions through federal and state grants and from the City of Naples, Collier County and other parties as follows: Year ended Inception 2012 To date Federal $ 382,000 $ 34,338,000 State 2,000 13,161,000 City of Naples - 202,000 Collier County - 163,000 Others - 4,281,000 Total $ 384,000 $ 52,145,000 NOTE 13 - COMMITMENTS AND CONTINGENCIES At September 30, 2012 and 2011, the Authority had in process various construction, consulting and engineering contracts totaling $1,202,000 and $5,769,000, respectively. Costs incurred on these contracts as of September 30, 2012 and 2011 totaled $148,000 and $5,718,000, respectively. The Authority is currently receiving, and has received in the past, grants which are subject to special compliance audits by the grantor agency, which may result in disallowed expense amounts. These amounts would constitute a contingent liability of the Authority. The Authority does not believe any contingent liabilities to be material. NOTE 14 - EXPENDITURE OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE During 2012, the Authority expended the following on capital improvement projects: Allowable Costs Match Match Cash Match Requiring Match Reqt % Reqt $ Applied Federal Rehabilitate Runway 5-23 $247,490 5% $12,375 $12,375 Water Management Improvment and Taxiway A Extension $163,527 10% $16,353 $16,360 State Water Management Improvment and Taxiway A Extension $ 43,465 5% $ 2,173 $ 2,178 25

40 SCHEDULE OF AVAILABLE RESOURCES, REVENUES, RECEIPTS, EXPENSES AND EXPENDITURES NON-GAAP BUDGETARY BASIS AND ACTUAL Year Ended September 30, 2012 Original Variance and Final Favorable Budget Actual (Unfavorable) FY 2012 FY 2012 FY 2012 AVAILABLE RESOURCES, REVENUES AND RECEIPTS AVAILABLE RESOURCES AT BEGINNING OF YEAR Restricted $ 471,000 $ 471,000 $ - Operating and capital reserves 4,000,000 3,500,000 (500,000) Unrestricted 6,832,000 10,040,000 3,208,000 Total available resources at beginning of year 11,303,000 14,011,000 2,708,000 OPERATING REVENUES Fuel sales (net) 6,458,000 6,512,000 54,000 Concession fees 572, ,000 51,000 Hangar/T-shelter rents 1,684,000 1,718,000 34,000 Building and land rents 994,000 1,020,000 26,000 Line services 415, ,000 8,000 U.S. Customs and Border Protection user fees 124, ,000 39,000 Other 15,000 16,000 1,000 Net operating revenues 10,262,000 10,475, ,000 NON-OPERATING REVENUES Customer facility charges 172, ,000 35,000 Investment earnings 44, ,000 71,000 Total non-operating revenues 216, , ,000 RECEIPTS Capital contributions 946, ,000 (562,000) Total receipts 946, ,000 (562,000) TOTAL REVENUES AND RECEIPTS 11,424,000 11,181,000 (243,000) TOTAL AVAILABLE RESOURCES, REVENUES AND RECEIPTS $ 22,727,000 $ 25,192,000 $ 2,465,000 26

