SECTION I INTRODUCTION

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5 TRINITY RIVER AUTHORITY OF TEXAS 5300 South Collins P.O. Box 60, Arlington, Texas (817) Annual Financial Report For the Fiscal Year December 1, 2011 through November 30, 2012 Harold L. Barnard President J. Kevin Ward General Manager J. Sam Scott, Treasurer Board of Directors Howard S. Slobodin, Secretary Board of Directors Don A. Tucker General Services Manager Thomas D. Sanders Construction Services Manager Jimmie R. Sims, Regional Manager, Southern Region Fiona M. Allen, Regional Manager, Northern Region Alison A. Mackey Chief Financial Officer -1-

6 Board of Directors Trinity River Authority of Texas November 30, 2012 Harold L. Barnard, President Area 5 (Ellis County) Amanda B. Davis Area 9 (Leon County) Kim C. Wyatt, Vice-President Area 6 (Navarro County) Kevin Maxwell Area 10 (Houston County) Linda D. Timmerman, Ed.D., Chairman, Executive Committee Area 8 (Freestone County) Martha A. Hernandez Area 1 (Tarrant County Place 1) Vacant Area 1 (Tarrant County Place 2) D. Joe McCleskey Area 11 (Trinity County) J. Carol Spillars Area 12 (Madison County) Andrew Martinez Area 13 (Walker County) William W. Collins, Jr. Area 1 (Tarrant County Place 3) Steve Cronin Area 14 (San Jacinto County) Christina M. Crain Area 2 (Dallas County Place 1) Manny Rachal Area 15 (Polk County) Ana Laura Saucedo Area 2 (Dallas County Place 2) David B. Leonard Area 16 (Liberty County) James W. Neale Area 2 (Dallas County Place 3) Harold E. Jenkins Area 2 (Dallas County Place 4) Michael Cronin Area 3 (Kaufman County) Jess A. Laird Area 4 (Henderson County) Nancy E. Lavinski Area 7 (Anderson County) Shirley K. Seale Area 17 (Chambers County) John W. Jenkins Area 18 (At-Large Place 1, Chambers County) Ronald J. Goldman Area 18 (At-Large Place 2, Tarrant County) Amir A. Rupani Area 18 (At-Large Place 3, Dallas County) -2-

7 TRINITY RIVER AUTHORITY OF TEXAS TABLE OF CONTENTS FOR THE FISCAL YEAR ENDED NOVEMBER 30, 2012 Exhibit Page SECTION I: INTRODUCTION SECTION Title Page 1-2 Table of Contents 3-4 Letter of Transmittal 5-6 SECTION II: FINANCIAL SECTION Independent Auditors' Report Management's Discussion and Analysis BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements: Statement of Net Assets Statement of Activities Fund Financial Statements: Governmental Funds Balance Sheet Reconciliation of Governmental Funds Balance Sheet to Statement of Net Assets - Governmental Activities Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances Reconciliation of Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to Statement of Activities Proprietary Funds Statement of Net Assets Proprietary Funds Statement of Revenues, Expenses and Changes in Net Assets Proprietary Funds Statement of Cash Flows Notes to the Basic Financial Statements REQUIRED SUPPLEMENTARY INFORMATION Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund (Unaudited) Notes to Required Supplementary Information (Unaudited) Schedules of OPEB Funding Progress and Employer Contributions (Unaudited) COMBINING STATEMENTS - NONMAJOR GOVERNMENTAL FUNDS Combining Balance Sheet Combining Statement of Revenues, Expenditures and Changes in Fund Balance

8 COMBINING STATEMENTS - NONMAJOR ENTERPRISE FUNDS Combining Statement of Net Assets Combining Statement of Revenues, Expenses and Changes in Net Assets (Liabilities) Combining Statement of Cash Flows COMBINING STATEMENTS - ALL INTERNAL SERVICE FUNDS Combining Statement of Net Assets - Internal Service Funds Combining Statement of Revenues, Expenses and Changes in Net Assets - Internal Service Funds Combining Statement of Cash Flows - Internal Service Funds

9 Trinity River Authority of Texas General Office April 1, 2013 TO: BOARD OF DIRECTORS TRINITY RIVER AUTHORITY OF TEXAS VIA: (2) EXECUTIVE COMMITTEE BOARD OF DIRECTORS (1) ADMINISTRATION COMMITTEE BOARD OF DIRECTORS Members of the Board of Directors: I am pleased to present for your review and approval the Annual Financial Report of the Trinity River Authority of Texas for Fiscal Year December 1, 2011 through November 30, It is the Authority's responsibility to present the information in a manner that represents accuracy, completeness and fairness of presentation. The Report is prepared in compliance with Authority Board approved documents and Section of the Texas Water Code. I believe that the Report is accurate in all material respects and presents the financial position and results of operations as measured by the financial activities of the various funds. In order for the reader to obtain maximum understanding, all disclosures necessary have been included as of this date and any subsequent events that would materially affect the financial position of the Authority have been disclosed. Emphasis on internal controls is paramount in the development and maintenance of the Authority's accounting system. I believe the Authority's internal accounting controls adequately safeguard assets and provide reasonable assurance of properly recorded financial transactions. The accompanying report has been prepared in accordance with the reporting standards established by Statement No. 34 of the Governmental Accounting Standards Board. The report consists of two parts: (1) Introduction Section; and (2) Financial Section, including the Management Discussion and Analysis, financial statements, and supplemental schedules of the Authority's operations accompanied by our Independent Auditors' Report. P.O. Box 60 Arlington, Texas Metro (817) TeleFax (817)

10 BOARD OF DIRECTORS TRINITY RIVER AUTHORITY OF TEXAS April 2, 2013 Page 2 The Board of Directors decided to have the audit performed by an Official Auditor instead of the State Auditor as provided for in Section of the Texas Water Code. The Board has designated Weaver and Tidwell, L.L.P. as Official Auditor. The Report contains the Auditors' Independent Auditors Report. Staff persons of various levels within the Authority have contributed to the Report under the direction of the Chief Financial Officer. This Report not only reflects the financial position and results of operation of the Authority but also the continued efforts by the staff to improve the information being reported to the Board of Directors, customers served by the Authority, potential bond buyers, and various State Departments and Agencies. Respectfully submitted, J. KEVIN WARD General Manager JKW/ps

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13 INDEPENDENT AUDITORS' REPORT -9-

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15 Members of the Board of Directors Trinity River Authority of Texas INDEPENDENT AUDITOR S REPORT We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the Trinity River Authority of Texas (the Authority), as of and for the year ended November 30, 2012, which collectively comprise the Authority s basic financial statements as listed in the table of contents. We have also audited the financial statements of each of the Authority s non-major governmental, non-major enterprise, and internal service funds presented as supplementary information in the accompanying combining and individual fund financial statements as of and for the year ended November 30, 2012, as listed in the table of contents. These financial statements are the responsibility of the Trinity River Authority s management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the Trinity River Authority, as of November 30, 2012, and the respective changes in financial position, and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of each non-major governmental, non-major enterprise, and internal service fund of the Trinity River Authority of Texas as of November 30, 2012, and the respective changes in financial position and respective cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated April 1, 2013, on our consideration of the Authority s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. - -

16 Trinity River Authority of Texas Page 2 Accounting principles generally accepted in the United States of America require that the management s discussion and analysis and schedule of revenues, expenditures and changes in fund balance- budget and actual general fund information and schedules of funding progress and employer contributions on pages 19 through 26 and 70 through 72 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Management has omitted management s discussion and analysis on each individual non-major governmental, non-major enterprise and internal service fund. Accounting principles generally accepted in the United States of America require that management s discussion and analysis be presented to supplement the individual fund financial statements. This information, although not a part of the basic financial statements is required by the Governmental Accounting Standards Board, who considers it to be an essential part of the financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. Our opinion on the basic financial statements is not affected by the missing management s discussion and analysis for individual non-major governmental, non-major enterprise and internal service funds. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Trinity River Authority of Texas basic financial statements. The introductory section, individual fund budgetary comparison schedules, and the supplemental debt service schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. The introductory section, individual fund budgetary comparison schedules, and the supplemental debt service schedules have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. WEAVER AND TIDWELL, L.L.P. Dallas, Texas April 1,

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19 Trinity River Authority of Texas General Office TRINITY RIVER AUTHORITY OF TEXAS Management's Discussion and Analysis (Unaudited) Year Ended November 30, 2012 As the management of the Trinity River Authority of Texas ("Authority"), we offer readers of the Authority's financial statements this narrative overview and analysis of the financial activities of the Authority for the fiscal year ended November 30, We encourage readers to consider the information presented here in conjunction with additional information that we have furnished with our letter of transmittal, which can be found in the Introduction section of this report. FINANCIAL HIGHLIGHTS As of November 30, 2012: The assets of the Authority exceeded its liabilities at the close of the most recent fiscal year by $549,569,489. Of this amount, $37,719,139 (unrestricted net assets) may be used to meet the Authority's ongoing obligations to contracting parties and creditors. The Authority's total net assets increased $3,900,040. Eighty-eight percent (88%) of this increase is from increases in net assets in the Central Regional Wastewater System, the Tarrant County Water Supply Project, and the Huntsville Regional Water Supply System. As of the close of the current fiscal year, the Authority's governmental funds reported combined ending fund balances of $16,528,202. $4,573,274, is available for spending at the Authority's discretion (unassigned fund balance). At the end of the current fiscal year, unassigned fund balance for the General Fund was $4,573,274 or approximately fifty-nine percent (59%) of total General Fund expenditures. During the current fiscal year the Authority issued $113,345,000 of revenue and refunding bonds. These issues were for the Central Regional Wastewater System ($74,270,000), Ten Mile Creek Regional Wastewater System ($5,850,000), Denton Creek Regional Wastewater System ($14,035,000), and Huntsville Regional Water Supply System ($19,190,000). During the current fiscal year the Authority changed its method of calculating capitalized interest. This change in accounting required a restatement of prior financial statements for prior period impacts of the change. As a result, the Authority decreased 2011 net assets by $43,265,179. The affected funds are as follows: -15-

20 Central Regional Wastewater System Ten Mile Creek Regional Wastewater System Denton Creek Regional Wastewater System Red Oak Creek Regional Wastewater System Tarrant County Water Supply Project Huntsville Regional Water Supply System Northeast Lakeview Wastewater Transportation Project OVERVIEW OF THE FINANCIAL STATEMENTS $ (25,547,718) (9,041,925) (1,601,792) (1,009,611) (6,001,643) 292,502 (354,992) This discussion and analysis is intended to serve as an introduction to the Authority's basic financial statements. The Authority's basic financial statements are comprised of three components: 1) governmentwide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. GOVERNMENT-WIDE FINANCIAL STATEMENTS. The government-wide financial statements are designed to provide readers with a broad overview of the Authority's finances, in a manner similar to a private-sector business. The statement of net assets presents information on all of the Authority's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the Authority is improving or deteriorating. The statement of activities presents information showing how the Authority's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., earned but uncollected revenue from contracting parties and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of the Authority that are principally supported by intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the Authority include only general government operations. The business-type activities of the Authority include wastewater treatment operations, fresh water treatment operations, reservoir operations, public recreation facilities, and financing projects for contracting parties. The government-wide financial statements include not only the Authority itself (known as the primary government), but also a legally separate component unit (the Trinity River Industrial Development Authority) for which the Authority is financially accountable. Financial information for this component unit is reported in a separate column from the financial information presented for the primary government itself. FUND FINANCIAL STATEMENTS. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Authority, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the Authority can be divided into two categories: governmental funds and proprietary funds. -16-

21 GOVERNMENTAL FUNDS. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The Authority maintains five individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the General Fund, which is considered to be a major fund. Data from the other four governmental funds are combined into a single aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The Authority adopts an annual appropriated budget for its General Fund. A budgetary comparison schedule has been provided for the General Fund as Required Supplementary Information to demonstrate compliance with this budget. PROPRIETARY FUNDS. The Authority maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The Authority uses enterprise funds to account for its wastewater treatment operations, fresh water treatment operations, raw water supply, reservoir operations, public recreation facilities, and financing projects. Internal service funds are an accounting device used to accumulate and recover costs internally among the Authority's various functions. The Authority uses internal service funds to account for its information technology support services, construction inspection services, administrative support services, medical and other insurance programs. Because these activities benefit both government and business-type activities, they have been allocated between the two activities. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary funds financial statements provide separate information for the Central Regional Wastewater System, Ten Mile Creek Regional Wastewater System, Tarrant County Water Supply Project, and Livingston-Wallisville Projects. The Central Regional Wastewater System and Tarrant County Water Supply Project are major funds of the Authority in accordance with GASB Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments. The Ten Mile Creek Regional Wastewater System and Livingston-Wallisville Projects are also significant to the Authority and are presented as major funds. Conversely, the internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements and individual statements elsewhere in this report. NOTES TO THE FINANCIAL STATEMENTS. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. -17-

22 GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the Trinity River Authority, assets exceeded liabilities by $549,569,489 at the close of the most recent fiscal year. TRINITY RIVER AUTHORITY CONDENSED SCHEDULE OF NET ASSETS Governmental Business-Type Activities Activities (as restated) 2012 Total 2011 (as restated) Current Assets $ 18,402,501 $ 18,188,253 $ 33,538,273 $ 38,990,563 $ 51,940,774 $ 57,178,816 Restricted Assets 664,928, ,831, ,928, ,831,126 Capital Assets 6,260,247 6,372,899 1,380,130,152 1,312,049,250 1,386,390,399 1,318,422,149 Other Assets 66,555 83, ,872, ,726, ,938, ,809,745 Total Assets 24,729,303 24,644,407 2,225,469,430 2,155,597,429 2,250,198,733 2,180,241,836 Long-Term Liabilities 3,587,542 3,927,075 1,595,348,124 1,535,154,486 1,598,935,666 1,539,081,561 Other Liabilities 1,589,817 1,278, ,103,761 94,211, ,693,578 95,490,826 Total Liabilities 5,177,359 5,206,063 1,695,451,885 1,629,366,324 1,700,629,244 1,634,572,387 Net Assets: Invested in Capital Assets, Net of Related Debt 3,197,003 3,243, ,452, ,565, ,649, ,809,484 Restricted 111,200, ,269, ,200, ,269,473 Unrestricted 16,354,941 16,194,775 21,364,198 27,395,717 37,719,139 43,590,492 Total Net Assets $ 19,551,944 $ 19,438,344 $ 530,017,545 $ 526,231,105 $ 549,569,489 $ 545,669,449 The largest portion of the Authority's net assets (73 percent) reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment), less any related debt used to acquire those assets that is still outstanding. The Authority uses these capital assets to provide services to cities and other contracting parties; consequently, these assets are not available for future spending. Although the Authority's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the Authority's net assets (20 percent) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets (7 percent) may be used to meet the Authority's ongoing obligations to its contracting parties and creditors. At the end of the current fiscal year, the Authority is able to report positive balances in all three categories of net assets, for both governmental and business-type activities. The Authority's total net assets increased $3,900,040. GOVERNMENTAL ACTIVITIES. The Authority's net assets reported in governmental activities increased $113,600 primarily due to water sales revenues. BUSINESS-TYPE ACTIVITIES. The Authority's net assets reported in business-type activities increased by $3,786,440, accounting for 97 percent of the total growth in the Authority's net assets. Key elements of this increase are as follows: -18-

23 Net assets of the Central Regional Wastewater System increased by $1,347,467 from (a) the excess of debt retirements over depreciation, (b) the capitalization of a portion of interest on long-term debt to construction-in-progress, and (c) investment income from construction funds. Net assets of the Tarrant County Water Supply Project increased by $786,516 from (a) the excess of debt retirements over depreciation, (b) the capitalization of a portion of interest on long-term debt to construction-in-progress, and (c) investment income from construction funds. Net assets of the Ten Mile Creek Regional Wastewater System increased by $462,061 from (a) the excess of debt retirements over depreciation, (b) the capitalization of a portion of the interest on long-term debt to construction-in-progress, and (c) investment income from construction funds. TRINITY RIVER AUTHORITY CHANGES IN NET ASSETS Governmental Business-Type Activities Activities Total Revenues: Program Revenues: Charges for Services $ 9,228,172 $ 11,108,016 $ 173,279,341 $ 170,264,567 $ 182,507,513 $ 181,372,583 Operating Grants and Contributions 340, ,949 39, , ,893 Capital Grants and Contributions 2,019,486 1,532,141 2,019,486 1,532,141 General Revenues: Unrestricted Investment Earnings 43,612 81,318 1,380,130 2,584,732 1,423,742 2,666,050 Miscellaneous 96, ,959 96, ,959 Total Revenues 9,612,367 11,703, ,775, ,601, ,388, ,304,626 Expenses: General Government 9,565,167 9,040,929 9,565,167 9,040,929 Wastewater Treatment 118,362, ,939, ,362, ,939,856 Water Supply 36,528,174 34,229,362 36,528,174 34,229,362 Raw Water 2,412,840 2,412,840 Recreation 692, , , ,321 Water Storage 9,471,869 13,416,661 9,471,869 13,416,661 Financing 5,237,105 7,657,794 5,237,105 7,657,794 Total Expenses 9,565,167 9,040, ,705, ,018, ,270, ,059,923 Increase in Net Assets Before Transfers and Special Items 47,200 2,662,354 4,070,444 17,582,349 4,117,644 20,244,703 Transfers 66,400 72,850 (66,400) (72,850) Special Items (217,604) (121,604) (217,604) (121,604) Change in Net Assets 113,600 2,735,204 3,786,440 17,387,895 3,900,040 20,123,099 Net Assets - Beginning 19,438,344 16,703, ,231, ,108, ,669, ,811,529 Net Assets - End of Year, as previously reported 19,438, ,496, ,934,628 Restatement Adjustment (43,265,179) (43,265,179) Net Assets - End of Year, as restated $ 19,551,944 $ 19,438,344 $ 530,017,545 $ 526,231,105 $ 549,569,489 $ 545,669,

24 FINANCIAL ANALYSIS OF THE AUTHORITY'S FUNDS As noted earlier, the Authority uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. GOVERNMENTAL FUNDS. The focus of the Authority's governmental funds is to provide information on nearterm inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Authority's financing requirements. At the end of the current fiscal year, the fund balance of the General Fund was $4,601,256. $27,982 of this balance was nonspendable relating to prepaid expenses. The remaining balance of $4,573,274 was unassigned. As a measure of the General Fund's liquidity, it may be useful to compare the unassigned fund balance to total fund expenditures. Unassigned fund balance represents 59 percent of total general fund expenditures. The fund balance of the Water Sales Special Revenue Fund was $11,482,245. $11,968 of this balance was nonspendable relating to prepaid expenses. $11,454,632 is committed by the Board to the support of the General Fund ($6,102,401), Technical Studies and Educational Initiatives ($4,040,170), and payments to the City of Houston for water sales ($1,312,061). $15,645 is restricted to water studies. PROPRIETARY FUNDS. The Authority's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Net assets of the Central Regional Wastewater System at the end of the year amounted to $240,961,086 of which $9,535,625 is unrestricted. The total growth in net assets for this fund was $1,347,467 as a result of the excess of debt retirement over depreciation, interest expense capitalized to construction-in-progress, and investment income from construction funds. $74,270,000 of revenue bonds were issued during the year for new construction. Construction-in-progress increased $72,306,300 and $14,672,648 of completed construction was transferred to fixed assets. Total remaining construction-in-progress was $163,570,593 and total construction related assets are $382,481,199. Net assets of the Tarrant County Water Supply Project at the end of the year amounted to $47,821,818 of which $1,654,247 is unrestricted. The total growth in net assets for this fund was $786,516 as a result of the excess of debt retirement over depreciation, interest expense capitalized to construction-in-progress, and investment income from construction funds. $2,703,244 was added to construction-in-progress and $2,348,959 of completed projects was transferred to fixed assets. Total remaining construction-in-progress was $2,079,033 and total construction related assets are $9,621,356. Net assets of the Livingston-Wallisville Projects at the end of the year amounted to $88,418,386. There was a decrease in net assets during the year of $35,323 due primarily to the excess of depreciation over principal paid on the Corps of Engineers contract. Net assets of the Ten Mile Creek Regional Wastewater System Enterprise Fund at the end of the year amounted to $37,783,073 of which $492,205 is unrestricted. The total growth in net assets for this fund was $462,061, as a result of the excess of debt retirement over depreciation, interest expense capitalized to construction-in-progress, and investment income from construction funds. $5,850,000 of revenue refunding bonds were issued during the year. $10,196,771 was added to construction-in-progress and $4,231,944 of completed projects were transferred to fixed assets. Total remaining construction-in-progress is $23,122,149 and total construction related assets are $45,685,

25 CAPITAL ASSET AND DEBT ADMINISTRATION CAPITAL ASSETS. The Authority's investment in capital assets net of depreciation for its governmental and business-type activities as of November 30, 2012, was $1,386,390,399. This investment in capital assets includes land, reservoir and related facilities, water storage rights, sewage and water treatment and related facilities, recreation facilities, machinery and equipment, buildings, improvements other than buildings, and construction-in-progress. The total increase in the Authority's investment in capital assets for the current fiscal year was 5 percent. As of November 30, 2012, the Authority had capital assets with a combined cost basis of $1,918,785,475 and total accumulated depreciation of $532,395,076. Major capital asset events during the current fiscal year included the following: Expansion of sewage systems and extensions at the Central Regional Wastewater System; the cost of additions to construction-in-progress during the fiscal year was $72,306,300. Expansion of water transportation and treatment facilities to the Tarrant County Water Supply Project; the cost of additions to construction-in-progress during the fiscal year was $2,703,244. Expansion of sewage system of the Denton Creek Regional Wastewater System; the cost of additions to construction-in-progress during the fiscal year was $4,142,769. Expansion of sewage system of the Ten Mile Creek Regional Wastewater System; the cost of additions to construction-in-progress during the fiscal year was $10,196,771. TRINITY RIVER AUTHORITY CAPITAL ASSETS Governmental Business-Type Activities Activities Total (as restated) (as restated) Land and Easements $ 635,810 $ 635,810 $ 88,914,245 $ 87,423,762 $ 89,550,055 $ 88,059,572 Reservoir and Related Facilities 54,894,503 54,880,720 54,894,503 54,880,720 Water Storage Rights 77,828,391 77,828,391 77,828,391 77,828,391 Sewage, Water Treatment and Related Facilities 1,451,289,300 1,423,801,797 1,451,289,300 1,423,801,797 Recreation Facilities 1,475,083 1,441,896 1,475,083 1,441,896 Machinery and Equipment 3,428,212 3,394,038 14,687,334 13,906,785 18,115,546 17,300,823 Buildings and Improvements 7,832,550 7,595, , ,433 8,216,483 7,969,594 Construction-in-Progress 217,416, ,588, ,416, ,588,694 Accumulated Depreciation and Amortization (5,636,325) (5,252,110) (526,758,751) (488,197,228) (532,395,076) (493,449,338) TOTAL $ 6,260,247 $ 6,372,899 $ 1,380,130,152 $ 1,312,049,250 $ 1,386,390,399 $ 1,318,422,149 Additional information on the Authority's capital assets can be found in Note 4 in the Notes to the Financial Statements. -21-

