THE CORPORATION OF THE CITY OF ST. CATHARINES, ONTARIO FINANCIAL STATEMENTS TO THE YEAR ENDED DECEMBER 31, 2010

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2 THE CORPORATION OF THE CITY OF ST. CATHARINES, ONTARIO FINANCIAL STATEMENTS TO THE YEAR ENDED DECEMBER 31, 2010 City of St. Catharines Consolidated Statements Port Dalhousie Business Association St. Catharines Downtown Association St. Catharines Public Library St. Catharines Transit Commission St. Catharines Paratransit System Niagara District Airport Commission

3 crawford smith swallow THE CORPORATION OF THE CITY OF ST. CATHARINES Consolidated Financial Statements December 31, 2010

4 crawford smith swallow THE CORPORATION OF THE CITY OF ST. CATHARINES Consolidated Financial Statements December 31, 2010 Table of Contents Independent Auditors' Report Consolidated Statement offinancial Position Consolidated Statement of Operations and Accumulated Surplus Consolidated Statement ofcash Flows Consolidated Statement of Change in Net Financial Assets Notes to Consolidated Financial Statements Schedule ofsegmented Reporting Schedules oftangible Capital Assets Independent Auditors' Report - Trust Funds Statement offinancial Position- Trust Funds Statement offinancial Activities and Changes in Fund Balances- Trust Funds Notes to Financial Statements - Trust Funds Page

5 Crawford, Smilh and Swallow Chartered Accountants LLP 531 Lake Street St. Catharines. Ontario L2N 4H6 Telephone (905) Telecopier (905) crawford smith swallow Offices in: Niagara Falls, Ontario St. Catharines. Ontario Fort Erie, Ontario Niagara-on-the-Lake, Ontario Port Col borne. Ontario INDEPENDENT AUDITORS' REPORT To the Members of Council, Inhabitants and Ratepayers of The Corporation of the City of St. Catharines We have audited the accompanying consolidated financial statements of The Corporation of the City of St. Catharines, which comprise the consolidated statement of financial position as at December 31, 2010, and the consolidated statements of operations and accumulated surplus, change in net financial assets and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation ofthese consolidated financial statements in accordance with Canadian generally accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or enor. Auditors' Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity's preparation and fair presentation ofthe consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. 1

6 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of The Corporation of the City of St. Catharines as at December 31, 2010, and the results of its operations, changes in net financial assets and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles. St. Catharines, Ontario June 28, 2011 CRAWFORD, SMITH AND SWALLOW CHARTERED ACCOUNTANTS LLP LICENSED PUBLIC ACCOUNT ANTS 2

7 THE CORPORATION OF THE CITY OF ST. CATHARINES CONSOLIDATED STATEMENT OF FINANCIAL POSITION December 31, 2010 (In thousands of dollars) Financial Assets Cash and cash equivalents - note 2 Taxes receivable - note 3 Accounts receivable Note receivable - St. Catharines Hydro Inc. - note 4 Investment in St. Catharines H dro Inc. - note 4 Liabilities Accounts payable and accmed liabilities - note 6 Deferred revenue - obligatory reserve funds - note 7 Other current liabilities Employee future benefits- note 8 Landfill post-closure liability- note ~ 2009 $ 85,833 15,257 16,005 7,754 52, ,106 19,778 12,416 2,394 12,977 Net Financial Assets Non-Financial Assets Tangible capital assets Inventories Other current assets 72, ,927 1, ,796 Accumu]ated Surplus -note , ,944 See accompanying notes crawford smith G& swallow 3

8 THE CORPORATION OF THE CITY OF ST. CATHARINES CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED SURPLUS for the year ended December 31, 2010 (In thousands ofdollars) Revenues Taxation Taxation from other governments User fees and charges Government grants Interest and penalties Investment income Donations Other Budget $ 74,389 2,533 33,046 2,261 2,150 2, ,263 2, , $ 74,565 2,173 27,531 3,051 2,253 2, ,677 2, Expenses General government Protection to persons and property Transportation services Environmental services Health services Social and family services Recreation and cultural services Plannin and develo ment 16,778 23,657 28,030 10,765 1, ,050 5,298 15,313 22,663 39,405 13,175 1, ,605 5, , ,335 Excess (Deficiency) of Revenues Over Expenses Before Other Revenue Related to Capital 16,971 (1,681) Other Revenue Related to Capital Government grants 6,723 Contributions from developers 4,981 Donations 188 Other 3,489 15,381 Excess of Revenues Over Expenses 16,971 Accumulated Surplus, Beginning of Year 573,944 13, ,244 Accumulated Surplus, End of Year 590, , ,944 See accompanying notes crawford smith swallow 4

9 THE CORPORATION OF THE CITY OF ST. CATHARINES CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended December 31, (In thousands ofdollars) Operations Excess of revenues over expenses Sources (Uses) Change in taxes receivable Change in accounts receivable Change in inventories Change in other current assets Change in accounts payable and accrued liabilities Change in deferred revenue - obligatory reserve funds Change in other current liabilities Change in employee future benefits Chan e in landfill ost-closure liabilit 2009 $ 13,700 (1,480) (2,618) (55) 132 (4,503) 4, (3,349) 21, ,673 Net increase in cash from operations Capital Acquisition oftangible capital assets Proceeds on disposal of tangible capital assets Net decrease in cash from capital activities Investing Income from St. Catharines Hydro Inc. Dividends received- St. Catharines Hydro Inc. 32,024 (39,885) 81 (39,804) (2,202) 1,999 Net decrease in cash from investing (203) Financing Long-term debt issued 7,203 Long-term debt repaid (7,044) Net increase in cash from financing 159 Decrease in Cash Position (7,824) Cash Position, Beginning of Year 93,657 Cash Position, End of Year 85,833 See accompanying notes crawford smith c:& swallow 5

10 THE CORPORATION OF THE CITY OF ST. CATHARINES CONSOLIDATED STATEMENT OF CHANGE IN NET FINANCIAL ASSETS for the year ended December 31, 2010 (In thousands ofdollars) 2009 $ Excess of Revenues over Expenses Acquisition of Tangible Capital Assets Amortization oftangible Capital Assets Loss on Disposal of Tangible Capital Assets Proceeds on Disposal of Tangible Capital Assets Change in Inventories Change in Other Current Assets 13,700 (39,885) 21, (55) 132 Decrease in Net Financial Assets (4,354) 76,502 Net Financial Assets, End of Year 72,148 See accompanying notes crawford smith G& swallow 6

11 THE CORPORATION OF THE CITY OF ST. CATHARINES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for the year ended December 31, Significant Accounting Policies The consolidated financial statements of the The Corporation of the City of St. Catharines (the "Municipality") are the representations of management prepared in accordance with local government accounting standards established by the Public Sector Accounting Board ("PSAB") of the Canadian Institute of Chartered Accountants with the exception of providing budget figures (note 17). (a) Basis of consolidation (i) (ii) These consolidated financial statements reflect the assets, liabilities, revenues and expenses of the operating fund, reserves, reserve funds and changes in investment in tangible capital assets. It includes the activities of all committees of council and the following boards, municipal enterprises and utilities which are under the control of council: St. Catharines Public Library Board St. Catharines Downtown Association Port Dalhousie Business Improvement Area St. Catharines Transit Commission - Urban Service St. Catharines Transit Commission - Paratransit System St. Catharines Hydro Inc. St. Catharines Hydro Inc. (the "Company") is accounted for on a modified equity basis, consistent with the accounting treatment for government business enterprises. Under the modified equity basis, the business enterprise's accounting principles are not adjusted to conform with those of the Municipality, and interorganizational transactions and balances are not eliminated. The Municipality recognizes its equity interest in the annual income or loss of the Company in its "Consolidated Statement of Operations and Accumulated Surplus" with a corresponding increase or decrease in its investment asset account. Any dividends that the Municipality receives from the Company are reflected as reductions in the investment asset account. Partial-consolidated entities The following joint local board is proportionately consolidated. See note 15. Niagara District Airport Commission (Joint Board) (iii) Accounting for Region and School Board transactions The taxation, other revenues, expenditures, assets and liabilities with respect to the operations of the school boards and the Region of Niagara are not reflected in the municipal fund balances of these consolidated financial statements. crawford smith swallow 7

12 THE CORPORATION OF THE CITY OF ST. CATHARINES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for the year ended December 31, Significant Accounting Policies - continued (a) Basis of consolidation- continued (iv) Trust funds Trust funds and their related operations administered by the Municipality are not consolidated, but are reported separately on the trust funds "Statement of Financial Position and Statement of Financial Activities and Changes in Fund Balances". (b) Basis ofaccounting (i) (ii) Revenues and expenses are reported on the accrual basis of accounting. The accrual basis of accounting recognizes revenues as they become available and measurable; expenditures are recognized as they are incurred and measurable as a result ofreceipt of goods or services and the creation of a legal obligation to pay. (iii) Cash and cash equivalents (iv) (v) Cash equivalents consist of provincial government bonds and schedule 1 banks bearer deposit notes. Cash equivalents are recorded at the lower of cost plus accrued interest and market value, and are redeemable on demand. Non-financial assets Non-financial assets are not available to discharge existing liabilities and are held for use in the provisions of services. They have useful lives extending beyond the current year, and are not intended for sale in the ordinary course of operations. The change in non-financial assets during the year, together with the excess of revenues over expenses, provides the change in net financial assets for the year. Tangible capital assets Tangible capital assets are recorded at cost. Cost includes all directly attributable expenditures in the acquisition, construction, development and/or betterment of the asset required to install the asset at the location. Amortization is recorded to reflect the cost, net of anticipated residual value, associated with the use of the asset in providing government services on a straight-line basis over the estimated useful life of the asset. Assets under construction are not amortized until the asset is available for productive use, at which time they are capitalized. Gains and/or losses on the disposal of an asset are be recorded on the Consolidated Statement of Operations and Accumulated Surplus as "gain/loss on disposal of assets". crawford smith G& swallow 8

13 THE CORPORATION OF THE CITY OF ST. CATHARINES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for the year ended December 31, Significant Accounting Policies - continued (b) Basis ofaccounting - continued (v) (vi) Tangible capital assets- continued Tangible assets received as contributions are recorded at their fair market value at the date of receipt and are also recorded as revenue. Similarly, transfer of assets to third parties are recorded as an expense equal to the net book value of the asset as at the date of transfer. The historical cost of works of art or historical treasures has not been assigned to these assets nor disclosed in the consolidated financial statements. Asset Class Period General Assets Land - NIL Land improvements years straight line and declining balance Buildings and building improvements years straight line Machinery and equipment years straight line Furniture and fixtures years straight line Information technology years straight line Vehicles years straight line Infrastructure Land - NIL Land improvements years straight line and declining balance Buildings and building improvements years straight line Machinery and equipment years straight line Information technology years straight line Vehicles years straight line Linear years straight line and declining balance Inventories Inventories are valued at average cost. (vii) Deferred revenue Funds received for specific purposes are accounted for as deferred revenue until the Municipality discharges the obligation which led to the receipt of the funds. crawfijrd smith swallow 9

14 THE CORPORATION OF THE CITY OF ST. CATHARINES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for the year ended December 31, Significant Accounting Policies - continued (b) Basis of accounting - continued (viii) Government transfers Government transfers are recognized in the period in which the events giving rise to the transfer occur, providing the transfers are authorized, any eligibility criteria have been met, and reasonable estimates ofthe amounts can be made. (ix) Use ofestimates The preparation ofthe financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. 2. Cash and Cash Equivalents thousands ofdollars) 2009 $ Cash 8,283 Cash e uivalents 77,550 85,833 crawford smith C& swallow 10

