COMPREHENSIVE ANNUAL FINANCIAL REPORT AS OF AND FOR THE YEARS ENDED SEPTEMBER 30, 2011 AND 2010

Transcription

1 COMPREHENSIVE ANNUAL FINANCIAL REPORT AS OF AND FOR THE YEARS ENDED SEPTEMBER 30, 2011 AND 2010 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, 2011 AND 2010 Prepared By: FINANCE DEPARTMENT

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4 Comprehensive Annual Financial Report As of and for the Years Ended September 30, 2011 and 2010 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 Ten Fiscal Years 30 Changes in Net Assets, Last Ten 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 Full Time Equivalent Employees by Function 42 Airport Information 43 Capital Contributions 44

5 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 Independent Auditors Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Federal Program and on Internal Control Over Compliance in Accordance with OMB Circular A Schedule of Expenditures of Federal Awards 49 Notes to Schedule of Expenditures of Federal Awards 50 Schedule of Findings and Questioned Costs 52 MANAGEMENT LETTER Management Letter 55 Response to Management Letter 57

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7 unqualified opinion that the Authority s financial statements for the fiscal years ended September 30, 2011 and 2010, are fairly presented in conformity with GAAP. The independent auditors report is the first component of the Financial Section of this report. The independent audit of the financial statements is part of the broader mandated provisions of the Single Audit Act of 1996 and the U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments and Non-Profit Organizations, relative to financial funds received from the U.S. Government. The standards governing these provisions require the independent auditor not only to report on the fair presentation of the financial statements, but also on the Authority s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are included in the Compliance Section of this report. GAAP requires that management provide a narrative introduction, overview and analysis to accompany the financial statements in the form of a Management Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The MD&A can be found in the financial section, immediately following the report of the independent auditors. The Airport The Naples Municipal Airport was originally constructed in 1942 as the Naples Airdrome and served as an Air Corps base for training gunners, bomber crews and fighter pilots for combat during World War II. After the end of the war, the city and county jointly operated the airport until the county sold its interest to the city in Naples Municipal Airport is located in western Collier County, approximately two miles from the City of Naples business district and approximately three miles inland of the Gulf of Mexico. The airport, which is owned by the City of Naples, is leased to the Authority under a 99 year lease. Historically, the Naples Municipal Airport has been classified in the National Plan of Integrated Airport Systems as a primary commercial service airport (a commercial service airport which enplanes 10,000 or more passengers each year). Naples Municipal Airport was the only commercial service airport in Collier County and was ranked (by passenger count) as the smallest commercial service airport in Florida. In October 2008, the only air carrier operating at the Naples Municipal Airport discontinued service. General aviation has always generated the majority of aircraft activity at Naples Municipal Airport. Of the 84,000 aircraft operations (one operation is one landing or one takeoff) at Naples Municipal Airport during fiscal year 2011, all but 119 operations (military) were attributed to general aviation. All types of aircraft, from small piston engine trainers to large business jets, can be seen at the Naples Municipal Airport. Use of the airport is restricted to aircraft less than 75,000 pounds maximum gross landing weight ii

8 and Stage 1 and Stage 2 jets are banned, except for public agency and emergency medical flights. The Authority The City of Naples Airport Authority was created by State Enabling Legislation and City of Naples action in The City of Naples, recognizing the benefits of an authority type management concept, established the Authority for the purpose of enhancing service to users, improving the community gateway image and eliminating financial subsidies by city taxpayers. The Authority is an independent reporting entity as defined by the Governmental Account Standards Board (GASB). The Authority s Board of Commissioners is composed of five members appointed by Naples City Council. Commissioners are appointed for a term of four years or until a successor is appointed, except that any person appointed to fill a vacancy is appointed to serve only the unexpired term. The Board of Commissioners retains the Executive Director, who is the chief operating and chief administrative officer, Secretary and Treasurer of the Authority. The Executive Director hires all other Authority employees. The Authority financially supports itself directly from aviation fuel sales and airport user fees, and indirectly by airport user taxes. No local, state or federal general taxes, such as property, utility, sales, intangible 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 pays the City of Naples for utility, police and fire fighting services and also built, equips and maintains City Fire Station #3, as well as several stormwater and environmental facilities. The Authority builds and maintains internal roadways and utilities and has constructed many of the external roadway improvements, including horticultural beautification and bicycle paths. The Authority s budget and amendments, if any, are adopted by resolution of the Board of Commissioners, as required by Florida Statutes. The adopted budget regulates the total expenditures of the Authority for the fiscal year, and it is unlawful for any officer of the Authority to expend or contract for expenditures that exceed the budgeted appropriations. The Authority has a September 30 Fiscal Year Ending date, and accordingly, the budget must be adopted by the Board of Commissioners before October 1, the beginning date of the new fiscal year. Financial Condition of the Authority The information presented in the Financial Section of this report is best understood when it is considered from the broader perspective of the specific environment within which the Authority operates. The Authority s economic condition is a composite of its financial health and its ability to meet its financial obligations and service commitments. iii