26 LONG-TERM LIABILITIES. At the end of the current fiscal year, the Authority had total long-term liabilities of $1,598,935,666. The majority of the debt represents bonds secured solely by specified revenue sources (e.g., revenue bonds). TRINITY RIVER AUTHORITY OUTSTANDING LIABILITIES Governmental Business-Type Activities Activities Total General Improvement Revenue Bonds $ 3,115,000 $ 3,245,000 $ 3,115,000 $ 3,245,000 Revenue Bonds $ 1,554,680,000 $ 1,492,217,000 1,554,680,000 1,492,217,000 Contracts Payable 83,682,038 83,242,775 83,682,038 83,242,775 Unamortized Bond Premium(Discount) 13,514,228 15,014,034 13,514,228 15,014,034 Deferred Amount on Refunding (8,881,135) (10,058,962) (8,881,135) (10,058,962) Interest Payable on Debt 48,283 50,298 17,482,755 16,815,384 17,531,038 16,865,682 Other Post Employment Benefits 364, , , ,575 Accounts Payable 1,619,825 1,650,148 34,153,019 31,135,662 35,772,844 32,785,810 Other Liabilities 394, , , , , ,473 TOTAL $ 5,177,359 $ 5,206,063 $ 1,695,451,885 $ 1,629,366,324 $ 1,700,629,244 $ 1,634,572,387 The Authority's total debt increased by $66,056,861 during the year. This increase was primarily due to the issuance of revenue bond debt of $113,345,000, as previously discussed, offset by the retirement and refunding of $50,882,000 of revenue bond debt. Arbitrage liabilities from investment earnings in excess of bond yields decreased $6,200 during the year to $140,000. These liabilities are being funded from the related construction funds. Additional information on the Authority's long-term debt can be found in Note 5 in the Notes to the Financial Statements. REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the Authority's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Chief Financial Officer, P.O. Box 60, Arlington, Texas **************************************** -22-

27 BASIC FINANCIAL STATEMENTS -23-

28 TRINITY RIVER AUTHORITY OF TEXAS EXHIBIT 1-1 GOVERNMENT-WIDE STATEMENT OF NET ASSETS NOVEMBER 30, 2012 TOTAL COMPONENT GOVERNMENTAL BUSINESS-TYPE PRIMARY UNIT - ACTIVITIES ACTIVITIES GOVERNMENT TRIDA ASSETS CURRENT: Cash $ 1,045 $ 55,626 $ 56,671 Equity in Pooled Cash and Investments 17,045,189 29,446,121 46,491,310 $ 23,996 Accounts Receivable, Net of Allowance 83, , ,497 Accounts Receivable - Contracting Parties 655,577 3,365,669 4,021,246 Contract Receivable - Current 15,884 15,884 Note Receivable - Current 14,698 1,527 16,225 Interest Receivable 18,331 18,331 Internal Balances 562,157 (562,157) System Contribution Receivable - Current 185, ,629 Inventory 714, ,289 Due from Restricted Assets (395,891) (395,891) Prepaids and Other Assets 39, , ,583 Total Current Assets 18,402,501 33,538,273 51,940,774 23,996 RESTRICTED: Equity in Pooled Cash and Investments 282,012, ,012,368 Money Market 286,553, ,553,758 US Government Agency and Instrumentality Obligations 93,475,603 93,475,603 Accounts Receivable 2,210,214 2,210,214 Accounts Receivable - Contracting Parties 152, ,741 Accrued Investment Income 122, ,714 Due to Current Assets 395, ,891 Prepaids and Other Assets 5,404 5,404 Total Restricted Assets 664,928, ,928,693 DIRECT FINANCING ARRANGEMENT RECEIVABLE 75,994,333 75,994,333 CAPITAL ASSETS: Land and Easements 635,810 88,914,245 89,550,055 Water Storage Rights 77,828,391 77,828,391 Sewage and Water Treatment and Related Facilities 1,196,982,461 1,196,982,461 Accumulated Depreciation (417,355,708) (417,355,708) Buildings 7,832, ,933 8,216,483 Accumulated Depreciation (2,488,457) (294,410) (2,782,867) Recreational Facilities 1,475,083 1,475,083 Accumulated Depreciation (1,282,170) (1,282,170) Reservoir and Related Facilities 54,894,503 54,894,503 Accumulated Depreciation (19,432,559) (19,432,559) Water Transportation and Treatment Facilities 254,306, ,306,839 Accumulated Depreciation (77,556,512) (77,556,512) Machinery and Equipment 3,428,212 14,687,334 18,115,546 Accumulated Depreciation (3,147,868) (10,837,392) (13,985,260) Construction-in-Progress 217,416, ,416,114 Total Capital Assets, Net 6,260,247 1,380,130,152 1,386,390,399 OTHER ASSETS: System Contribution Receivable, Long Term 1,962,364 1,962,364 Note Receivable - Less Current 14,799 14,799 Contract Receivable - Long Term 41,406,027 41,406,027 Deferred Charges - Unamortized Bond Expense 51,756 27,509,588 27,561,344 Total Other Assets 66,555 70,877,979 70,944,534 TOTAL ASSETS 24,729,303 2,225,469,430 2,250,198,733 23,996 (continued - 1) -24-

29 TRINITY RIVER AUTHORITY OF TEXAS EXHIBIT 1-1 GOVERNMENT-WIDE STATEMENT OF NET ASSETS NOVEMBER 30, 2012 TOTAL COMPONENT GOVERNMENTAL BUSINESS-TYPE PRIMARY UNIT - ACTIVITIES ACTIVITIES GOVERNMENT TRIDA LIABILITIES CURRENT: Payable from Current Assets: Accounts Payable and Accrued Expenses $ 880,965 $ 4,410,309 $ 5,291,274 Accounts Payable-Contracting Parties 131,318 5,641,747 5,773,065 System Contribution Payable - Current 185, ,629 Contracts Payable - Current 391, ,797 Unearned Revenue 394,251 2, ,011 Accrued Interest Payable 476, ,806 Claims Payable 314, ,919 Payable from Restricted Assets: Accounts and Retainage Payable 20,794,357 20,794,357 Accounts Payable - Contracting Parties 285, ,269 Accounts Payable - Construction Revenue Bonds - Current 135,000 50,480,000 50,615,000 $ 7,700,000 Current Obligations Contracted by Others (7,700,000) Accrued Interest on Bonds Payable 48,283 17,005,949 17,054,232 Unearned Income 114, ,219 Total Current Liabilities 1,589, ,103, ,693,578 NIL LONG-TERM LIABILITIES: Bonds Payable, Less Current 2,980,000 1,504,200,000 1,507,180,000 Unamortized Bond Premium (Discount) 13,514,228 13,514,228 Deferred Amount on Refunding (8,881,135) (8,881,135) Deferred Interest Payable 40,603,944 40,603,944 System Contribution Payable 1,962,364 1,962,364 Accounts Payable and Accrued Expenses 607, ,344 1,480,886 Unearned Revenue 24,216 24,216 Other Post Employment Benefits 364, ,866 Uncommitted 26,284,063 26,284,063 Contracts Payable, Less Current 16,402,234 16,402,234 Total Long-Term Liabilities 3,587,542 1,595,348,124 1,598,935,666 NIL TOTAL LIABILITIES 5,177,359 1,695,451,885 1,700,629,244 NIL NET ASSETS Invested in Capital Assets, Net of Related Debt 3,197, ,452, ,649,530 Restricted for: Debt Service 109,437, ,437,452 Construction 276, ,498 Other Purposes 1,486,870 1,486,870 Unrestricted 16,354,941 21,364,198 37,719,139 23,996 TOTAL NET ASSETS $ 19,551,944 $ 530,017,545 $ 549,569,489 $ 23,996 The accompanying notes are an integral part of the financial statements. (concluded - 2) -25-

30 TRINITY RIVER AUTHORITY OF TEXAS EXHIBIT 1-2 GOVERNMENT-WIDE STATEMENT OF ACTIVITIES YEAR ENDED NOVEMBER 30, 2012 Net (Expense) Revenue and Program Revenues Changes in Net Assets Operating Capital Primary Government Component Charges Grants and Governmental Business-Type Unit - Functions/Programs Expenses for services Contributions Activities Activities Total TRIDA Primary Government Governmental Activities: General Government and Administration $ 9,415,456 $ 9,228,172 $ 340,583 $ 153,299 $ 153,299 Interest and Fiscal Charges 149,711 (149,711) (149,711) Total Governmental Activities 9,565,167 9,228, ,583 3,588 3,588 Business type activities: Wastewater 118,362, ,852,194 $ 1,386,740 $ (123,342) (123,342) Water Supply 36,528,174 38,223, ,746 2,328,453 2,328,453 Water Storage 9,471,869 9,779, , ,272 Raw Water 2,412,840 2,411,949 (891) (891) Recreation 692, ,213 83,240 83,240 Financing 5,237,105 5,235,963 (1,142) (1,142) Total Business-Type Activities 172,705, ,279,341 2,019,486 2,593,590 2,593,590 Total Primary Government $ 182,270,404 $ 182,507,513 $ 340,583 $ 2,019,486 3,588 2,593,590 2,597,178 Component Unit: TRIDA $ 4,250 $ (4,250) General Revenues: Investment Earnings 43,612 1,380,130 1,423, Miscellaneous 96,724 96,724 Transfers 66,400 (66,400) Special Items: System Contribution Refund (217,604) (217,604) Total General Revenues, Special Items, and Transfers 110,012 1,192,850 1,302, Change in Net Assets 113,600 3,786,440 3,900,040 (4,190) Net Assets - Beginning, as previously reported 19,438, ,496, ,934,628 28,186 Restatement Adjustment (43,265,179) (43,265,179) Net Assets - Beginning, as restated 19,438, ,231, ,669,449 28,186 Net Assets - Ending $ 19,551,944 $ 530,017,545 $ 549,569,489 $ 23,996 The accompanying notes are an integral part of the financial statements. -26-

31 TRINITY RIVER AUTHORITY OF TEXAS EXHIBIT 1-3 BALANCE SHEET - GOVERNMENTAL FUNDS NOVEMBER 30, 2012 GOVERNMENTAL ACTIVITIES GENERAL NONMAJOR FUND GOVERNMENTAL TOTAL ASSETS CURRENT ASSETS: Cash $ 1,045 $ 1,045 Equity in Pooled Cash and Investments 5,124,428 $ 11,920,761 17,045,189 Accounts Receivable 10,400 73,485 83,885 Accounts Receivable - Contracting Parties 655, ,577 Prepaids and Other Assets 27,982 11,968 39,950 Due from Other Authority Funds 102,252 33, ,015 Note Receivable - Current 14,698 14,698 Total Current Assets 5,266,107 12,710,252 17,976,359 LONG-TERM ASSET: Note Receivable, Less Current 14,799 14,799 TOTAL ASSETS $ 5,266,107 $ 12,725,051 $ 17,991,158 LIABILITIES AND FUND BALANCE LIABILITIES: Accounts Payable and Accrued Expenses $ 417,447 $ 109,917 $ 527,364 Accounts Payable - Contracting Parties 18, , ,318 Due to Other Authority Funds 229, , ,364 Unearned Revenue 394, ,251 Deferred Revenue 75,659 75,659 Total Liabilities 664, ,105 1,462,956 FUND BALANCE: Nonspendable: Prepaids 27,982 11,968 39,950 Committed 11,898,813 11,898,813 Restricted 16,165 16,165 Unassigned 4,573,274 4,573,274 Total Fund Balance 4,601,256 11,926,946 16,528,202 TOTAL LIABILITIES AND FUND BALANCE $ 5,266,107 $ 12,725,051 $ 17,991,158 The accompanying notes are an integral part of the financial statements. -27-

32 TRINITY RIVER AUTHORITY OF TEXAS EXHIBIT 1-4 RECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS - GOVERNMENTAL ACTIVITIES NOVEMBER 30, 2012 Total fund balances - governmental funds $ 16,528,202 Amounts reported for governmental activities in the statement of net assets are different because: Certain revenues are deferred at the fund level because they are not available as of year-end. 75,659 Capital assets used in governmental activities are not financial resources and therefore are not reported as assets in governmental funds. 6,260,247 Compensated absences and deferred compensation are not payable from current resources and are therefore not reported as liabilities in the funds. (961,143) Accrued interest payable on long-term debt is not reported in the governmental funds. (48,283) Bonds payable are not due and payable in the current period and therefore are not reported as liabilities in the funds. (3,115,000) Bond Sale Expenses are expensed in governmental funds but are capitalized and amortized at government-wide. 51,756 A portion of internal service funds assets and liabilities are allocated to the governmental activities. This represents the cumulative effect of that allocation. 760,506 Total net assets - governmental activities $ 19,551,944 The accompanying notes are an integral part of the financial statements. -28-

33 TRINITY RIVER AUTHORITY OF TEXAS EXHIBIT 1-5 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - GOVERNMENTAL FUNDS YEAR ENDED NOVEMBER 30, 2012 NONMAJOR GENERAL GOVERNMENTAL FUND FUNDS TOTAL REVENUES: Administrative Overhead Charges $ 6,028,243 $ 6,028,243 Investment Income 10,151 $ 33,461 43,612 Professional Fees 1,123,876 15,336 1,139,212 Grants 340, ,583 Rental Income 41,280 41,280 Water Sales 1,659,304 1,659,304 Water Studies 151, ,630 Operating Overhead 187, ,839 Other 17,483 17,483 Total Revenues 7,408,872 2,200,314 9,609,186 EXPENDITURES: Current: Personal Services 6,248, ,020 6,474,094 Supplies 247, , ,710 Other Services and Charges 1,058,486 1,375,327 2,433,813 Capital Outlays 233,031 67, ,780 Contribution Refund 7,982 7,982 Debt Service: Principal Payments 130, ,000 Interest Payments 150, ,893 Paying Agent Fees Total Expenditures 7,794,880 2,062,225 9,857,105 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (386,008) 138,089 (247,919) OTHER FINANCING SOURCES (USES): Transfers In 2,120,191 3,710,061 5,830,252 Transfers Out (1,866,882) (3,896,970) (5,763,852) Total Other Financing Sources (Uses) 253,309 (186,909) 66,400 NET CHANGE IN FUND BALANCE (132,699) (48,820) (181,519) FUND BALANCE - DECEMBER 1, ,733,955 11,975,766 16,709,721 FUND BALANCE - NOVEMBER 30, 2012 $ 4,601,256 $ 11,926,946 $ 16,528,202 The accompanying notes are an integral part of the financial statements. -29-

34 TRINITY RIVER AUTHORITY OF TEXAS EXHIBIT 1-6 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED NOVEMBER 30, 2012 Net change in fund balances - total governmental funds $ (181,519) Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlay as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which depreciation exceeded capital outlays in the current period. (112,651) Governmental funds report deferred revenues for amounts not available to be collected within 60-days of year-end. This is the change in the amount not collectible with 60-days of year-end. 3,181 Repayment of long-term debt is recorded as an expenditure at the fund level, but as a reduction of liabilities at the government-wide level. 130,000 Certain liabilities are accrued at the government-wide level but not at the fund level. This is the current year change in those liabilities, reported as expense in the statement of activities. 184,066 Certain charges from the internal service funds are allocated to governmental activities. 90,523 Change in net assets of governmental activities $ 113,600 The accompanying notes are an integral part of the financial statements. -30-

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36 TRINITY RIVER AUTHORITY OF TEXAS STATEMENT OF NET ASSETS - PROPRIETARY FUNDS YEAR ENDED NOVEMBER 30, 2012 MAJOR ENTERPRISE FUNDS TARRANT CENTRAL COUNTY REGIONAL WATER LIVINGSTON- WASTEWATER SUPPLY WALLISVILLE SYSTEM PROJECT PROJECTS ASSETS CURRENT ASSETS: Cash $ 250 $ 100 $ 21,633 Equity in Pooled Cash and Investments 13,943,402 1,238, ,586 Accounts Receivable, Net of Allowance 35,792 15,103 Accounts Receivable - Contracting Parties 509,827 1,783, ,465 Contract Receivable - Current Interest Receivable Note Receivable - Current System Contribution Receivable - Current Prepaids and Other Assets 139, Inventory 714,289 Due from Other Authority Funds 112,825 5,680 Due from (to) Restricted Assets (337,270) (58,621) Total Current Assets 15,118,831 2,964,220 1,271,527 RESTRICTED ASSETS: Equity in Pooled Cash and Investments 166,935,084 22,127, ,498 Money Market Fund 198,099,859 US Government Agency and Instrumentality Obligations 85,162,021 8,313,582 Accounts Receivable 9,605 45,000 Accounts Receivable - Contracting Parties Accrued Investment Income 114,121 7,797 Due from Other Authority Funds Due from (to) Current Assets 337,270 58,621 Prepaids and Other Assets 2,454 Total Restricted Assets 450,660,414 30,552, ,498 DIRECT FINANCING ARRANGEMENT RECEIVABLE CAPITAL ASSETS: Land and Easements 20,009,207 3,323,571 52,262,032 Water Storage Rights 10,580,707 Sewage System and Extensions 893,760,529 Accumulated Depreciation (334,260,194) Buildings Accumulated Depreciation Recreational Facilities Accumulated Depreciation Reservoir and Facilities 50,608,355 Accumulated Depreciation (16,753,716) Water Transportation and Treatment Facilities 209,720,430 Accumulated Depreciation (54,824,563) Machinery and Equipment 7,882,718 1,125,250 1,019,107 Accumulated Depreciation (5,812,344) (1,025,161) (818,896) Construction-in-Progress 163,570,593 2,079,033 Total Capital Assets, Net 745,150, ,398,560 96,897,589 OTHER ASSETS: Deferred Charges - Unamortized Bond Expense 17,171,478 1,311,470 Contract Receivable - Long Term System Contribution Receivable Total Other Assets 17,171,478 1,311,470 TOTAL ASSETS 1,228,101, ,226,708 98,445,614 (continued - 1) -32-

37 EXHIBIT 1-7 TEN MILE CREEK REGIONAL NONMAJOR TOTAL INTERNAL WASTEWATER ENTERPRISE ENTERPRISE SERVICE SYSTEM FUNDS FUNDS FUNDS $ 300 $ 33,168 $ 55,451 $ 175 1,269,266 8,243,351 25,117,442 4,328,679 28,953 79,848 88, ,791 3,353,373 12,296 15,884 15,884 18,331 18,331 1,527 1, , ,629 83, , , , ,289 3, ,738 1,297,490 (395,891) 1,353,185 8,925,985 29,633,748 5,885,910 30,924,030 61,749, ,012,368 23,233,501 65,220, ,553,758 93,475,603 2,155,609 2,210, , , ,714 2,634 2, , ,200 5,404 56,314, ,127, ,931,327 75,994,333 75,994,333 4,392,575 8,926,860 88,914,245 67,247,684 77,828, ,713, ,508,742 1,196,982,461 (50,014,707) (33,080,807) (417,355,708) 383, ,933 (294,410) (294,410) 1,475,083 1,475,083 (1,282,170) (1,282,170) 4,286,148 54,894,503 (2,678,843) (19,432,559) 44,586, ,306,839 (22,731,949) (77,556,512) 1,685,785 1,939,118 13,651,978 1,035,356 (1,308,613) (1,255,782) (10,220,796) (616,596) 23,122,149 28,644, ,416,114 98,590, ,674,355 1,379,711, ,760 2,648,189 6,378,451 27,509,588 41,406,027 41,406,027 1,962,364 1,962,364 2,648,189 49,746,842 70,877, ,905, ,469,373 2,221,148,779 6,304, (continued - 2)

38 TRINITY RIVER AUTHORITY OF TEXAS STATEMENT OF NET ASSETS - PROPRIETARY FUNDS YEAR ENDED NOVEMBER 30, 2012 MAJOR ENTERPRISE FUNDS TARRANT CENTRAL COUNTY REGIONAL WATER LIVINGSTON- WASTEWATER SUPPLY WALLISVILLE SYSTEM PROJECT PROJECTS LIABILITIES Payable from Current Assets: Accounts Payable and Accrued Expenses $ 2,071,073 $ 405,107 $ 222,245 Accounts Payable - Contracting Parties 2,634, ,062 System Contribution Payable - Current Contracts Payable - Current Maturities 113,171 Unearned Revenue 1, Due to Other Authority Funds 478,096 84,610 Accrued Interest on Contracts Payable 276,989 Claims Payable Payable from Restricted Assets: Accounts and Retainage Payable 16,028, ,256 Accounts Payable - Contracting Parties Revenue Bonds - Current Maturities 28,020,000 5,805,000 Accrued Interest on Bonds Payable 10,206,752 2,447,402 Due to Other Authority Funds 2,634 85,645 Unearned Revenue 3,595 Total Current Liabilities 59,440,324 10,528, ,645 LONG-TERM LIABILITIES Revenue Bonds Payable, Less Current Maturities 924,290, ,000,000 Unamortized Bond Premium (Discount) 8,227,817 2,896,431 Deferred Amount on Refunding (5,355,780) (2,045,806) Deferred Interest Payable Uncommitted Accounts Payable and Accrued Expenses 537,785 25,626 60,444 Unearned Revenue Other Post Employment Benefits Contracts Payable, Less Current Maturities 9,265,139 System Contribution Payable Total Long-Term Liabilities, Net 927,699, ,876,251 9,325,583 TOTAL LIABILITIES 987,140, ,404,890 10,027,228 NET ASSETS Invested in Capital Assets, Net of Related Debt 173,592,998 27,683,871 87,519,279 Restricted for: Debt Service 56,732,463 18,483,700 Construction 276,498 Other Purposes 1,100,000 Unrestricted 9,535,625 1,654, ,609 TOTAL NET ASSETS $ 240,961,086 $ 47,821,818 $ 88,418,386 RECONCILIATION OF NET ASSETS: Enterprise Funds Internal Service Funds Allocated to Business-Type Activities Business-Type Activities, Government-Wide The accompanying notes are an integral part of the financial statements. (continued - 3) -34-