15 THE CORPORATION OF THE CITY OF ST. CATHARINES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for the year ended December 31, Taxes Receivable and Revenues Property tax billings are prepared by the Municipality based on an assessment roll prepared by the Municipal Property Assessment Corporation ("MP AC"). The property tax receivables, tax revenue and accounts payable and accrued liabilities of the Municipality are subject to measurement uncertainty as a significant number of appeals submitted by ratepayers have yet to be heard. In addition to the allowance for doubtful accounts of $ 523,000, the Municipality has a contingent liability of$ 2,135,039 to fund prior year tax appeals. The taxes receivable balance, including penalties and interest, is as follows: Less allowance (in thousands of dollars) 2009 $ 8,668 7,256 The Province of Ontario instituted a mandatory capping program through the provisions of Bill 79, which limited assessment related increases to 10% in 1998, and an additional 5% in each of 1999 and Multi-residential, commercial and industrial property owners experiencing decreases were also capped at appropriate levels to fund the phasing-in of increases. The Province has enacted Bill 140, which serves to extend the capping provisions of Bill 79 indefinitely. The new legislation limits assessment related increases in property tax bills to 5%. crawfijrd smith c& swallow 11

16 THE CORPORATION OF THE CITY OF ST. CATHARINES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for the year ended December 31, Investment in St. Catharines Hydro Inc. Statement offinancial Position Current assets Investments Capital assets Future income tax assets Other assets Total Assets Current liabilities Other liabilities Long-term note payable Future income tax liabilities Total Liabilities Net Assets thousands of dollars) 2009 $ 8,086 38,477 14, , ,754 8,435 52,257 Statement of Financial Activities Revenues Operating expenses Net Income 4,714 2,107 2,607 In the prior year, the consolidated statements for the company were adjusted for a change in accounting policy on a retroactive basis without restatement. The impact on the company was a reduction to investment in Horizon Holdings Inc. and retained earnings in the amount of $ 405,000. The change was as a result of the implementation of changes in Handbook Section "Income Taxes" by Horizon Holdings Inc. 5. Credit Facility The Municipality has an authorized operating loan of$ 20,000,000 ofwhich NIL has been drawn upon as at December 31, crawford smith G& swallow 12

17 THE CORPORATION OF THE CITY OF ST. CATHARINES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for the year ended December 31, Accounts Payable and Accrued Liabilities The accounts payable balance is as follows: Trade accounts payable Payables to other governments Payables to school boards Other thousands ofdollars) 2009 $ 5,512 8, ,658 19, Deferred Revenue- Obligatory Reserve Funds The following balances are reflected as deferred revenue - obligatory reserve funds as provincial legislation restricts how these funds may be used and under certain circumstances these funds may be refunded. thousands ofdollars) 2009 $ Impost and development 3,256 Subdivider deposits 389 Revenue under the Planning Act 870 Future sidewalks 960 Gasoline tax- provincial 836 Gasoline tax - federal 6,105 12,416 crawford smith swallow 13

18 THE CORPORATION OF THE CITY OF ST. CATHARINES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for the year ended December 31, Employee Future Benefits The Municipality provides certain employee benefits which will require funding in future periods. Under the sick-leave benefit plan, unused sick leave can accumulate and employees may become entitled to a cash payment when they leave the Municipality's employment. The Municipality pays certain medical, dental and life insurance benefits on behalf of its retired employees. The Municipality recognizes these post-retirement costs in the period in which the employees renders the services. The accrued benefit obligation was determined by actuarial valuation using a discount rate of 4.75% (5.25%- 2009). The Municipality has established a reserve for the accumulated sick leave liability. The balance as at December 31, 2010 is$ 3,088,702 ($ 3,095, ). Defined Benefit Plan Information thousands of dollars) 2009 $ 12,977 12,977 Accrued benefit obligation, beginning of year 12,330 Expense for the year 1,251 Amortization of actuarial losses 37 Benefits paid during the year (641) Accrued benefit obligation, end ofyear 12,977 As a result of an actuarial valuation conducted in 2011 for the year ending December 31, 2010, it was determined that an actuarial loss of$ 1,825,611 existed. This amount is being amortized over the expected average remaining service lives of several employee groups. The unamortized value remaining is $ 1,641,451. The actual obligation is $ 15,156,203. The next actuarial valuation required is for December 31, The main actuarial assumptions employed for the valuation are as follows: General Inflation - Future general inflation levels, as measured by changes in the Consumer Price Index ("CPI"), were assumed at 2.0% in 2010 and thereafter. Salary Levels- Future salary and wage levels were assumed to increase at 2.0% per annum for the year 2010 through 2015 and 3.3% thereafter. Medical Costs- Medical costs were assumed to increase at a rate of 8.00% graded down to 7.63% in 2011, 7.25% in 2012, 6.88% in 2013, 6.50% in 2014, 6.13% in 2015, 5.75% in 2016, 5.38% in 2017, and 5.00% in 2018 and each year thereafter. Dental Costs - Dental costs were assumed to increase at a rate of 5.0% per annum. crawford smith c& swallow 14

19 THE CORPORATION OF THE CITY OF ST. CATHARINES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for the year ended December 31, Net Long-Term Liabilities (a) The balance of net long-term liabilities reported on the "Consolidated Statement of Financial Position" is made up as follows: thousands ofdollars) 2009 $ The Municipality has assumed responsibility for the payment ofprincipal and interest charges on certain long-term liabilities issued by other municipalities. At the end of the year the ~,~.,...,..,,,.,.. amount ofthis Net long-term liabilities, end of year (b) Ofthe net long-term liabilities reported in (a) of this note, principal payments are due as follows: ,577, ,289, ,571, ,641, ,028,000 Thereafter 27,156,000 (c) Included in the net long-term liabilities reported in (a),$ 9,333,000 relates to a sinking fund debenture for which as at December 31, 2010, there were no sinking funds required to be set aside. (d) The long-term liabilities in (a) issued in the name of the Municipality have received approval of the Ontario Municipal Board for those approved on or before December 31, Those approved after January 1, 1993 have been approved by by-law. The annual principal and interest payments required to service these liabilities are within the annual debt repayment limit prescribed by the Ministry of Municipal Affairs and Housing. (e) Interest expense on long-term debt amounted to$ 2,789,868 ($ 2,676, ). $ crawford smith c& swallow 15

20 THE CORPORATION OF THE CITY OF ST. CATHARINES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for the year ended December 31, Accumulated Surplus Invested in tangible capital assets Operating fund Reserves and reserve funds Equity in St. Catharines Hydro Inc. Amounts to be recovered Employee future benefits Landfill post-closure liability Net lon -term liabilities thousands of dollars) 2009 $ 500,830 6,217 77,256 60, , ,944 (a) Operating fund balance To be applied in the following year to operations ofthe: Operating fund Transit Library Airport Commission To be applied to water operations for the thousands of dollars) 2009 $ 3, crawford smith swallow 16

21 THE CORPORATION OF THE CITY OF ST. CATHARINES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for the year ended December 31, Accumulated Surplus - continued (b) Reserves and reserve fund balances Reserves set aside by council for specific purposes: Working capital Replacement ofequipment Cumulative sick leave Library purposes Transit purposes Encumbrances Cemetery Move Ontario Brownfield Roads and sewers Reserve Funds set aside by council for specific purposes: Actifest Aquatic facility Business improvement purposes Community development Hospital levy Mausoleum Paratransit capital purposes Parkin thousands ofdollars) 2009 $ ,204 3,095 2, , , ,136 4, ,034 43,142 77,256 crawford smith c& swallow 17

22 THE CORPORATION OF THE CITY OF ST. CATHARINES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for the year ended December 31, Accumulated Surplus - continued (c) St. Catharines Hydro Inc. net equity 11. Trust Funds thousands of dollars) 2009 $ Balance, beginning of year 59,808 Changes during the year Net income for the year Dividends paid during the year Change in accounting policy- see note 4 2,607 (1,999) (405) Balance, end of year 60, Trust funds administered by the Municipality amounting to $ 8,665,000 ($ 8,305, ) have not been included in the "Consolidated Statement of Financial Position" nor have their operations been included in the "Consolidated Statement offinancial Activities". 12. Pension Agreements The Municipality makes contributions to the Ontario Municipal Employees Retirement System ("OMERS"), which is a multi-employer plan, on behalf of 889 members of its staff The plan is a defined benefit plan which specifies the amount of the retirement benefit to be received by the employees based on the length ofservice and rates ofpay. The amount contributed to OMERS for 2010 was $ 3,820,624 ($ 4,060, ) for current service and is included as an expense in the "Consolidated Statement of Operations and Accumulated Surplus". crawford smith c& swallow 18

23 THE CORPORATION OF THE CITY OF ST. CATHARINES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for the year ended December 31, Contractual Obligations and Commitments Capital expenditures The estimated future capital expenditures based on projects in progress at December 31, 2010 is approximately$ 44,360,000 ($ 55,436, ) after deducting the expenditures incurred as at December 31, These projects will be financed by grants, subsidies and long-term liabilities in future years. Niagara Health System St. Catharines Hospital The Municipality is committed to funding $ 31,200,000 (net present value) of the local share amounting to $ 60,000,000 to construct a new Niagara Health System ("NBS") hospital complex to be located in St. Catharines. The Municipality has approved a plan which results in an additional annual "tax" levy in the amount of$ 2,029,605 for next year and$ 2,208,959 per year for 15 years thereafter. The schedule of payments to the NBS is anticipated to consist of a lump sum payment of $ 8,271,760 in 2011 and annual installments of$ 2,208,959 from 2012 to As at December 31, 2010, there is a Hospital Levy reserve fund in the amount of $ 6,125, Contingent Liabilities From time to time, the Municipality is subject to claims and other lawsuits that arise in the ordinary course of business, some of which may seek damages in substantial amounts, including punitive or extraordinary damages. These claims may be covered by the Municipality's insurance up to a maximum of $ 20,000,000 per occurrence. Liability for these claims and lawsuits are recorded to the extent that the probability of a loss is likely and it is estimable. 15. Contributions to Joint Board Further to note 1 (a)(ii) the following contributions were made by the Municipality to: (in thousands of dollars) 2009 $ Niagara District Airport Commission 145 The Municipality's share of the net assets of the Niagara District Airport Commission is approximately 55%. crawfijrd smith c& swallow 19

24 THE CORPORATION OF THE CITY OF ST. CATHARINES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for the year ended December 31, Landfill Post Closure Liability The Municipality currently monitors several landfill sites which were closed in prior years. The liability for post-closure care has been recognized based on monitoring costs included in the 2010 budget and inflation adjusted at 1.5% per annum. These costs were then discounted to December 31,2010 using a discount rate of4.75%. The liability for post-closure care as at December 31, 2010 is $3,452,096 ($ 3,136, ). Estimated annual expenditures for post-closure care are $ 174,000 ($ 155, ) and are expected to be incurred for the next 32 years. 17. Budget Figures The approved operating budget for 2010 is reflected on the "Consolidated Statement of Operations and Accumulated Surplus". These numbers have not been audited but are presented for information purposes only. The budgets established for capital funds, reserves and reserve funds are on a project-oriented basis, the costs of which may be carried out over one or more years. As such, they are not directly comparable with current year actual amounts and have not been reflected. Budget figures have been reclassified to comply with PSAB reporting requirements. 18. Comparative Figures Certain figures have been reclassified to conform with the current year's presentation. 19. Segmented Reporting The City of St. Catharines is a lower tier municipality that provides a wide range of services to its citizens. Segments include General Government, Protection, Transportation, Environmental and Recreation and Culture. Major services and activities provided by each segment are as follows: General Government Reported in the General Government functional area are the combined functions of general government, health services, social and family services and planning and development. General government includes services relating to governance, corporate management and program support. These are the combined services of the CAO's office, Financial Management, Legal and Corporate Support Services departments. Health Services includes the administration, operation and maintenance of City cemeteries. Also included here is the City's commitment to the new Niagara Health System hospital. Social and family services includes the administration, operation and maintenance of seniors programs and facilities. Also included here are Para Transit Services provided by the St. Catharines Transit Commission. crawford smith swallow 20