9 The financial condition of the Authority is primarily dependent upon aviation fuel sales, unlike the majority of U.S. airports that are monetarily supported by significant commercial airline service and/or general taxpayer dollars. Aviation fuel sales, in turn, are usually dependent upon several factors, including the economic conditions in the United States and locally. The Authority s local customer base typically offsets any impact of a nationwide economic slowdown. The economic landscape of Collier County is quite different from much of the country. Due to the prosperous tourism market and the large number of very wealthy people, the local economy usually remains strong, however, the recent economic downturn has impacted the activity at the Naples Municipal Airport and the local community. Like other area businesses and governmental agencies, the Authority reduced its staffing levels in Current staffing levels remain at prior year levels. Operating revenues increased 9.3% for 2011, but the Authority has maintained this reduced operating expense level until demand requires additional staffing. For fiscal year 2011, net fuel sales made up 63.1% of the Authority net operating revenues. The Authority s selling price of aviation fuel is based on a cost plus formula in accordance with the published rates and charges set by the Executive Director. The Authority maintains the exclusive right to fuel sales at the Naples Municipal Airport. A more detailed discussion of the Authority s financial results is contained in the MD&A found in the Financial Section of this report. Relevant Financial Policies The Authority has developed published rates and charges based on a reasonable rate of return, in addition to meeting the requirements of maintenance, operating costs and capital recovery. These rates and charges, as a package, maintain and enhance the healthy financial condition of the Authority. It should be noted that there are significant regulatory guidelines that must be considered when developing airport rates and charges. At a minimum, the Authority s rates and charges are updated annually. As part of the Authority s planning process, a five year capital improvement program is updated at least annually. In conjunction with the budgeting process, the Authority develops a five year cash flow forecast incorporating the five year capital improvement program and five year projections of operating revenues and expenses. These projections allow the Authority to determine the impact of capital projects on future budgets and future revenue requirements, allowing the Authority to develop successful plans. For fiscal year 2011, the Authority maintained a $3.5 million reserve for emergency operating and capital contingencies. The reserve for 2010 and 2009 was maintained at $3.0 million. iv

10 Current and Long Term Capital Initiatives The two major sources of outside funding for the Authority s capital improvement plan are the FAA and the Florida Department of Transportation (FDOT). The amount of funding that is provided by these two agencies is predicated on whether the airport is designated as a commercial service or general aviation airport. Until 2010, the Naples Municipal Airport was designated as a primary commercial service airport, with the Authority eligible for $1 million per year in Entitlement Funding from the FAA under the Airport Improvement Program. Due to the loss of scheduled commercial air service the Airport has lost that designation and is currently eligible for $150,000 per year in Entitlement Funding as a general aviation airport. Appropriations for the Airport Improvement Program expired September 30, The FAA Reauthorization Act of 2007 that would authorize appropriations for the program for fiscal years 2008 through 2011 has not yet been approved. The FAA has maintained funding programs of previous years authorized in Continuing Resolutions by Congress. The 2007 program has been continued though January of The Authority, as a publicly owned Florida airport, is also eligible for state funding. FDOT provides up to one-half of the local share of project costs when FAA funding is received, and when no federal funding is available, FDOT can provide up to 80% of eligible project costs for general aviation airports. During fiscal year 2011, the Authority completed the construction of the U.S. Customs and Border Protection building, completed the installation of WiFi infrastructure, and acquired the former MidAmerica Hangar (renamed Executive Hangar II). The FAA Part 150 Study Update commenced in 2008 and was stopped in FY 2011 due to the downturn in aircraft operations over the last several years. The noise exposure map (NEM) was completed during the study along with activity forecasts. Work commenced and continues on the airfield pavement improvements, expansion of the General Aviation Terminal restrooms, and construction of an observation area, and these projects will be completed in early FY During FY 2011, the Authority expended $4.1 million on capital improvement projects and purchases, with $1.7 million being reimbursed by FAA funding and $2.4 million coming from Authority funds. Capital improvement projects slated for FY 2012 are budgeted at $8.5 million, of which $946,000 is anticipated to come from the FAA and Customer Facility Charges. New projects for which the Authority anticipates FAA funding of $328,000 include implementation of a Geographic Information System and production of an Exhibit A Property Map and Boundary Survey (total anticipated cost of $345,000). The Authority's capital improvement plan also includes $1.5 million for the expansion and rehabilitation of the Rental Car Wash Facility and $6.7 million for non-assisted projects and equipment purchases. v

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12 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

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

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18 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, 2011 and 2010, 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 4,889,000 4,491,000 4,612,000 % increase (decrease) from prior year 8.9% (2.6)% (22.3)% Aircraft operations 84,000 86, ,000 % increase (decrease) from prior year (2.3)% (23.9)% (13.1)% Enplanements (scheduled) % increase (decrease) from prior year 0.0% (100.0)% (98.1)% From 2008 through 2010, aviation fuel gallons decreased after reaching in 2007 their highest level since the establishment of the Authority in The decrease in fuel volume in 2009 and 2010 is attributed to the national economic downturn. The 8.9% increase in gallons in 2011 appears to be a reflection of a turnaround in economy and the travel industry. From 2006 through 2011, aircraft operations decreased after reaching its highest level ever in Ramp space and airspace capacity in Southwest Florida is 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 2009 and 2010 reflects the impact of the national economic downturn. The minimal reduction in 2011 appears to be a reflection of a turnaround in economy and the travel industry. Naples Municipal Airport provided scheduled commercial air service to the community for 50+ years. In 2009, the Airport lost all scheduled air service. In order to support the community and provide the level of service they desire, the Authority continues its efforts to bring scheduled air service back to Naples Municipal Airport. 3

19 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 $ 10,200,000 $ 9,332,000 $ 9,302,000 Total non-operating revenues 525, , ,000 Total revenues 10,725,000 9,620,000 9,585,000 Total operating expenses 9,885,000 9,337,000 8,649,000 Total non-operating expenses 29,000 30, ,000 Total expenses 9,914,000 9,367,000 8,765,000 Income before capital contributions 811, , ,000 Capital contributions 2,366,000 3,666,000 7,354,000 Increase in net assets 3,177,000 3,919,000 8,174,000 Beginning net assets 61,788,000 57,869,000 49,695,000 Ending net assets $ 64,965,000 $ 61,788,000 $ 57,869,000 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 nine-month period. Operating revenues for 2010 increased $30,000 over the prior year. This 0.3% increase is attributed to the slight increase in fuel sales and ramp fee revenues offset by decreased concession fees from rental car companies and aircraft storage rents for small piston aircraft. 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; and receipt of a Workers Compensation policy dividend, offset by a decrease on the Authority s unrealized gain on investments. Non-operating revenues for 2010 increased $5,000 over the prior year. This 1.8% increase is attributed to an increase on the Authority s unrealized gain on investments offset by a decrease in interest revenue related to the decrease in interest rates from the prior year and a decrease in Customer Facility Charges related to the impact from the economic turndown. Operating expenses in FY 2011 were $548,000 greater than 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 Patrol 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 4