39 EXHIBIT 1-7 TEN MILE CREEK REGIONAL NONMAJOR TOTAL INTERNAL WASTEWATER ENTERPRISE ENTERPRISE SERVICE SYSTEM FUNDS FUNDS FUNDS $ 262,053 $ 1,058,347 $ 4,018,825 $ 391, ,026 1,844,249 5,641, , , , , , , , , , , , ,919 1,163,647 2,613,303 20,794, , ,269 3,515,000 13,140,000 50,480,000 1,266,825 3,084,970 17,005,949 88, , ,219 6,704,016 23,091, ,465, , ,860, ,050,000 1,504,200,000 42,066 2,347,914 13,514,228 (585,739) (893,810) (8,881,135) 40,603,944 40,603,944 26,284,063 26,284, ,436 74, ,261 72,083 24,216 24, ,866 7,137,095 16,402,234 1,962,364 1,962, ,418, ,590,756 1,594,911, , ,122, ,681,868 1,695,376,911 1,298,487 27,929,556 80,308, ,033, ,760 9,111,312 25,109, ,437, , , ,870 1,486, ,205 5,232,595 17,537,281 4,587,423 $ 37,783,073 $ 110,787,505 $ 525,771,868 $ 5,006,183 $ 525,771,868 4,245,677 $ 530,017,545 (concluded - 4) -35-

40 TRINITY RIVER AUTHORITY OF TEXAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - PROPRIETARY FUNDS YEAR ENDED NOVEMBER 30, 2012 MAJOR ENTERPRISE FUNDS TARRANT CENTRAL COUNTY REGIONAL WATER LIVINGSTON- WASTEWATER SUPPLY WALLISVILLE SYSTEM PROJECT PROJECTS OPERATING REVENUES: Wastewater Contract Revenue $ 82,985,005 Water Supply Contract Revenue $ 30,447,810 Water Storage Contract Revenue $ 4,177,520 Raw Water Contract Revenue Direct Financing Arrangement Revenue Recreational Facilities Fees Reclaimed Wastewater Revenue 690,240 Professional Fees 566, ,598 Management Fees Insurance Premiums Other 1,884, ,913 Total Operating Revenues 86,126,026 30,447,810 4,426,031 OPERATING EXPENSES: Personal Services 11,183,283 1,640,561 1,655,848 Supplies 5,664,829 1,637, ,383 Other Services and Charges 18,869,955 13,933,209 1,425,708 Depreciation 23,093,946 5,366, ,407 Total Operating Expenses 58,812,013 22,578,121 4,169,346 OPERATING INCOME (LOSS) 27,314,013 7,869, ,685 NON-OPERATING REVENUES (EXPENSES): Investment Income 989,632 79,424 1,284 Interest Expense (25,923,734) (7,064,155) (302,464) Paying Agent Fees (5,647) (1,550) Amortization of Bond Sale Expense (1,071,892) (127,234) SEC Disclosure Fees (22,167) (7,000) Other 38,902 43,659 6,822 Total Non-Operating Revenues (Expense) - Net (25,994,906) (7,076,856) (294,358) INCOME (LOSS) BEFORE CONTRIBUTIONS, CONTRIBUTION REFUNDS, AND TRANSFERS 1,319, ,833 (37,673) CONTRIBUTIONS CONTRIBUTION REFUND (24,557) TRANSFERS IN 51,110 18,240 2,350 TRANSFERS OUT (22,750) CHANGE IN NET ASSETS 1,347, ,516 (35,323) NET ASSETS - DECEMBER 1, 2011, as previously reported 265,161,337 53,036,945 88,453,709 RESTATEMENT ADJUSTMENT Capitalization of Interest (25,547,718) (6,001,643) NET ASSETS - DECEMBER 1, 2011, as restated 239,613,619 47,035,302 88,453,709 NET ASSETS - NOVEMBER 30, 2012 $ 240,961,086 $ 47,821,818 $ 88,418,386 Change in Net Assets of Enterprise Funds Change in Net Assets of Internal Service Funds Allocation of Internal Service Funds Operating Income to Governmental Activities Total Change in Net Assets of Business-Type Activities The accompanying notes are an integral part of the financial statements. (continued - 1) -36-

41 EXHIBIT 1-8 TEN MILE CREEK REGIONAL NONMAJOR TOTAL WASTEWATER ENTERPRISE ENTERPRISE INTERNAL SYSTEM FUNDS FUNDS SERVICE FUNDS $ 11,478,251 $ 19,247,917 $ 113,711,173 7,776,071 38,223,881 5,353,110 9,530,630 2,411,949 2,411,949 5,235,963 5,235, , , , ,696 $ 3,703,290 1,948,610 4,973,824 9,864 2,003,460 11,478,251 40,801, ,279,341 10,625,724 1,628,588 3,175,264 19,283,544 7,353, ,511 1,656,921 9,749, ,533 2,855,972 12,906,186 49,991,030 1,933,072 3,567,845 5,997,785 38,943, ,971 8,671,916 23,736, ,967,552 9,910,566 2,806,335 17,065,067 55,311, ,158 86, ,082 1,368,934 11,196 (3,468,529) (16,668,409) (53,427,291) (2,183) (9,090) (18,470) (155,669) (454,265) (1,809,060) (12,250) (66,084) (107,501) 6, , (3,545,207) (16,985,685) (53,897,012) 11,544 (738,872) 79,382 1,414, ,702 1,193, ,793 2,019,486 (193,047) (217,604) 7,240 2,560,380 2,639,320 3,240 (2,547,750) (2,570,500) (138,460) 462, ,758 3,285, ,482 46,362, ,736, ,751,568 4,414,701 (9,041,925) (2,673,893) (43,265,179) 37,321, ,062, ,486,389 4,414,701 $ 37,783,073 $ 110,787,505 $ 525,771,868 $ 5,006,183 $ 3,285, ,482 (90,521) $ 3,786,440 (concluded - 2) -37-

42 TRINITY RIVER AUTHORITY OF TEXAS STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS YEAR ENDED NOVEMBER 30, 2012 MAJOR ENTERPRISE FUNDS TARRANT CENTRAL COUNTY REGIONAL WATER LIVINGSTON- WASTEWATER SUPPLY WALLISVILLE SYSTEM PROJECT PROJECTS CASH FLOWS FROM OPERATING ACTIVITIES: Cash Received from Customers $ 88,494,813 $ 29,648,220 $ 3,761,449 Cash Received from Other Authority Funds for Services 927,739 Cash Received (Refunded) on Direct Financing Arrangement Receivable Other Operating Cash Receipts Cash Received for Claim Refunds Cash Paid for Claims Cash Payments for Premiums and Administration Cash Payments to Customers (3,031,036) (1,162,292) Cash Payments to Suppliers for Goods and Services (22,389,408) (15,166,186) (1,165,394) Cash Payments for Employee Services (10,540,822) (1,605,089) (1,564,556) Cash Payments to Other Authority Funds for Services (2,277,184) (441,441) (380,602) Net Cash Provided by (Used for) Operating Activities 51,184,102 11,273, ,897 CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES: Transfers from Other Authority Funds 28,360 18,240 2,350 Transfers to Other Authority Funds Other Cash Receipts (Payments) 41,499 39,165 Net Cash Provided by (Used for) Non-Capital Financing Activities 69,859 57,405 2,350 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition and Construction of Capital Assets Exclusive of Capitalized Interest (63,613,645) (2,839,676) (608,379) Principal Paid on Revenue Bond Maturities (26,050,000) (5,565,000) Interest Paid on Revenue Bonds and Related Fees (30,765,112) (7,458,769) Principal Payments on Contracts Payable (109,640) Interest Paid on Contracts Payable (305,702) Proceeds from Issuance of Bonds 72,920,962 Bond Sale Expenses Paid (390,610) Paying Agent Fees (5,647) (1,550) Proceeds from the Sale of Capital Assets 3,608 14,332 SEC Disclosure Fees (22,167) (7,000) Cash Deposited in Trust for Defeasance of Debt Contribution Received (Refunded) Bond Sales Expenses Refunded 8,212 System Contribution Refund Cash Payments to Other Authority Funds Net Cash Provided by (Used for) Capital and Related Financing Activities (47,914,399) (15,871,995) (1,009,389) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of Investments $ (40,085,000) $ (8,305,000) Proceeds from Sales and Maturities of Investments 166,567,028 8,307,000 Cash Received for Investment Income 1,726, ,676 $ 1,284 Net Cash Provided by (Used for) Investing Activities 128,208, ,676 1,284 Total Change in Cash and Cash Equivalents 131,548,360 (4,399,702) (354,858) Cash and Cash Equivalents, Beginning of Year 247,430,235 27,766,097 1,075,575 Cash and Cash Equivalents, End of Year $ 378,978,595 $ 23,366,395 $ 720,717 (continued - 1) -38-

43 EXHIBIT 1-9 TEN MILE CREEK REGIONAL NONMAJOR TOTAL INTERNAL WASTEWATER ENTERPRISE ENTERPRISE SERVICE SYSTEM FUNDS FUNDS FUNDS $ 12,226,375 $ 41,951,082 $ 176,081,939 86,031 1,013,770 $ 9,315,937 3,792,500 3,792,500 9,864 9, ,018 (3,416,670) (612,216) (298,759) (1,971,866) (6,463,953) (2,936,908) (15,249,898) (56,907,794) (1,701,870) (1,516,102) (2,937,397) (18,163,966) (3,432,715) (669,832) (2,231,625) (6,000,684) (609,810) 6,804,774 23,448,691 93,361,676 (159,326) 7,240 12,660 68,850 3,240 (138,460) 2, , ,831 12, ,250 (134,872) (10,772,721) (20,155,962) (97,990,383) (248,998) (3,390,000) (10,217,000) (45,222,000) (3,936,916) (12,842,058) (55,002,855) (301,988) (411,628) (365,555) (671,257) 34,421, ,342,408 (114,428) (167,637) (672,675) (2,183) (7,544) (16,924) 4,327 22,267 (12,250) (66,084) (107,501) (147,128) (147,128) 402, ,176 1,022,244 6,729 31,684 46,625 (54,792) (54,792) (30) (30) (17,962,502) (9,105,344) (91,863,629) (248,998) $ (48,390,000) $ 26,315, ,189,028 $ 86, ,483 2,148,516 $ 11,196 86,303 26,509, ,947,544 11,196 (11,061,594) 40,865, ,597,841 (532,000) 66,488,691 94,380, ,141,178 4,860,854 $ 55,427,097 $ 135,246,215 $ 593,739,019 $ 4,328,854 (continued - 2) -39-

44 TRINITY RIVER AUTHORITY OF TEXAS STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS YEAR ENDED NOVEMBER 30, 2012 MAJOR ENTERPRISE FUNDS TARRANT CENTRAL COUNTY REGIONAL WATER LIVINGSTON- WASTEWATER SUPPLY WALLISVILLE SYSTEM PROJECT PROJECTS RECONCILIATION OF OPERATING INCOME/LOSS TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating Income (Loss) $ 27,314,013 $ 7,869,689 $ 256,685 Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by Operating Activities: Depreciation 23,093,946 5,366, ,407 Change in Assets and Liabilities: Due to Other Authority Funds 472,496 78,573 85,645 Due from Other Authority Funds 26,340 (5,680) Accounts Receivable - Contracting Parties 992,568 (1,783,290) (644,991) Contracts Receivable Interest Receivable Long-Term Accounts Receivable - Contracting Parties Accounts Receivable - Other 45,260 (6,199) Claim Refunds Receivable Prepaids and Other Assets 16 19,339 1,598 Inventory (31,600) Accounts Payable - Contracting Parties (751,051) (178,591) Accounts Payable and Accrued Expenses 21,848 (98,520) 46,512 Current Payable - Current Claims Payable OPEB Obligation Direct Financing Arrangement Receivable Unearned Revenue 266 (603) (80) Total Adjustments 23,870,089 3,403, ,212 Net Cash Provided by Operating Activities $ 51,184,102 $ 11,273,212 $ 650,897 SUPPLEMENTAL NONCASH DISCLOSURES: Gain/Loss on Disposal of Capital Assets $ 13,343 Amortization of Bond Premium/Discount (2,462,350) $ (481,897) Amortization of Deferred Amount on Refunding (1,018,302) 244,574 Change in Estimated Arbitrage Liability (4,500) Deferral of Interest Expense on Uncommitted Portion of Long-Term Debt Change in Fair Value of Investments 444,125 (26,996) Change in Liabilities Related to Capital Assets 5,761,940 (197,058) $ 509,383 Bond Selling Costs Retained from Bond Proceeds 1,349,038 Bond Proceeds Deposited in Trust for Defeasance of Debt Amortization of Loss on Refunding Change in Assets Related to Capital Assets Change in Repair and Maintenance Contract Receivable Transfer of Capital Assets RECONCILIATION OF CASH AND CASH EQUIVALENTS AT END OF YEAR: Current Assets: Cash $ 55,451 Equity in Pooled Cash and Investments 25,117,442 Restricted Assets: Equity in Pooled Cash and Investments 282,012,368 Money Market Fund 286,553,758 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 593,739,019 The accompanying notes are an integral part of the financial statements. (continued - 3) -40-

45 EXHIBIT 1-9 TEN MILE CREEK REGIONAL NONMAJOR TOTAL INTERNAL WASTEWATER ENTERPRISE ENTERPRISE SERVICE SYSTEM FUNDS FUNDS FUNDS $ 2,806,335 $ 17,065,067 $ 55,311,789 $ 715,158 3,567,845 5,997,785 38,943, ,971 59, , , ,135 2,367 23,027 (1,297,430) 296,729 2,804,321 1,665,337 (12,296) 40,011 40,011 (14,791) (14,791) (3,558,549) (3,558,549) (7,316) 31,745 1,752 50,957 (2,576) 28,969 47, ,767 (31,600) 152,427 (463,593) (1,240,808) (75,776) 1,446 (104,490) 53,654 (2,742,363) (2,742,363) (132,285) 49,291 4,157,500 4,157, (94,659) (94,866) 3,998,439 6,383,624 38,049,887 (874,484) $ 6,804,774 $ 23,448,691 $ 93,361,676 $ (159,326) $ 13,343 $ (16,725) $ (239,580) (3,200,552) 43, ,298 (546,079) (4,500) 3,596,837 3,596,837 18, ,690 (1,063,395) 1,294,723 6,305, ,989 1,949,027 (5,771,733) (5,771,733) (14,238) (14,238) (1,192) (1,192) (3,578) (3,578) NIL NIL (concluded - 4) -41-

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47 TRINITY RIVER AUTHORITY OF TEXAS EXHIBIT 1-10 NOTES TO THE BASIC FINANCIAL STATEMENTS YEAR ENDED NOVEMBER 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting and reporting policies of the Trinity River Authority of Texas ("Authority") conform to accounting principles generally accepted in the United States of America for governmental entities. The more significant of such policies are set forth below. Reporting Entity The Authority was created by the State Legislature of Texas as a conservation and reclamation district in The Authority is governed by a Board of Directors who are appointed by the Governor of the State of Texas for a term of six years. The Authority is charged by state legislative mandate with three functions, which include maintenance of a Master Plan for basin-wide development, serving as the local sponsor for Federal water projects and providing services authorized by the Texas Legislature within the defined territory of the Authority. Public services currently provided by the Authority include wastewater treatment, water treatment, recreation, reservoir facilities and industrial air and water pollution control facilities. The Authority owns or operates eight water treatment and supply projects, six wastewater treatment projects, one reservoir, water rights in four reservoirs, and one recreation project ("Projects"). The services provided by each water treatment, wastewater treatment and reservoir project of the Authority are contracted for by cities, municipalities or districts ("contracting parties"). The contracting parties have agreed to pay their pro-rata share of the cost of debt service and operation and maintenance expenses of each project. Each project has been set up as an individual enterprise fund, and the Authority's Board of Directors exercises oversight responsibility over each project. The Authority's Board of Directors does not exercise any oversight responsibility over the contracting parties. Also, the Authority currently is involved in projects in which water and sewer services are purchased through an interconnecting line for the benefit of their contracting parties. The Authority exercises no financial accountability or control over the entities that own the interconnecting lines and, therefore, those entities are not included in these financial statements. The Authority also serves as a conduit for tax exempt financing for municipal water and wastewater facilities and industrial air and water pollution control facilities, each of which is recorded in separate enterprise funds. The entities for which the tax exempt financing was issued have contracted with the Authority to pay all debt service and operating and maintenance expenses of the facilities. The Authority's Board of Directors exercises financial accountability over each enterprise fund. Under the auspices of the Trinity River Industrial Development Authority ("TRIDA"), tax exempt financing for industrial development projects has been provided in the past. TRIDA has ceased issuing tax-exempt industrial revenue bonds and it is not anticipated that any new bonds will be issued in the future. TRIDA is included in the Authority's basic financial statements as a discretely presented component unit in accordance with generally accepted accounting principles and Governmental Accounting Standards Board (GASB) Statement No. 14, the Financial Reporting Entity, as amended by GASB Statement No. 39, Determining Whether Certain Organizations Are Component Units. -43-

48 All members of the TRIDA Board of Directors are also members of the Board of Directors of the Trinity River Authority of Texas. All actions of the TRIDA Board are subject to final approval by the Board of Directors of the Trinity River Authority of Texas and the Trinity River Authority is entitled to the resources of TRIDA. Therefore, information regarding TRIDA's outstanding obligations are disclosed in Note 6. Separately issued financial statements can be obtained for TRIDA by contacting the Chief Financial Officer at P.O. Box 60, Arlington, Texas Government-Wide Financial Statements The Statement of Net Assets and the Statement of Activities display information about the Authority and its discretely presented component unit. These statements include the financial activities of the overall government. These statements distinguish between governmental and business-type activities of the Authority. Governmental activities, which are normally supported by inter-governmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees charged to external parties. The Statement of Activities presents a comparison between direct expenses and program revenues of the business-type activities of the Authority and for each function of the Authority's governmental activities. Direct expenses are those that are specifically associated with a program or function. Program revenues include: 1) charges paid by the recipients of goods or services offered by the programs and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues are presented as general revenues. Eliminations have been made to minimize double counting of internal activities. Internal receivables, payables, and transfers between funds are eliminated in the process of converting to government-wide financial statements. Internal program revenues, general revenues, and related expenses are not eliminated. When both restricted and unrestricted resources are available, unrestricted resources are used only after restricted resources have been depleted. Fund Financial Statements The fund financial statements provide information about the Authority's individual funds. Separate statements for each fund category - governmental and proprietary - are presented. The fund financial statements present all governmental, enterprise and internal service funds as follows: Governmental Funds The Authority's only major governmental fund is the General Fund. The General Fund accounts for the general operations of the Authority. Nonmajor governmental funds of the Authority are comprised of the Clean Rivers Program Special Revenue Fund, Water Sales Special Revenue Fund, the Debt Service Fund, and the Capital Projects Fund. In years prior to fiscal year 2012, the Clean Rivers Program was reported within the General Fund. Proprietary Funds The Authority's proprietary funds are comprised of enterprise and internal service funds. Enterprise Funds account generally for (1) projects that are financed and operated by the Authority and for which the -44-

49 EXHIBIT 1-10 recipient parties have agreed by contractual arrangement to pay the Authority for certain costs (see Revenue Recognition) and (2) projects that are financed but not operated by the Authority (see Direct Financing Agreements). Contractual arrangements generally require separate accounting for each project. Internal Service Funds account for services provided by one fund to other Authority funds on a cost reimbursement basis. Major proprietary funds reported are Central Regional Wastewater System, Tarrant County Water Supply Project, Livingston-Wallisville Projects, and Ten Mile Creek Regional Wastewater System. The Central Regional Wastewater System fund is used to account for the activities of the Central Regional wastewater disposal system and the Authority's contracts for wastewater treatment with the cities of Addison, Arlington, Bedford, Carrollton, Colleyville, Dallas, Euless, Coppell, Farmers Branch, Fort Worth, Grand Prairie, Irving, Grapevine, Hurst, Mansfield, North Richland Hills, Duncanville, Keller, Cedar Hill, Southlake, and the Dallas-Fort Worth International Airport Board. The Tarrant County Water Supply Project fund is used to account for the sale and delivery of treated water to the cities of Euless, Bedford, Colleyville, Grapevine and North Richland Hills. The Livingston-Wallisville Projects fund accounts for the operation and maintenance of the Livingston reservoir facilities. The Ten Mile Creek Regional Wastewater System fund is used to account for the activities of the Ten Mile Creek Wastewater Disposal System and the Authority's contracts for wastewater treatment with the cities of Cedar Hill, DeSoto, Duncanville, Ferris and Lancaster. The Authority reports a number of nonmajor funds which are listed in the table of contents. Accounting standards require that internal service funds are never reported as major funds. Measurement Focus and Basis of Accounting The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All proprietary funds and the government-wide financial statements are reported using the economic resources measurement focus. All governmental funds are reported using a current financial resources measurement focus. Governmental funds are accounted for using the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual; i.e., when they become both measurable and available. "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period, generally within 60 days of year-end. Expenditures are recorded when the related fund liability is incurred. However, debt service expenditures, as well as expenditures related to compensated absences are recorded only when payment is due. The government-wide financial statements and fund financial statements for proprietary funds are reported using the economic resources measurement focus. Under the accrual basis of accounting, revenues are recognized when earned, including unbilled water and sewer services which are accrued as of year-end. Expenses are recognized at the time the liability is incurred. With this measurement focus, all assets and all liabilities associated with the operation of these funds are included on the statement of net assets. -45-