41 SCHEDULE OF AVAILABLE RESOURCES, REVENUES, RECEIPTS, EXPENSES AND EXPENDITURES NON-GAAP BUDGETARY BASIS AND ACTUAL (Continued) Year Ended September 30, 2012 Original Variance and Final Favorable Budget Actual (Unfavorable) FY 2012 FY 2012 FY 2012 TOTAL AVAILABLE RESOURCES, REVENUES AND RECEIPTS $ 22,727,000 $ 25,192,000 $ 2,465,000 EXPENSES AND EXPENDITURES OPERATING EXPENSES Personnel $ 4,276,000 $ 4,219,000 $ 57,000 Professional fees 823, , ,000 Communications 106, ,000 4,000 Insurance 469, ,000 (11,000) Utilities and environmental 320, ,000 46,000 Office/postage/printing 58,000 35,000 23,000 ATCT, ARFF and police service 720, ,000 23,000 U. S. Customs and Border Protection 323, ,000 24,000 Dues/subscriptions/fees 37,000 35,000 2,000 Auto gas and diesel fuel 63,000 71,000 (8,000) Pilot services 51,000 55,000 (4,000) Maintenance and repair 526, ,000 99,000 Operating expenses 7,772,000 7,146, ,000 CAPITAL EXPENDITURES 8,496,000 2,880,000 5,616,000 DEBT SERVICE EXPENSES AND EXPENDITURES Rental credit expense 28,000 28,000 - Total debt service expenses and expenditures 28,000 28,000 - TOTAL EXPENSES AND EXPENDITURES $ 16,296,000 $ 10,054,000 6,242,000 AVAILABLE RESOURCES AT YEAR END Restricted $ 614,000 $ 648,000 $ 34,000 Operating and capital reserves 4,000,000 4,000,000 - Unrestricted 1,817,000 10,490,000 8,673,000 TOTAL AVAILABLE RESOURCES AT YEAR END 6,431,000 15,138,000 8,707,000 NET CHANGE IN AVAILABLE RESOURCES BALANCE $ (4,872,000) $ 1,127,000 $ 5,999,000 RECONCILIATION OF BUDGETARY BASIS TO GAAP CHANGE IN NET ASSETS - BUDGETARY BASIS $ 1,127,000 Add: Capital expenditures 2,880,000 Less: Depreciation and amortization (3,164,000) Contribution of capital asset to government agency (50,000) Gain on disposal of capital assets 3,000 CHANGE IN NET ASSETS - GAAP $ 796,000 27

42 28

43 STATISTICAL SECTION This part of the City of Naples Airport Authority s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the Authority s overall financial health. Contents Page Financial Trends 30 These schedules contain trend information to help the reader understand how the Authority s financial performance and well-being have changed over time. Revenue Capacity 33 These schedules contain information to help the reader to assess the Authority s most significant revenue source, aviation fuel sales. Debt Capacity 36 These schedules present information to help the reader assess the affordability of the Authority s current levels of outstanding debt and the Authority s ability to issue additional debt in the future. Demographic and Economic Information 38 These schedules offer demographic and economic indicators to help the reader understand the environment within which the Authority s financial activities take place. Operating Information 40 These schedules contain information about the Authority s operations and resources to help the reader understand how the Authority s financial information relates to the services the Authority provides and the activities it performs. Miscellaneous Information 44 This schedule provides the reader with information on the sources of the Authority s contributed capital. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 29

44 NAPLES, FLORIDA NET ASSETS BY COMPONENT, LAST TEN FISCAL YEARS Invested in capital assets, net of related debt $ 25,567,000 $ 24,791,000 $ 26,764,000 $ 33,719,000 $ 33,779,000 $ 37,586,000 $ 45,749,000 $ 48,533,000 $ 51,583,000 $ 51,298,000 Restricted 186, , ,000 87,000 28,000 18, , , , ,000 Unrestricted 2,551,000 3,486,000 4,808,000 3,140,000 9,821,000 12,091,000 11,944,000 12,967,000 12,440,000 13,815,000 Total net assets $ 28,304,000 $ 28,474,000 $ 31,757,000 $ 36,946,000 $ 43,628,000 $ 49,695,000 $ 57,869,000 $ 61,788,000 $ 64,965,000 $ 65,761,000 30