20 swale maintenance and repairs to the Executive Hangar II (see Introductory Section). Operating expenses for 2010 increased $688,000 over the prior year. This 8.0% increase is attributed to increased depreciation expense reflecting a full year s deprecation on major capital improvements completed during 2009 and one-time operating expenses associated with the completion of the General Aviation Terminal in early In 2011, non-operating expenses decreased by $1,000, reflecting the imputed non-cash interest expense on advance rental credits for a Braniff Plan lease. In 2010, non-operating expenses decreased $86,000. This 74.1% decrease is attributed to the recognition of an unrealized gain on investment in 2010 as compared to the recognition of an unrealized loss on investment in In FY 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. In 2010, capital contributions of $3.7 million were received in the form of grants from the Federal and State governments for specific capital improvement projects. 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 1.0% Fuel Sales (net) 63.1% Line services 4.1% Building and land rent 9.4% Hangar/Tshelter/tiedown 16.3% Concession fees 5.9% The following is a summary of the Authority s operating revenues at 30 September Operating revenues: Fuel sales (net) $ 6,441,000 $ 5,860,000 $ 5,813,000 Concession fees 598, , ,000 Hangar/T-shelter/tiedown 1,664,000 1,559,000 1,618,000 Building and land rent 958, , ,000 Line services 419, , ,000 U.S. Customs & Border Protection 103, Other 17,000 35,000 8,000 Total operating revenues $ 10,200,000 $ 9,332,000 $ 9,302,000 5

21 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 4.8% ATCT, ARFF and police service 9.4% Utilities and environmental 4.0% Maintenance and repair 6.5% Other 2.5% Insurance 6.2% Communications 1.8% Professional fees 8.5% Personnel 56.3% The following is a summary of the Authority s operating expenses before depreciation at September Operating expenses: Personnel $ 3,992,000 $ 3,742,000 $ 3,967,000 Professional fees 602, , ,000 Communications 126,000 62, ,000 Insurance 443, , ,000 Utilities and environmental 284, , ,000 ATCT, ARFF and police service 665, , ,000 U.S. Customs & Border Protection 342, Maintenance and repair 462, , ,000 Other 178, , ,000 Total operating expenses before depreciation $ 7,094,000 $ 6,713,000 $ 6,544,000 The following is a condensed summary of the Authority s net assets at September Current and other assets $ 16,489,000 $ 15,278,000 $ 15,614,000 Capital assets (after depreciation) 51,583,000 48,533,000 45,749,000 Total assets 68,072,000 63,811,000 61,363,000 Current liabilities 2,658,000 1,617,000 3,118,000 Noncurrent liabilities 449, , ,000 Total liabilities 3,107,000 2,023,000 3,494,000 Net assets: Invested in capital assets, net 51,583,000 48,533,000 45,749,000 Restricted Unrestricted 13,382,000 13,255,000 12,120,000 Net assets $ 64,965,000 $ 61,788,000 $ 57,869,000 6

22 Total assets increased by $4.3 million or 6.7% in Of this increase, $1.7 million is attributed to the capital improvement project during the year accomplished with a Federal grant. Both cash and current liabilities are $1.1 million greater than the prior year, due to timing of payments. Total liabilities increased by $1.1 million or 53.6% in 2011 due to an increase in accounts payable related to capital projects and deferred revenue. Total assets increased by $2.4 million or 4.0% in This increase is attributed to the large amount of capital improvement projects during the year accomplished with State and Federal grants. Total liabilities decreased by $1.5 million or 42.1% in 2010 due to a decrease in accounts payable related to capital projects. The Authority s total assets exceeded liabilities by $65.0 million and $61.8 million, in 2011 and 2010 respectively. The largest portion of the Authority s net assets each year (79.4% of total net assets for 2011) represents its investment in capital assets (e.g. land, infrastructure, buildings, improvements, intangible assets and equipment). The remaining $13.4 million of net assets (20.6% of total net assets for 2011) 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 debt in an emergency. A high ratio is considered favorable to creditors, but may indicate excessive investment in working capital items. The increase in the Authority s current ratio from 4.91 for 2009 to 9.22 for 2010 is attributed to the decrease in accounts payable related to capital projects. The decrease in the Authority s current ratio to 6.06 in 2011 is attributed to the increase in accounts payable related to capital projects. The Authority s net assets increased $3.9 million in 2010 over 2009, and further increased $3.2 million in 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 $ 3,011,000 $ 2,657,000 $ 2,609,000 Non-Capital Financing Activities 229, Capital and Related Financing Activities (2,323,000) (2,100,000) (2,604,000) Investing Activities 141, , ,000 Net increase in Cash and Cash Equivalents 1,058, , ,000 Cash and Cash Equivalents: Beginning of Year 13,954,000 13,253,000 13,057,000 End of Year $ 15,012,000 $ 13,954,000 $ 13,253,000 7

23 The Authority s available cash and cash equivalents increased from $14.0 million at the end of 2010 to $15.0 million at the end of This increase of $1.0 million in cash and equivalents is attributed to an increase in net operating revenues. The increase in cash and cash equivalents in 2009 is attributed to the reduction in operating expenses in response to reduced operating revenues while generating sufficient income during the year to cover the portion of the capital improvements not funded by State and Federal grants. Cash and equivalents of $14.0 million at the end of 2010 represents an increase from the 2009 results and is attributed to a reduction in expenditures for capital improvement projects offset by a decrease in State and Federal grant receipts. 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, 2010 and 2011, $0.3 million was invested in Fund B. Based on information provided to the Authority by the State Board of Administration, and after several years of recognizing unrealized losses, the Authority recognized an unrealized gain on this investment of $32,000 and $93,000 in 2011 and 2010 respectively. Capital Acquisitions and Construction Activities At the end of 2011, the Authority had $51.6 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 increase (including additions and deductions) of $3.1 million, or 6.3% over the prior year. During 2011, completed projects totaling $3.5 million were either acquired by contribution or closed from construction-in-progress to their respective capital asset accounts. The major completed projects were: U.S. Customs Facility $1,581,000 Acquisition of the Executive Hangar II 780,000 Installation of WiFi Infrastructure 237,000 Part 150 Study Update 515,000 Rental Car Parking Lot Lights 39,000 Small projects and equipment 348,000 $3,500,000 At the end of 2011 major projects within construction-in-progress consisted of the following: Airfield Pavement Improvements $2,837,000 GAT Restroom Expansion 178,000 Observation Area 110,000 West Quad Drainage Improvement Phase2 90,000 Road Construction (APF III) 79,000 West Quad Detention Pond 46,000 Small projects 1,022,000 $4,362,000 8