50 The Authority applies all GASB pronouncements as well as Financial Accounting Standards Board pronouncements issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements. During fiscal year 2012, the Authority implemented the following new accounting standards. In December 2009, the GASB issued Statement No. 57, OPEB Measurements by Agent Employers and Agent Multiple Employer Plans. The objective of this Statement is to clarify that when actuarially determined OPEB measures are reported by an agent multiple employer OPEB plan and its participating employers, those measures should be determined as of a common date and at a minimum frequency to satisfy the agent multiple employer OPEB plan's financial reporting requirements. The adoption of this Statement had no impact on the financial statements. In June 2011, the GASB issued Statement No. 64, Derivative Instruments: Application of Hedge Accounting Ferminution Provisions, an amendment of GASB Statement No The objective of this Statement is to clarify whether an effective hedging relationship continues after the replacement of a swap counterparty or a swap counterparty's credit support provider. This statement sets forth criteria that establish when the effective hedging relationship continues and hedge accounting should be applied. The adoption of this Statement had no impact on the financial statements. Net Assets Net assets represent the difference between assets and liabilities. Net assets invested in capital assets, net of related debt, consist of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowing spent for the acquisition, construction or improvements of those assets. The debt related to unspent bond proceeds is not deducted from the capital asset balance in this calculation. Net assets are reported as restricted when there are limitations imposed on their use through external restrictions imposed by creditors, grantors or laws or regulations of other governments. Unrestricted net assets represent the remaining portion of net assets. Revenue Recognition Revenues in the proprietary funds are recorded when earned. The Authority frequently constructs facilities to provide service to others which are financed in part by the issuance of its revenue bonds. Therefore, the recipients of the services generally contract to pay the Authority amounts equivalent to operating and maintenance expenses and the debt service requirements of the revenue bonds. Such amounts received for services are recorded as earned revenues when due in accordance with contract provisions. Generally, revenue bond debt service is predominantly applicable to interest in the early years, with the portion thereof applicable to principal retirements increasing in later years. Since depreciation of the related facilities is generally provided on the straight-line method (see Capital Assets), depreciation expense may exceed the portion of revenues received which is applicable to bond principal retirements in the early years. This may result in reporting operating losses in enterprise funds in early years which will reverse in later years. The Authority recognizes operating revenues based upon the costs of providing services to its contracting parties. All other income that is not directly related to the provision of services is reported as nonoperating revenue. -46-

51 EXHIBIT 1-10 Budget and Budgetary Accounting The Authority maintains control over operating expenditures/expenses in all operating funds by the establishment of an annual operating budget. The annual operating budget is adopted for all funds on a basis consistent with generally accepted accounting principles except for the proprietary funds in which capital outlays and bond principal payments are budgeted as expenses. The budget, as formally adopted by the Board of Directors, establishes the maximum authorization of operating funds to be expended by any fund. Any subsequent amendment thereto must be approved by the President of the Board of Directors and/or the Board of Directors. Amendments were not material in relation to the original authorizations except for the following funds: General Fund, Debt Service Fund, Water Sales Special Revenue Fund, Clean Rivers Program Special Revenue Fund, Lakeview Water Supply Project and Pollution Control Facilities. Management is allowed to make revisions to individual line items of the budget, provided the maximum authorized budget is not exceeded. All unused budget authorizations lapse at the end of the year. For funds containing capital assets under construction, construction budgets are formally adopted at the inception of the project by the Board of Directors, establishing the maximum authorization of funds to be expended for construction of capital assets. Any subsequent amendment thereto must be approved by the Board of Directors. Appropriations do not lapse at year-end. Certain operating items, such as depreciation, and other non-operating items are unbudgeted. Cash and Investments The Authority maintains a cash and investment pool that is available for use by all funds. Each fund's share in the pool is reported as "Equity in Pooled Cash" in that fund's statement of net assets. In addition, investments are separately held by several of the Authority's funds. The investment policies of the Authority are in accordance with the State of Texas Public Funds Investment Act. This Act provides for investment in a variety of investment types, including, but not limited to, direct obligations of the United States of America or its agencies, direct obligations of the state of Texas and its agencies, certain repurchase agreements, certificates of deposit issued by state and national banks and savings and loan associations domiciled in Texas and local government investment pools. The Authority's investment policy is more restrictive, allowing investments in direct obligations of the United States, the Federal Home Loan Bank, Federal Farm Credit Bank, Federal National Mortgage Association, Federal National Mortgage Acceptance Corporation, local government investment pools and certain repurchase agreements. Investments are recorded at fair value and changes in the fair value of investments are reported as a component of investment income. Fair value is defined as the price at which a security would be exchanged in a transaction between a willing buyer and seller. Bond resolutions frequently provide that interest and profits from investments in certain restricted funds will be deposited into other funds. In such cases the investments are stated at fair value in the restricted funds and accrued interest receivable is included in the fund into which accrued interest is to be deposited when received - See Note 2. Inventory Inventory is valued at the lower of cost or market (first-in, first-out). Inventory in the Proprietary Fund Types consists primarily of supplies. -47-

52 Short-term Interfund Receivables/Payables During the course of operations, transactions occur between individual funds for goods provided or services rendered. These receivables and payables are classified as "due from other Authority funds" or "due to other Authority funds" on the balance sheet. Direct Financing Agreements The Authority frequently sells its revenue bonds to provide financing of water, sewage or pollution control facilities for others, but does not operate or maintain the facilities. Arrangements of this type are accounted for in the various enterprise funds as financing arrangements. Restricted Assets Certain proceeds of enterprise fund revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. In certain funds the "Revenue Fund" account is considered to be a restricted asset. In those cases the Revenue Fund is used to report resources received from the contracting parties to pay operating and maintenance expenses and debt service obligations. The "Construction Fund" account is used to report those proceeds of revenue bond issuances that are restricted for use in construction. The "Interest and Sinking Fund" account is used to segregate resources accumulated for debt service payments over the next twelve months or for early redemption of revenue bonds. The "Reserve Fund" account is used to report resources set aside to make up potential future deficiencies in the Interest and Sinking fund; in some cases, debt service reserve funds are funded in total or in part from proceeds of bond sales. The "Contingency Fund", "Emergency Fund", and "Research and Development" accounts are used to report resources set aside to meet unexpected contingencies or to fund asset renewals and replacements. The "Arbitrage Rebate Fund" account is used to report resources set aside to pay any excess investment earnings to the United States Treasury as may become due and payable. As of November 30, 2012, all Governmental Fund assets were unrestricted. Enterprise Fund restrictions at November 30, 2012 are as follows: Restricted For: Ten Mile Central Tarrant Creek Regional County Livingston- Regional Nonmajor Wastewater Water Supply Wallisville Wastewater Enterprise System Project Projects System Funds Revenue $ 318,386 Construction $ 382,481,199 $ 9,621,356 $ 276,498 $ 45,685,962 97,695,105 Interest and Sinking 25,219,257 7,284,902 3,605,862 11,238,038 Reserve 41,719,958 13,646,200 6,772,275 17,739,459 Contingency 250, ,870 Emergency 1,000,000 Research and Development 100,000 Arbitrage Rebate Fund 140,000 Total Restricted $ 450,660,414 $ 30,552,458 $ 276,498 $ 56,314,099 $ 127,127,

53 EXHIBIT 1-10 Capital Assets Capital assets, which include property, plant, equipment, infrastructure assets and water storage rights, are reported in the applicable governmental or business-type activities columns in the government-wide financial statements and in the fund financial statements for proprietary funds. Capital assets are defined as those assets greater than $5,000 with estimated useful lives in excess of two years. All purchased capital assets are valued at cost. Donated capital assets are valued at their estimated fair value on the date received. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Assets acquired are capitalized and depreciated over the remaining useful lives of the related capital assets, as applicable. Depreciation of capital assets is charged as an expense against operations. Accumulated depreciation is reported on the statements of net assets. Depreciation is generally recorded on the straight-line basis over the estimated life of the assets. The estimated useful lives are as follows: Reservoir facilities Buildings Sewage and water treatment facilities Machinery and equipment 100 years 40 years 40 years 3-10 years During fiscal year 2012, the Authority changed its method of calculating capitalized interest. This change in accounting requires a restatement of prior financial statements for prior period impacts of this change. As a result, the Authority has restated the beginning net assets of business-type activities in 2011 for the Authority to reflect the accumulated prior year impact of the change as follows: Net Assets at November 30, 2011, as previously reported $ 588,934,628 Restatement Adjustment - Capitalization of Interest (43,265,179) Net Assets at November 30, 2011, as restated $ 545,669,449 Interest is capitalized on proprietary fund type assets. The amount of interest capitalized is calculated by multiplying the fund's weighted average interest rate by the fund's average accumulated capital outlays for construction projects in progress. Long-Term Liabilities Long-term liabilities to finance governmental funds are reported in the governmental activities column of the government-wide statement of net assets - See Note 5. Long-term liabilities to finance enterprise funds are paid by revenues collected based on contractual arrangements and are accounted for in the appropriate enterprise funds - See Note 5. Compensated Absences Accumulated vacation leave that is expected to be liquidated with expendable available financial resources is reported as an expenditure and a liability of the governmental funds that will pay the liability. Amounts of accumulated vacation leave that are not expected to be liquidated with expendable available financial resources are reported as long-term liabilities in the Governmental Activities. Accumulated vacation leave of the proprietary funds is recorded as an expense and liability of those funds as the benefits accrue to employees. -49-

54 In the event of an employee's retirement, resignation, or other termination upon eligibility, the employee is entitled to compensation for unused sick leave up to a maximum of ninety days. An employee is considered eligible to receive sick leave pay if they reach age 65 or if the sum of their age and years of service with the Authority reaches 80. Sick leave is generally considered a long-term liability and is accrued in the appropriate proprietary fund and therefore in the government-wide business-type activities, or for General Fund and Water Sales employees, in the governmental activities at the government-wide Statement of Net Assets. Deferred Compensation Plan The Authority offers its employees a Deferred Compensation Plan (the "Plan") consistent with Internal Revenue Code Section 457(a). Vesting in the Plan is immediate; assets are paid to an employee when that employee terminates employment, retires or experiences as unforeseeable emergency. Employees may contribute voluntarily to the Plan an amount not to exceed $17,000, $22,500 for employees age 50 and above, and $34,000 for a three-year pre-retirement catch-up. All amounts of compensation deferred under the Plan, all property and rights purchased with these amounts, and all income attributable to these amounts, property or rights, are solely the property and rights of the employees in accordance with IRS regulations. Accordingly, these amounts are not included in the Authority's financial statements. It is the opinion of the Authority's management that the Plan complies with all related IRS regulations. Interfund Transactions Certain interfund transactions are accounted for as revenues, expenditures or expenses. Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund are recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses in the fund that is reimbursed. All other interfund transactions are reported as transfers. Statement of Cash Flows For purposes of the Statement of Cash Flows, the proprietary funds consider all equity in pooled cash and investments and cash in banks (including restricted assets) to be cash equivalents. 2. DEPOSITS AND INVESTMENTS Deposits - At year-end, the carrying amount of the Authority's deposits was $444,855, and the bank balance was $1,338,024. The bank balance was collateralized by federal depository insurance. The carrying amount of the Authority's deposits excludes $23,996 of deposits for TRIDA but includes petty cash of $3,070. Investments - All of the Authority's investments at November 30, 2012 were purchased through brokers and are held by bank trust departments ("Agent") in the Authority's name. The Authority invests in TexPool and TexStar, local government investment pools. The values of the pools' shares are equal to the value of the investments in the pool. -50-

55 EXHIBIT 1-10 Interest Rate Risk - The Authority's investment funds can be broadly categorized into four types: construction funds, operating funds, interest and sinking funds, and reserve funds. As a means of limiting the Authority's exposure to fair value losses arising from interest rate fluctuations, the Authority's investment policy limits maturities based on the objectives of the funds. Investment maturities are limited as follows: * Construction Funds - The interval of the relevant construction period not to exceed 5 years. Operating Funds - Five years with a weighted average life to maturity of less than 3 years. Interest and Sinking Funds - No more than 6 months. Reserve Funds - No more than 10 years. Concentration of Credit Risk - It is the policy of the Authority that 100% of the Authority's funds may be invested in direct obligations of the U.S. Government. No more than 50% of the Authority's funds may be invested in any one U.S. Government Agency or instrumentality, repurchase agreements, or certificates of deposit. As of November 30, 2012, 10% of the Authority's portfolio was invested in Federal Home Loan Bank securities, 9% was invested in Federal Agriculture Mortgage Corporation, and 8% was invested in Federal Farm Credit Securities. Weighted Fair Percent Average Value* Distribution Maturity Rating Money Market Funds $ 286,553, % AAAm U.S. Government Agencies Federal Home Loan Bank 68,482, % 12.2 Months AAA Federal Agriculture Mtg. Corp. 65,082, % 6.4 Months AAA Federal Farm Credit 60,059, % 2.2 Months AAA Total Securities 193,625, % Investment Pools: TexPool 109,400, % 1.7 Months AAAm TexStar 118,447, % 1.7 Months AAAm Frost Trust Fund % AAAm Accrued Investment Income** 263, % Cash 444, % Total Cash and Investments $ 708,736, % 2.0 Months Fair Value is the amount at which a security could be exchanged in a current transaction between willing parties, other than in a forced liquidation. In accordance with GASB 31, all investments are recorded at fair value. ** A portion of accrued investment income is included in investment pools at year-end. Local government pools operate as a money market fund under the Public Funds Investment Act, which requires that it maintain an AAA, AAAm or equivalent rating from a nationally recognized rating service. Pools are rated AAAm and operate in full compliance with the PFIA and rating agency requirements. The pools are exempted from SEC registration and the requirements of Rule 2a-7 pertaining to registered money market funds; however, similar to Rule 2a-7, they seek to maintain a stable net asset value of $1 per unit. -51-

56 3. INTERFUND TRANSACTIONS Interfund receivables and payables at November 30, 2012 consist of the following individual fund receivables and payables: Current Receivables and Payables Receivable Payable Governmental Funds: General Fund $ 102,252 $ 229,073 Nonmajor Governmental Funds 33, ,291 Proprietary Funds: Enterprise Funds: Central Regional Wastewater System 112, ,096 Tarrant County Water Supply Project 87,244 Ten Mile Creek Regional Wastewater System 127,255 Livingston-Wallisville Projects 5,680 85,645 Nonmajor Enterprise Funds 5, ,138 Internal Service Funds 1,297, ,135 TOTAL INTERFUND RECEIVABLES AND PAYABLES $ 1,557,877 $ 1,557,877 Various bond resolutions provide that interest from investments in certain restricted funds within an enterprise fund shall be deposited in certain restricted funds or in current assets. Amounts shown as Due from (to) Restricted Assets and Due from (to) Current Assets represent residual amounts that have not been transferred. Interfund Transfers Interfund transfers were made during the year for various operating and non-operating purposes, primarily for the refund of excess insurance premiums charged in previous years. Such amounts are reflected as transfers in and transfers out in the operating statements of the funds as follows: Transfer In Transfer Out Governmental Funds: General Fund $ 2,120,191 $ 1,866,882 Nonmajor Governmental Funds 3,710,061 3,896,970 Proprietary Funds: Enterprise Funds: Central Regional Wastewater System 51,110 22,750 Tarrant County Water Supply Project 18,240 Livingston-Wallisville Projects 2,350 Ten Mile Creek Regional Wastewater System 7,240 Nonmajor Enterprise Funds 2,560,380 2,547,750 Internal Service Funds 3, ,460 TOTAL TRANSFERS IN AND OUT $ 8,472,812 $ 8,472,

57 EXHIBIT CAPITAL ASSETS Capital Asset activity for the fiscal year ended November 30, 2012 is as follows: Additions Deletions Balance and and Balance December 1, 2011 Transfers Transfers November 30, 2012 Governmental Activities: Land and Easements $ 635,810 $ 635,810 Construction-in-progress NIL NIL Buildings and Improvements 7,595, ,389 7,832,550 Machinery and Equipment 3,394,038 63,391 $ (29,217) 3,428,212 Accumulated Depreciation (5,252,110) (413,432) 29,217 (5,636,325) TOTAL $ 6,372,899 $ (112,652) NIL $ 6,260,247 Balance Additions Deletions December 1, 2011, and and Balance as restated Transfers Transfers November 30, 2012 Business-Type Activities: Land and Easements $ 87,423,762 $ 2,072,674 $ (582,191) $ 88,914,245 Construction-in-progress 140,588, ,046,465 (29,219,045) 217,416,114 Water Storage Rights 77,828,391 77,828,391 Sewage and Water Treatment and Related Facilities 1,423,801,797 31,815,274 (4,327,771) 1,451,289,300 Buildings and Improvements 374,433 9, ,933 Recreational Facilities 1,441,896 33,187 1,475,083 Reservoir and Related Facilities 54,880,720 13,783 54,894,503 Machinery and Equipment 13,906,785 1,316,057 (535,508) 14,687,334 Accumulated Depreciation (488,197,228) (41,434,811) 2,873,288 (526,758,751) TOTAL $ 1,312,049,250 $ 99,872,129 $ (31,791,227) $ 1,380,130,152 Sewage and Water Treatment and Related Facilities: Balance December 1, 2011, as previously reported $ 1,467,066,976 Restatement Adjustment (43,265,179) Balance December 1, 2011, as restated $ 1,423,801,

58 In the Government-wide statement of activities, depreciation is allocated to each function as follows: General Government and Administration $ 413,432 Wastewater 31,415,960 Water Supply 6,575,855 Water Storage 1,035,928 Recreation 44,826 Total Depreciation Expense $ 39,486, LONG-TERM LIABILITIES The following is a summary of long-term liability transactions for the fiscal year ended November 30, 2012: Balance Balance Due Within December 1, 2011 Additions Reductions November 30, 2012 One Year Governmental Activities: General Improvement Revenue Bonds $ 3,245,000 $ 130,000 $ 3,115,000 $ 135,000 Compensated Absences 710,597 $ 419, , , ,601 Business-Type Activities: Enterprise Funds: Revenue Bonds 1,492,217, ,345,000 50,882,000 1,554,680,000 50,480,000 Contracts Payable: Committed 19,951,605 3,157,574 16,794, ,797 Uncommitted 26,284,063 26,284,063 NIL Deferred Interest Expense 37,007,107 3,596,837 40,603,944 NIL Premium/Discount 15,014,034 1,775,084 3,274,890 13,514,228 NIL Deferred Amount (10,058,962) (326,936) (1,504,763) (8,881,135) NIL Arbitrage Liability 146,200 4,500 10, ,000 NIL Compensated Absences 1,399,395 1,049, ,974 1,490, ,899 Internal Service Funds: Compensated Absences 207, , , , ,501 TOTAL $ 1,586,123,131 $ 120,025,394 $ 57,498,216 $ 1,648,650,309 $ 52,334,798 Bonded debt of the Authority consists of revenue refunding bonds and revenue bonds, which is secured by and payable from net revenues of the Authority. Certain revenue bond issues contain provisions that allow the Authority to prepay or call the bonds. Specifically, net revenues from contracts between the Authority and its contracting parties have been pledged for repayment of the Authority s revenue bonds. The amount of the pledge is equal to the remaining outstanding debt service requirements for these bonds, which were all originally issued to provide funding for construction and capital improvement projects throughout the Authority. The pledge continues for the life of the bonds. For the year ended November 30, 2012, debt service of $97,866,992 was secured by pledged revenues of $84,332,511, escrowed cash of $8,971,285, interest earned on accounts restricted for debt service of $398,258, proceeds from direct financing arrangements of $4,157,500 and reserve funds of $7,

59 EXHIBIT 1-10 The various revenue bond indentures contain significant limitations and restrictions on annual debt service requirements, maintenance of and flow of monies through various restricted accounts, and minimum amounts to be maintained in various sinking funds. None of the revenue bond indentures contain bond coverage requirement provisions. The Authority s General Improvement Revenue Bonds are secured by and payable from revenues from the Water Sales Special Revenue Fund and administrative overhead charges from the General Fund. Specifically, fifty percent of revenues collected by the Water Sales Special Revenue Fund from certain water sales contracts and thirty percent of certain administrative overhead charges collected by the General Fund have been pledged for repayment of the bonds. The amount of the pledge is equal to the remaining outstanding debt service requirements and continues for the life of the bonds. For the year ended November 30, 2012, debt service of $278,878 was secured by pledged revenues of $277,886, and interest income earned on accounts restricted for debt service of $992. Premiums and discounts on bonds are amortized using the effective interest rate method over the life of the bonds. At November 30, 2012, unamortized premiums net of unamortized discounts were $8,227,817, $2,896,431, $42,066, and $2,347,914 in Central Regional Wastewater System, Tarrant County Water Supply Project, Ten Mile Creek Regional Wastewater System and Nonmajor Enterprise Funds, respectively. Deferred amounts on refundings, including gains and losses, are amortized using the straight-line method over the shorter of the remaining life of the old debt or the life of the new debt. At November 30, 2012, unamortized deferred amounts on refundings were $5,355,780, $2,045,806, $585,739 and $893,810 in Central Regional Wastewater System, Tarrant County Water Supply Project, Ten Mile Creek Regional Wastewater System, and Nonmajor Enterprise Funds, respectively. Deferred bond issuance costs are comprised of fees paid to underwriters and other issuance costs. These costs are being amortized over the term of the related bond indenture using the straight-line method. At November 30, 2012, unamortized deferred bond issuance costs were $17,171,478, $1,311,470, $2,648,189 and $6,378,451 in Central Regional Wastewater System, Tarrant County Water Supply Project, Ten Mile Creek Regional Wastewater System, and Nonmajor Enterprise Funds, respectively. On May 31, 2012, the Authority issued $19,190,000 of Huntsville Regional Water Supply System Project Contract Revenue Bonds, Series 2012, for the purpose of paying the costs of acquisition and construction of improvements and expansions to the Huntsville Regional Water Supply System and to pay the costs associated with the Issuance of the Bonds. The bonds bear interest at a rate of 2.00% to 4.00% per annum and mature serially on August 1 of each year. On July 25, 2012, the Authority issued $14,035,000 of Denton Creek Regional Wastewater System Revenue Bonds, Series 2012, for the purpose of improving existing plant facilities, providing additional interceptor capacity, and paying costs of issuance. The bonds bear interest at a rate of.04% to 2.45% and mature serially on February 1 of each year. On August 1, 2012, the Authority issued $74,270,000 of Regional Wastewater System Revenue Bonds, Series 2012, for the purpose of improving existing plant facilities, providing additional interceptor capacity, and paying costs of issuance. The bonds bear interest at a rate of 0.10% to 1.87% per annum and mature serially on August 1 of each year. -55-