25 THE CORPORATION OF THE CITY OF ST. CATHARINES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for the year ended December 31, Segmented Reporting- continued General Government - continued Planning and development services includes services relating to the Official Plan, zoning, community improvement, the attraction and retention of new and existing businesses and tourism. Also included here are the services provided by the Downtown Association and Port Dalhousie Business Improvement Area. Protection to Persons and Property Reported in the Protection to Persons and Property functional area are services relating to fire suppression, prevention, training and communication, the issuance ofpermits, building inspections and property standards, enforcement of applicable municipal bylaws and technical analysis and recommendations for proposed and existing developments. Transportation Services Reported in the Transportation Services functional area are services relating to the construction, rehabilitation and maintenance of City's road and sidewalk network, winter control, parking and parking enforcement and street lighting. Also included are Urban Transit Services provided by the St. Catharines Transit Commission and the City's portion of the Niagara District Airport. Environmental Services Reported in the Environmental Services functional area are services relating to the construction, rehabilitation and maintenance of the City's storm sewer, sanitary sewer and waterline network, pollution control, environmental monitoring and the implementation of environmental programs. Recreation/Culture Services Reported in the Recreation/Cultural Services functional area are services relating to the administration, operations and maintenance of the City's parks, recreation facilities and programs, museum, heritage facilities and cultural programs. Also included are library services provided by the St. Catharines Public Library Board. crawford smith. swallow 21

26 General General Recreation! Recreation! Government Government Protection Protection Transportation Transportation Environmental Environmental Culture Culture SCHI SCHI Total Total Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual $ $ $ $ $ $ $ $ $ $ $ $ $ $ Revenues Taxation 17,146!7,075 16,687 15,733 21,814 21,326 4,746 4,996!6,!51!5,435 76,544 74,565 Taxation from other governments ,107 2,173 User fees and charges 2,707 1,920 1,146 1,093 ll,loo 10,795!6,356 11,861 1,843 1,862 33,152 27,531 Government grants ,950 2, ,703 3,051 Interest and penalties ! ,308 2,253 Investment income 1,782 1, ,521 2,265 Donations !53 84 Other 2,804 1, ,825 3,010 6,432 5,677 St. Catharines Hydro Inc. net income 3,659 2,202 3,659 2,202 Loss on di~osal of tangible ca~ital assets (25) (661) (138) 49 (12) (405) (147) 25,888 23,301 19,131 18,129 35,299 34,482 22,814 19,700 22,383 21,840 3,659 2, , ,654 Expenditures Salaries and wages 16,128 15,655 20,999 19,550 16,011 14,716 4,637 4,240 12,670 12,402 70,445 66,563 Operating materials and supplies 4,482 4,672 1,177 1,243 7,820 8, ,053 5,606 5,352 20,056 20,352 Contracted services 2,506 2, ,495 3, ,301 1,550 7,228 9,096 Rents and frnancial expenses , Interfunctionat transfer (!,528) (!,613) (539) (381) 1,951 1,907 (103) (!37) External transfer Amortization 1,203 1, ,570 12,402 4,201 3,918 3,3!3 3,278 22,066 21,526 Debt service ! ,790 2,677 23,871 22,486 23,950 22,664 39,426 39,404!3,691!3,176 24,004 23, , ,335 Excess (Deficiency) of Revenues Over Expenses Before Other Revenue Related to Capital 2, (4,819) (4,535) (4,127) (4,922) 9,123 6,524 (1,621) (1,765) 3,659 2,202 4,232 (!,681) Other Revenue Related to Capital Government grants 10,893 3,2!0 2,960 3, ,773 6,723 Contributions from developers 383 2,440 1,341 2,541 l3 1,737 4,98! Donations Other 947 2, ,489 11,276 6,597 4,301 8,542 1, ,579 15, THE CORPORATION OF THE CITY OF ST. CATHARINES SCHEDULE OF SEGMENTED REPORTING December31, 2010 (In thousands of dollars) Excess {Deficiency) of Revenues Over Expenses 2, (4,819) (4,535) 7,149 1,675 13,424 15,066 (6!9) (1,523) 3,659 2,202 20,81! 13,700 See accompanying notes craw/orr! smith (]ij,.<:r.=llnw

27 General Land 41,876 1,706 43,582 43,582 Land improvements 38, ,155 17,756 1, ,883 20,272 Buildings, improvements and components 80, ,460 78,676 30,014 1,603 2,460 29,157 49,519 Machinery and equipment 17,410 3, ,873 8,979 1, ,707 10,166 Furniture and fixtures 2, ,569 1, ,085 1,484 Information technology 4, ,224 1, ,400 1,824 Vehicles 38,873 2,749 1,082 40,540 14,762 3,129 1,078 16,813 23, ,708 9,581 4, ,619 74,487 8,143 4,585 78, ,574 Infrastructure Land 2, ,240 2,240 Land improvements 7, ,318 2, ,550 4,768 Buildings, improvements and components 22,030 3, ,756 3, ,264 21,492 Machinery and equipment 13,489 1, ,144 6, ,058 7,086 Information technology Vehicles 7,726 1, ,373 4, ,910 3,463 Linear 535,542 13,768 2, , ,917 11,829 1, , , ,319 19,916 3, , ,598 13,923 2, , ,039 Work in Progress 9,985 27,351 37,336 37,336 December 31, ,012 56,848 7, , ,085 22,066 7, , , THE CORPORATION OF THE CITY OF ST. CATHARINES SCHEDULES OF TANGIBLE CAPITAL ASSETS for the year ended December 31, (In thousands ofdollars) Cost Accumulated Amortization Balance, Balance, Balance, Balance, Net Beginning of End of Beginning of End of Book Year Additions Disposals Year Year Amortization Disposals Year Value $ $ $ $ $ $ $ $ $ See accompanying notes crawford smith swallow

28 Cost Accumulated Amortization Balance, Balance, Balance, Balance, Net Beginning of End of Beginning of End of Book Year Additions Disposals Year Year Amortization Disposals Year Value $ $ $ $ $ $ $ $ $ General Land 36,726 5, ,876 41,876 Land improvements 37,107 1, ,661 16,602 1, ,756 20,905 Buildings, improvements and components 78,594 1, ,184 28,513 1, ,014 50,170 Machinery and equipment 15,881 2, ,410 8,422 1, ,979 8,431 Furniture and fixtures 2, , ,005 1,502 Information technology 3,339 1, ,197 1, ,971 2,226 Vehicles 36,915 3,290 1,332 38,873 13,095 2,991 1,324 14,762 24, ,820 15,507 2, ,708 69,148 7,913 2,574 74, ,221 Infrastructure Land 1, ,228 2,228 Land improvements 7,299 7,299 2, ,401 4,898 Buildings, improvements and components 20,174 1,856 22,030 3, ,809 18,221 Machinery and equipment 12,525 1, ,489 6, ,672 6,817 Information technology Vehicles 6,988 1, ,726 4, ,798 2,928 Linear 511,771 25,765 1, , ,018 11,763 1, , , ,282 30,692 2, , ,457 13,613 2, , ,721 Work in Progress 16,299 {6,3142 9,985 9,985 December 31, ,401 39,885 5, , ,605 21,526 5, , , THE CORPORATION OF THE CITY OF ST. CATHARINES SCHEDULES OF TANGIBLE CAPITAL ASSETS for the year ended December 31, 2010 (In thousands ofdollars) See accompanying notes crawford smith swallow

29 Crawford, Smith and Swallow Chartered Accountants LLP 531 Lake Street St. Catharines, Ontario L2N 4H6 Telephone (905) Telecopier (905) crawford smith swallow Offices in: Niagara Falls, Ontario St. Catharines, Ontario Fort Erie, Ontario Niagara-on-the-Lake, Ontario Port Col borne, Ontario INDEPENDENT AUDITORS' REPORT- TRUST FUNDS To the Members ofcouncil, Inhabitants and Ratepayers ofthe Corporation ofthe City ofst. Catharines We have audited accompanying financial statements of the trust funds of The Corporation of the City ofst. Catharines, which comprise the statement of financial position as at December 31,2010 and the statement of financial activities and changes in fund balances for the year then ended and a summary ofsignificant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian generally accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 25

30 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of the trust funds of The Corporation of the City of St. Catharines as at December 31, 2010 and the continuity of trust funds for the year then ended in accordance with Canadian generally accepted accounting principles. St. Catharines, Ontario June 28, 2011 CRAWFORD, SMITH AND SWALLOW CHARTERED ACCOUNTANTS LLP LICENSED PUBLIC ACCOUNTANTS 26

31 Cemetery Perpetual Marker Care & Memorial Total Care Fund Maintenance Fund Forest THE CORPORATION OF THE CITY OF ST. CATHARINES STATEMENT OF FINANCIAL POSITION- TRUST FUNDS December 31,2010 (In thousands ofdollars) Assets Cash Investments (market value $8,445; 2009 $8,078) Due from operating fund Liabilities and Fund Balances $ $ $ $ ,078 6, ,306 7, Due to operating fund 1 Fund balances 8,305 7, ,306 7, See accompanying notes crawford smith c& swallow 27

32 28 THE CORPORATION OF THE CITY OF ST. CATHARINES STATEMENT OF FINANCIAL POSITION- TRUST FUNDS December 31,2010 (In thousands ofdollars) Assets Library Endowment Museum & Trust Fund Lottery & Bingo $ $ Cash Investments (market value $8,445; 2009 $8,078) 687 Due from operating fund Liabilities and Fund Balances Due to operating fund 1 Fund balances See accompanying notes crawford smith c& swallow

33 STATEMENT OF FINANCIAL ACTIVITIES AND CHANGES IN FUND BALANCES- TRUST FUNDS for the year ended December 31, 2010 (In thousands ofdollars) Cemetery Perpetual Marker Care & Memorial Total Care Fund Maintenance Fund Forest THE CORPORATION OF THE CITY OF ST. CATHARINES Balance, Beginning of Year 2009 $ 8, $ 6, $ $ Receipts Sale ofplots, crypts and markers Ticket sales Book revenue Interest Donations Expenditures Contribution to operating fund Administration Balance, End of Year See accompanying notes crawford smith swallow

34 30 THE CORPORATION OF THE CITY OF ST. CATHARINES STATEMENT OF FINANCIAL ACTIVITIES AND CHANGES IN FUND BALANCES- TRUST FUNDS for the year ended December 31, 2010 (In thousands ofdollars) Library Endowment Museum & Trust Fund Lottery & Bingo Receipts Sale ofplots, crypts and markers Ticket sales Book revenue Interest Donations Expenditures Contribution to operating fund Administration Balance, End of Year See accompanying notes crawford smith c& swallow