24 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 Note 3 and Note 13, of the notes to the financial statements. Debt In January 2006, the Authority paid off its outstanding debt. No new debt was 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 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, plus the Authority will 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,

25 STATEMENTS OF NET ASSETS September 30, ASSETS CURRENT ASSETS Cash and cash equivalents $ 15,012,000 $ 13,954,000 Accounts receivable (net) 343, ,000 Inventories 474, ,000 Due from governmental agencies 47,000 48,000 Prepaid expenses 228, ,000 Total current assets 16,104,000 14,914,000 NONCURRENT ASSETS Investment 192, ,000 Other asset 193, ,000 Capital assets (net) 51,583,000 48,533,000 LIABILITIES Total noncurrent assets 51,968,000 48,897,000 Total assets 68,072,000 63,811,000 CURRENT LIABILITIES Accounts payable 1,675, ,000 Deferred revenue 735, ,000 Compensated absences 188, ,000 Accrued expenses and other liabilities 44,000 20,000 Advance rental credits 16,000 15,000 Total current liabilities 2,658,000 1,617,000 NONCURRENT LIABILITIES Compensated absences 439, ,000 Advance rental credits 10,000 26,000 Total noncurrent liabilities 449, ,000 Total liabilities 3,107,000 2,023,000 NET ASSETS Invested in capital assets 51,583,000 48,533,000 Unrestricted 13,382,000 13,255,000 Total net assets $ 64,965,000 $ 61,788,000 The notes to the financial statements are an integral part of this statement. 10

26 STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS Years Ended September 30, OPERATING REVENUES Fuel sales (net) $ 6,441,000 $ 5,860,000 Concession fees 598, ,000 Hangar/T-shelter/tiedown 1,664,000 1,559,000 Building and land rent 958, ,000 Line services 419, ,000 U.S. Customs and Border Protection user fees 103,000 - Other 17,000 35,000 Net operating revenues 10,200,000 9,332,000 OPERATING EXPENSES Personnel 3,992,000 3,742,000 Professional fees 602, ,000 Communications 126,000 62,000 Insurance 443, ,000 Utilities and environmental 284, ,000 Office/postage/printing 37,000 38,000 ATCT, ARFF and police service 665, ,000 U.S. Customs and Border Protection expense 342,000 - Dues/subscriptions/fees 37,000 33,000 Auto gas and diesel fuel 53,000 44,000 Pilot services 51,000 47,000 Maintenance and repair 462, ,000 Miscellaneous expense - - Depreciation and amortization 2,791,000 2,624,000 Total operating expenses 9,885,000 9,337,000 Operating income (loss) 315,000 (5,000) NON-OPERATING REVENUES (EXPENSES) Customer facility charges 186, ,000 Interest revenue 75,000 51,000 Unrealized gain on investments 32,000 93,000 Grant revenue 229,000 - Advance rental credit expense (29,000) (30,000) Gain on disposal of capital assets 3,000 7,000 Total non-operating revenues (expenses) 496, ,000 Income before capital contributions 811, ,000 Capital contributions 2,366,000 3,666,000 Change in net assets 3,177,000 3,919,000 Total net assets - beginning 61,788,000 57,869,000 Total net assets - ending $ 64,965,000 $ 61,788,000 The notes to the financial statements are an integral part of this statement. 11

27 STATEMENTS OF CASH FLOWS Years Ended September 30, CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 25,384,000 $ 20,049,000 Cash payments to suppliers for goods and services (18,491,000) (13,705,000) Cash payments for personnel services (3,899,000) (3,722,000) Other operating revenues 17,000 35,000 Net cash provided by operating activities 3,011,000 2,657,000 CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Operating grants received 229,000 - CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Customer facility charges 186, ,000 Acquisition and construction of capital assets (4,236,000) (6,937,000) Capital contributed 1,724,000 4,693,000 Proceeds from sale of capital assets 3,000 7,000 Net cash used in capital and related financing activities (2,323,000) (2,100,000) CASH FLOWS FROM INVESTING ACTIVITIES Interest and dividends on investments 75,000 50,000 Increase in cash equivalents for transfer from SBA Fund B investments 66,000 94,000 Net cash provided by investing activities 141, ,000 Net increase in cash and cash equivalents 1,058, ,000 CASH AND CASH EQUIVALENTS, beginning of year 13,954,000 13,253,000 CASH AND CASH EQUIVALENTS, end of year $ 15,012,000 $ 13,954,000 The notes to the financial statements are an integral part of this statement. 12

28 STATEMENTS OF CASH FLOWS (Continued) Years Ended September 30, RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating income (loss) $ 315,000 $ (5,000) Adjustments to reconcile operating income (loss) to net cash provided by operating activities Depreciation and amortization 2,791,000 2,624,000 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 Decrease in accounts receivable 16,000 7,000 Increase in inventories (140,000) (17,000) (Increase) decrease in prepaid expenses (8,000) 74,000 Increase (decrease) in accounts payable (98,000) 52,000 Increase in compensated absences 68,000 44,000 Increase (decrease) in accrued expenses and other current liabilities 24,000 (24,000) Increase in deferred revenue 142,000 1,000 Total adjustments 2,696,000 2,662,000 NET CASH PROVIDED BY OPERATING ACTIVITIES $ 3,011,000 $ 2,657,000 NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES Contribution of hangar $ 642,000 $ - Unrealized gain on investment activities $ 32,000 $ 93,000 13