60 On August 30, 2012, the Authority issued $5,850,000 of Ten Mile Creek Regional Wastewater System Revenue Refunding Bonds, Series 2012, of which the net proceeds were used to partially refund the Series 2003A Revenue Bonds. Although the refunding resulted in the recognition of an accounting loss of $326,937 for the year ended November 30, 2012, the Authority in effect reduced its aggregate debt service payments by $1,066,476 over the next eleven years and obtained an economic gain (difference between the present values of the old and new debt service payments) of $670,796. The bonds bear interest at a rate of 2.0% to 2.5% per annum and mature serially on August 1 of each year. In accordance with the terms of the contract between the Corps of Engineers and the Authority related to Joe Pool Lake, interest on the uncommitted portion of the contracts payable began accruing on January 8, The principal and accumulated interest will be amortized over a fifty-year period as segments are committed. The contracting parties may defer payment of interest on the uncommitted portion, and certain cities have chosen that election. Deferred interest payments from the contracting parties have been recorded as long-term receivables. Accrued deferred interest as of November 30, 2012 is $40,603,944. Annual debt service requirements to maturity, exclusive of uncommitted contracts payable, at November 30, 2012 are summarized as follows: General Improvement Enterprise Funds Committed Year Ending Revenue Bonds Revenue Bonds Contracts Payable Total Requirements November 30 Principal Interest Principal Interest Principal Interest Principal Interest $ 135,000 $ 144,848 $ 50,480,000 $ 54,543,593 $ 391,797 $ 691,086 $ 51,006,797 $ 55,379, , ,570 58,830,000 52,449, , ,708 59,378,178 53,262, , ,060 63,320,000 50,337, , ,478 63,895,405 51,127, , ,085 67,425,000 48,014, , ,344 67,938,908 48,778, , ,878 69,380,000 45,694, , ,231 69,912,022 46,438, , , ,530, ,250,381 1,418,178 2,943, ,883, ,663,311 1,175, , ,940, ,859,299 1,555,251 2,649, ,670, ,738, ,000 12, ,190,000 41,097,142 1,917,516 2,287, ,372,516 43,396,533 43,740,000 3,722,681 2,360,966 1,832,987 46,100,966 5,555,668 4,840, ,860 2,842,171 1,269,222 7,682,171 1,426,082 5, ,510, ,789 2,515, ,951 1,831, ,558 1,831, , ,380 12, ,380 12,965 Total $ 3,115,000 $ 1,370,124 $ 1,554,680,000 $ 621,126,529 $ 16,794,031 $ 15,151,518 $ 1,574,589,031 $ 637,648,171 Pursuant to the provisions of the indentures and the remarketing agreements for the Pollution Control bonds, the remarketing agents will determine the rate of interest for the Pollution Control bonds for each rate period after the initial rate period which is in its judgment the lowest rate, on the basis of prevailing financial market conditions, necessary on and as of the first day of the new rate period to remarket the Pollution Control bonds in a secondary market transaction at a price equal to the purchase price for such Pollution Control bonds. The indenture sets forth certain fall-back rates if, for any reason, an interest rate or rates for the Pollution Control bonds are not determined by the remarketing agents for any rate period. In no case shall the rate of interest borne by any Pollution Control bonds for any rate period exceed the lesser of 15% or the highest rate permitted by applicable law (maximum interest rate). Rate period or period means, when used with respect to any particular rate of interest for a bond in the flexible, daily, weekly or multiannual mode, the period during which such rate of interest determined for such bond will remain in effect as described in the indentures. The Pollution Control bonds are supported by a letter of credit, issued in the name of the contracting party, in an amount sufficient to pay the purchase price of the bonds plus interest in the event they are unable to be successfully remarketed. -56-

61 EXHIBIT 1-10 As such, TXU Electric Company 2001A, and Community Solid Waste Disposal Inc. s 1999, 2001 and 2007 portions of the debt service requirements to maturity have been computed using the November 30, 2012 interest rates which were 8.5%, 0.23%, 0.23%, and 0.23%, respectively. In prior years, the Authority defeased certain revenue bonds by placing the proceeds of new bonds in an irrevocable trust to provide all future debt service payments on the old bonds. Accordingly, the trust accounts and the defeased bonds are not included in the Authority's financial statements. The difference between the reacquisition price and the net carrying amount of the refunded debt is deferred and amortized using the straight line method as a component of interest expense over the life of the old debt or the new debt, whichever is shorter. At November 30, 2012, the following outstanding Revenue Bonds were considered defeased: Tarrant County Water Supply Project Series 2003 $ 37,215,000 Ten Mile Creek Regional Wastewater System Series 2003A 5,660, TRINITY RIVER INDUSTRIAL DEVELOPMENT AUTHORITY TRIDA was organized in November 1979 by the Authority under the Development Corporation Act of TRIDA issues tax exempt revenue bonds for the development of local industry to secure the advantages of balanced and increased employment, an improved economic position and provide for a broader tax base. All members of the Board of Directors of TRIDA are also members of the Board of Directors of the Authority. All actions of TRIDA's Board of Directors are subject to final approval by the Board of Directors of the Authority. As a provision of the Deficit Reduction Act of 1984, the Federal government placed a limit on the amount of Industrial Development Bonds (IDBs) which may be issued in each state. In order to avoid potential competition with the Authority, which issues bonds in the form of Pollution Control Revenue Bonds, management of TRIDA, with the concurrence of the Board of Directors, decided to cease accepting applications for the issuance of IDB's effective December 26, TRIDA contracts its rights under the loan agreements to an approved trustee who must be located in the state of Texas. Each bond issue requires an investment letter stating that the investor has placed no reliance on TRIDA or the Authority with respect to financial or any other matters whatsoever relating to the corporations. The revenue bonds are payable solely from payment from the user (benefiting corporations) of the bonds as defined under the loan agreement and neither TRIDA nor the Authority is under any obligation to pay bonds from any source. All payments are made directly from the benefiting corporations to the trustees. As of November 30, 2012, TRIDA's outstanding industrial Development Revenue Bonds Series were as follows: User Corporation Issue Amount Interest Rate Maturity SERIES 1997 REFUNDING: Automatic Data Processing South Inc. $ 7,700,000 Variable to 15%

62 7. SEGMENT INFORMATION FOR ENTERPRISE FUNDS The Authority maintains numerous enterprise funds which are classified into six types of operating segments. Segment information for the wastewater, water supply, water storage, raw water, recreation and financing segments for the year ended November 30, 2012 is as follows: Wastewater Water Supply Water Storage Raw Water Recreation Financing Other Current Assets $ 19,801,223 $ 4,016,715 $ 3,322,424 $ 600,558 $ 1,771,090 $ 449,324 Capital Assets 1,027,835, ,685, ,854, ,912 Other Assets 639,412,787 55,051,015 41,682,525 75,207,988 Due From Other TRA Funds 112,825 1,435 7, Due To Other TRA Funds 765, ,114 91,168 28,582 25,780 Other Current Liabilities 78,570,470 14,773,792 1,436, ,622 30,747 4,299,948 Long Term Liabilities 1,274,739, ,437,944 83,350,685 25,927 71,357,364 Invested in Capital Assets, Net of Related Debt 234,138,412 38,965, ,594, ,912 Restricted 87,722,000 23,202, ,498 Unrestricted 11,226,867 2,218,000 2,117, ,375 1,688,636 Contract Revenue 113,711,173 38,223,881 9,530,630 2,411,949 Direct Financing Arrangement 5,235,963 Other 3,141, , ,213 Expenses, Exclusive of Depreciation 49,456,981 22,213,879 4,226,925 2,412, ,583 45,146 Depreciation 31,319,778 6,557,930 1,024,561 41,329 Operating Income 36,075,435 9,452,072 4,527,655 (491) 66,301 5,190,817 Non-Operating Revenue (Expense) (36,766,174) (7,680,987) (4,263,593) 777 3,782 (5,190,817) Contributions 1,386, ,746 Contribution Refunds (193,047) (24,557) Transfers (Net) 43,600 22,410 2, Changes in Net Assets 546,554 2,401, , ,543 Net Assets, Beginning (as restated) 356,540,725 61,983, ,721, ,089 1,954,005 Net Assets, Ending 333,087,279 64,385, ,987, ,375 2,024,548 Operating Activities 69,439,225 14,079,964 1,048,944 (27,404) 127,649 8,693,298 Non Capital Financing Activit 87,865 61,575 2, Capital & Related Financing Activities (82,776,621) 1,573,515 (1,676,932) (7,368) (42,687) (8,933,536) Investing Activities 154,439, ,173 5,021 1,177 3,782 1,143 Cash & Cash Equivalents, Beginning 400,276,251 30,777,733 3,273, ,781 1,655, ,678 Cash & Cash Equivalents, Ending 541,465,968 46,989,960 2,652, ,186 1,744, ,

63 EXHIBIT DEFINED CONTRIBUTION PLAN The Authority provides pension benefits for all of its full-time employees through a defined contribution plan, Trinity River Authority of Texas Money Purchase Pension Plan, administered by The Hartford Financial Services Group, Inc. In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings. Employees are eligible to participate from the date of employment. The Board of Directors has approved a contribution amount equal to 12% of the employee's annual salary. The Authority's contributions for each employee (and interest allocated to the employee's account) are fully vested after 7 years' continuous service. Authority contributions for, and interest forfeited by, employees who leave employment before three years of service are allocated to the participants. Any amendments to the plan's provisions or required contributions must be approved by the Board of Directors. The Authority's total gross payroll in fiscal year 2012 was $21,992,264. The Authority's contributions were calculated using the gross salary amount less miscellaneous payroll adjustments not qualifying for pension which resulted in pension earnings of $21,356,896. The Authority made the required 12% contribution, amounting to $2,313, CONSTRUCTION COMMITMENTS AND RELATED The Authority was obligated at November 30, 2012 under contracts for construction of various projects. The major construction projects in progress during 2012 are accounted for in the Central Regional Wastewater System, the Tarrant County Water Supply Project, the Ten Mile Creek Regional Wastewater System, the Red Oak Creek Regional Wastewater System, the Mountain Creek Regional Wastewater System, the Denton Creek Regional Wastewater System, the Denton Creek Wastewater Transportation System - Graham Branch, the Huntsville Regional Water Supply System, the Livingston Regional Water Supply System, and the Northeast Lakeview Project. At November 30, 2012, the Authority was committed under construction contracts for $213,304,672 of which $149,944,912 has been incurred, and committed for engineering contracts for $103,016,338 of which $75,727,205 has been incurred. The Authority capitalized interest in 2012 in connection with construction in the Tarrant County Water Supply Project, Ten Mile Creek Regional Wastewater System, Red Oak Creek Regional Wastewater System, Denton Creek Regional Wastewater System, Mountain Creek Regional Wastewater System, Huntsville Regional Water Supply System, Denton Creek Wastewater Transportation System (Graham Branch) Livingston Regional Water Supply System, and Central Regional Wastewater System. The net interest capitalized for the year in connection with these projects was $4,779, RISK FINANCING The Authority has established a Staywell Health Insurance Internal Service Fund ("Staywell"). The purpose of Staywell is to provide a self-insurance program with respect to medical claims of the Authority's employees and their covered dependents. Self-insurance is provided up to annual and lifetime maximums per person and an aggregate annual maximum for total claims, above which all losses are insured by a private insurance carrier. Premiums are established at a level adequate to pay all reinsurance and administrative expenses, and all estimated claims incurred by participants. -59-

64 The Authority has established a Risk Retention Insurance Internal Service Fund ("Risk Retention"). The purpose of the Fund is to provide risk retention programs for fire and casualty, general liability, directors' and officers' liability, and automobile liability and a self-insurance program for workers' compensation, all which had been covered by insurance policies written by insurance companies or provide retention levels above which an insurance company provides insurance coverage. Risk Retention is intended to receive monies from other funds of the Authority, invest these monies, receive interest on investments and disburse money for insurance premiums and in satisfaction and payment of approved claims. The life of Risk Retention will be indefinite so long as it accomplishes the purposes for which it was intended. Prior to November 1, 1992, the Authority has obtained insurance coverage from insurance carriers and no self-insurance premiums were charged to other Authority funds for the year ended November 30, Governmental Accounting Standards Board Statement No. 10 requires that a liability for claims be accrued if information prior to the issuance of the financial statements indicates that is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. This includes provisions for claims reported but not paid and claims incurred but not reported. The provision for reported claims is determined by estimating the amount which will ultimately be paid each claimant. The provision for claims incurred but not yet reported is estimated based on the Authority's experience. Because actual claims liabilities depend on such complex factors as the health of the participating employees and their dependents, the process used in computing the estimated claims liability could differ from actual results. Claim liabilities are reevaluated periodically to take into consideration recently settled claims, the frequency of claims and other economic and social factors. As of November 30, 2012, the Authority has recognized claims payable of $314,919. Changes in the medical claims liability amount in fiscal year 2011 and 2012 were: Current Year Current Year Beginning of Claims and End of Fiscal Fiscal Year Changes in Claim Fiscal Year Fund Year Liability Estimates Payments Liability Staywell 2011 $ 489,835 $ 3,538,746 $ 3,581,377 $ 447,204 Staywell ,204 3,037,325 3,169, ,919 As of December 1, 1995, the Authority was no longer self-insured for workers' compensation claims. The Authority elected to purchase a full coverage workers' compensation program insured from a third party. There were no significant reductions in coverage from the prior year, nor has any settlement exceeded coverage in the last three years. Permanent full-time employees who are enrolled in the Authority's Staywell Health Program on the date they attain age 60 years of age or older, have been employed by the Authority for a minimum of 10 years, and who subsequently terminate employment, may continue coverage at the group rate for themselves (or a dependent spouse who is also covered under the Staywell Plan on the date the employee terminates employment), in the Staywell Health program until the attainment of age 65, or the date that they (or a dependent spouse) become eligible for Medicare or another employer's group health insurance coverage program whichever occurs sooner. -60-

65 EXHIBIT 1-10 An employee who chooses to participate in this program pays the full group rate premium of the Staywell Health program, which is less than the premium the employee would pay for an independent health policy. The difference between the two premiums is considered a benefit and is referred to as an Implied Premium Subsidy. This Implied Premium Subsidy is considered a future liability and a current cost of the health plan. The cost that is recognized annually is the Current Year Normal Cost for the fiscal year 2012 plus the amortization of the Actuarial Accrued Liability (AAL). The AAL is the accrual of the Actuarial Present Value of the Implied Premium Subsidy benefits attributed to current Authority employees as of December 1, The Authority has established an Other Post Employment Benefits (OPEB) Contingency Fund in the Staywell Health Insurance Internal Service Fund to match the accrued costs of the Implied Premium Subsidy benefits. This fund is not an irrevocable trust and therefore does not reduce the reported liability. As of November 30, 2012, the Net OPEB cost is $96,223, and the Annual Required Contribution (ARC) is $101,850. The Authority's annual OPEB cost (expense) is calculated based on the ARC, an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize, using the level dollar method, any unfunded actuarial liability (or funding excess) over a period not to exceed thirty years. As of December 1, 2011, the most recent actuarial valuation date, the OPEB plan was 0% funded. The accrued actuarial liability for benefits was $706,844 and the actuarial value of assets was $0, resulting in an Unfunded Actuarial Liability (UAAL) of $706,844. The covered payroll (annual covered payroll of active employees covered by the plan) was $19,795,342, and the ratio of the UAAL to covered payroll was 3.6%. Significant Assumptions - Actuarial liabilities were computed using one unit credit actuarial cost method. Liabilities were valued as of the measurement date of December 1, 2011, using a discount rate of 4% per annum, which assumes no prefunding of the liability. The RP-2000 Combined Mortality Table was used and withdrawal rates were taken from Table T7 of the Actuary's Pension Handbook. For purposes of benefit election, it was assumed that 30% of employees who elect coverage while in active employment will elect continued coverage in retirement and 50% of members electing coverage will elect coverage for a spouse. -61-

66 Discount Rate 4% 4% 4% Determination of Annual Required Contribution Normal Cost at Fiscal Year End $ 60,973 $ 57,858 $ 57,858 Amortization of Actuarial Accrued Liability 40,877 40,123 40,123 Annual Required Contribution 101,850 97,981 97,981 Determination of Annual OPEB Cost Annual Required Contribution 101,850 97,981 97,981 Interest on Net OPEB Obligation 12,623 5,446 5,446 Adjustment (18,250) (7,874) (7,874) Annual OPEB Cost $ 96,223 $ 95,553 $ 95,553 Determination of Net OPEB Obligation Net OPEB Obligation - Beginning of Year $ 315,575 $ 220,022 $ 136,159 Annual OPEB Cost 96,223 95,553 95,553 Employer Contributions Paid (46,932) (11,690) Change in Net OPEB Obligation 49,291 95,553 83,863 Net OPEB Obligation - End of Year $ 364,866 $ 315,575 $ 220,022 Percentage of Annual Cost Contributed 49% 0% 12% 11. CONTINGENT LIABILITIES The Authority has been named as a defendant or co-defendant in a number of legal actions. While the outcome of these cases is not known at this time, management of the Authority is of the opinion that any awards to injured parties which must be paid in excess of amounts covered by insurance or by the Risk Retention Insurance Internal Service Fund will not be material to the financial position of the Authority. -62-

67 EXHIBIT OTHER REQUIRED INDIVIDUAL FUND DISCLOSURES Total expenses and transfers out for the following funds exceeded budgeted amounts for the year ended November 30, 2012 as follows: Excess Over Budgeted Fund Total Expenses and Transfers Big Bear Creek Interceptor System $ 4,000 Lancaster Water and Sewer Project 3,200 Denton Creek Wastewater Interceptor System 2,547,803 Northeast Lakeview Wastewater Transportation Project 339 Debt Service Fund 29,007 Southlake Sewer Project 2,520 Midlothian Raw Water Supply Project 20 Cade Branch Wastewater Interceptor Extension Project 45 Ennis Raw Water Supply Project 9 Denton Creek Wastewater Pressure Interceptor System 97 Navarro Mills Reservoir 2,400, NEW PRONOUNCEMENTS GASB Statement No. 60, Accounting and Financial Reporting for Service Concession Arrangements, was issued in December 2010 to improve financial reporting by addressing issues related to service concession arrangements (SCAs), which are a type of public-private or public-public partnership. The standard addresses SCAs in which there is an arrangement between a transferor (a government) and an operator (governmental or nongovernmental entity) in which (1) the transferor conveys to an operator the right and related obligation to provide services through the use of infrastructure or another public asset (a "facility") in exchange for significant consideration and (2) the operator collects and is compensated by fees from third parties. The statement also includes required disclosures about the SCAs. This standard becomes effective for the Authority in fiscal year GASB Statement No. 61, The Financial Reporting Entity: Omnibus - an amendment of GASB Statements No. 14 and No. 34 was issued in November 2010 to improve financial reporting governmental reporting entity. The standard modifies certain requirements for inclusion of component units, amends criteria for blending, and clarifies the reporting of equity interests in legally separate entities. This standard becomes effective for the Authority in fiscal year GASB Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre- November 30, 1989 FASB and AICPA Pronouncements was issued in December 2010 to incorporate into the GASB's authoritative literature certain accounting and financial reporting guidance that is included in the following pronouncements issued on or before November 30, 1989, which does not conflict with or contradict GASB pronouncements: 1. Financial Accounting Standards Board (FASB) Statements and Interpretations 2. Accounting Principles Board Opinions 3. Accounting Research Bulletins of the American Institute of Certified Public Accountants' (AICPA) Committee on Accounting Procedure. -63-

68 This standard becomes effective for the Authority in fiscal year GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, was issued in July 2012 to establish guidance for reporting deferred outflows of resources, deferred inflows of resources, and net position in a statement of financial position. This standard becomes effective for the Authority in fiscal year GASB Statement No. 65, Items Previously Reported as Assets and Liabilities was issued in March This Statement establishes accounting and financial reporting standards that reclassify certain items that were previously reported as assets and liabilities and recognizes them as outflows of resources or inflows of resources. This standard becomes effective for the Authority in fiscal year GASB Statement No. 66, Technical Corrections an Amendment of GASB Statements No. 10 and No. 62 was issued in March This Statement amends Statement No. 10, Accounting and Financial Report for Risk Financing and Related Insurance Issues, by removing the provision that limits fund-based reporting of a state and local government's risk financing activities to the general fund and the internal service fund type. This Statement also modifies the specific guidance on accounting for (1) operating lease payments that vary from a straight-line basis, (2) the difference between the initial investment (purchase price) and the principal amount of a purchased loan or group of loans, and (3) servicing fees related to mortgage loans that are sold when the stated service fee rate differs significantly from a current (normal) servicing fee rate. This standard becomes effective for the Authority in fiscal year GASB Statement No. 67, Financial Reporting for Pension Plans - an Amendment of GASB Statement No. 25 was issued in June The objective of this Statement is to improve financial reporting by State and local governmental pension plans. This standard becomes effective for the Authority in fiscal year GASB Statement No. 68, Accounting and Financial Reporting for Pensions - an Amendment of GASB Statement No. 27 was issued in June The objective of this Statement is to improve the usefulness of information for decisions made by various users of the general purpose external financial reports of governments whose employees - both active employees and inactive employees - are provided with pensions. This standard becomes effective for the Authority in fiscal year GASB Statement No. 69, Government Combinations and Disposals of Government Operations was issued in January This Statement establishes accounting and financial reporting standards related to governmental combinations and disposals of government operations. This standard becomes effective for the Authority in fiscal year Management has not yet determined the impact of these statements on the basic financial statements. -64-

69 REQUIRED SUPPLEMENTARY INFORMATION -65-

70 TRINITY RIVER AUTHORITY OF TEXAS EXHIBIT 1-11 REQUIRED SUPPLEMENTARY INFORMATION - SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - GENERAL FUND (Unaudited) YEAR ENDED NOVEMBER 30, 2012 GENERAL FUND ORIGINAL FINAL BUDGET BUDGET ACTUAL VARIANCE REVENUES: Administrative Overhead Charges $ 4,858,610 $ 4,858,610 $ 6,028,243 $ (1,169,633) Investment Income 5,270 5,270 10,151 (4,881) Professional Fees 868, ,700 1,123,876 (255,176) Rental Income 41,280 41,280 41,280 Operating Overhead 187,839 (187,839) Other 17,483 (17,483) Total Revenues 5,773,860 5,773,860 7,408,872 (1,635,012) EXPENDITURES: Current: Personal Services 6,078,940 6,234,215 6,248,074 (13,859) Supplies 209, , ,307 (6,367) Other Services and Charges 1,199,750 1,091,510 1,058,486 33,024 Capital Outlays 297, , ,031 63,969 Contribution Refund 7,982 (7,982) Total Expenditures 7,785,590 7,863,665 7,794,880 68,785 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (2,011,730) (2,089,805) (386,008) (1,703,797) OTHER FINANCING SOURCES: Transfers from Other Authority Funds 582, ,320 2,120,191 (1,537,871) Transfers to Other Authority Funds (280,890) (1,835,650) (1,866,882) 31,232 Total Other Financing Sources 301,430 (1,253,330) 253,309 (1,506,639) EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES (1,710,300) (3,343,135) (132,699) (3,210,436) FUND BALANCE - DECEMBER 1, ,733,955 3,271,824 4,733,955 (1,462,131) FUND BALANCE - NOVEMBER 30, 2012 $ 3,023,655 $ (71,311) $ 4,601,256 $ (4,672,567) The accompanying notes are an integral part of this required supplementary information. -66-