45 NAPLES, FLORIDA CHANGES IN NET ASSETS, LAST TEN FISCAL YEARS OPERATING REVENUES Fuel sales (net) $ 4,155,000 $ 5,618,000 $ 6,249,000 $ 6,945,000 Concession fees 540, , , ,000 Hangar/T-shelter/tiedown 856, ,000 1,009,000 1,115,000 Building and land rent 694, , , ,000 Commercial air transportation 5, Line services 36,000 54,000 61,000 97,000 U.S. Customs user fees Other 9,000 57,000 94,000 96,000 Net operating revenues 6,295,000 7,983,000 8,907,000 9,873,000 OPERATING EXPENSES Personnel 2,549,000 2,923,000 3,169,000 3,390,000 Professional fees 1,570,000 1,971,000 1,312,000 1,193,000 Communications 88, , , ,000 Insurance 349, , , ,000 Utilities and environmental 347, , , ,000 Office/postage/printing 33,000 33,000 33,000 38,000 ATCT, ARFF and police service 363, , , ,000 U.S. Customs and Boarder Patrol expense Dues/subscriptions/fees 15,000 18,000 20,000 23,000 Auto gas and diesel fuel 16,000 24,000 36,000 53,000 Pilot services 15,000 23,000 27,000 25,000 Maintenance and repair 279, , , ,000 Hurricane recovery/repair ,124,000 Depreciation and amortization 1,935,000 1,500,000 1,370,000 1,411,000 Total operating expenses 7,559,000 8,067,000 7,630,000 10,221,000 Operating income (loss) (1,264,000) (84,000) 1,277,000 (348,000) NON-OPERATING REVENUES (EXPENSES) Customer facility charges 199, , , ,000 Passenger facility charges 27,000 9,000 1,000 - Interest revenue 67,000 64, , ,000 Unrealized gain (loss) on investments Surcharge revenue 5, Grant revenue 50,000-16, ,000 Insurance proceeds Interest expense (157,000) (142,000) (129,000) (58,000) Contribution of capital asset to government agency Gain (Loss) on disposal of capital assets - - (12,000) (17,000) Total non-operating revenues (expenses) 191,000 92, , ,000 Income (loss) before capital contributions (1,073,000) 8,000 1,551, ,000 Capital contributions 951, ,000 1,732,000 4,603,000 Change in net assets $ (122,000) $ 170,000 $ 3,283,000 $ 5,189,000 31

46 $ 7,103,000 $ 7,351,000 $ 5,813,000 $ 5,860,000 $ 6,441,000 $ 6,512,000 1,474, , , , , ,000 1,289,000 1,535,000 1,618,000 1,559,000 1,664,000 1,718, , , , , ,000 1,020, , , , , , , , ,000 86,000 36,000 8,000 35,000 17,000 16,000 11,124,000 10,973,000 9,302,000 9,332,000 10,200,000 10,475,000 3,910,000 4,479,000 3,967,000 3,742,000 3,992,000 4,219, , , , , , , , , ,000 62, , , , , , , , , , , , , , ,000 45,000 40,000 32,000 38,000 37,000 35, , , , , , , , ,000 25,000 27,000 32,000 33,000 37,000 35,000 71,000 82,000 67,000 44,000 53,000 71,000 33,000 41,000 27,000 47,000 51,000 55, , , , , , , , ,673,000 1,733,000 2,105,000 2,624,000 2,791,000 3,164,000 9,164,000 9,717,000 8,649,000 9,337,000 9,885,000 10,310,000 1,960,000 1,256, ,000 (5,000) 315, , , , , , , , , , ,000 51,000 68,000 64,000 - (101,000) (85,000) 93,000 39,000 51, , , ,154, (33,000) (32,000) (31,000) (30,000) (29,000) (28,000) - (556,000) (50,000) 731,000 10,000 9,000 7,000 3,000 3,000 1,910,000 2,115, , , , ,000 3,870,000 3,371, , , , ,000 2,812,000 2,696,000 7,354,000 3,666,000 2,595, ,000 $ 6,682,000 $ 6,067,000 $ 8,174,000 $ 3,919,000 $ 3,177,000 $ 796,000 32

47 NAPLES, FLORIDA AVERAGE AVIATION FUEL MARGINS (PER GALLON) Jet A Prepaid Annual Prepaid Fiscal Full Full Volume Scheduled Full Full Public Scheduled Year Flowage Service Service Discount Airline Service Service Self Fueling Airline 2003 $ 0.35 $ 1.53 $ 0.89 $ - $ 0.54 $ 0.92 $ 0.68 $ 0.74 $ LL AVIATION FUEL SALES (GALLONS) Jet A Prepaid Annual Prepaid Fiscal Full Full Volume Scheduled Full Full Public Scheduled Year Flowage Service Service Discount Airline Total Service Service Self Fueling Airline Total ,094,826 1,375,318 1,251,119-16,208 4,737, , ,486 76,377 70, , ,190 2,019, ,992 1,061,693-4,973, , ,836 81,919 42, , ,754 2,127,628 1,078,684 1,467, ,084 5,760, , ,920 79,147 64, , ,778 1,957,772 1,151,462 1,513, ,458 5,780, , ,803 72,254 18, , ,588 2,040,129 1,295,325 1,619, ,694 6,036, , ,737 66,805 15, , ,642 2,017,530 1,228,956 1,622, ,477, , ,781 51,871 27, , ,104 1,381,586 1,129,922 1,251,958-4,218, , ,698 41,535 2, , ,749 1,280,427 1,141,723 1,331,142-4,171, , ,119 43, , ,992 1,592,831 1,093,734 1,407,793-4,559, , ,559 71, , ,521 1,544,348 1,247,745 1,422,233-4,691, , ,737 97, , LL 33