29 NOTES TO FINANCIAL STATEMENTS September 30, 2011 and 2010 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. Pursuant to GASB Statement Number 20, Accounting and Financial 14

30 NOTES TO FINANCIAL STATEMENTS September 30, 2011 and 2010 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Basis of accounting (continued) 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

31 NOTES TO FINANCIAL STATEMENTS September 30, 2011 and 2010 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 Equipment 3 30 Improvements other than buildings 5 15 Vehicles 5 10 Intangible 3 7 Furniture and office equipment

32 NOTES TO FINANCIAL STATEMENTS September 30, 2011 and 2010 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. 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 when 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 capital projects is used to segregate resources accumulated for capital projects that require Federal Aviation Administration (FAA) approval. 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

33 NOTES TO FINANCIAL STATEMENTS September 30, 2011 and 2010 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 as 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

34 NOTES TO FINANCIAL STATEMENTS September 30, 2011 and 2010 NOTE 2 - CASH AND INVESTMENTS (Continued) Investments The Authority s investment policy 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, 2011 and 2010 was.757 and.707, respectively. The weighted average life (WAL) of Fund B as of September 30, 2011 and 2010 was 4.82 years and 7.49 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, 2011 and 2010 was $192,000 and $226,000, respectively. 19

35 NOTES TO FINANCIAL STATEMENTS September 30, 2011 and 2010 NOTE 3 - CAPITAL ASSETS A summary of changes in capital assets for the years ended September 30 were as follows: Beginning Ending Fiscal Year 2011 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 Beginning Ending Fiscal Year 2010 Balance Increases Decreases Balance Capital Assets not being depreciated: Land $ 2,974,000 $ - $ - $ 2,974,000 Construction in progress 11,720,000 5,408,000 15,084,000 2,044,000 Total capital assets not being depreciated 14,694,000 5,408,000 15,084,000 5,018,000 Capital Assets being depreciated: Infrastructure 28,345,000 9,699, ,000 37,737,000 Buildings 15,577,000 3,014,000-18,591,000 Equipment 6,061,000 79,000 14,000 6,126,000 Improvements other than buildings 1,841,000 2,161,000-4,002,000 Vehicles 888, ,000 Intangibles 632, ,000 Furniture and office equipment 193, ,000 6, ,000 Total capital assets being depreciated 53,537,000 15,084, ,000 68,294,000 Less accumulated depreciation for: Infrastructure 12,378,000 1,405, ,000 13,476,000 Buildings 5,554, ,000-6,051,000 Equipment 2,432, ,000 14,000 2,857,000 Improvements other than buildings 1,118, ,000-1,246,000 Vehicles 361, , ,000 Intangibles 457,000 22, ,000 Furniture and office equipment 182,000 33,000 6, ,000 Total accumulated depreciation 22,482,000 2,624, ,000 24,779,000 Total capital assets being depreciated, net 31,055,000 12,460,000-43,515,000 Total capital assets, net $ 45,749,000 $ 17,868,000 $ 15,084,000 $ 48,533,000 20

36 NOTES TO FINANCIAL STATEMENTS September 30, 2011 and 2010 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. Rental credits of $44,000, recorded as non-cash rent revenue, and non-cash interest expense of $29,000, are reflected in the current year under the remaining lease. The balance of advance rental credits in the statement of net assets represents the portion of the lessee s cost that will amortize over the remaining term of the 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%. $ 26,000 $ 41,000 Less current portion (16,000) (15,000) $ 10,000 $ 26,000 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 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 Beginning Ending Current Fiscal Year 2010 Balance Increases Decreases Balance Portion Compensated absences $ 515,000 $ 254,000 $ (210,000) $ 559,000 $ 179,000 Advance rental credits 55,000 - (14,000) 41,000 15,000 Total noncurrent liabilities $ 570,000 $ 254,000 $ (224,000) $ 600,000 $ 194,000 21

37 NOTES TO FINANCIAL STATEMENTS September 30, 2011 and 2010 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, 2010 are as follows: Year Ending September 30 Amount 2012 $ 659, , , , , ,951, ,661, ,874, , ,000 Total $11,727,000 The contingent rentals for the year ended September 30, 2011 and 2010 were $516,000 and $451,000, 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 $8,678,000 $8,678,000 Other buildings 3,073,000 3,073,000 Total cost 11,751,000 11,751,000 Less accumulated depreciation (5,205,000) (4,860,000) Net carrying amount $6,546,000 $6,891,000 Depreciation for the assets on lease was $351,000 and $352,000 for the years ended September 30, 2011 and 2010, respectively. 22

38 NOTES TO FINANCIAL STATEMENTS September 30, 2011 and 2010 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, 2011 and 2010, 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 estimate 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. 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, 2011 and 2010 was $190,000 and $182,000, 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, 2011 and 2010 were $2,993,000 and $2,821,000, and its covered payroll was $2,735,000 and $2,663,000, respectively. 23

39 NOTES TO FINANCIAL STATEMENTS September 30, 2011 and 2010 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, 2011 and 2010, the Authority paid $443,000 and $438,000, 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, 2011 and 2010, the Authority collected $186,000 and $137,000, respectively. In 2010, the Authority contracted for the installation of three poles with LED lights for the rental car parking lot at the General Aviation Terminal at an estimated cost of $46,000. As of September 2011, $43,000 was expended on this project and the CFC was used to reimburse the Authority. 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, 2011 and 2010 for these services were $665,000 and $694,000, 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, 2011 were $7,619,

40 NOTES TO FINANCIAL STATEMENTS September 30, 2011 and 2010 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 2011 To date Federal $ 1,724,000 $33,956,000 State - 13,159,000 City of Naples - 202,000 Collier County - 163,000 Others 642,000 4,281,000 Total $ 2,366,000 $51,761,000 NOTE 13 - COMMITMENTS AND CONTINGENCIES At September 30, 2011 and 2010, the Authority had in process various construction, consulting and engineering contracts totaling $5,769,000 and $4,902,000, respectively. Costs incurred on these contracts as of September 30, 2011 and 2010 totaled $3,503,000 and $1,428,000, 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. 25