71 TRINITY RIVER AUTHORITY OF TEXAS EXHIBIT 1-12 REQUIRED SUPPLEMENTARY INFORMATION NOTES TO REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) YEAR ENDED NOVEMBER 30, The Authority maintains control over operating expenditures in all operating funds by the establishment of an annual operating budget. The annual operating budget is adopted for the General Fund on a basis consistent with generally accepted accounting principles. The budget, as formally adopted by the Board of Directors, establishes the maximum authorization of operating funds to be expended. Any subsequent amendment thereto must be approved by the President of the Board of Directors and/or the Board of Directors. Management is allowed to make revisions to individual line items of the budget, provided the maximum authorized budget is not exceeded. All unused budget authorizations lapse at the end of the year. In 2012, the General Fund received a transfer from the Risk Retention Fund as a rebate of insurance premiums of $4,430. The Water Sales Special Revenue Fund, Construction Services Staff Internal Service Fund, Central Regional Wastewater System Enterprise Fund, and Capital Projects transferred $219,660, $38,480, $22,750, and $5, respectively, to compensate the General Fund for the use of general facilities. The General Fund transferred $1,864,469 to Debt Service Fund for debt service payments related to the Series 2008 General Improvement Bonds and received $1,583,866 for excess payments related to debt service. The Water Sales Special Revenue Fund transferred $251,000 to the General Fund for use towards capital outlays. General Fund transferred $2,413 of beginning fund balance to the Clean Rivers Program Special Revenue Fund. The original budget for revenues for the year ended November 30, 2012 was not amended as it is the Authority's policy not to amend the revenue budget. However, the actual Administrative Overhead Charges were $1,169,633 greater than the budgeted amount due to additional administrative fees received on the issuance of new debt in various enterprise funds. -67-

72 TRINITY RIVER AUTHORITY OF TEXAS EXHIBIT 1-13 REQUIRED SUPPLEMENTARY INFORMATION SCHEDULES OF OPEB FUNDING PROGRESS AND EMPLOYER CONTRIBUTIONS (UNAUDITED) YEAR ENDED NOVEMBER 30, 2012 SCHEDULE OF OPEB FUNDING PROGRESS The schedule of funding progress provides an indication of the Plan's funded status from an ongoing, long-term perspective. The funded ratio percentage included within the schedule indicates over time whether the Plan is becoming financially stronger or weaker. Generally, the greater this percentage is, the stronger the Plan. Trends in the Unfunded Actuarial Accrued Liability (UAAL) and annual covered payroll are both affected by inflation. Expressing the UAAL as a percentage of annual covered payroll approximately adjusts for the effects of inflation and aids analysis of the Plan's progress made in accumulating sufficient assets to pay benefits when due. Generally, the smaller this percentage is, the stronger the Plan Actuarial Value of Assets $0 $0 $0 Actuarial Accrued Liability (AAL) Projected Unit Credit $915,498 $693,813 $706,844 Unfunded AAL (UAAL) $915,498 $693,813 $706,844 Funded Ratio 0% 0% 0% Covered Payroll $19,340,383 $20,109,063 $19,795,342 UAAL as a % of Covered Payroll 4.73% 3.45% 3.57% SCHEDULE OF OPEB EMPLOYER CONTRIBUTIONS The schedule of employer contribution shows the Authority's contribution compared to the Annual Required Contribution (ARC). Annual Year Ended Required TRA Percentage November 30 Contribution Contribution Contributed 2008 $ 126,494 $ 32,195 25% ,494 82,953 66% ,981 11,690 12% ,981 NIL 0% ,850 46,932 46% Actuarial Valuation Date December 1-68-

73 COMBINING STATEMENTS NONMAJOR GOVERNMENTAL FUNDS -69-

74 TRINITY RIVER AUTHORITY OF TEXAS EXHIBIT 2-1 COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS NOVEMBER 30, 2012 ASSETS CLEAN RIVERS CAPITAL WATER DEBT PROGRAM PROJECTS SALES SERVICE TOTAL CURRENT ASSETS: Equity in Pooled Cash and Investments $ 2,585 $ 11,451,942 $ 466,234 $ 11,920,761 Accounts Receivable 73,485 73,485 Accounts Receivable - Contracting Parties 655, ,577 Prepaids and Other Assets 11,968 11,968 Due from Other Authority Funds 33,763 33,763 Note Receivable - Current 14,698 14,698 Total Current Assets 76,070 NIL 12,167, ,234 12,710,252 LONG-TERM ASSET: Note Receivable, Less Current 14,799 14,799 TOTAL ASSETS $ 76,070 NIL $ 12,182,747 $ 466,234 $ 12,725,051 LIABILITIES AND FUND BALANCE LIABILITIES: Accounts Payable and Accrued Expenses $ 1,011 $ 108,906 $ 109,917 Accounts Payable - Contracting Parties 112, ,987 Due to Other Authority Funds 74,539 8,699 $ 22, ,291 Unearned Revenue 394, ,251 Deferred Revenue 75,659 75,659 TOTAL LIABILITIES 75,550 NIL 700,502 22, ,105 FUND BALANCE Nonspendable: Prepaids 11,968 11,968 Committed 11,454, ,181 11,898,813 Restricted ,645 16,165 Total Fund Balance 520 NIL 11,482, ,181 11,926,946 TOTAL LIABILITIES AND FUND BALANCE $ 76,070 NIL $ 12,182,747 $ 466,234 $ 12,725,

75 TRINITY RIVER AUTHORITY OF TEXAS EXHIBIT 2-2 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - NONMAJOR GOVERNMENTAL FUNDS YEAR ENDED NOVEMBER 30, 2012 CLEAN CAPITAL WATER DEBT RIVERS PROJECTS SALES SERVICE TOTAL REVENUES: Grant Revenue $ 340,583 $ 340,583 Investment Income 78 $ 110 $ 32,281 $ ,461 Water Sales 1,659,304 1,659,304 Water Studies 151, ,630 Professional Fees 15,336 15,336 Total Revenues 340, ,858, ,200,314 EXPENDITURES: Current: Personal Services 226, ,020 Supplies 21,905 89, ,403 Other Services and Charges 320,649 1,051,365 3,313 1,375,327 Capital Outlays 60,716 7,033 67,749 Debt Service: Principal Payments 130, ,000 Interest Payments 150, ,893 Paying Agent Fees Total Expenditures 342,554 60,716 1,373, ,039 2,062,225 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (1,893) (60,606) 484,635 (284,047) 138,089 OTHER FINANCING SOURCES (USES): Transfer In 2,413 1,019,560 2,688,088 3,710,061 Transfer Out (5) (1,294,279) (2,602,686) (3,896,970) Total Other Financing Sources (Uses) 2,413 (5) (274,719) 85,402 (186,909) EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES 520 (60,611) 209,916 (198,645) (48,820) FUND BALANCE - DECEMBER 1, 2011 NIL 60,611 11,272, ,826 11,975,766 FUND BALANCE - NOVEMBER 30, 2012 $ 520 NIL $ 11,482,245 $ 444,181 $ 11,926,

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77 COMBINING STATEMENTS NONMAJOR ENTERPRISE FUNDS -73-

78 TRINITY RIVER AUTHORITY OF TEXAS COMBINING STATEMENT OF NET ASSETS - NONMAJOR ENTERPRISE FUNDS NOVEMBER 30, 2012 DENTON RED OAK MOUNTAIN HUNTSVILLE CREEK CREEK CREEK REGIONAL REGIONAL REGIONAL REGIONAL WATER WASTEWATER WASTEWATER WASTEWATER SUPPLY SYSTEM SYSTEM SYSTEM SYSTEM ASSETS CURRENT ASSETS: Cash $ 150 $ 150 $ 150 $ 50 Equity in Pooled Cash and Investments 746, , , ,189 Accounts Receivable, Net of Allowance 3,606 Accounts Receivable - Contracting Parties 168,646 27,474 Contract Receivable - Current Interest Receivable Note Receivable - Current Due from Other Authority Funds System Contribution Receivable - Current 35, ,963 Prepaids and Other Assets 38,231 17,708 12, Total Current Assets 992, , , ,339 RESTRICTED ASSETS: Equity in Pooled Cash and Investments 18,826,457 7,419,694 5,387,296 21,832,969 Money Market Fund 54,182,309 10,154, ,221 Accounts Receivable - Contracting Parties Accrued Investment Income Prepaids and Other Assets Due from Other Authority Funds 2,634 Total Restricted Assets 73,009,954 17,578,037 6,271,275 21,832,969 DIRECT FINANCING ARRANGEMENT RECEIVABLE CAPITAL ASSETS: Land and Easements 2,421,683 1,713, , ,469 Water Storage Rights Sewage System and Extensions 85,232,026 48,880,713 17,510,877 Accumulated Depreciation (13,600,842) (10,903,221) (3,799,246) Buildings Accumulated Depreciation Recreational Facilities Accumulated Depreciation Reservoir and Facilities Accumulated Depreciation Water Transportation and Treatment Facilities 28,668,675 Accumulated Depreciation (14,963,884) Machinery and Equipment 160, , , ,972 Accumulated Depreciation (91,661) (116,895) (65,367) (423,872) Construction-in-Progress 8,559,626 1,511,735 6,740,936 1,798,348 Total Capital Assets, Net 82,680,858 41,282,015 21,362,899 16,115,708 OTHER ASSETS: Deferred Charges - Unamortized Bond Expense 3,326,543 1,479, , ,749 Contract Receivable - Long Term System Contribution Receivable 142,664 1,819,700 Total Other Assets 3,469,207 1,479,383 2,218, ,749 TOTAL ASSETS 160,152,435 61,064,743 30,512,707 38,996,765 (continued - 1) -74-

79 EXHIBIT 8-1 LIVINGSTON TRINITY NORTHEAST DENTON REGIONAL COUNTY LAKEVIEW CREEK WATER REGIONAL LIVINGSTON WALKER- WASTEWATER WASTEWATER SUPPLY WATER SUPPLY RECREATION CALLOWAY TRANSPORTATION INTERCEPTOR SYSTEM SYSTEM FACILITIES BRANCHES PROJECT SYSTEM $ 50 $ 50 $ 32, , ,980 1,711,925 $ 756,535 $ 8,797 25,347 12,570 13,632 2,057 1,527 1, , , ,724 1,771, ,535 10, , ,500 3,490, , ,500 3,490, ,380 95,536 21, ,933 (294,410) 1,475,083 (1,282,170) 1,014,055 14,976,050 (1,014,055) (1,242,201) 7,505,140 4,542,955 (3,566,280) (3,298,869) 225, , ,448 (194,019) (143,996) (219,972) 645,230 4,805,899 1,347, ,912 21,830 13,733,849 96,446 3, ,985 96,446 3, ,985 5,475,934 1,947,618 2,107, ,365 17,502,217 NIL (continued - 2) -75-

80 TRINITY RIVER AUTHORITY OF TEXAS COMBINING STATEMENT OF NET ASSETS - NONMAJOR ENTERPRISE FUNDS NOVEMBER 30, 2012 DENTON RED OAK MOUNTAIN HUNTSVILLE CREEK CREEK CREEK REGIONAL REGIONAL REGIONAL REGIONAL WATER WASTEWATER WASTEWATER WASTEWATER SUPPLY SYSTEM SYSTEM SYSTEM SYSTEM LIABILITIES CURRENT LIABILITIES: Payable from Current Assets: Accounts Payable and Accrued Expenses $ 141,395 $ 118,465 $ 55,088 $ 121,715 Accounts Payable - Contracting Parties 481, ,275 92,829 69,782 System Contribution Payable - Current 35, ,963 Due to Other Authority Funds 51,873 60,617 43,779 26,280 Accrued Interest on Contracts Payable Contracts Payable - Current Maturities Unearned Revenue Payable from Restricted Assets: Accounts and Retainage Payable 347,408 65, , ,429 Accounts Payable - Contracting Parties Revenue Bonds - Current Maturities 2,835,000 1,820,000 70,000 2,985,000 Accrued Interest on Bonds Payable 1,548, , , ,815 Unearned Revenue Total Current Liabilities 5,441,836 3,012,310 1,303,162 3,955,023 LONG-TERM LIABILITIES: Revenue Bonds Payable, Less Current Maturities 144,895,000 52,040,000 12,720,000 23,610,000 Unamortized Bond Premium (Discount) 349,026 50,002 1,663,068 Deferred Amount on Refunding (299,745) (86,599) (349,929) Deferred Interest Payable Unearned Revenue Accounts Payable and Accrued Expenses 30,434 5,180 14,898 Contracts Payable, Less Current Maturities Uncommitted System Contribution Payable 142,664 1,819,700 Total Long-Term Liabilities, Net 145,086,945 52,033,837 14,544,880 24,938,037 TOTAL LIABILITIES 150,528,781 55,046,147 15,848,042 28,893,060 NET ASSETS Invested in Capital Assets, Net of Related Debt (2,161,279) 434,762 13,584,456 5,624,758 Restricted for: Debt Service 11,403,489 5,391, ,789 4,151,285 Other Purposes 100,000 25,000 11,870 Unrestricted 281, , , ,662 TOTAL NET ASSETS $ 9,623,654 $ 6,018,596 $ 14,664,665 $ 10,103,705 (continued - 3) -76-

81 EXHIBIT 8-1 LIVINGSTON TRINITY NORTHEAST DENTON REGIONAL COUNTY LAKEVIEW CREEK WATER REGIONAL LIVINGSTON WALKER- WASTEWATER WASTEWATER SUPPLY WATER SUPPLY RECREATION CALLOWAY TRANSPORTATION INTERCEPTOR SYSTEM SYSTEM FACILITIES BRANCHES PROJECT SYSTEM $ 43,046 $ 21,179 $ 30,747 $ 319,047 31,979 76,584 79,095 19,230 24,360 25,780 4,114 12,570 75,000 70,000 $ 725,000 31,588 23, , , ,456 56, , ,732 2,565,000 1,050,000 14,205,000 (14,091) 74,221 24,216 19,322 3,425 1,711 2,570,231 1,053,425 25,927 14,279,221 2,783,644 1,268,881 82, ,256 15,221,953 NIL 2,407, , ,912 21, , , ,167 1,939,286 91,282 73,176 1,688, ,279 10,854 $ 2,692,290 $ 678,737 $ 2,024,548 $ 376,109 $ 2,280,264 NIL (continued - 4) -77-

82 TRINITY RIVER AUTHORITY OF TEXAS COMBINING STATEMENT OF NET ASSETS - NONMAJOR ENTERPRISE FUNDS NOVEMBER 30, 2012 DENTON CREEK CADE BRANCH DENTON CREEK DENTON CREEK WASTEWATER WASTEWATER WASTEWATER WASTEWATER PRESSURE INTERCEPTOR INTERCEPTOR TRANSPORTATION INTERCEPTOR EXTENSION SYSTEM - SYSTEM - SYSTEM PROJECT FORT WORTH GRAHAM BRANCH ASSETS CURRENT ASSETS: Cash Equity in Pooled Cash and Investments $ 223,042 $ 28,254 $ 44,468 $ 766 Accounts Receivable, Net of Allowance Accounts Receivable - Contracting Parties Contract Receivable - Current Interest Receivable Note Receivable - Current Due from Other Authority Funds System Contribution Receivable - Current Prepaids and Other Assets Total Current Assets 223,042 28,254 44, RESTRICTED ASSETS: Equity in Pooled Cash and Investments 844, , ,130 $ 2,376,442 Money Market Fund Accounts Receivable - Contracting Parties Accrued Investment Income Prepaids and Other Assets Due from Other Authority Funds Total Restricted Assets 844, , ,130 2,376,442 DIRECT FINANCING ARRANGEMENT RECEIVABLE 939,333 CAPITAL ASSETS: Land and Easements 25,419 91,919 3,133,983 Water Storage Rights Sewage System and Extensions 585,165 2,187,833 2,582,343 9,539,680 Accumulated Depreciation (253,571) (1,034,417) (962,999) (270,255) Buildings Accumulated Depreciation Recreational Facilities Accumulated Depreciation Reservoir and Facilities Accumulated Depreciation Water Transportation and Treatment Facilities Accumulated Depreciation Machinery and Equipment Accumulated Depreciation Construction-in-Progress 9,388,464 Total Capital Assets, Net 357,013 1,245,335 1,619,344 21,791,872 OTHER ASSETS: Deferred Charges - Unamortized Bond Expense 5,135 29, ,482 Contract Receivable - Long Term System Contribution Receivable Total Other Assets 5,135 29, ,482 TOTAL ASSETS 2,363,706 1,475,374 2,005,545 24,300,562 (continued - 5) -78-

83 EXHIBIT 8-1 ELLIS COUNTY BIG BEAR REGIONAL FREESTONE SOUTHLAKE CREEK HUNTSVILLE SENDERA WATER RAW WATER SEWER WASTEWATER WASTEWATER RANCH SUPPLY SUPPLY PROJECT INTERCEPTOR PROJECT PROJECT PROJECT PROJECT $ 266,854 $ 314,270 11, , ,663 $ 236,394 $ 54,813 55, , , ,000 6,685,000 4, ,084 4, ,084 NIL NIL 616,298 6,943, , ,663 (continued - 6) -79-

84 TRINITY RIVER AUTHORITY OF TEXAS COMBINING STATEMENT OF NET ASSETS - NONMAJOR ENTERPRISE FUNDS NOVEMBER 30, 2012 DENTON CREEK CADE BRANCH DENTON CREEK DENTON CREEK WASTEWATER WASTEWATER WASTEWATER WASTEWATER PRESSURE INTERCEPTOR INTERCEPTOR TRANSPORTATION INTERCEPTOR EXTENSION SYSTEM - SYSTEM - SYSTEM PROJECT FORT WORTH GRAHAM BRANCH LIABILITIES CURRENT LIABILITIES: Payable from Current Assets: Accounts Payable and Accrued Expenses Accounts Payable-Contracting Parties $ 204,528 $ 19,564 $ 279 $ 766 System Contribution Payable - Current Due to Other Authority Funds Accrued Interest on Contracts Payable Contracts Payable - Current Maturities Unearned Revenue Payable from Restricted Assets: Accounts and Retainage Payable 937,277 Accounts Payable - Contracting Parties Revenue Bonds - Current Maturities 320, , , ,000 Accrued Interest on Bonds Payable 28,651 2,217 14,313 61,973 Unearned Revenue Total Current Liabilities 553, , ,592 1,170,016 LONG-TERM LIABILITIES: Revenue Bonds Payable, Less Current Maturities 1,435, ,000 4,255,000 Unamortized Bond Premium (Discount) 45 (1,531) 53,034 Deferred Amount on Refunding (4,075) (21,686) Deferred Interest Payable Unearned Revenue Accounts Payable and Accrued Expenses Contracts Payable, Less Current Maturities Uncommitted System Contribution Payable Total Long-Term Liabilities, Net 1,435,000 (4,030) 936,783 4,308,034 TOTAL LIABILITIES 1,988, ,751 1,091,375 5,478,050 NET ASSETS Invested in Capital Assets, Net of Related Debt 357,013 1,064, ,164 18,412,288 Restricted for: Debt Service 194, , ,224 Other Purposes Unrestricted 18,514 8,690 44,189 TOTAL NET ASSETS $ 375,527 $ 1,267,623 $ 914,170 $ 18,822,512 (continued - 7) -80-

85 EXHIBIT 8-1 ELLIS COUNTY BIG BEAR REGIONAL FREESTONE SOUTHLAKE CREEK HUNTSVILLE SENDERA WATER RAW WATER SEWER WASTEWATER WASTEWATER RANCH SUPPLY SUPPLY PROJECT INTERCEPTOR PROJECT PROJECT PROJECT PROJECT $ 203,624 30,888 $ 44,318 28,582 $ 230,456 $ 54, , ,000 5,938 55,433 7, , , , ,094 44,318 6,100,000 1, ,799 (3,884) (127,892) (2,543) 6,144, ,298 6,943, ,094 44,318 3, ,345 NIL NIL NIL NIL $ 3,760 $ 281,345 (continued - 8) -81-

86 TRINITY RIVER AUTHORITY OF TEXAS COMBINING STATEMENT OF NET ASSETS - NONMAJOR ENTERPRISE FUNDS NOVEMBER 30, 2012 SUMMIT LAKEVIEW ENNIS MIDLOTHIAN REGIONAL REGIONAL RAW WATER RAW WATER WATER WATER SUPPLY SUPPLY STORAGE SUPPLY PROJECT PROJECT PROJECT SYSTEM ASSETS CURRENT ASSETS: Cash Equity in Pooled Cash and Investments $ 4,086 $ 3,976 $ 14,980 $ 90,008 Accounts Receivable, Net of Allowance Accounts Receivable - Contracting Parties 2,623 Contract Receivable - Current Interest Receivable Note Receivable - Current Due from Other Authority Funds System Contribution Receivable - Current Prepaids and Other Assets Total Current Assets 4,086 3,976 17,603 90,008 RESTRICTED ASSETS: Equity in Pooled Cash and Investments Money Market Fund Accounts Receivable - Contracting Parties Accrued Investment Income Prepaids and Other Assets Due from Other Authority Funds Total Restricted Assets DIRECT FINANCING ARRANGEMENT RECEIVABLE CAPITAL ASSETS: Land and Easements 101,644 50,764 Water Storage Rights Sewage System and Extensions Accumulated Depreciation Buildings Accumulated Depreciation Recreational Facilities Accumulated Depreciation Reservoir and Facilities 4,286,148 Accumulated Depreciation (2,678,843) Water Transportation and Treatment Facilities 3,869,639 Accumulated Depreciation (902,916) Machinery and Equipment Accumulated Depreciation Construction-in-Progress Total Capital Assets, Net 1,708,949 3,017,487 OTHER ASSETS: Deferred Charges - Unamortized Bond Expense Contract Receivable - Long Term System Contribution Receivable Total Other Assets TOTAL ASSETS 4,086 3,976 1,726,552 3,107,495 (continued - 9) -82-