35 THE CORPORATION OF THE CITY OF ST. CATHARINES NOTES TO FINANCIAL STATEMENTS- TRUST FUNDS for the year ended December 31, Significant Accounting Policies The financial statements of the Municipality's trust funds are the representations of management prepared in accordance with local government accounting standards established by the Public Sector Accounting Board ("PSAB") of the Canadian Institute of Chartered Accountants. (a) Basis of accounting (i) Revenues and expenditures are reported on the accrual basis of accounting. (ii) The accrual basis of accounting recognizes revenues as they become available and measurable; expenditures are recognized as they are incurred and measurable as a result of the receipt of goods or services and the creation of a legal obligation to pay. (iii) Investments are recorded at cost. crawford smith c& swallow 31

36 crawford smith swallow PORT DALHOUSIE BUSINESS ASSOCIATION Financial Statements December 31, 2010

37 crawford smith swallow PORT DALHOUSIE BUSINESS ASSOCIATION Financial Statements December 31, 2010 Table of Contents Page Independent Auditors' Report 1-2 Statement offinancial Position 3 Statement of Operations and Accumulated Surplus 4 Statement ofcash Flows 5 Statement ofchange in Net Financial Assets 6 Notes to Financial Statements 7-9

38 Crawford, Smith and Swallow Chartered Accountants LLP 531 Lake Street St. Catharines, Ontario L2N 4H6 Telephone (905) Telecopier (905) Offices in: Niagara Falls, Ontario St. Catharines, Ontario Fort Erie, Ontario Niagara-on-the-Lake. Ontario Port Colborne, Ontario crawford smith swallow INDEPENDENT AUDITORS' REPORT To the Board Members ofthe Port Dalhousie Business Association, Members of Council, Inhabitants and Ratepayers of The Corporation ofthe City of St. Catharines We have audited the accompanying financial statements of the Port Dalhousie Business Association, which comprise the statement of financial position as at December 31, 2010, and the statements of operations and accumulated surplus, change in net financial assets and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian generally accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 1

39 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of the Port Dalhousie Business Association as at December 31, 2010, and the results of its operations, change in net financial assets and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles. St. Catharines, Ontario February 26, 2011 CRAWFORD, SMITH AND SWALLOW CHARTERED ACCOUNTANTS LLP LICENSED PUBLIC ACCOUNTANTS 2

40 PORT DALHOUSIE BUSINESS ASSOCIATION STATEMENT OF FINANCIAL POSITION December 31, 2010 Financial Assets Cash GST/HST receivable Liabilities Accounts payable and accrued liabilities Due to the City of St. Catharines Deferred revenue 2009 $ 49, ,655 9,373 9,373 Net Financial Assets 51,282 Non-Financial Assets Tangible capital assets - note 2 9,162 enses 9,162 Accumulated Surplus - note 3 60,444 See accompanying notes crawford smith c& swallow 3

41 PORT DALHOUSIE BUSINESS ASSOCIATION STATEMENT OF OPERATIONS AND ACCUMULATED SURPLUS for the year ended December 31,2010 (Unaudited) Budget Actual Actual $ $ $ Revenues Requisition from the City of St. Catharines Original 55,000 55,000 55,000 Taxes written off {1,292} {447} Net requisition 55,000 53,708 54,553 Community relations 19,092 GST recovery 9,258 Haunted pub crawl 7,000 7,270 Interest Loss on disposal oftangible capital assets (237) Membership dues 750 1,050 Miscellaneous Restaurant walking tour 21,000 19,356 21,137 ~reimbursement 1,667 84,050 76, ,428 Expenses Administration 24,600 25,500 16,871 Amortization 2,875 1,648 Bank charges Community relations 19,092 Dalhousie dollars 2,000 1, Haunted pub crawl 6,023 Internet and website 4,470 1,996 2,234 Professional fees 500 1,562 3,414 Promotions and marketing 6,275 9,380 3,746 Rent and utilities 9,515 9,933 8,461 Restaurant walking tour 16,500 17,735 16,553 Special events 11,500 5,226 1,516 Streetscaping 500 1,142 5,258 Su2Qlies 2,300 1,817 1,778 78,360 79,073 87,169 Excess (Deficiency) of Revenues Over Expenses 5,690 (2,768) 24,259 Accumulated Surplus, Beginning of Year 60,444 60,444 36,185 Accumulated Surplus, End of Year 66,134 57,676 60,444 See accompanying notes crawford smith G& swallow 4

42 PORT DALHOUSIE BUSINESS ASSOCIATION STATEMENT OF CASH FLOWS for the year ended December 31, $ $ Operations Excess (deficiency) ofrevenue over expenses (2,768) 24,259 Uses Increase in accounts receivable (11,632) Decrease in accounts payable and accrued liabilities (7,898) (53) Increase in prepaid expenses (6,221) Sources Decrease in accounts receivable 7,440 Increase in due to the City of St. Catharines 169 Increase in deferred revenue 833 (14,119) (11,685) 8,442 Non-cash charges to operations Amortization of tangible capital assets 2,875 1,648 Loss on disposal oftangible capital assets 237 2,875 1,885 Net change in cash from operations (5,570) 14,459 Capital Acquisition of tangible capital assets (9,280) (7,717) Increase (Decrease) in Cash Position (14,850) 6,742 Cash Position, Beginning of Year 49,023 42,281 Cash Position, End of Year 34,173 49,023 See accompanying notes crawford smith swallow 5

43 PORT DALHOUSIE BUSINESS ASSOCIATION STATEMENT OF CHANGE IN NET FINANCIAL ASSETS for the year ended December 31, $ $ Excess (Deficiency) of Revenues over Expenses Acquisition of Tangible Capital Assets Amortization of Tangible Capital Assets Loss on Disposal of Tangible Capital Assets (2,768) 24,259 (9,280) (7,717) 2,875 1, Change in Prepaid Expenses (6,221) Increase (Decrease) in Net Financial Assets (15,394) 18,427 Net Financial Assets, Beginning of Year 51,282 32,855 Net Financial Assets, End of Year 35,888 51,282 See accompanying notes crawford smith C& swallow 6

44 PORT DALHOUSIE BUSINESS ASSOCIATION NOTES TO FINANCIAL STATEMENTS for the year ended December 31, 2010 Organization The Port Dalhousie Business Association (the "Association"), established in 1986 pursuant to the Ontario Municipal Act, operates to revitalize and promote the Port Dalhousie business area. 1. Significant Accounting Policies The financial statements of the Association are the representations of management prepared in accordance with Canadian generally accepted accounting principles for local governments as recommended by the Public Sector Accounting Board ("PSAB") of the Canadian Institute of Chartered Accountants. Significant aspects of the accounting policies adopted by the Association are as follows: Accrual accounting Revenues and expenses are reported on the accrual basis ofaccounting. The accrual basis of accounting recognizes revenues as they become available and measurable; expenses are recognized as they are incurred and measurable as a result of receipt of goods or services and the creation of a legal obligation to pay. Non-financial assets Non-financial assets are not available to discharge existing liabilities and are held for use in the provision of services. They have useful lives extending beyond the current year, and are not intended for sale in the ordinary course ofoperations. Tangible capital assets Tangible capital assets are recorded at historical cost. Cost includes all directly attributable expenditures in the acquisition, construction, development and/or betterment ofthe asset required to install the asset at the location. Amortization is recorded to reflect the cost, net of anticipated residual value, associated with the use of the asset in providing services on a straight-line basis over the estimated useful life of the asset. Additions during the year are amortized from the month of acquisition. Disposals are amortized until the month of disposition. Gains and/or losses on the disposal of an asset are recorded on the statement of operations and accumulated surplus as "gain/loss on disposal of assets". Asset Class Banners Computers Lights Office equipment Period 5 years 5 years 5 years 10 years crawford smith swallow 7

45 PORT DALHOUSIE BUSINESS ASSOCIATION NOTES TO FINANCIAL STATEMENTS for the year ended December 31, Significant Accounting Policies - continued Use of estimates The preparation of the financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. 2. Tangible Capital Assets Accumulated Net Book Net Book Cost Amortization Value Value $ $ $ $ Banners 6,869 2,061 4,808 6,182 Computers Lights 9, ,352 Office equipment 4,031 2,217. 1,814 2,217 21,028 5,461 15,567 9,162 During the year, tangible capital assets in the amount of$ 9,280 for lights were acquired. In 2009, tangible capital assets in the amount of$ 6,869 for banners and $ 848 for a computer were acquired. There were no dispositions of tangible capital asses in In 2009, the Association disposed of a computer having a cost of$ 2,366, accumulated amortization of$ 2,129, and a net book value of$ 237 for NIL proceeds. 3. Accumulated Surplus $ $ Invested in tangible capital assets 15,567 9,162 Reserve funds Streetscaping 5,597 16,632 Contemporary and Heritage 36,512 34,650 42,109 51,282 57,676 60,444 crawford smith swallow 8

46 PORT DALHOUSIE BUSINESS ASSOCIATION NOTES TO FINANCIAL STATEMENTS for the year ended December 31, Lease Commitment The Association is currently committed to monthly lease payments of$ 655 totalling $7,860 with a fixed term ending December 31, Reserve Funds Streetscaping Reserve Fund The streetscaping reserve fund is used to fund expenditures that contribute towards the development and beautification of Port Dalhousie that are approved by the Association. It is the policy of the Association that the operating fund net revenue or deficit for the year be transferred to or from the fund. Contemporary and Heritage Reserve Fund The contemporary and heritage reserve fund is used to accumulate donation and fundraising revenues for the funding of special projects as determined by the Association. crawford smith G& swallow 9

47 crawford smith swallow ST. CATHARINES DOWNTOWN ASSOCIATION Financial Statements and Supplementary Information December 31, 2010

48 crawford smith swallow ST. CATHARINES DOWNTOWN ASSOCIATION Financial Statements and Supplementary Information December 31, 2010 Table of Contents Page Independent Auditors' Report 1-2 Statement of Financial Position 3 Statement of Operations and Accumulated Surplus 4 Statement of Cash Flows 5 Statement of Change in Net Financial Assets 6 Notes to Financial Statements 7-9 SUPPLEMENTARY INFORMATION Independent Auditors' Report on Supplementary Information 10 Schedule of Revenues 11 Schedule ofexpenses 12-13

49 Crawford, Smith and Swallow Chartered Accountants LLP 531 Lake Street St. Cathannes, Ontario L2N 4H6 Telephone (905) Telecopier (905) crawford smith swallow Offices in Niagara Falls. Ontario St. Catharines, Ontario Fort Erie. Ontario Niagara-on-the-Lake. Ontario Port Col borne, Ontario INDEPENDENT AUDITORS' REPORT To the Board Members of the St. Catharines Downtown Association, Members of Council, Inhabitants and Ratepayers of The Corporation of the City of St. Catharines We have audited the accompanying financial statements of the St. Catharines Downtown Association, which comprise the statement of financial position as at December 31, 2010, and the statements of operations and accumulated surplus, change in net financial assets and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian generally accepted accounting principles, and for such intemal control as management determines is necessary to enable the preparation of financial statements that are fi ee from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perfmm the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider intemal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's intemal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

50 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of the St. Catharines Downtown Association as at December 31, 2010, and the results of its operations, changes in net financial assets and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles. St. Catharines, Ontario February 9, 2011 CRAWFORD, SMITH AND SWALLOW CHARTERED ACCOUNTANTS LLP LICENSED PUBLIC ACCOUNTANTS 2