48 AVIATION FUEL SALES (NET REVENUE) Jet A Prepaid Annual Prepaid Fiscal Full Full Volume Scheduled Full Full Public Scheduled Year Flowage Service Service Discount Airline Total Service Service Self Fueling Airline Total 2003 $ 731,601 $ 2,098,610 $ 1,113,549 $ - $ 8,815 $ 3,952,575 $ 237,486 $ 68,151 $ 56,389 $ 32,458 $ 394, ,161 3,151, , ,908-5,421, , ,464 57,283 10, , ,771 3,346,975 1,107,439 1,371, ,974 6,196, , ,552 60,815 17, , ,453 3,317,423 1,605,030 1,309, ,464 6,647, , ,975 56,398 6, , ,693 3,459,750 1,455,751 1,689, ,165 6,972, , ,570 52,584 6, , ,725 3,583,487 1,474,827 1,871, ,109, , ,417 63,133 23, , ,937 2,598,651 1,454,081 1,504,865-5,693, , ,976 32, , ,323 2,519,840 1,532,421 1,667,402-5,844, , ,228 22, , ,308 3,137,801 1,461,453 1,760,216-6,497, , ,734 38, , ,770 3,112,119 1,620,039 1,685,166-6,559, ,662 97,491 51, , LL Source: Authority's Finance Department records Notes: The Executive Director is authorized to adjust fuel charges at any time, with or without notice. The Authority's fuel charges to customers are based on a cost plus formula (cost of fuel + margin). The Authority offers various fuel programs to meet Airport customers' needs. Aviation fuel sales (net revenue) does not include aviation oil sales, non-aviation fuel sales, fuel truck rental and credit card fees, which are included in Fuel sales (net) as show on the Statement of Revenues, Expenses and Changes in Net Assets. 34

49 NAPLES, FLORIDA PRINCIPAL CUSTOMERS - BY GROSS SALES For the Year Ended September 30, 2012 Company Gross Sales % of Total Gross Sales Mercury Air Group - NetJets $ 4,373, % Flexjet 1,165, % Citation Air by Cessna 891, % Mercury Air Group - Flight Options 624, % Hertz Corporation 354, % Delta Private Jet 327, % Travel Management 314, % ASG 303, % Avant Air 253, % Avis Rent-A-Car System 252, % Source: Authority's accounting records Note: Information for the ninth year prior is not available. PRINCIPAL CUSTOMERS - BY AVIATION FUEL GALLONS For the Year Ended September 30, 2012 Company Aviation Fuel Gallons % of Total Aviation Gallons Mercury Air Group - NetJets 883, % Health Management Associates 300, % Flexjet 233, % Citation Air by Cessna 180, % Mercury Air Group - Flight Options 124, % ST Aviation 62, % Delta Private Jet 61, % Travel Management 59, % ASG 59, % Avant Air 46, % Source: Authority's accounting records Note: Information for the ninth year prior is not available. 35

50 NAPLES, FLORIDA RATIOS OF OUTSTANDING DEBT Rental Car Percentage Fiscal Airport Road Facility Total of Net Per Based Year Term Loan Term Loan Term Loan Revenue 1 Aircraft $ 1,344,000 $ 687,000 $ 2,031, % 5, ,233, ,000 1,798, % 4, ,123, ,000 1,465, % 3, % % % % % % % - Source: Authority's financial statements Note: The Authority's outstanding debt was issued December 2000 and paid off January Details regarding the Authority's debt can be found in the notes to the financial statements. 1 See page 32 for net revenue information. 2 See page 43 for based aircraft information. DEBT LIMITATIONS Ratio of Fiscal Total Debt to Year Debt Limit Outstanding Debt Debt Limit 2003 $ 15,000,000 $ 2,031, % ,000,000 1,798, % ,000,000 1,465, % ,000, % ,000, % ,000, % ,000, % ,000, % ,000, % ,000, % Source: Authority's Enabling Legislation and financial statements Note: The Authority's debt limit is set by the Legislature of the State of Florida. The Authority's outstanding debt was issued December 2000 and paid off January