87 EXHIBIT 8-1 LANCASTER NAVARRO JOE WATER AND POLLUTION MILLS BARDWELL POOL SEWER CONTROL RESERVOIR RESERVOIR LAKE PROJECT FACILITIES TOTAL $ 33,168 $ 569,390 $ 835,282 $ 512,460 8,243,351 28,953 15, ,791 11,967 3,917 15,884 14,791 3,540 18,331 1,527 1,777 3, ,629 29,117 39,559 3, , , , ,868 8,925,985 $ 5,376 61,749,298 65,220,398 97, , ,200 2, , ,127,858 67,995,000 75,994,333 8,926,860 2,504,389 3,817,156 60,926,139 67,247, ,508,742 (33,080,807) 383,933 (294,410) 1,475,083 (1,282,170) 4,286,148 (2,678,843) 44,586,409 (22,731,949) 1,939,118 (1,255,782) 28,644,339 2,504,389 3,817,156 60,926, ,674,355 6,378, ,900 40,758,127 41,406,027 1,962, ,900 40,758,127 49,746,842 3,102,896 5,368, ,223,134 NIL 68,097, ,469,373 (continued - 10) -83-

88 TRINITY RIVER AUTHORITY OF TEXAS COMBINING STATEMENT OF NET ASSETS - NONMAJOR ENTERPRISE FUNDS NOVEMBER 30, 2012 SUMMIT LAKEVIEW ENNIS MIDLOTHIAN REGIONAL REGIONAL RAW WATER RAW WATER WATER WATER SUPPLY SUPPLY STORAGE SUPPLY PROJECT PROJECT PROJECT SYSTEM LIABILITIES CURRENT LIABILITIES: Payable from Current Assets: Accounts Payable and Accrued Expenses $ 26 $ 4,015 Accounts Payable - Contracting Parties $ 3,691 $ 3,101 4,443 14,360 System Contribution Payable - Current Due to Other Authority Funds Accrued Interest on Contracts Payable Contracts Payable - Current Maturities Unearned Revenue Payable from Restricted Assets: Accounts and Retainage Payable Accounts Payable - Contracting Parties Revenue Bonds - Current Maturities Accrued Interest on Bonds Payable Unearned Revenue Total Current Liabilities 3,691 3,101 4,469 18,375 LONG-TERM LIABILITIES: Revenue Bonds Payable, Less Current Maturities Unamortized Bond Premium (Discount) Deferred Amount on Refunding Deferred Interest Payable Unearned Revenue Accounts Payable and Accrued Expenses Contracts Payable, Less Current Maturities Uncommitted System Contribution Payable Total Long-Term Liabilities, Net TOTAL LIABILITIES 3,691 3,101 4,469 18,375 NET ASSETS Invested in Capital Assets, Net of Related Debt 1,708,949 3,017,487 Restricted for: Debt Service Other Purposes Unrestricted ,134 71,633 TOTAL NET ASSETS $ 395 $ 875 $ 1,722,083 $ 3,089,120 (continued - 11) -84-

89 EXHIBIT 8-1 LANCASTER NAVARRO JOE WATER AND POLLUTION MILLS BARDWELL POOL SEWER CONTROL RESERVOIR RESERVOIR LAKE PROJECT FACILITIES TOTAL $ 1,058,347 $ 251,971 $ 12,004 $ 73,892 1,844, ,629 5, ,138 50, , , ,549 65, , ,613, ,269 $ 2,780,000 13,140, ,684 3,084, , , , ,586 2,882,684 23,091,112 65,215, ,050,000 2,347,914 (893,810) 40,603,944 40,603,944 24,216 74,970 1,522,903 5,614,192 7,137,095 26,284,063 26,284,063 1,962,364 1,522,903 72,502,199 65,215, ,590, ,971 1,799,179 72,795,785 68,097, ,681,868 2,504,389 2,740,571 29,120,907 80,308,063 25,109, , , , ,442 5,232,595 $ 2,850,925 $ 3,569,253 $ 29,427,349 NIL NIL $ 110,787,505 (concluded - 12) -85-

90 TRINITY RIVER AUTHORITY OF TEXAS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS (LIABILITIES) - NONMAJOR ENTERPRISE FUNDS YEAR ENDED NOVEMBER 30, 2012 DENTON RED OAK MOUNTAIN HUNTSVILLE CREEK CREEK CREEK REGIONAL REGIONAL REGIONAL REGIONAL WATER WASTEWATER WASTEWATER WASTEWATER SUPPLY SYSTEM SYSTEM SYSTEM SYSTEM OPERATING REVENUES: Wastewater Contract Revenue $ 7,949,193 $ 4,985,569 $ 1,027,234 Water Supply Contract Revenue $ 5,652,548 Water Storage Contract Revenue Raw Water Contract Revenue Direct Financing Arrangement Revenue Recreational Facility Fees Other Total Operating Revenues 7,949,193 4,985,569 1,027,234 5,652,548 OPERATING EXPENSES: Personal Services 925, , , ,779 Supplies 400,021 92,284 56, ,186 Other Services and Charges 1,376, , ,436 1,895,315 Depreciation 2,116,093 1,268, , ,637 Total Operating Expenses 4,818,167 2,932,216 1,603,061 3,892,917 OPERATING INCOME (LOSS) 3,131,026 2,053,353 (575,827) 1,759,631 NON-OPERATING REVENUES (EXPENSES): Investment Income (Loss) 99,705 21,281 15,949 28,665 Interest Expense (4,165,244) (1,764,479) (215,884) (445,022) Paying Agent Fees (1,992) (1,433) (1,344) SEC Disclosure Fees (33,084) (17,500) (7,000) (500) Amortization of Bond Sale Expense (194,005) (125,041) (16,303) (44,809) Other Total Non-Operating Revenue (Expense) - Net (4,294,504) (1,887,162) (223,230) (463,010) INCOME (LOSS) BEFORE CONTRIBUTIONS, CONTRIBUTION REFUNDS, AND TRANSFERS (1,163,478) 166,191 (799,057) 1,296,621 CONTRIBUTIONS 193,047 CONTRIBUTION REFUNDS (193,047) TRANSFERS IN 2,552,310 2, ,860 TRANSFERS OUT CHANGE IN NET ASSETS 1,388, ,921 (798,347) 1,299,481 NET ASSETS (LIABILITIES) - DECEMBER 1, 2011, AS PREVIOUSLY REPORTED 9,836,614 6,859,286 15,463,012 8,511,722 RESTATEMENT ADJUSTMENT Capitalization of Interest (1,601,792) (1,009,611) 292,502 NET ASSETS (LIABILITIES) - DECEMBER 1, 2011, AS RESTATED 8,234,822 5,849,675 15,463,012 8,804,224 NET ASSETS (LIABILITIES) - NOVEMBER 30, 2012 $ 9,623,654 $ 6,018,596 $ 14,664,665 $ 10,103,705 (continued - 1) -86-

91 EXHIBIT 8-2 LIVINGSTON TRINITY NORTHEAST DENTON DENTON CREEK REGIONAL COUNTY LAKEVIEW CREEK WASTEWATER WATER REGIONAL LIVINGSTON WALKER- WASTEWATER WASTEWATER PRESSURE SUPPLY WATER SUPPLY RECREATIONAL CALLOWAY TRANSPORTATION INTERCEPTOR INTERCEPTOR SYSTEM SYSTEM FACILITIES BRANCHES PROJECT SYSTEM SYSTEM $ 1,180,361 $ 879,230 $ 3,182,394 $ 1,379,923 $ 86,576 $ 766,349 9,864 1,180, , ,213 3,182,394 1,379,923 86, , , , ,968 33,460 32, , , ,702 3,184, , ,077 41, ,177 14,629 1,182, , ,912 3,184, ,177 14,629 (2,626) (45,384) 66,301 (2,219) 996,746 71,947 1,475 8,724 3,782 2,895 7,426 $ 83 2,211 (85,556) (57,896) (649,285) (88,291) (1,240) (496) (3,500) (3,500) (4,183) (430) (19,620) (53) (91,764) (49,602) 3,782 2,895 (666,219) 30 (86,576) (94,390) (94,986) 70, , (14,629) 632, (2,547,750) 539,106 (94,426) 70, ,527 (2,547,720) (14,629) 2,153, ,163 1,954, ,433 2,304,729 2,547, ,156 (354,992) 2,153, ,163 1,954, ,433 1,949,737 2,547, ,156 $ 2,692,290 $ 678,737 $ 2,024,548 $ 376,109 $ 2,280,264 NIL $ 375,527 (continued - 2) -87-

92 TRINITY RIVER AUTHORITY OF TEXAS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS (LIABILITIES) - NONMAJOR ENTERPRISE FUNDS YEAR ENDED NOVEMBER 30, 2012 CADE BRANCH DENTON CREEK DENTON CREEK WASTEWATER WASTEWATER WASTEWATER INTERCEPTOR INTERCEPTOR TRANSPORTATION EXTENSION SYSTEM - SYSTEM - PROJECT FORT WORTH GRAHAM BRANCH OPERATING REVENUES: Wastewater Contract Revenue $ 122,561 $ 159,934 $ 354,533 Water Supply Contract Revenue Water Storage Contract Revenue Raw Water Contract Revenue Direct Financing Arrangement Revenue Recreational Facility Fees Other Total Operating Revenues 122, , ,533 OPERATING EXPENSES: Personal Services Supplies Other Services and Charges Depreciation 54,707 64, ,702 Total Operating Expenses 54,707 64, ,702 OPERATING INCOME (LOSS) 67,854 95, ,831 NON-OPERATING REVENUES (EXPENSES): Investment Income (Loss) ,297 Interest Expense (16,994) (47,656) 1,481 Paying Agent Fees (749) (749) SEC Disclosure Fees Amortization of Bond Sale Expense (7,702) (4,801) (7,709) Other Total Non-Operating Revenue (Expense) - Net (24,859) (52,505) 6,069 INCOME (LOSS) BEFORE CONTRIBUTIONS, CONTRIBUTION REFUNDS, AND TRANSFERS 42,995 42, ,900 CONTRIBUTIONS CONTRIBUTION REFUNDS TRANSFERS IN TRANSFERS OUT CHANGE IN NET ASSETS 42,995 42, ,900 NET ASSETS (LIABILITIES) - DECEMBER 1, 2011, AS PREVIOUSLY REPORTED 1,224, ,299 18,699,612 RESTATEMENT ADJUSTMENT Capitalization of Interest NET ASSETS (LIABILITIES) - DECEMBER 1, 2011, AS RESTATED 1,224, ,299 18,699,612 NET ASSETS (LIABILITIES) - NOVEMBER 30, 2012 $ 1,267,623 $ 914,170 $ 18,822,512 (continued - 3) -88-

93 EXHIBIT 8-2 SOUTHLAKE BIG BEAR CREEK ELLIS COUNTY REGIONAL FREESTONE ENNIS HUNTSVILLE SENDERA WATER RAW WATER RAW WATER SEWER WASTEWATER WASTEWATER RANCH SUPPLY SUPPLY SUPPLY PROJECT INTERCEPTOR PROJECT PROJECT PROJECT PROJECT PROJECT $ 2,420 $ 3,836 $ 53,546 $ 195,654 $ 690,322 $ 1,711,251 $ 4,736 2,420 3,836 53, , ,322 1,711,251 4,736 2,520 4,000 8,995 9, ,695 1,711,346 4,749 2,520 4,000 8,995 9, ,695 1,711,346 4,749 (100) (164) 44, ,230 (373) (95) (13) (34,192) (165,779) (123) (600) (250) (237) (500) (500) (9,809) (19,813) (40) (44,551) (186,230) NIL NIL NIL NIL (367) 653 NIL NIL NIL NIL NIL (367) 653 NIL NIL NIL NIL NIL 4, , NIL NIL NIL NIL 4, , NIL NIL NIL NIL $ 3,760 $ 281,345 $ 395 (continued - 4) -89-

94 TRINITY RIVER AUTHORITY OF TEXAS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS (LIABILITIES) - NONMAJOR ENTERPRISE FUNDS YEAR ENDED NOVEMBER 30, 2012 SUMMIT LAKEVIEW MIDLOTHIAN REGIONAL REGIONAL RAW WATER WATER WATER NAVARRO SUPPLY STORAGE SUPPLY MILLS PROJECT PROJECT PROJECT RESERVOIR OPERATING REVENUES: Wastewater Contract Revenue Water Supply Contract Revenue $ 63,932 Water Storage Contract Revenue $ 17,041 $ 422,726 Raw Water Contract Revenue $ 5,640 Direct Financing Arrangement Revenue Recreational Facility Fees Other Total Operating Revenues 5,640 17,041 63, ,726 OPERATING EXPENSES: Personal Services Supplies Other Services and Charges 5,650 17,081 64, ,120 Depreciation 107, ,988 Total Operating Expenses 5, , , ,120 OPERATING INCOME (LOSS) (10) (107,194) (129,238) 46,606 NON-OPERATING REVENUES (EXPENSES): Investment Income (Loss) ,247 Interest Expense Paying Agent Fees SEC Disclosure Fees Amortization of Bond Sale Expense Other Total Non-Operating Revenue (Expense) - Net ,247 INCOME (LOSS) BEFORE CONTRIBUTIONS, CONTRIBUTION REFUNDS, AND TRANSFERS NIL (107,153) (128,993) 47,853 CONTRIBUTIONS CONTRIBUTION REFUNDS TRANSFERS IN TRANSFERS OUT CHANGE IN NET ASSETS NIL (107,153) (128,993) 47,853 NET ASSETS (LIABILITIES) - DECEMBER 1, 2011, AS PREVIOUSLY REPORTED 875 1,829,236 3,218,113 2,803,072 RESTATEMENT ADJUSTMENT Capitalization of Interest NET ASSETS (LIABILITIES) - DECEMBER 1, 2011, AS RESTATED 875 1,829,236 3,218,113 2,803,072 NET ASSETS (LIABILITIES) - NOVEMBER 30, 2012 $ 875 $ 1,722,083 $ 3,089,120 $ 2,850,925 (continued - 5) -90-

95 EXHIBIT 8-2 LANCASTER WATER AND POLLUTION BARDWELL JOE POOL SEWER CONTROL RESERVOIR LAKE PROJECT FACILITIES TOTAL $ 19,247,917 7,776,071 $ 965,455 $ 3,947,888 5,353,110 2,411,949 $ 3,002 $ 4,977,505 5,235, ,349 9, ,455 3,947,888 3,002 4,977,505 40,801,223 3,175,264 1,656, ,651 99,134 3,200 17,007 12,906,186 5,997, ,651 99,134 3,200 17,007 23,736, ,804 3,848,754 (198) 4,960,498 17,065,067 1,224 1, ,082 (57,063) (3,915,909) (4,960,517) (16,668,409) (9,090) (66,084) (454,265) 81 (55,839) (3,914,684) 198 (4,960,498) (16,985,685) 426,965 (65,930) NIL NIL 79, ,793 (193,047) 2,560,380 (2,547,750) 426,965 (65,930) NIL NIL 724,758 3,142,288 29,493,279 NIL NIL 112,736,640 (2,673,893) 3,142,288 29,493,279 NIL NIL 110,062,747 $ 3,569,253 $ 29,427,349 NIL NIL $ 110,787,505 (Concluded - 6) -91-

96 TRINITY RIVER AUTHORITY OF TEXAS COMBINING STATEMENT OF CASH FLOWS - NONMAJOR ENTERPRISE FUNDS FOR THE FISCAL YEAR ENDED NOVEMBER 30, 2012 DENTON CREEK RED OAK CREEK MOUNTAIN CREEK HUNTSVILLE REGIONAL REGIONAL REGIONAL REGIONAL WASTEWATER WASTEWATER WASTEWATER WATER SUPPLY SYSTEM SYSTEM SYSTEM SYSTEM CASH FLOWS FROM OPERATING ACTIVITIES: Cash Received from Customers $ 8,941,249 $ 5,271,962 $ 1,279,054 $ 6,042,530 Cash Received from Other Authority Funds for Services 80,431 Cash Received on Direct Financing Arrangement Receivable Other Operating Cash Receipts Cash Payments to Suppliers for Goods and Services (1,509,393) (836,763) (527,665) (1,934,727) Cash Payments for Employee Services (878,732) (558,474) (291,517) (407,045) Cash Payments to Other Funds for Services (307,438) (186,665) (225,716) (855,370) Cash Payments to Customers (750,900) (189,290) (98,838) (473,110) Net Cash Provided by (Used For) Operating Activities 5,494,786 3,581, ,318 2,372,278 CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES: Transfer from Other Authority Funds 4,590 2, ,860 Other Cash Receipts (Payments) Net Cash Provided by (Used for) Non-Capital Financing Activities 4,706 2, ,860 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition and Construction of Capital Assets, Exclusive of Capitalized Interest (4,421,289) (2,861,601) (5,061,038) (1,392,009) Principal Paid on Revenue Bond Maturities (1,995,000) (1,740,000) (1,010,000) Interest Paid on Revenue Bonds and Related Fees (4,165,225) (1,785,333) (247,118) (369,085) Principal Paid on Contracts Payable Interest Paid on Contracts Payable Bond Sale Expenses Paid (167,637) Paying Agent Fees (1,992) (1,433) (1,344) Contributions Received SEC Disclosure Fees (33,084) (17,500) (7,000) (500) Bond Sale Expenses Refunded 15,152 2,189 3,529 Proceeds from Issuance of Bonds 13,780,070 20,641,376 System Contribution Refund Cash Payments to Other Authority Funds Net Cash Provided by (Used for) Capital and Related Financing Activities 3,010,995 (6,403,678) (5,315,156) 17,871,967 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from the Sales and Maturities of Investments 26,000, ,000 Cash Received for Investment Income 80,817 21,190 15,941 30,053 Net Cash Provided by (Used For) Investing Activities 26,080,817 21,190 15, ,053 TOTAL CHANGE IN CASH 34,591,304 (2,798,536) (5,163,179) 20,592,158 CASH, BEGINNING OF YEAR 39,163,729 21,053,224 11,931,803 1,801,050 CASH, END OF YEAR $ 73,755,033 $ 18,254,688 $ 6,768,624 $ 22,393,208 (Continued - 1) -92-

97 EXHIBIT 8-3 NORTHEAST DENTON DENTON CREEK LIVINGSTON TRINITY COUNTY LAKEVIEW CREEK PRESSURE REGIONAL REGIONAL LIVINGSTON WALKER- WASTEWATER WASTEWATER WASTEWATER WATER SUPPLY WATER SUPPLY RECREATION CALLOWAY TRANSPORTATION INTERCEPTOR INTERCEPTOR SYSTEM SYSTEM FACILITIES BRANCHES PROJECT SYSTEM SYSTEM $ 1,212,340 $ 1,086,865 $ 762,282 $ 2,956,570 $ 1,381,880 $ 87,280 5, ,500 9,864 (477,178) (435,447) (276,236) (3,053,470) (287,934) (222,082) (291,613) (214,584) (132,643) (76,648) (22,362) (45,762) (2,797) (168,494) 186, , ,649 (287,756) 1,387, , (747,620) (42,687) (14,664) (75,000) (65,000) (700,000) (305,000) (96,263) (59,250) (669,554) (92,968) 620,176 (3,500) (3,500) (801) (373) $ (54,792) (30) (302,207) (124,250) (42,687) (1,388,519) (54,822) (398,341) 1,475 8,724 3,782 2,895 7, ,211 1,475 8,724 3,782 2,895 7, ,211 (113,100) 178,930 89,204 (284,861) 6,387 (54,739) 8, , ,600 1,655,289 1,041,396 3,492,939 54,739 1,058,710 $ 560,819 $ 579,530 $ 1,744,493 $ 756,535 $ 3,499,326 NIL $ 1,067,360 (Continued - 2) -93-

98 TRINITY RIVER AUTHORITY OF TEXAS COMBINING STATEMENT OF CASH FLOWS - NONMAJOR ENTERPRISE FUNDS FOR THE FISCAL YEAR ENDED NOVEMBER 30, 2012 DENTON CREEK RED OAK CREEK MOUNTAIN CREEK HUNTSVILLE REGIONAL REGIONAL REGIONAL REGIONAL WASTEWATER WASTEWATER WASTEWATER WATER SUPPLY SYSTEM SYSTEM SYSTEM SYSTEM RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES: Operating Income (Loss) $ 3,131,026 $ 2,053,353 $ (575,827) $ 1,759,631 Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by (Used for) Operating Activities: Depreciation 2,116,093 1,268, , ,637 Change in Assets and Liabilities: Due to Other Authority Funds 15,521 57,560 36,779 26,280 Due from Other Authority Funds Accounts Receivable - Contracting Parties (90,345) 4, ,865 Contracts Receivable Interest Receivable Long-Term Accounts Receivable - Contracting Parties Accounts Receivable (3,606) Prepaids and Other Assets 10, ,219 1,563 Accounts Payable - Contracting Parties 331, ,161 (219,885) (83,128) Accounts Payable and Accrued Expenses (15,265) 23, (65,707) Direct Financing Arrangement Receivable Contracts Payable - Current Unearned Revenue (435) 2 Net Cash Provided by (Used For) Operating Activities $ 5,494,786 $ 3,581,201 $ 135,318 $ 2,372,278 SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES: Amortization of Bond Premium/Discount $ (103,726) $ (21,411) $ (142,738) Amortization of Deferred Amount on Refunding of Bonds 38,391 74,228 54,280 Amortization of Loss on Refunding Deferral of Interest Expense on Uncommitted Portion of Long-Term Debt Change in Liabilities Related to Capital Assets (494,397) 756,664 $ 776,308 Change in Assets Related to Capital Assets (70) (575) Change in Fair Value of Investments 18, Bond Selling Costs Retained from Bond Proceeds 254, ,059 Change in Repair and Maintenance Contract Receivable Transfer of Capital Assets 2,547,720 (Continued - 3) -94-