51 ST. CATHARINES DOWNTOWN ASSOCIATION STATEMENT OF FINANCIAL POSITION December 31,2010 Financial Assets - note 5 Cash Accounts receivable - note $ Liabilities Accounts payable and accrued liabilities Provision for redemption ofparking tokens - note 2 Net Financial Assets 36,620 6,248 42,868 59, ,571 See accompanying notes crawford smith c& swallow 3

52 ST. CATHARJNES DOWNTOWN ASSOCIATION STATEMENT OF OPERATIONS AND ACCUMULATED SURPLUS for the year ended December 31, 2010 (Unaudited) Budget Actual Actual $ $ $ Revenues Requisition from the City of St. Catharines Member levies 384, , ,431 Supplemental taxes 3,411 10,250 Taxes written-off (8,090) (40,502) (25,627) Net requisition 376, , ,054 Other recoveries from the City of St. Catharines Recovery of calendar expense 2,600 Recovery of Christmas expenses 10,000 10,000 10,000 12,600 Total revenues from City of St. Catharines 376, , ,654 Other revenues Events 1 376, , ,198 Expenses Administration 154, , ,730 Amortization 30,787 24,084 Development 43,000 37,799 31,415 Events 38,000 63,707 56,996 Media and visual marketing 110,500 81,965 90,249 Tourism 12,000 12,886 6, , , ,373 Excess (Deficiency) of Revenues over Expenses 18,154 (5,273) 16,825 Accumulated Surplus, Beginning of Year 153, , ,746 Accumulated Surplus, End of Year 171, , ,571 See accompanying notes crawford smith C& swallow 4

53 ST. CATHARINES DOWNTOWN ASSOCIATION STATEMENT OF CASH FLOWS for the year ended December 31, $ 2009 $ Operations Excess (deficiency) of revenues over expenses (5,273) 16,825 Uses Increase in accounts receivable (22,168) Increase in prepaid expenses (8,987) Decrease in accounts payable and accrued liabilities (18,102) Decrease in provision for redemption of parking tokens (390) (27,479) (22,168) Sources Decrease in accounts receivable 10,906 Increase in accounts payable and accmed liabilities 11,440 Increase in provision for redemption of parking tokens ,906 12,025 Non-cash charges to operations Amortization of tangible capital assets 30,787 24,084 Net change in cash from operations 8,941 30,766 Capital Acquisition oftangible capital assets (19,095) (47,947) Decrease in Cash Position (10,154) (17,181) Cash Position, Beginning of Year 28,780 45,961 Cash Position, End of Year 18,626 28,780 See accompanying notes crawford smith swallow 5

54 ST. CATHARINES DOWNTOWN ASSOCIATION STATEMENT OF CHANGE IN NET FINANCIAL ASSETS for the year ended December 31, $ Excess (Deficiency) of Revenues over Expenses (5,273) Acquisition of Tangible Capital Assets (19,095) Amortization of Tangible Capital Assets 30, $ 16,825 (47,947) 24,084 Change in Prepaid Expenses (8,987) Decrease in Net Financial Assets (2,568) (7,038) Net Financial Assets, Beginning of Year 59,231 66,269 Net Financial Assets, End of Year 56,663 59,231 See accompanying notes crawford smith c& swallow 6

55 ST. CATHARINES DOWNTOWN ASSOCIATION NOTES TO FINANCIAL STATEMENTS for the year ended December 31, Organization The St. Catharines Downtown Association (the "Association"), established in 1973 pursuant to the Ontario Municipal Act, operates to develop and revitalize the downtown core of St. Catharines. The Association participates in programs aimed at the physical improvement and beautification of the area, as well as the promotion of businesses located in the downtown core. 1. Significant Accounting Policies The financial statements of the Association are the representations of management prepared in accordance with Canadian generally accepted accounting principles for local governments as recommended by the Public Sector Accounting Board ("PSAB") of the Canadian Institute of Chartered Accountants. Significant aspects of the accounting policies adopted by the Association are as follows: Accrual accounting Revenues and expenses are reported on the accrual basis of accounting. The accrual basis of accounting recognizes revenues as they become available and measurable; expenses are recognized as they are incurred and measurable as a result of receipt of goods or services and the creation of a legal obligation to pay. Revenue recognition Revenue from member levies is recognized as income when they become available and measurable. Non-financial assets Non-financial assets are not available to discharge existing liabilities and are held for use in the provision of services. They have useful lives extending beyond the current year, and are not intended for sale in the ordinary course ofoperations. Tangible capital assets Tangible capital assets are recorded at historical cost. Cost includes all directly attributable expenditures in the acquisition, construction, development and/or bettennent of the asset required to install the asset at the location. Ammiization is recorded to reflect the cost, net of anticipated residual value, associated with the use of the asset in providing services on a straight-line basis over the estimated useful life of the asset. Additions during the year are amortized from the month of acquisition. Disposals are amortized until the month of disposition. Gains and/or losses on the disposal of an asset are recorded on the statement of operations and accumulated surplus as "gain/loss on disposal of assets". Asset Class Banners Garbage receptacles Holiday decor Kiosks Planters Rate 3 years 10 years 5 years 20 years 10 years crawford smith C& swallow 7

56 ST. CATHARINES DOWNTOWN ASSOCIATION NOTES TO FINANCIAL STATEMENTS for the year ended December 31, Significant Accounting Policies - continued Use of estimates The preparation of the financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the rep01ted amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the rep01ting periods. Actual results could differ from those estimates. 2. Parking Tokens The provision for redemption of parking tokens of$ 5,858 ( $ 6,248) represents the estimated value of parking tokens in the hands of merchants and their customers. 3. Tangible Capital Assets Banners Garbage receptacles Holiday decor Kiosks Planters Cost $ 39,431 12,473 67,042 44,594 26,670 Accumulated Am01tization $ 32,860 8,019 16,293 31,712 18, $ 6,571 4,454 50,749 12,882 7, $ 19,715 5,702 43,152 15,112 10, , ,562 82,648 94, Accumulated Surplus $ $ Tangible capital assets 82,648 94,340 Operating fund Reserve fund 1 5. Bank Indebtedness 148, ,571 Bank indebtedness, as it may occur, is secured by a registered general security agreement covering all assets other than real prope1iy. The maximum line of credit available to the Association is$ 20,000, which bears interest at prime plus 2.5%. As at December 31,2010, the amount drawn from the line of credit was $ nil ( $ nil). crawford smith swallow 8

57 ST. CATHARINES DOWNTOWN ASSOCIATION NOTES TO FINANCIAL STATEMENTS for the year ended December 31, Reserve Fund The reserve fund is used to fund expenses, nonnally of a capital nature, that are approved by the Association. It is the policy of the Association that the operating fund net revenue or deficit for the year be transfened to or from the reserve fund. 7. Lease Commitment The Association is committed to minimum monthly lease payments in the amount of$ 489 for a one year term ending December 31, The Association has also committed to the following annual maintenance contract payments for the installation, maintenance, and storage of Christmas decorations for the next two years: , ,284 In addition, the Association is committed to the following annual minimum lease payments for the rental of equipment for the next five years: 8. Related Party Transactions , , , , ,134 Accounts receivable includes$ 25,402 (2009- $ 48,402) due from the City of St.Catharines. 9. Comparative Figures Certain prior year balances have been reclassified to confom1 with current year presentation. $ $ crawford smith swallow 9

58 crawford smith swallow ST. CATHARINES DOWNTOWN ASSOCIATION Supplementary Information December 31, 2010

59 Crawford, Smith and Swallow Chartered Accountants LLP 531 Lake Street St. Catharines, Ontario L2N 4H6 Telephone (905} Tefecopier (905} crawford smith swallow Off1ces in Niagara Falls, Ontario St. Catharines, Ontario Fort Ene, Ontano Niagara-on-the-Lake. Ontario Port Col borne, Ontar1o INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTARY INFORMATION To the Board Members of the St. Catharines Downtown Association, Members of Council, Inhabitants and Ratepayers of The Corporation ofthe City of St. Catharines We have audited and reported separately on the financial statements of the St. Catharines Downtown Association as at and for the year ended December 31, Our audit was conducted for the purpose of forming an opinion on the basic financial statements of the Association taken as a whole. The cunent year's supplementary information included in the schedules of revenues and expenses is presented for purposes of additional analysis and is not a required pati of the basic financial statements. Such supplementary information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. St. Catharines, Ontario February 9, 2011 CRAWFORD, SMITH AND SWALLOW CHARTERED ACCOUNT ANTS LLP LICENSED PUBLIC ACCOUNTANTS 10

60 ST. CATHARINES DOWNTOWN ASSOCIATION SCHEDULE OF REVENUES for the year ended December 31, (Unaudited) Budget Actual Actual $ $ $ Events 12 Days ofchristmas 5,100 Chili cook off 1, Classic Car Show 6,976 4,953 Full moon tours Historical ghost walking tours 2,199 2,519 16,7 48 8,544 See accompanying notes crawford smith C& swallow 11

61 ST. CATHARINES DOWNTOWN ASSOCIATION SCHEDULE OF EXPENSES for the year ended December 31, (Unaudited) Budget Actual Actual $ $ $ Administration Accommodations 5,900 5,924 5,982 Bad debts (recovered) (1,175) Communications equipment 10,000 8,587 9,853 Parking tokens 700 Professional fees 5,500 5,578 5,388 Salaries and payroll taxes 128, , ,388 Supplies 5,000 4,551 4, , , ,730 Amortization Banners 13,144 13,144 Garbage receptacles 1,248 1,248 Holiday decor 11,498 4,795 Kiosks 2,230 2,230 Planters 30,787 24,084 Development Annual general meeting Business development program 1,500 2,681 1,580 Committee/board/staff development 3,600 4,081 3,362 Development/revitalization 31 Facade/streetscape improvements 1,000 1,231 Membership/resources 1,600 2,850 1,700 Newsletter/supplements 1,500 1,513 1,750 Safety 32,000 25,835 20,012 Website ,000 37,799 31,415 See accompanying notes crawford smith swallow 12

62 ST. CATHARINES DOWNTOWN ASSOCIATION SCHEDULE OF EXPENSES for the year ended December 31, 2010 (Unaudited) Budget Actual Actual $ $ $ Events Chili cook off 2,000 1,687 1,654 Christmas 13,000 36,215 23,459 Classic Car Show 10,000 16,398 17,072 Full moon tours Heritage walk Historical ghost walking tours 2, Movie nights 6,000 4,177 7,674 New events 1,203 Winterlicious/Smnmerlicious 1 38,000 63,707 56,996 Media and Visual Marketing Beautification/maintenance/identification 30,000 7,241 17,388 General marketing 45,000 40,815 48,885 Kiosks Marketing campaign 25,000 25, ,000 Mini-lights Sponsorship 10,000 8, ,500 81,965 90,249 Tourism Adve1iising 12,000 12,886 6,899 See accompanying notes crawford smith swallow 13

63 crawford smith swallow ST. CATHARINES PUBLIC LIBRARY BOARD Financial Statements December 31, 2010

64 crawford smith swallow ST. CATHARINES PUBLIC LIBRARY BOARD Financial Statements December 31, 2010 Table of Contents Independent Auditors' Report Statement offinancial Position Statement ofoperations and Accumulated Surplus Statement ofcash Flows Statement ofchange in Net Financial Assets Notes to Financial Statements Schedule oftangible Capital Assets Schedule oftrust Fund Activities Schedule ofother Revenue Schedule ofexpenses Page