51 NAPLES, FLORIDA PLEDGED-REVENUE COVERAGE Airport Road and Rental Car Facility Term Loan Less: Net Debt Service Fiscal Gross Operating Available Scheduled Additional Year Revenues Expenses Revenues Principal Interest Principal Coverage 2001 $ 5,978,000 $ 4,082,000 $ 1,896,000 $ - $ 111,000 $ 130, ,672,000 4,489,000 2,183,000 99, ,000 75, ,566,000 5,624, , , ,000 75, ,208,000 6,567,000 1,641, , ,000 43, ,305,000 6,260,000 3,045, ,000 94, , ,415,000 8,810,000 1,605,000 48,000 24,000 1,417, Rental Car Facility Term Loan Customer Plus: Net Debt Service Fiscal Facility Interest Earned Available Scheduled Additional Year Charges (CFCs) On CFCs Revenues Principal Interest Principal Coverage 2001 $ 265,000 $ 5,000 $ 270,000 $ - $ 47,000 $ 130, ,000 2, ,000 53,000 53,000 75, ,000 1, ,000 80,000 44,000 75, ,000 1, ,000 80,000 36,000 43, ,000 5, ,000 80,000 28, , ,000 2, ,000 20,000 5, , Source: Authority's financial statements and loan schedules Notes: Gross revenues include nonoperating interest revenue, surcharge revenue and Customer Facility Charges. Operating expenses do not include depreciation expense. Additional details regarding revenues and expenses can be found in the financial statements. The Authority's outstanding debt was issued December 2000 and paid off January

52 NAPLES, FLORIDA DEMOGRAPHIC AND ECONOMIC INFORMATION City of Naples Collier County Metropolitan Statistical Area Personal Per Personal Per Income Capita Income Capita (thousands Personal (thousands Personal Unemployment Year Population of dollars) Income Population of dollars) Income Rate , ,073 41, ,918 10,940,352 41, % , ,181 43, ,466 11,601,373 42, % ,490 1,128,908 50, ,186 11,878,015 41, % ,970 1,248,117 54, ,658 12,711,343 42, % ,101 1,327,060 57, ,858 15,236,905 49, % ,556 1,393,690 61, ,854 17,990,169 57, % ,651 1,369,989 63, ,032 19,846,737 63, % ,390 1,368,953 61, ,800 19,739,453 62, % ,537 1,171,927 59, ,520 19,127,928 60, % 2012 n/a n/a n/a n/a n/a n/a n/a Sources: Population, personal income and per capita personal income for City of Naples provided by City of Naples, Florida, Comprehensive Annual Financial Report, Population, personal income and per capita personal income for Collier County provided by Collier County, Florida, Comprehensive Annual Financial Report, Unemployment information provided by the U.S. Department of Labor, Bureau of Labor Statistics. Note: Population, personal income, per capita personal income, and unemployment rate for 2012 not available (n/a). 38

53 NAPLES, FLORIDA PRINCIPAL EMPLOYERS Percentage of Total Employer Collier County Public Schools Number of Employees 5,451 Employment 5.2% NCH Healthcare System 3, % Publix Supermarket 2, % Collier County Government (excl. Sheriff) 2, % Wal-Mart 1, % Collier County Sheriffs Office 1, % Marriott Corporation % Fifth Third Bank % Naples Grande Resort (Registry Resort) % Barron Collier Partnership % Source: Collier County, Florida, Comprehensive Annual Financial Report,

54 NAPLES, FLORIDA AVIATION FUEL AND AIRCRAFT OPERATIONS STATISTICS Fiscal Year 100LL Aviation Fuel Gallons Jet A Total Local Aircraft Operations Itinerant Total ,429 4,737,471 5,242,900 28,052 84, , ,264 4,973,537 5,508,801 36,962 99, , ,848 5,760,813 6,321,661 51, , , ,557 5,780,607 6,265,164 36, , , ,023 6,036,037 6,523,060 31, , , ,091 5,477,095 5,933,186 34,966 94, , ,819 4,218,570 4,612,389 32,885 80, , ,992 4,171,041 4,491,033 20,029 66,158 86, ,122 4,563,303 4,889,425 18,323 66,016 84, ,875 4,214,326 4,569,201 18,837 68,241 87,078 Source: Authority's Operations and Finance Department records Aviation Fuel Gallons & Aircraft Operations Historical Comparison FY FY 2012 Aviation Gallons 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 Aircraft Operations 180, , , , ,000 80,000 60,000 40,000 20, LL Jet A Total Local Itinerant Total 40