41 SCHEDULE OF AVAILABLE RESOURCES, REVENUES, RECEIPTS, EXPENSES AND EXPENDITURES NON-GAAP BUDGETARY BASIS AND ACTUAL For the Year Ended September 30, 2011 Original Variance and Final Favorable Budget Actual (Unfavorable) FY 2011 FY 2011 FY 2011 AVAILABLE RESOURCES, REVENUES AND RECEIPTS AVAILABLE RESOURCES AT BEGINNING OF YEAR Restricted $ 317,000 $ 320,000 $ 3,000 Operating and capital reserves 3,500,000 3,500,000 - Unrestricted 8,566,000 9,287, ,000 Total available resources at beginning of year 12,383,000 13,107, ,000 OPERATING REVENUES Fuel sales (net) 5,865,000 6,441, ,000 Concession fees 542, ,000 56,000 Hangar/T-shelter rents 1,540,000 1,664, ,000 Building and land rents 955, ,000 3,000 Line services 374, ,000 45,000 U.S. Customs user fees 113, ,000 (10,000) Other 10,000 17,000 7,000 Net operating revenues 9,399,000 10,200, ,000 NON-OPERATING REVENUES Customer facility charges 137, ,000 49,000 Grants 0 230, ,000 Investment earnings 44, ,000 63,000 Total non-operating revenues 181, , ,000 RECEIPTS Capital contributions 1,865,000 2,365, ,000 Total receipts 1,865,000 2,365, ,000 TOTAL REVENUES AND RECEIPTS 11,445,000 13,088,000 1,643,000 TOTAL AVAILABLE RESOURCES, REVENUES AND RECEIPTS $ 23,828,000 $ 26,195,000 $ 2,367,000 26

42 SCHEDULE OF AVAILABLE RESOURCES, REVENUES, RECEIPTS, EXPENSES AND EXPENDITURES NON-GAAP BUDGETARY BASIS AND ACTUAL (Continued) For the Year Ended September 30, 2011 Original Variance and Final Favorable Budget Actual (Unfavorable) FY 2011 FY 2011 FY 2011 TOTAL AVAILABLE RESOURCES, REVENUES AND RECEIPTS $ 23,828,000 $ 26,195,000 $ 2,367,000 EXPENSES AND EXPENDITURES OPERATING EXPENSES Personnel $ 4,071,000 $ 3,992,000 $ 79,000 Professional fees 649, ,000 47,000 Communications 106, ,000 (20,000) Insurance 482, ,000 39,000 Utilities and environmental 333, ,000 49,000 Office/postage/printing 53,000 37,000 16,000 ATCT, ARFF and police service 704, ,000 39,000 U. S. Customs 432, ,000 90,000 Dues/subscriptions/fees 38,000 37,000 1,000 Auto gas and diesel fuel 50,000 53,000 (3,000) Pilot services 48,000 51,000 (3,000) Maintenance and repair 478, ,000 16,000 Miscellaneous expense Operating expenses 7,444,000 7,094, ,000 CAPITAL EXPENDITURES 7,962,000 5,061,000 2,901,000 DEBT SERVICE EXPENSES AND EXPENDITURES Rental credit expense 29,000 29,000 - Total debt service expenses and expenditures 29,000 29,000 - TOTAL EXPENSES AND EXPENDITURES $ 15,435,000 $ 12,184,000 3,251,000 AVAILABLE RESOURCES AT YEAR END Restricted $ 245,000 $ 254,000 $ 9,000 Operating and capital reserves 3,500,000 3,500,000 - Unrestricted 4,648,000 10,257,000 5,609,000 TOTAL AVAILABLE RESOURCES AT YEAR END 8,393,000 14,011,000 5,618,000 NET CHANGE IN AVAILABLE RESOURCES BALANCE $ (3,990,000) $ 904,000 $ 4,894,000 RECONCILIATION OF BUDGETARY BASIS TO GAAP CHANGE IN NET ASSETS - BUDGETARY BASIS $ 904,000 Add: Capital expenditures 5,061,000 Less: Depreciation and amortization (2,791,000) Gain on disposal of capital assets 3,000 CHANGE IN NET ASSETS - GAAP $ 3,177,000 27

43 28

44 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 35 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

45 NAPLES, FLORIDA NET ASSETS BY COMPONENT, LAST TEN FISCAL YEARS Invested in capital assets, net of related debt $ $ $ 25,850,000 $ 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 Restricted 174, , , ,000 87,000 28, Unrestricted 2,402,000 2,551,000 3,486,000 4,808,000 3,140,000 9,821,000 12,109,000 12,120,000 13,255,000 13,382,000 Total net assets $ 28,426,000 $ 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 30