65 Crawford, Smith and Swallow Chartered Accountants LLP 531 Lake Street St. Catharines, Ontario L2N4H6 Telephone (905) Telecopier (905) crawford smith swallow Offices in: Niagara Falls, Ontario St. Catharines, Ontario Fort Erie, Ontario Niagara-on-the-Lake, Ontario Port Col borne, Ontario INDEPENDENT AUDITORS' REPORT To the Board Members of the St. Catharines Public Library Board, Members of Council, Inhabitants and Ratepayers of The Corporation ofthe City of St. Catharines We have audited the accompanying financial statements of the St. Catharines Public Library Board, which comprise the statement of financial position as at December 31, 2010, and the statements of operations and accumulated surplus, change in net financial assets and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian generally accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 1

66 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Basis for Qualified Opinion In common with many non-profit organizations, the Board derives part of its revenue in the Endowment and Trust Fund from the general public in the form of donations and fundraising, the completeness of which is not susceptible of satisfactory audit verification. Accordingly, our verification of these revenues was limited to the amounts recorded in the records of the Board and we were not able to determine whether any adjustments might be necessary to donations revenue, trust funds and financial assets. Qualified Opinion In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, the financial statements present fairly, in all material respects, the financial position of the St. Catharines Public Library Board as at December 31, 2010, and the results of its operations, changes in net financial assets and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles. St. Catharines, Ontario May 12,2011 CRAWFORD, SMITH AND SWALLOW CHARTERED ACCOUNTANTS LLP LICENSED PUBLIC ACCOUNTANTS 2

67 ST. CATHARINES PUBLIC LIBRARY BOARD STATEMENT OF FINANCIAL POSITION December 31, $ $ Financial Assets Cash- note 2 2,617,115 2,171,603 Investments - note 3 970, ,450 Accounts receivable 41,472 23,264 3,628,713 3,097,317 Liabilities Accounts payable and accrued liabilities 289, ,430 Deferred income 51,145 12,867 Post-employment benefits - note 4 315, , , ,565 Net Financial Assets 2,972,541 2,534,752 Non-Financial Assets Tangible capital assets - schedule 1 5,653,737 5,635,425 Prepaid expenses 8,623 41,334 5,662,360 5,676,759 Accumulated Surplus - note 5 8,634,901 8,211,511 Signed on behalf ofthe Board: ~C{h:._;.- _.,.)=-'---'21.'--'Q~.~B, ,~..., Director Director See accompanying notes crawford smith swallow 3

68 ST. CATHARINES PUBLIC LIBRARY BOARD STATEMENT OF OPERATIONS AND ACCUMULATED SURPLUS for the year ended December 31, (Unaudited) Budget Actual Actual $ $ $ Revenues Municipal contribution City of St. Catharines 4,906,500 4,906,500 4,742,100 Province of Ontario regular grant 228, , ,616 Special grants 25,417 28,481 Other 216, , ,142 5,351,800 5,464,453 5,249,339 Expenses Salaries, wages and payroll taxes 3,785,000 3,398,205 3,386,262 Library materials 147, , ,483 Occupancy 508, , ,877 General and administration 217, , ,946 Amortization 846, ,781 4,657,700 5,041,063 4,986,349 Excess of Revenues Over Expenses 694, , ,990 Accumulated Surplus, Beginning of Year 8,211,511 8,211,511 7,948,521 Accumulated Surplus, End of Year 8,905,611 8,634,901 8,211,511 See accompanying notes crawford smith swallow 4

69 ST. CATHARINES PUBLIC LIBRARY BOARD STATEMENT OF CASH FLOWS for the year ended December 31, 2010 Operations Excess ofrevenue over expenses Uses Increase in accounts receivable Increase in prepaid expenses Decrease in accounts payable and accrued liabilities Decrease in deferred income 2010 $ 2009 $ 423, ,990 (18,208) (18,208) (1,778) (98,342) (3,080) (103,200) Sources Decrease in accounts receivable Decrease in prepaid expenses Increase in accounts payable and accrued liabilities Increase in deferred income Increase in post-employment benefits Non-cash charges to operations Amortization of tangible capital assets 32,711 46,276 38,278 9, , ,746 4,844 4,196 9, ,781 Net change in cash from operations Investing Increase in investments Capital Acquisition oftangible capital assets Increase in Cash Position Cash Position, Beginning of Year 1,378,246 1,004,611 (67,676) (33,763) (865,058) (881,002) 445,512 89,846 2,171,603 2,081,757 Cash Position, End ofyear 2,617,115 2,171,603 See accompanying notes crawford smith c& swallow 5

70 ST. CATHARINES PUBLIC LIBRARY BOARD STATEMENT OF CHANGE IN NET FINANCIAL ASSETS for the year ended December 31, Excess of Revenues over Expenses Acquisition of Tangible Capital Assets Amortization of Tangible Capital Assets Change in Prepaid Expenses Increase in Net Financial Assets Net Financial Assets, Beginning of Year Net Financial Assets, End of Year 2010 $ 423,390 (865,058) 846,746 32, ,789 2,534,752 2,972, $ 262,990 (881,002) 835,781 (1,778) 215,991 2,318,761 2,534,752 See accompanying notes crawford smith G& swallow 6

71 ST. CATHARINES PUBLIC LIBRARY BOARD NOTES TO FINANCIAL STATEMENTS for the year ended December 31, 2010 Organization The St. Catharines Public Library Board (the "Board") was established in January, 1888 pursuant to City of St. Catharines By-law #615 and operates four branches within St. Catharines, Ontario. The branches are known as Grantham, William Hamilton Merritt, Centennial and Port Dalhousie. 1. Significant Accounting Policies The financial statements of the Board are the representations of management prepared in accordance with Canadian generally accepted accounting principles for local governments as recommended by the Public Sector Accounting Board ("PSAB") of the Canadian Institute of Chartered Accountants. Significant aspects of the accounting policies adopted by the Board are as follows: Accrual accounting The accrual method ofreporting revenue and expenses has been used. Investments Investments are carried at fair market value. Non-financial assets Non-financial assets are not available to discharge existing liabilities and are held for use in the provision of services. They have useful lives extending beyond the current year, and are not intended for sale in the ordinary course of operations. Tangible capital assets Tangible capital assets are recorded at historical cost. Cost includes all directly attributable expenditures in the acquisition, construction, development and/or betterment of the asset required to install the asset at the location. Amortization is recorded to reflect the cost, net of anticipated residual value, associated with the use of the asset in providing services on a straight-line basis over the estimated useful life of the asset. Additions during the year are amortized from the month of acquisition. Disposals are amortized until the month of disposition. Gains and/or losses on the disposal of an asset are recorded on the statement of operations and accumulated surplus as "gain/loss on disposal of assets". The historical cost of works of art or historical treasures have not been assigned to these assets nor disclosed in the financial statements. Asset Class Buildings Building improvements Collection Furniture and equipment Information technology Period years years 7 years years 3-10 years crawford smith swallow 7

72 ST. CATHARINES PUBLIC LIBRARY BOARD NOTES TO FINANCIAL STATEMENTS for the year ended December 31, Significant Accounting Policies - continued 2. Cash Deferred revenue Funds received for specific purposes are accounted for as deferred income until the Board discharges the obligation which lead to the receipt of the funds. Post-employment benefits The Board pays certain medical, dental and life insurance benefits on behalf of its retired employees. The Board recognizes these post-retirement costs in the period in which the employees render their services. See note 4. Use ofestimates The preparation of the financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The total balance ofcash is comprised of the following: $ $ Cash - operating 2,600,995 2,154,301 Cash - trust funds 16,120 17, Investments 2,617,115 2,171,603 The total balance of investments is comprised ofthe following: 2010 $ 2009 $ Investments - operating fund Investments - trust funds 216, , , , , , Post-Employment Benefits 2010 $ 2009 $ Vacation pay Post-retirement benefits 40, ,813 39, , , ,268 crawford smith c& swallow 8

73 ST. CATHARINES PUBLIC LIBRARY BOARD NOTES TO FINANCIAL STATEMENTS for the year ended December 31, Post-Employment Benefits - continued Vacation Pay As at December 31, 2010 employees of the St. Catharines Public Library Board have accumulated vacation credits in the amount of $ 40,508 ( $ 39,502). These credits must be used within the next fiscal year. Post-Retirement Benefits The St. Catharines Public Library Board pays certain medical, dental and life insurance benefits on behalf of its retired employees. The accrued benefit liability was determined by actuarial valuation using a discount of 4.75% ( %). Defined Benefit Plan Information $ $ Employee benefit plan assets Employee benefit plan liabilities 274, ,766 Employee benefit plan deficit 274, , $ Accrued benefit obligation, beginning of year 266,766 Expense for the year 21,645 Amortization ofactuarial loss (gain) 656 Benefits paid during the year (14,254) Accrued benefit obligation, end ofyear 274, $ 273,711 18,006 (10,155) (14,796) 266,766 As a result of an actuarial valuation conducted in 2011 for the year ending December 31, 2010, it was determined that an actuarial loss of$ 5,902 existed. This amount is being amortized over the expected average remaining service life of the employee group, which in this case, is 9 years or$ 656 per annum. The unamortized value remaining is$ 5,246. The actual obligation is$ 280,059. The main actuarial assumptions employed for the valuation are as follows: General Inflation - Future general inflation levels, as measured by changes in the Consumer Price Index ("CPI"), were assumed at 2% in 2010 and thereafter. Salary Levels- Future salary and wage levels were assumed to increase at 2.0% per annum for the year 2010 through 2015 and 3.30% thereafter. Medical Costs - Medical costs were assumed to increase at a rate of 8%, graded down to 7.63% in 2011, 7.25% in 2012, 6.88% in 2013, 6.50% in 2014, 6.13% in 2015, 5.75% in 2016, 5.38% in 2017, and 5.0% in 2018 and each year thereafter. Dental Costs - Dental costs were assumed to increase at a rate of 5.0% and each year thereafter. crawford smith C& swallow 9

74 ST. CATHARINES PUBLIC LIBRARY BOARD NOTES TO FINANCIAL STATEMENTS for the year ended December 31, Accumulated Surplus $ $ Invested in tangible capital assets 5,653,737 5,635,425 Operating fund 145, ,000 Reserve funds 2,381,624 2,054,077 Trust funds Architects Nevada tickets 3,673 3,673 Endowment and trust 765, , , ,277 Amount to be recovered- post-employment benefits (315,321) (306,268) 6. Trust Funds 8,634,901 8,211,511 Architects fund This fund has been allocated for the purchase of architectural material through an agreement with the Niagara Society of Architects. The funds along with accumulated interest are maintained in a separate bank account at the TD Canada Trust. Nevada tickets fund This fund has been allocated by the Board for the same purpose as the Endowment and Trust fund as detailed above. These funds along with accumulated interest are maintained in a separate bank account at TD Canada Trust. Endowment and trust fund This fund has been allocated by the Board for the future improvement ofcollections and access to collections, provision of library support programs and purchase of equipment, furniture and such other capital projects to improve library service above and beyond that normally funded by provincial or municipal funds. These funds along with accumulated interest and donations are held in a separate bank account at TD Canada Trust and in an investment account at Scotia McLeod. crawford smith c& swallow 10