99 EXHIBIT 8-3 NORTHEAST DENTON DENTON CREEK LIVINGSTON TRINITY COUNTY LAKEVIEW CREEK PRESSURE REGIONAL REGIONAL LIVINGSTON WALKER- WASTEWATER WASTEWATER WASTEWATER WATER SUPPLY WATER SUPPLY RECREATION CALLOWAY TRANSPORTATION INTERCEPTOR INTERCEPTOR SYSTEM SYSTEM FACILITIES BRANCHES PROJECT SYSTEM SYSTEM $ (2,626) $ (45,384) $ 66,301 $ (2,219) $ 996,746 NIL $ 71, , ,077 41, ,177 NIL 14,629 19,230 23,059 25,780 (5,818) (1,435) 5,600 16,702 1, ,143 (3,710) (13,783) 76,584 (394,318) 704 (20,032) (2,175) (1,709) 114, ,500 (358) $ 186,882 $ 293,896 $ 127,649 $ (287,756) $ 1,387,480 NIL $ 404,780 $ 2,277 $ 9,364 66,718 $ (2,547,720) (Continued - 4) -95-

100 TRINITY RIVER AUTHORITY OF TEXAS COMBINING STATEMENT OF CASH FLOWS - NONMAJOR ENTERPRISE FUNDS FOR THE FISCAL YEAR ENDED NOVEMBER 30, 2012 CADE DENTON CREEK DENTON CREEK BRANCH WASTEWATER WASTEWATER WASTEWATER INTERCEPTOR TRANSPORTATION SOUTHLAKE INTERCEPTOR FORT SYSTEM SEWER SYSTEM WORTH (GRAHAM BRANCH) PROJECT CASH FLOWS FROM OPERATING ACTIVITIES: Cash Received from Customers $ 197,960 $ 183,220 $ 355,300 Cash Received from Other Funds for Services Cash Received on Direct Financing Arrangement Receivable Other Operating Cash Receipts Cash Payments to Suppliers for Goods and Services $ (3,920) Cash Payments for Employee Services Cash Payments to Other Funds for Services (12) Cash Payments to Customers (1,940) (51,683) Net Cash Provided by (Used For) Operating Activities 197, , ,360 (55,615) CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES: Transfer from Other Authority Funds Other Cash Receipts (Payments) Net Cash Provided by (Used for) Non-Capital Financing Activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition and Construction of Capital Assets Exclusive of Capitalized Interest (5,615,054) Principal Paid on Revenue Bond Maturities (185,000) (135,000) (160,000) Interest Paid on Revenue Bonds and Related Fees (13,125) (45,300) (195,519) Principal Paid on Contracts Payable Interest Paid on Contracts Payable Bond Sale Expenses Paid Paying Agent Fees (600) (601) Contributions Received SEC Disclosure Fees Bond Sale Expenses Refunded Proceeds from Issuance of Bonds System Contribution Refund Cash Payments to Other Authority Funds Net Cash Provided by (Used for) Capital and Related Financing Activities (198,725) (180,901) (5,970,573) CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from the Sales and Maturities of Investments Cash Received for Investment Income , Net Cash Provided by (Used For) Investing Activities , TOTAL CHANGE IN CASH (179) 3,020 (5,604,916) (55,515) CASH, BEGINNING OF YEAR 225, ,578 7,982,124 55,515 CASH, END OF YEAR $ 224,904 $ 356,598 $ 2,377,208 NIL (Continued - 5) -96-

101 EXHIBIT 8-3 ELLIS COUNTY BIG BEAR REGIONAL FREESTONE ENNIS MIDLOTHIAN CREEK HUNTSVILLE SENDERA WATER RAW WATER RAW WATER RAW WATER WASTEWATER WASTEWATER RANCH SUPPLY SUPPLY SUPPLY SUPPLY INTERCEPTOR PROJECT PROJECT PROJECT PROJECT PROJECT PROJECT $ 411,696 $ 144,131 $ 690,322 $ 1,777,069 $ 4,740 $ 5, ,000 $ (5,400) (6,995) (5,425) (709,598) (1,755,739) (1,749) (2,650) (85,938) (2,000) (4,000) (8,080) (21,350) (3,000) (3,000) (21) (91,359) 402, ,706 (27,356) (20) (9) (19) (365,000) (605,000) (7,000) (34,694) (133,771) (368) (400) (500) (500) 10,814 (400,594) (728,457) (7,368) (91,195) 2,657 11,361 (34,318) (9) 91, ,737 43, , ,542 4,082 3,985 NIL $ 236,394 $ 54,813 $ 266,854 $ 314,270 $ 4,086 $ 3,976 (Continued - 6) -97-

102 TRINITY RIVER AUTHORITY OF TEXAS COMBINING STATEMENT OF CASH FLOWS - NONMAJOR ENTERPRISE FUNDS FOR THE FISCAL YEAR ENDED NOVEMBER 30, 2012 CADE DENTON CREEK DENTON CREEK BRANCH WASTEWATER WASTEWATER WASTEWATER INTERCEPTOR TRANSPORTATION SOUTHLAKE INTERCEPTOR FORT SYSTEM SEWER SYSTEM WORTH (GRAHAM BRANCH) PROJECT RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES: Operating Income (Loss) $ 67,854 $ 95,376 $ 116,831 $ (100) Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by (Used for) Operating Activities: Depreciation 54,707 64, ,702 Change in Assets and Liabilities: Due to Other Authority Funds Due from Other Authority Funds Accounts Receivable - Contracting Parties 55,835 23,007 Contracts Receivable Interest Receivable Long-Term Accounts Receivable - Contracting Parties Accounts Receivable Prepaids and Other Assets Accounts Payable - Contracting Parties 19, (1,173) (54,115) Accounts Payable and Accrued Expenses (1,400) Direct Financing Arrangement Receivable Contracts Payable - Current Unearned Revenue Net Cash Provided by (Used For) Operating Activities $ 197,960 $ 183,220 $ 353,360 $ (55,615) SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES: Amortization of Bond Premium/Discount $ (86) $ 414 $ 1,481 Amortization of Deferred Amount on Refunding of Bonds 6,114 3,517 Amortization of Loss on Refunding Deferral of Interest Expense on Uncommitted Portion of Long-Term Debt Change in Liabilities Related to Capital Assets 189,430 Change in Assets Related to Capital Assets (547) Change in Fair Value of Investments Bond Selling Costs Retained from Bond Proceeds Change in Repair and Maintenance Contract Receivable Transfer of Capital Assets (Continued - 7) -98-

103 EXHIBIT 8-3 ELLIS COUNTY BIG BEAR REGIONAL FREESTONE ENNIS MIDLOTHIAN CREEK HUNTSVILLE SENDERA WATER RAW WATER RAW WATER RAW WATER WASTEWATER WASTEWATER RANCH SUPPLY SUPPLY SUPPLY SUPPLY INTERCEPTOR PROJECT PROJECT PROJECT PROJECT PROJECT PROJECT $ (164) $ 44,551 $ 186,230 $ (373) $ (95) $ (13) $ (10) 28, ,799 (55,433) 19,293 10,128 (21) (198,594) 14,951 20,721 (47,427) (10,032) 4 (9) (1,400) (27,431) 365, ,000 (21,801) (16,812) $ (91,359) $ 402,701 $ 739,706 $ (27,356) $ (20) $ (9) $ (19) $ (2,643) $ 17,488 7,768 (14,238) (Continued - 8) -99-

104 TRINITY RIVER AUTHORITY OF TEXAS COMBINING STATEMENT OF CASH FLOWS - NONMAJOR ENTERPRISE FUNDS FOR THE FISCAL YEAR ENDED NOVEMBER 30, 2012 SUMMIT LAKEVIEW REGIONAL REGIONAL WATER WATER NAVARRO STORAGE SUPPLY MILLS BARDWELL PROJECT PROJECT RESERVOIR RESERVOIR CASH FLOWS FROM OPERATING ACTIVITIES: Cash Received from Customers $ 20,384 $ 23,040 $ 2,921,852 $ 743,880 Cash Received from Other Funds for Services Cash Received on Direct Financing Arrangement Receivable Other Operating Cash Receipts Cash Payments to Suppliers for Goods and Services (11,064) (61,356) (3,095,593) (479,116) Cash Payments for Employee Services Cash Payments to Other Funds for Services (6,029) (3,581) (3,600) (15,370) Cash Payments to Customers (5,430) (4,407) (61,685) Net Cash Provided by (Used For) Operating Activities (2,139) (46,304) (239,026) 249,394 CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES: Transfer from (to) Other Authority Funds Other Cash Receipts (Payments) Net Cash Provided by (Used for) Non-Capital Financing Activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition and Construction of Capital Assets Exclusive of Capitalized Interest Principal Paid on Revenue Bond Maturities Interest Paid on Revenue Bonds and Related Fees Principal Paid on Contracts Payable (233,481) Interest Paid on Contracts Payable (48,498) Bond Sale Expenses Paid Paying Agent Fees Contributions Received SEC Disclosure Fees Bond Sale Expenses Refunded Proceeds from Issuance of Bonds System Contribution Refund Cash Payments to Other Authority Funds Net Cash Provided by (Used for) Capital and Related Financing Activities (281,979) CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from the Sales and Maturities of Investments Cash Received for Investment Income ,247 1,224 Net Cash Provided by (Used For) Investing Activities ,247 1,224 TOTAL CHANGE IN CASH (2,098) (46,059) (237,779) (31,361) CASH, BEGINNING OF YEAR 17, , , ,643 CASH, END OF YEAR $ 14,980 $ 90,008 $ 569,390 $ 835,282 (Continued - 9) -100-

105 EXHIBIT 8-3 LANCASTER JOE WATER AND POLLUTION POOL SEWER CONTROL LAKE PROJECT FACILITIES TOTAL $ 498,970 $ 4,950,875 $ 41,951,082 86,031 2,870,000 3,792,500 9,864 (50,057) $ (4,600) (5,757) (15,249,898) (2,937,397) (42,965) (24) (11,250) (2,231,625) (16,130) (101,379) (1,971,866) 389,818 (106,003) 7,803,868 23,448,691 12, ,805 (20,155,962) (2,870,000) (10,217,000) (4,934,485) (12,842,058) (68,507) (301,988) (317,057) (365,555) (167,637) (7,544) 620,176 (66,084) 31,684 34,421,446 (54,792) (30) (385,564) (7,804,485) (9,105,344) 26,315,000 1, ,483 1, ,509,483 5,479 (105,805) (598) 40,865, , ,805 5,974 94,380,580 $ 512,460 NIL $ 5,376 $ 135,246,215 (Continued - 10) -101-

106 TRINITY RIVER AUTHORITY OF TEXAS COMBINING STATEMENT OF CASH FLOWS - NONMAJOR ENTERPRISE FUNDS FOR THE FISCAL YEAR ENDED NOVEMBER 30, 2012 SUMMIT LAKEVIEW REGIONAL REGIONAL WATER WATER NAVARRO STORAGE SUPPLY MILLS BARDWELL PROJECT PROJECT RESERVOIR RESERVOIR RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES: Operating Income (Loss) $ (107,194) $ (129,238) $ 46,606 $ 482,804 Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by (Used for) Operating Activities: Depreciation 107, ,988 Change in Assets and Liabilities: Due to Other Authority Funds Due from Other Authority Funds (1,777) Accounts Receivable - Contracting Parties (1,100) 2,185,468 44,214 Contracts Receivable 40,011 Interest Receivable (14,791) Long-Term Accounts Receivable - Contracting Parties Accounts Receivable Prepaids and Other Assets 19,291 (6,478) Accounts Payable - Contracting Parties (987) 9, ,972 (294,589) Accounts Payable and Accrued Expenses (12) (755) Direct Financing Arrangement Receivable Contracts Payable - Current (2,742,363) Unearned Revenue (55,255) Net Cash Provided by (Used For) Operating Activities $ (2,139) $ (46,304) $ (239,026) $ 249,394 SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES: Amortization of Bond Premium/Discount Amortization of Deferred Amount on Refunding of Bonds Amortization of Loss on Refunding Deferral of Interest Expense on Uncommitted Portion of Long-Term Debt Change in Liabilities Related to Capital Assets Change in Assets Related to Capital Assets Change in Fair Value of Investments Bond Selling Costs Retained from Bond Proceeds Change in Repair and Maintenance Contract Receivable $ (3,578) Transfer of Capital Assets RECONCILIATION OF CASH AND CASH EQUIVALENTS AT END OF YEAR: Current Assets: Cash $ 33,168 Equity in Pooled Cash and Investments 8,243,351 Restricted Assets: Equity in Pooled Cash and Investments 61,749,298 Money Market Fund 65,220,398 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 135,246,215 (Continued - 11) -102-

107 EXHIBIT 8-3 LANCASTER JOE WATER AND POLLUTION POOL SEWER CONTROL LAKE PROJECT FACILITIES TOTAL $ 3,848,754 $ (198) $ 4,960,498 $ 17,065,067 5,997,785 5, ,496 2, ,187 (26,630) 2,804,321 40,011 (14,791) (3,659,692) (3,558,549) (7,316) ,969 59,455 (104,405) (463,593) (1,400) 1,446 2,870,000 4,157,500 (2,742,363) (94,659) $ 389,818 $ (106,003) $ 7,803,868 $ 23,448,691 $ (239,580) 184,298 (14,238) $ 3,596,837 3,596,837 1,294,723 (1,192) 18, ,989 (3,578) NIL (Concluded - 12) -103-

108 THIS PAGE INTENTIONALLY LEFT BLANK -104-

109 COMBINING STATEMENTS ALL INTERNAL SERVICE FUNDS -105-

110 TRINITY RIVER AUTHORITY OF TEXAS COMBINING STATEMENT OF NET ASSETS - INTERNAL SERVICE FUNDS NOVEMBER 30, 2012 INFORMATION SOUTHERN TECHNOLOGY CONSTRUCTION REGION SUPPORT SERVICES SUPPORT SERVICES STAFF SERVICES ASSETS CURRENT ASSETS: Cash $ 125 $ 50 Equity in Pooled Cash and Investments $ 414,998 2,152, ,084 Accounts Receivable Accounts Receivable - Contracting Parties 12,296 Due from Other Authority Funds Prepaids and Other Assets 157, Total Current Assets 572,907 2,165, ,134 CAPITAL ASSETS: Machinery and Equipment 915,691 77,137 42,528 Accumulated Depreciation (521,279) (62,392) (32,925) Total Capital Assets, Net 394,412 14,745 9,603 TOTAL ASSETS 967,319 2,179, ,737 LIABILITIES CURRENT LIABILITIES: Payable from Current Assets: Accounts Payable and Accrued Expenses 160, ,401 34,809 Due to Other Authority Funds 40, ,205 13,885 Claims Payable Total Current Liabilities 200, ,606 48,694 LONG-TERM LIABILITIES: Accounts Payable and Accrued Expenses 31,986 40,097 Other Post Employment Benefits Total Long-Term Liabilities 31,986 40,097 TOTAL LIABILITIES 200, ,592 88,791 NET ASSETS Invested in Capital Assets 394,412 14,745 9,603 Unrestricted 372,786 1,846,519 28,343 TOTAL NET ASSETS $ 767,198 $ 1,861,264 $ 37,

111 EXHIBIT 42-1 STAYWELL RISK HEALTH RETENTION INSURANCE INSURANCE TOTAL $ 175 $ 800,937 $ 843,567 4,328,679 86,574 2,190 88,764 12,296 1,297,490 1,297, ,506 2,185, ,757 5,885,910 1,035,356 (616,596) 418,760 2,185, ,757 6,304,670 11, , , , , ,919 11, ,538 72, , , , , ,785 11,198 1,298, ,760 1,505, ,559 4,587,423 $ 1,505,216 $ 834,559 $ 5,006,

112 TRINITY RIVER AUTHORITY OF TEXAS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - INTERNAL SERVICE FUNDS YEAR ENDED NOVEMBER 30, 2012 INFORMATION SOUTHERN TECHNOLOGY CONSTRUCTION REGION SUPPORT SERVICES SUPPORT SERVICES STAFF SERVICES OPERATING REVENUES: Professional Fees $ 3,703,290 Management Fees $ 1,428,820 $ 519,790 Insurance Premiums Total Operating Revenues 1,428,820 3,703, ,790 OPERATING EXPENSES: Personal Services 635,515 2,637, ,895 Supplies 427,647 50,850 16,036 Other Services and Charges 416, , ,441 Depreciation 109,501 10,964 8,506 Total Operating Expenses 1,589,253 3,443, ,878 OPERATING INCOME (LOSS) (160,433) 259,648 14,912 NON-OPERATING REVENUE: Investment Income 1,370 4, Other Total Non-Operating Revenues - Net 1,520 4, INCOME (LOSS) BEFORE TRANSFERS (158,913) 264,265 15,118 TRANSFERS IN 850 2, TRANSFERS OUT (38,480) CHANGE IN NET ASSETS (158,063) 227,885 15,408 NET ASSETS - DECEMBER 1, ,261 1,633,379 22,538 NET ASSETS - NOVEMBER 30, 2012 $ 767,198 $ 1,861,264 $ 37,

113 EXHIBIT 42-2 STAYWELL RISK HEALTH RETENTION INSURANCE INSURANCE TOTAL $ 3,703,290 1,948,610 $ 4,340,894 $ 632,930 4,973,824 4,340, ,930 10,625,724 3,730,329 7,353, ,533 9, ,084 1,933, ,971 3,739, ,084 9,910, ,185 (154) 715,158 2,923 2,180 11, ,923 2,278 11, ,108 2, ,702 3,240 (99,980) (138,460) 604,108 (97,856) 591, , ,415 4,414,701 $ 1,505,216 $ 834,559 $ 5,006,

114 TRINITY RIVER AUTHORITY OF TEXAS COMBINING STATEMENT OF CASH FLOWS - INTERNAL SERVICE FUNDS YEAR ENDED NOVEMBER 30, 2012 INFORMATION TECHNOLOGY SUPPORT SERVICES CONSTRUCTION SERVICES STAFF SOUTHERN REGION SUPPORT SERVICES CASH FLOWS FROM OPERATING ACTIVITIES: Cash Received from Other Authority Funds for Services Cash Received for Claim Refunds Cash Payments for Claims Cash Payments to Suppliers for Goods and Services Cash Payments for Employee Services Cash Payment for Premiums and Administration Cash Payments to Other Authority Funds for Services Net Cash Provided by (Used for) Operating Activities $ 1,428,820 $ 3,690,994 $ 519,790 (878,544) (293,122) (81,290) (586,290) (2,513,570) (332,855) (501,050) (65,370) (36,014) 383,252 40,275 CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES: Transfers from Other Authority Funds 850 2, Transfers to Other Authority Funds (38,480) Other Income Net Cash Provided by (Used for) Non-Capital Financing Activities 1,000 (36,280) 290 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition and Construction of Capital Assets Exclusive of Capitalized Interest (248,998) CASH FLOWS FROM INVESTING ACTIVITIES: Cash Received for Investment Income 1,370 4, Total Change in Cash and Cash Equivalents (282,642) 351,489 40,771 Cash and Cash Equivalents, Beginning of Year 697,640 1,800,729 76,363 Cash and Cash Equivalents, End of Year $ 414,998 $ 2,152,218 $ 117,134 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES: Operating Income (Loss) $ (160,433) $ 259,648 $ 14,912 Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by (Used for) Operating Activities: Depreciation 109,501 10,964 8,506 Change in Assets and Liabilities: Accounts Receivable Accounts Receivable - Contracting Parties (12,296) Claim Refunds Receivable Accounts Payable and Accrued Expenses 22,416 23,894 1,971 Prepaids and Other Assets (47,543) (223) 1,001 Due to Other Authority Funds 40, ,205 13,885 Due from Other Authority Funds 60 Claims Payable OPEB Obligation Total Adjustments 124, ,604 25,363 Net Cash Provided by (Used for) Operating Activities $ (36,014) $ 383,252 $ 40,275 SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES: Change in Liabilities Related to Capital Assets $ 49,993 RECONCILIATION OF CASH AND CASH EQUIVALENTS AT END OF YEAR: Current Assets: Cash $ 175 Equity in Pooled Cash and Investments 4,328,679 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 4,328,

115 EXHIBIT 42-3 STAYWELL RISK HEALTH RETENTION INSURANCE INSURANCE TOTAL $ 3,043,403 $ 632,930 $ 9,315, , ,018 (3,416,670) (3,416,670) (448,914) (1,701,870) (3,432,715) (612,216) (612,216) (1,590) (41,800) (609,810) (689,055) 142,216 (159,326) 3,240 (99,980) (138,460) (99,882) (134,872) (248,998) 2,923 2,180 11,196 (686,132) 44,514 (532,000) 1,487, ,053 4,860,854 $ 800,937 $ 843,567 $ 4,328,854 $ 601,185 $ (154) $ 715, ,971 1,752 1,752 (12,296) 50,957 50,957 5,373 53,654 39, , , ,135 (1,297,490) (1,297,430) (132,285) (132,285) 49,291 49,291 (1,290,240) 142,370 (874,484) $ (689,055) $ 142,216 $ (159,326) -111-

116

117 Harold L. Barnard, President Ellis County Kim C. Wyatt, Vice President Navarro County Linda D. Timmerman, Ed.D., Chair, Executive Committee Freestone County Patricia Carlson Tarrant County William W. Collins, Jr. Tarrant County Christina M. Crain Dallas County Michael Cronin Kaufman County Steve Cronin San Jacinto County Amanda B. Davis Leon County Ronald J. Goldman At Large, Tarrant County Martha A. Hernandez Tarrant County Harold E. Jenkins Dallas County Jess A. Laird Henderson County Nancy E. Lavinski Anderson County David B. Leonard Liberty County D. Joe McCleskey Trinity County Andrew Martinez Walker County Kevin Maxwell Houston County James W. Neale Dallas County Manny Rachal Polk County Amir A. Rupani At Large, Dallas County Ana Laura Saucedo Dallas County Shirley K. Seale Chambers County J. Carol Spillars Madison County John W. Jenkins At Large, Chambers County J. Kevin Ward General Manager Fiona M. Allen, P.E. Regional Manager, Northern Region Jim R. Sims Regional Manager, Southern Region Thomas D. Sanders Construction Services Manager Alison A. Mackey, CPA Chief Financial Officer Don A. Tucker General Services Manager Sam Scott Executive Services Manager Howard S. Slobodin General Counsel

118 Trinity River Authority of Texas