46 NAPLES, FLORIDA CHANGES IN NET ASSETS, LAST TEN FISCAL YEARS OPERATING REVENUES Fuel sales (net) $ 4,220,000 $ 4,155,000 $ 5,618,000 $ 6,249,000 Concession fees 541, , , ,000 Hangar/T-shelter/tiedown 816, , ,000 1,009,000 Building and land rent 665, , , ,000 Commercial air transportation 30,000 5, Line services 29,000 36,000 54,000 61,000 U.S. Customs user fees Other 7,000 9,000 57,000 94,000 Net operating revenues 6,308,000 6,295,000 7,983,000 8,907,000 OPERATING EXPENSES Personnel 2,372,000 2,549,000 2,923,000 3,169,000 Professional fees 856,000 1,570,000 1,971,000 1,312,000 Communications 90,000 88, , ,000 Insurance 258, , , ,000 Utilities and environmental 244, , , ,000 Office/postage/printing 30,000 33,000 33,000 33,000 ATCT, ARFF and police service 237, , , ,000 U.S. Customs and Boarder Patrol expense Dues/subscriptions/fees 16,000 15,000 18,000 20,000 Auto gas and diesel fuel 15,000 16,000 24,000 36,000 Pilot services 13,000 15,000 23,000 27,000 Maintenance and repair 358, , , ,000 Hurricane recovery/repair Depreciation and amortization 2,252,000 1,935,000 1,500,000 1,370,000 Total operating expenses 6,741,000 7,559,000 8,067,000 7,630,000 Operating income (loss) (433,000) (1,264,000) (84,000) 1,277,000 NON-OPERATING REVENUES (EXPENSES) Customer facility charges 192, , , ,000 Passenger facility charges 17,000 27,000 9,000 1,000 Interest revenue 83,000 67,000 64, ,000 Unrealized gain (loss) on investments Surcharge revenue 89,000 5, Grant revenue - 50,000-16,000 Insurance proceeds Interest expense (104,000) (157,000) (142,000) (129,000) Contribution of capital asset to government agency Gain (Loss) on disposal of capital assets (113,000) - - (12,000) Total non-operating revenues (expenses) 164, ,000 92, ,000 Income (loss) before capital contributions (269,000) (1,073,000) 8,000 1,551,000 Capital contributions 2,382, , ,000 1,732,000 Change in net assets $ 2,113,000 $ (122,000) $ 170,000 $ 3,283,000 31

47 $ 6,945,000 $ 7,103,000 $ 7,351,000 $ 5,813,000 $ 5,860,000 $ 6,441, ,000 1,474, , , , ,000 1,115,000 1,289,000 1,535,000 1,618,000 1,559,000 1,664, , , , , , , , , , , , , ,000 96,000 86,000 36,000 8,000 35,000 17,000 9,873,000 11,124,000 10,973,000 9,302,000 9,332,000 10,200,000 3,390,000 3,910,000 4,479,000 3,967,000 3,742,000 3,992,000 1,193, , , , , , , , , ,000 62, , , , , , , , , , , , , ,000 38,000 45,000 40,000 32,000 38,000 37, , , , , , , ,000 23,000 25,000 27,000 32,000 33,000 37,000 53,000 71,000 82,000 67,000 44,000 53,000 25,000 33,000 41,000 27,000 47,000 51, , , , , , ,000 2,124, , ,411,000 1,673,000 1,733,000 2,105,000 2,624,000 2,791,000 10,221,000 9,164,000 9,717,000 8,649,000 9,337,000 9,885,000 (348,000) 1,960,000 1,256, ,000 (5,000) 315, , , , , , , , , , ,000 51,000 75, (101,000) (85,000) 93,000 32, , , , , ,154, (58,000) (33,000) (32,000) (31,000) (30,000) (29,000) - - (556,000) (17,000) 731,000 10,000 9,000 7,000 3, ,000 1,910,000 2,115, , , , ,000 3,870,000 3,371, , , ,000 4,603,000 2,812,000 2,696,000 7,354,000 3,666,000 2,366,000 $ 5,189,000 $ 6,682,000 $ 6,067,000 $ 8,174,000 $ 3,919,000 $ 3,177,000 32

48 NAPLES, FLORIDA AVERAGE AVIATION FUEL MARGINS (PER GALLON) Jet A 100LL Prepaid Annual Prepaid Fiscal Full Full Volume Scheduled Full Full Public Scheduled Year Flowage Service Service Discount Airline Service Service Self Fueling Airline 2002 $ 0.35 $ 1.45 $ 1.06 $ - $ 0.46 $ 0.88 $ 0.58 $ 0.58 $ AVIATION FUEL SALES (GALLONS) Jet A 100LL 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 ,060,876 1,387,928 1,161,943-40,553 4,651, , ,850 87,851 60, , ,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, ,122

49 AVIATION FUEL SALES (NET REVENUE) $ Jet A 100LL 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 2002 $ 725,700 $ 2,011,792 $ 1,226,815 $ - $ 18,819 $ 3,983,126 $ 251,728 $ 80,975 $ 51,286 $ 26, , ,601 2,098,610 1,113,549-8,815 3,952, ,486 68,151 56,389 32, , ,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, ,828 Source: Authority's Finance Department records 34 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.

50 NAPLES, FLORIDA PRINCIPAL CUSTOMERS - BY GROSS SALES For the Year Ended September 30, 2011 Company Gross Sales % of Total Gross Sales Mercury Air Group - NetJets $ 4,392, % Flexjet 1,008, % Citation Air by Cessna 680, % Mercury Air Group - Flight Options 483, % Naples Jet Center 533, % ASG 369, % Hertz Corporation 330, % Travel Management 259, % Delta Private Jet 253, % XOJET 246, % 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, 2011 Company Aviation Fuel Gallons % of Total Aviation Gallons Mercury Air Group - NetJets 944, % Health Management Associates 290, % Flexjet 216, % Citation Air by Cessna 146, % Mercury Air Group - Flight Options 102, % Naples Jet Center 125, % ASG 75, % XOJET 51, % Delta Private Jet 50, % Naples Airport Properties 47, % Source: Authority's accounting records Note: Information for the ninth year prior is not available. 35

51 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 $ 1,454,000 $ 842,000 $ 2,296, % 6, ,344, ,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 2002 $ 5,000,000 $ 2,296, % ,000,000 2,031, % ,000,000 1,798, % ,000,000 1,465, % ,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

52 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

53 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 ,047 $ 884,548 $ 40, ,475 $ 10,197,520 $ 40, % , ,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, % 2011 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 2011 not available (n/a). 38

54 NAPLES, FLORIDA PRINCIPAL EMPLOYERS Percentage of Total Employer NCH Healthcare System Number of Employees 5,000 Employment 4.8% Collier County School District 4, % Publix Supermarket 3, % Marriott Corporation 2, % Collier County Government (excl. Sheriff) 2, % Wal-Mart 1, % Collier County Sheriffs Office 1, % Winn Dixie Stores Inc. 1, % Home Depot 1, % Gargiulo Inc % Source: Collier County, Florida, Comprehensive Annual Financial Report, Notes: Information for the ninth year prior is not available. 39