75 ST. CATHARINES PUBLIC LIBRARY BOARD NOTES TO FINANCIAL STATEMENTS for the year ended December 31, Long-Term Leases Grantham Branch The Board is currently committed to minimum lease payments in the amount of$ 21,000 up to July 31, The Board is also obligated to pay a proportionate share of operating costs and property taxes. William Hamilton Merritt Branch The Board is currently committed to minimum lease payments in the amount of$ 9,563 up to to March 31, The Board is also obligated to pay a proportionate share of operating costs and property taxes. Centennial Public Library The lease with the City of St. Catharines, for a nominal amount expires December 31, Port Dalhousie Branch Rent is paid on a yearly basis to the City of St. Catharines in the amount of$ 600 with no set date of expiry. 8. Pension Agreements The Board makes contributions to the Ontario Municipal Employees Retirement System ("OMERS"), which is a multi-employer plan, on behalf of 65 members of its staff. The plan is a defined benefit plan which specifies the amount of the retirement benefit to be received by the employees based on the length of service and rates ofpay. The amount contributed to OMERS for 2010 was$ 143,484 (2009- $ 150,314) for current service and is included as an expenditure in the statement of operations and accumulated surplus. 9. Economic Dependence The Board receives a significant portion of its revenues for operations from the following sources: 10. Committment City of St. Catharines Province of Ontario To cover its share of the cost of the new Municipal Aquatic Centre and Library, the Board is expected to fund a debenture in the amount of$ 1,760,000 which bears interest at 5% and payable in annual blended instalments of $ 138,250 for twenty years beginning January, This new branch is expected to be operational January, 2012 and will coincide in the closure of the Grantham branch. With the closure of that branch, the Board will realize savings of approximately$ 48,000 annually in rent and taxes. crawford smith c& swallow 11

76 SCHEDULE OF TANGIBLE CAPITAL ASSETS Schedule 1 for the year ended December 31, Land 25,138 25,138 25,138 Buildings 5,002,200 5,002,200 2,263,937 67,175 2,331,112 2,671,088 Building improvements 74,617 46, ,863 2,619 3,670 6, ,574 Collection 5,469, , ,977 5,600,143 2,991, , ,977 3,068,239 2,531,904 Furniture and equipment 371,479 20, , ,886 13, , ,866 IT egui_ement 441,685 44,485 58, , ,014 62,989 58, ,313 90,167 December 31, ,384, , ,667 11,567,987 5,749, , ,667 5,914,250 5,653,737 Land 25,138 25,138 25,138 Buildings 5,002,200 5,002,200 2,196,192 67,745 2,263,937 2,738,263 Building improvements 35,478 39,139 74, ,028 2,619 71,998 Collection 5,289, , ,912 5,469,477 2,906, , ,912 2,991,715 2,477,762 Furniture and equipment 346,304 27,602 2, , ,417 11,896 2, , ,593 IT egui_ement 450,285 38,621 47, , ,576 72,659 47, , ,671 December 31, ,149, , ,560 11,384,596 5,558, , ,560 5,749,171 5,635,425 ST. CATHARINES PUBLIC LIBRARY BOARD Cost Accumulated Amortization Balance, Balance, Balance, Balance, Net Beginning of End of Beginning of End of Book Year Additions Disposals Year Year Amortization Disposals Year Value $ $ $ $ $ $ $ $ $ See accompanying notes crawford smith c& swallow 12

77 ST. CATHARINES PUBLIC LIBRARY BOARD SCHEDULE OF TRUST FUND ACTIVITIES Schedule 2 for the year ended December 31, 2010 Nevada Endowment Tickets Architects and Trust Fund Fund Fund Total Total $ $ $ $ $ Revenues Book revenue 14,329 14,329 15,223 Donations 55,174 55,174 10,935 Interest 4,288 4,288 13,297 73,791 73,791 39,455 Expenditures Library materials 7,207 7, Net Change in Trust Fund 66,584 66,584 38,461 Trust Fund, Beginning of Year 3, , , ,816 Trust Fund, End of Year 3, , , ,277 See accompanying notes crawford smith swallow 13

78 ST. CATHARINES PUBLIC LIBRARY BOARD SCHEDULE OF OTHER REVENUE Schedule 3 for the year ended December 31, 2010 (Unaudited) Budget Actual Actual $ $ $ Fines and memberships 154, , ,410 Interest 12,000 22,147 27,575 Photocopying 6,500 6,098 6,528 Programming fees 9,600 8,833 8,942 Sundry 34,500 58,941 33,529 Donations 55,174 10,935 Book revenue 14,329 15, , , ,142 See accompanying notes crawford smith swallow 14

79 ST. CATHARINES PUBLIC LIBRARY BOARD SCHEDULE OF EXPENSES Schedule 4 for the year ended December 31, 2010 (Unaudited) Budget Actual Actual $ $ $ Salaries, Wages and PayrolJ Taxes Library and clerical 2,983,073 2,697,627 2,701,737 Maintenance 168, , ,693 Payroll taxes 633, , ,832 3,785,000 3,398,205 3,386,262 Library Materials Binding 18,200 17,951 11,404 Microfilm 8,300 6,786 7,033 Periodicals 92,600 92,285 61,348 Processing 28,200 25,526 28, , , ,483 Occupancy Communications 46,500 40,257 40,505 Insurance 33,500 32,740 32,248 Rent and taxes 105, ,378 87,617 Repairs and maintenance 146, , ,537 Security 13,800 13,800 13,300 Utilities 162, , , , , ,877 General and Administration Audio visual supplies 3,800 1,356 2,159 Catalogue support system service Data processing 6,700 6,700 6,700 Equipment rental 9,500 6,721 7,098 Equipment repairs and maintenance 75,000 68,108 58,934 Library supplies 29,000 25,143 35,455 Printing and stationary 3,600 2,013 1,162 Professional fees 28,000 21,243 14,900 Programming 9,600 10,366 11,845 Sundry 13,200 19,154 9,002 Training and development 12,500 12,456 11,964 Trans2ortation and 2ostage 25,700 25,696 26, , , ,946 See accompanying notes crawford smith c& swallow 15

80 ST. CATHARINES TRANSIT COMMISSION - URBAN SERVICE Financial Statements December 31, 2010

81 ST. CATHARINES TRANSIT COMMISSION - URBAN SERVICE Financial Statements December 31, 2010 Table of Contents Page Independent Auditors' Report 1-2 Statement of Financial Position 3 Statement of Operations and Accumulated Surplus 4 Statement of Cash Flows 5 Statement of Change in Net Financial Liabilities 6 Notes to Financial Statements 7-11 Schedule of Tangible Capital Assets 12 Schedule of Expenses 13-14

82 INDEPENDENT AUDITORS' REPORT To the Commissioners of the St. Catharines Transit Commission - Urban Service, Members of Council, Inhabitants and Ratepayers of The Corporation of the City of St. Catharines We have audited the accompanying financial statements of St. Catharines Transit Commission Urban Service, which comprise the statement of financial position as at December 31, 2010, and the statements of operations and accumulated surplus, change in net financial liabilities and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian generally accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 1

83 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of St. Catharines Transit Commission - Urban Service as at December 31, 2010, and the results of its operations, change in net financial liabilities and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles. St. Catharines, Ontario May 12, 2011 CRAWFORD, SMITH AND SWALLOW CHARTERED ACCOUNTANTS LLP LICENSED PUBLIC ACCOUNTANTS 2

84 ST. CATHARINES TRANSIT COMMISSION- URBAN SERVICE STATEMENT OF FINANCIAL POSITION December 31, $ Financial Assets Cash 1,003,187 Accounts receivable 271,901 Due from Paratransit S stem of St. Catharines - note 5 1,084,911 2,359,999 Liabilities Accounts payable and accrued liabilities 845,975 Deferred income 532,887 Due to City ofst. Catharines - note 4 1,288,922 Employee future benefits - note 2 1,305,993 3,973,777 Net Financial Liabilities (1,613,778) Non-Financial Assets Tangible capital assets - schedule 1 26,810,079 Inventories 618,638 37,464 27,466,181 Accumulated Surplus - note 3 25,852,403 See accompanying notes crawford smith C& swallow 3

85 ST. CATHARINES TRANSIT COMMISSION - URBAN SERVICE STATEMENT OF OPERATIONS AND ACCUMULATED SURPLUS for the year ended December 31, 2010 (Unaudited) Budget Actual Actual $ $ $ Revenues Municipal contribution - City of St. Catharines 6,036,483 10,153,285 9,211,078 Passenger farebox income 6,846,384 6,844,684 6,431,033 Thorold service municipal contribution 460, , ,134 Intown charters 55,000 50,798 40,357 Tickets sold to District School Board of Niagara 500, , ,865 Tickets sold to Niagara Catholic District School Board 68,000 28,500 49,423 Bus advertising 100, ,000 99,334 Shelter advertising 100,000 89,890 88,953 Other income 137, , ,897 Loss on disposal of tangible capital assets (42,583) (7,674) 14,303,846 18,356,219 17,151,400 Expenses Transportation 6,779,721 7,086,760 6,562,932 Fuel 2,208,869 1,792,025 1,700,028 Equipment and vehicle maintenance 2,507,200 2,540,125 2,450,200 Premises and plant 760, ,986 1,292,604 General and administration 2,047,492 2,046,943 2,053,882 Amortization 2,803,047 2,614,399 14,303,846 17,148,886 16,674,045 Excess of Revenues Over Expenses 1,207, ,355 Accumulated Surplus, Beginning of Year 25,852,403 25,852,403 25,375,048 Accumulated Surplus, End of Year 25,852,403 27,059,736 25,852,403 See accompanying notes 4

86 ST. CATHARINES TRANSIT COMMISSION - URBAN SERVICE STATEMENT OF CASH FLOWS for the year ended December 31, $ $ Operations Excess of revenues over expenses 1,207, ,355 Uses Increase in accounts receivable (263,208) Increase in due from Paratransit System of St. Catharines (87,815) Increase in inventories (11,244) Decrease in accounts payable and accrued liabilities (132,904) Decrease in deferred income (388,286) Decrease in due to City of St. Catharines (95,168) (739,309) (239,316) Sources Decrease in accounts receivable 244,210 Decrease in due from Paratransit System of St. Catharines 91,476 Decrease in inventories 43,324 Decrease in prepaid expenses 9, ,426 Increase in accounts payable and accrued liabilities 220,916 Increase in deferred income 61,675 Increase in due to City of St. Catharines 376,804 Increase in employee future benefits 102,012 55, , ,826 Non-cash charges to operations Amortization of tangible capital assets 2,803,047 2,614,399 Loss on disposal of tangible capital assets 42,583 7,674 2,845,630 2,622,073 Net change in cash from operations 4,065,860 3,431,938 Capital Acquisition of tangible capital assets (4,149,972) (3,133,128) Increase (Decrease) in Cash Position (84,112) 298,810 Cash Position, Beginning of Year 1,003, ,377 Cash Position, End of Year 919,075 1,003,187 See accompanying notes 5

87 ST. CATHARINES TRANSIT COMMISSION - URBAN SERVICE STATEMENT OF CHANGE IN NET FINANCIAL LIABILITIES for the year ended December 31, $ $ Excess of Revenues Over Expenses 1,207, ,355 Acquisition of Tangible Capital Assets (4,149,972) (3,133,128) Amortization of Tangible Capital Assets 2,803,047 2,614,399 Loss on Disposal of Tangible Capital Assets 42,583 7,674 Change in Inventories 43,324 (11,244) Change in Prepaid Expenses 9, ,426 Decrease (Increase) in Net Financial Liabilities (44,535) 74,482 Net Financial Liabilities, Beginning of Year (1,613,778) (1,688,260) Net Financial Liabilities, End of Year (1,658,313) (1,613,778) See accompanying notes 6