55 NAPLES, FLORIDA COMMERCIAL PASSENGER STATISTICS Fiscal Year Enplanements Deplanements Total CFCs PFCs ,603 10,720 21,323 $199,000 $27, ,486 3,484 6,970 $161,000 $9, ,025 30,186 60,211 $233,000 $1, ,558 27,457 54,015 $226,000 $ ,835 20,910 39,745 $235,000 $ ,143 2,959 6,102 $209,000 $ $170,000 $ $137,000 $ $186,000 $ $207,000 $0 Source: Authority's Operations and Finance Department records Commercial Passenger Activity FY FY 2012 Passengers 70,000 CFCs & PFCs $250,000 60,000 $200,000 50,000 40,000 $150,000 30,000 $100,000 20,000 10,000 $50, $0 Enplanements Deplanements Total CFCs PFCs 41

56 NAPLES, FLORIDA FULL-TIME EQUIVALENT EMPLOYEES BY FUNCTION Last Ten Fiscal Years Customer Service Operations Airport Development Facilities & Custodial Security Administration Executive TOTAL EMPLOYEES

57 NAPLES, FLORIDA AIRPORT INFORMATION Airport Name: Naples Municipal Airport Airport Identifier: APF Location: 2 nautical miles northeast of City of Naples business district Elevation: 9 feet ARP Latitude: 26 o 9' 8.93" N ARP Longitude: 81 o 46' 31.61' W Acres (+/-): Leased from City 640 Owned by Authority 92 Air Traffic Control Tower: Contract Tower U.S. Customs & Border Protection User Fee Runways: 05/23 Asphalt 5800 ft. X 150 ft. 14/32 Asphalt 5000 ft. X 100 ft. SW/NE Turf 1850 ft. X 100 ft. Air Carrier Terminal: Fiscal Year Area (sq. ft.) 21,190 21,190 21,190 21,190 21,190 21,190 21,190 21,190 21,190 21,190 Gates Parking (spaces) Rental Car Agencies General Aviation Terminal: Area (sq. ft.) 11,650 11,650 11,650 11,650 11,650 11,650 11,650 19,747 19,747 19,747 Parking (spaces) Rental Car Agencies Aircraft Storage: T-Hangars Common Storage T-Shelters Tiedowns Non-Authority Owned (units) Based Aircraft: Sources: Florida Department of Transportation and Authority records 43

58 NAPLES, FLORIDA CAPITAL CONTRIBUTIONS Fiscal FAA FDOT Collier County City of Naples Other Cumulative Year Grants Grants Contributions Contributions Contributions Total Prior to '73 $ - $ 15,827 $ - $ 147,786 $ - $ 163, ,257 19, , ,493 26, , ,287 7, , ,901 34, , ,326 34, ,249, ,159 42, ,939, ,600 1,942, ,321 14, ,376 2,400, , , ,885, , , ,359, ,776 15, ,441, ,175, , ,769, ,538 29, ,643, ,173 38, ,940, ,659 52,396 3,976 3,977-6,473, ,391 12,701 6, ,784, , ,884 2,664-9,826 7,903, ,587 45, ,217, ,647, , ,822, , , ,377, , , ,189, , , ,721, ,632 1,272, ,529, ,109 43, ,087, ,116,513 (1,032,265) ,172, , , ,992, , , ,384, ,507, , ,319, ,256,599 1,333,664-50,000 78,000 23,037, ,234, , ,000-2,500 25,419, , , ,370, , ,532, ,075, , ,264, ,410, , ,777,709 32,867, ,271, , ,706 35,679, ,889 2,038, ,579 38,374, ,568, , ,247 45,729, ,940, , ,395, ,723, ,079 51,761, ,287 2, ,145,562 Source: Authority's financial statements and accounting records Note: Other Contributions for 2006 include the acquisition of the NAA North Facility. 44

59

60

61

62