55 NAPLES, FLORIDA AVIATION FUEL AND AIRCRAFT OPERATIONS STATISTICS Fiscal Year 100LL Aviation Fuel Gallons Jet A Total Local Aircraft Operations Itinerant Total ,885 4,651,300 5,225,185 33, , , ,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 84,339 Source: Authority's Operations and Finance Department records Aviation Fuel Gallons & Aircraft Operations Historical Comparison FY FY 2011 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

56 NAPLES, FLORIDA COMMERCIAL PASSENGER STATISTICS Fiscal Year Enplanements Deplanements Total CFCs PFCs ,540 14,710 29, ,000 17, ,603 10,720 21, ,000 27, ,486 3,484 6, ,000 9, ,025 30,186 60, ,000 1, ,558 27,457 54, , ,835 20,910 39, , ,143 2,959 6, , , , ,000 - Source: Authority's Operations and Finance Department records Commercial Passenger Activity FY FY 2011 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

57 Customer & Line Services Operations Airport Development Facilities & Custodial Security Administration Executive TOTAL EMPLOYEES NAPLES, FLORIDA FULL-TIME EQUIVALENT EMPLOYEES BY FUNCTION Last Ten Fiscal Years 42 Source: Authority's records

58 General Aviation Terminal: Area (sq. ft.) 11,650 11,650 11,650 11,650 11,650 11,650 11,650 11,650 19,747 19,747 Parking (spaces) Rental Car Agencies Based Aircraft: 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 Patrol User Fee 43 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. Fiscal Year Air Carrier Terminal: 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 Aircraft Storage: T-Hangars Common Storage T-Shelters Tiedowns Non-Authority Owned (units) Sources: Florida Department of Transportation and Authority records

59 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 51,761,105 Source: Authority's financial statements and accounting records Note: Other Contributions for 2006 include the acquisition of the NAA North Facility. 44

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64 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Fiscal Year Ended September 30, 2011 Federal/Pass Through Entity Federal Program CFDA Contract Number Grantor Number Expenditures U.S. Department of Transportation Federal Aviation Administration Rehabilitate Runway 5-23 Construction Phase AIP-32 1,995,026 Total Expenditures of Federal Awards $ 1,995,026 See accompanying notes to the schedule of expenditures of federal awards. 49

65 NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED SEPTEMBER 30, 2011 NOTE 1 PURPOSE OF THE SCHEDULE The Schedule of Expenditures of Federal Awards (the Schedule) is a supplementary schedule to the Authority s financial statements and is presented for the purpose of additional analysis. The Schedule is required by Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation Federal Financial Assistance Pursuant to the Single Audit Act of 1984 (Public Law ), the Single Audit Act Amendments of 1996 (Public Law ), and OMB Circular A-133, federal financial assistance is defined as assistance provided by a federal agency, either directly or indirectly, that nonfederal entities receive or administer, in the form of grants, contracts, cooperative agreements, loans, loan guarantees, property interest subsidies, insurance, or direct appropriations. Catalog of Federal Domestic Assistance OMB Circular A-133 requires the Schedule to show the total expenditures for each of the Council s federal financial assistance programs as identified in the Catalog of Federal and Domestic Assistance (CFDA). Federal financial assistance programs that have not been assigned a CFDA number are indicated with an N/A. Basis of Accounting Federal expenditures included in the Schedule are reported using the accrual basis of accounting. 50

66 NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED SEPTEMBER 30, 2011 NOTE 3 MATCH REQUIREMENT The Authority received financial assistance under several grants and contracts requiring local match in the form of cash. A match amount is established at the time the financial assistance is awarded. However, this financial assistance is received on a reimbursement basis and can only be recognized to the extent of allowable costs. For the fiscal year ended September 30, 2011, the Authority had matching requirements as follows: Federal Allowable Costs Requiring Match Match Requirement Percent Match Requirement Dollars Cash Match Applied Rehabilitate Runway 5-23 $ 1,814,723 5% $ 90,736 $ 90,740 51

67 SCHEDULE OF FINDINGS AND QUESTIONED COSTS FEDERAL PROGRAMS YEAR ENDED SEPTEMBER 30, 2011 Financial Statements Section I Summary of Auditors Results Type of auditors report issued; Unqualified Internal control over financial reporting: Material weakness(es) identified? yes X no Significant deficiency(ies) identified that are not considered to be material weakness(es)? yes X none reported Noncompliance material to financial statements noted? yes X no Federal Awards Internal control over major federal programs: Material weakness(es) identified? yes X no Significant deficiency(ies) identified that are not considered to be material weakness(es)? yes X none reported Type of auditor s report issued on compliance for major federal programs: Unqualified Any audit findings disclosed that are required to be reported in accordance with Section 510(a) of Circular A-133? yes X no 52

68 SCHEDULE OF FINDINGS AND QUESTIONED COSTS FEDERAL PROGRAMS YEAR ENDED SEPTEMBER 30, 2011 Identification of major program: Section I Summary of Auditors Results (Continued) CFDA Number(s) Name of Federal Program or Cluster U.S. Department of Transportation Federal Aviation Administration Airport Improvement Program Dollar threshold used to distinguish between Type A or Type B programs was: Major Federal Program $ 300,000 Auditee qualified as low-risk auditee pursuant to OMB Circular A-133? X yes no Section II Financial Statement Findings This schedule identifies the significant deficiencies, material weaknesses, fraud, illegal acts, violations of the provisions of contract and grant agreements and abuse related to the financial statements for which Government Auditing Standards requires reporting in a Circular A-133 audit. There were no such instances required to be reported. Section III Findings and Questioned Costs Major Federal Programs This section identifies the audit findings required to be reported by Section.501(a) of Circular A-133 as well as well as any abuse finding involving federal awards that is material to a major program. There were no such instances required to be reported. Section IV Other Issues No Summary Schedule of Prior Audit Findings is required because there were no prior audit findings related to Federal programs. No Corrective Action Plan is required because there were no findings required to be reported under the Federal Single Audit Act. 53

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