88 ST. CATHARINES TRANSIT COMMISSION - URBAN SERVICE NOTES TO FINANCIAL STATEMENTS for the year ended December 31, 2010 Organization The St. Catharines Transit Commission (the "Service") was established pursuant to the St. Catharines Act The purpose of the Service is to provide a safe, courteous and reliable transit service which responds to the needs of the community. 1. Significant Accounting Policies The financial statements of the Service are the representations of management prepared in accordance with local government accounting standards established by the Public Sector Accounting Board ("PSAB") of the Canadian Institute of Chartered Accountants. The financial statements have, in management's opinion, been properly prepared within reasonable limits of materiality and within the framework of the accounting policies summarized below: Accrual accounting The accrual method of reporting revenue and expenses has been used. Non-financial assets Non-financial assets are not available to discharge existing liabilities and are held for use in the provision of services. They have useful lives extending beyond the current year, and are not intended for sale in the ordinary course of operations. Tangible capital assets Tangible capital assets are recorded at historic cost. Cost includes all directly attributable expenditures in the acquisition, construction, development and/or betterment of the asset required to install the asset at the location. Amortization is recorded to reflect the cost, net of anticipated residual value, associated with the use of the asset in providing services on a straight-line basis over the estimated useful life of the asset. Additions during the year are amortized from the month of acquisition. Disposals are amortized until the month of disposition. Gains and/or losses on the disposal of an asset are recorded on the statement of operations and accumulated surplus as "gain/loss on disposal of tangible capital assets." Asset Class Period Land improvements years Building years Structures years Equipment years Furniture - 20 years IT equipment years Vehicles years Inventories Inventories are valued at lower of cost and replacement cost. 7

89 ST. CATHARINES TRANSIT COMMISSION - URBAN SERVICE NOTES TO FINANCIAL STATEMENTS for the year ended December 31, Significant Accounting Policies - continued Investment by the Corporation of the City of St. Catharines The investment by the Corporation of the City of St. Catharines is recorded at cost. See notes 3 and 4. Operations The financial statements include only the operations of the Service. The operations of the Paratransit System of St. Catharines are reported separately. Employee future benefits The Service pays certain medical, dental and life insurance benefits on behalf of its retired employees. The Service recognizes these post-retirement costs in the period in which the employees rendered the services. See note 2. Use of estimates The preparation of the financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. 2. Employee Future Benefits $ $ Vacation pay 90,847 98,961 Post-retirement benefits 1,317,158 1,207,032 1,408,005 1,305,993 Vacation Pay As at December 31, 2010, employees of the Service have accumulated vacation pay credits in the amount of $ 90,847 ( $ 98,961). These credits must be used within the next fiscal year. Post-Retirement Benefits The Service pays certain medical, dental and life insurance benefits on behalf of its retired employees. The accrued benefit liability was determined by actuarial valuation using a discount rate of 4.75% ( %). 8

90 ST. CATHARINES TRANSIT COMMISSION - URBAN SERVICE NOTES TO FINANCIAL STATEMENTS for the year ended December 31, Employee Future Benefits - continued Defined Benefit Plan Information $ $ Employee benefit plan assets Employee benefit plan liabilities 1,317,158 1,207,032 Employee benefit plan deficit 1,317,158 1,207,032 Accrued benefit obligation, beginning of year 1,207,032 1,159,323 Expense for the year 151, ,349 Amortization of actuarial losses 45,797 5,134 Benefits paid during the year (86,964) (85,774) Accrued benefit obligation, end of year 1,317,158 1,207,032 As a result of an actuarial valuation conducted in 2011 for the year ending December 31, 2010, it was determined that an actuarial loss of $ 412,169 existed. This amount is being amortized over the expected average remaining service life of the employee group, which in this case, is 9 years or $ 45,797 per annum. The unamortized value remaining is $ 366,372. The actual obligation is $ 1,683,530. The main actuarial assumptions employed for the valuation are as follows: General Inflation - Future general inflation levels, as measured by changes in the Consumer Price Index ("CPI"), were assumed at 2.0% in 2010 and thereafter. Salary Levels - Future salary and wage levels were assumed to increase at 2.0% per annum for the year 2010 through 2015 and 3.3% per annum thereafter. Medical Costs - Medical costs were assumed to increase at a rate of 8.00%, graded down to 7.63% in 2011, 7.25% in 2012, 6.88% in 2013, 6.50% in 2014, 6.13% in 2015, 5.75% in 2016, 5.38% in 2017, and 5.00% in 2018 and each year thereafter. Dental Costs - Dental costs were assumed to increase at a rate of 5.0% and each year thereafter. 3. Accumulated Surplus $ $ Invested in tangible capital assets 28,114,421 26,810,079 Operating fund Reserve fund for future tangible capital assets 327, ,894 Investment in City of St. Catharines 25,423 25,423 Amount to be recovered - post-employment benefits (1,408,005) (1,305,993) 27,059,736 25,852,403 9

91 ST. CATHARINES TRANSIT COMMISSION - URBAN SERVICE NOTES TO FINANCIAL STATEMENTS for the year ended December 31, Economic Dependence The Corporation of the City of St. Catharines is obligated to subsidize the Service for any excess of expense over revenue. 5. Related Party Transactions The Service charges the Paratransit System of St. Catharines for certain costs. These charges are as follows: $ $ Transportation 7,142 7,142 Fuel 1,104 1,104 Equipment and vehicle maintenance 1,104 1,104 Plant and premises 36,216 36,216 General administration 4,332 4,332 The Service charges the Corporation of the City of St. Catharines for certain costs. These charges are as follows: $ $ Parking meter coin counts 3,400 3,400 The Corporation of the City of St. Catharines charges the Service for certain costs on a flat fee basis. These charges are as follows: $ $ Data processing 7,450 7,450 Downtown bus terminal rent First Street Louth land and building lease 1 1 Included in accounts receivable and accounts payable is $ nil and $ 9,299 respectively, ( $ nil and $ 17,161) due from and to the Corporation of the City of St. Catharines. 10

92 ST. CATHARINES TRANSIT COMMISSION - URBAN SERVICE NOTES TO FINANCIAL STATEMENTS for the year ended December 31, Pension Agreement The Service makes contributions to the Ontario Municipal Employees Retirement System ("OMERS"), which is a multi-employer plan, on behalf of 132 members of its staff. The plan is a defined benefit plan which specifies the amount of the retirement benefit to be received by the employees based on the length of service and rates of pay. The amount contributed to OMERS for 2010 was $ 475,199 ( $ 480,154) for current service and is included as an expense on the statement of operations and accumulated surplus. 11

93 SCHEDULE OF TANGIBLE CAPITAL ASSETS Schedule 1 for the year ended December 31, 2010 Land 357, , ,225 Land improvements 715, , ,402 16, , ,504 Buildings 7,062,300 7,062,300 1,745,845 94,370 1,840,215 5,222,085 Structures 182, ,775 83,347 13,551 96,898 85,877 Equipment 1,119,525 2,101,293 21,915 3,198, , ,576 21, ,957 2,448,946 Furniture 57,716 57,716 53,387 2,886 56,273 1,443 IT equipment 1,054,229 40,429 93,400 1,001, ,875 98,846 50, , ,354 Vehicles 30,078,113 2,008, ,700 31,396,663 10,528,675 2,476, ,700 12,315,676 19,080,987 December 31, ,626,906 4,149, ,015 43,971,863 13,816,827 2,803, ,432 15,857,442 28,114,421 Land 357, , ,225 Land improvements 715, , ,472 16, , ,621 Buildings 7,062,300 7,062,300 1,651,475 94,370 1,745,845 5,316,455 Structures 182, ,775 69,795 13,552 83,347 99,428 Equipment 937, ,207 1,119, ,877 48, , ,229 Furniture 57,716 57,716 50,502 2,885 53,387 4,329 IT equipment 605, ,629 12,400 1,054, ,685 79,590 12, , ,354 Vehicles 28,283,800 2,705, ,700 30,078,113 9,073,048 2,358, ,026 10,528,675 19,549,438 Work in progress 215,721 (215,721) December 31, ,416,878 3,133, ,100 40,626,906 12,117,854 2,614, ,426 13,816,827 26,810,079 ST. CATHARINES TRANSIT COMMISSION - URBAN SERVICE Cost Accumulated Amortization Balance, Balance, Balance, Balance, Net Beginning of End of Beginning of End of Book Year Additions Disposals Year Year Amortization Disposals Year Value $ $ $ $ $ $ $ $ $ See accompanying notes 12

94 ST. CATHARINES TRANSIT COMMISSION - URBAN SERVICE SCHEDULE OF EXPENSES Schedule 2 for the year ended December 31, 2010 (Unaudited) Budget Actual Actual $ $ $ Transportation Bus operators wages 4,874,897 5,049,554 4,787,443 Payroll taxes 1,628,716 1,659,949 1,502,794 6,503,613 6,709,503 6,290,237 Thorold Transcab service 145, , ,602 Uniforms 32,550 32,462 24,117 Licences 27,000 28,209 25,872 Tickets, transfers and passes 35, ,306 35,987 Miscellaneous 35,700 42,777 42,117 6,779,721 7,086,760 6,562,932 Fuel Gasoline and diesel fuel 2,123,869 1,699,073 1,613,982 Lubricants 85,000 92,952 86,046 2,208,869 1,792,025 1,700,028 Equipment and Vehicle Maintenance Mechanics wages 904, , ,168 Servicemen wages 326, , ,984 Mechanics payroll taxes 300, , ,948 Servicemen payroll taxes 108, ,133 99,250 1,640,410 1,645,093 1,549,350 Bus tires 80, , ,146 Materials 735, , ,106 Radios 13,390 7,098 5,790 Service and staff vehicles 15,000 12,780 27,334 Mechanics tool replacements 5,000 2,658 12,488 Miscellaneous 18,400 20,396 12,986 2,507,200 2,540,125 2,450,200 See accompanying notes 13

95 ST. CATHARINES TRANSIT COMMISSION - URBAN SERVICE SCHEDULE OF EXPENSES for the year ended December 31, 2010 Schedule 2 - continued (Unaudited) Budget Actual Actual $ $ $ Premises and Plant Utilities 220, , ,465 Garage supplies 32,448 39,613 31,969 Building maintenance and janitorial 175, , ,005 Bus shelters 10,300 3, Property taxes 128, , ,126 Fire and boiler insurance 4,153 3,491 3,780 Carlisle Square terminal maintenance 190, , , , ,986 1,292,604 General Administration Salaries 1,045,140 1,025, ,999 Payroll taxes 344, , ,651 1,389,649 1,461,347 1,352,650 Insurance 360, , ,357 Office 117,163 96,537 94,472 Telephone 28,840 31,081 30,657 Professional fees 29,740 16,131 40,177 Advertising 65,000 53,789 67,444 Miscellaneous 57,100 52,927 62,125 2,047,492 2,046,943 2,053,882 See accompanying notes 14

96 PARATRANSIT SYSTEM OF ST. CATHARINES Financial Statements December 31, 2010

97 PARATRANSIT SYSTEM OF ST. CATHARINES Financial Statements December 31, 2010 Table of Contents Page Independent Auditors' Report 1-2 Statement of Financial Position 3 Statement of Operations and Accumulated Surplus 4 Statement of Cash Flows 5 Statement of Change in Net Financial Assets 6 Notes to Financial Statements 7-9 Schedule of Tangible Capital Assets 10 Schedule of Expenses 11-12