Tacoma Narrows Airport Financial Report December 2008 City of Tacoma Transportation Services Division Public Works Department Prepared by: Michele Tuong
Table of Contents Management s Discussion and Analysis... 3 Financial Statements... 7 Notification These financial statements are interim, unaudited reports prepared primarily for the use of management. Not all transactions reported in these statements have been recorded on the full accrual basis of accounting or in accordance with generally accepted accounting principles. 1
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Management s Discussion and Analysis 3
City of Tacoma, Washington Public Works Department Tacoma Narrows Airport Management s Discussion and Analysis December 31, 2008 The following is a narrative overview and analysis of the financial activities of the Tacoma Narrows Airport for the year ended December 31, 2008. This discussion and analysis is designed to focus on significant financial issues and activities and to identify any changes in the financial position. The information presented here should be read in conjunction with the financial statements taken as a whole. The financial statements are prepared on a full accrual basis of accounting. Financial Highlights A total of $9.3 million in grant revenue was recorded in 2008 from the FAA for 95% of the funding for construction costs associated with the FAA mandated runway safety improvements. On December 31, 2008 the City of Tacoma sold the Airport to Pierce County for $3 million with the first million received in January 2009, and the balance to be paid on or before December 31, 2010. The cash balance of $525,000 remaining after paying 2008 expenses has been accrued and recorded as a payable to Pierce County per the agreement. Financial Analysis Condensed Balance Sheets As of December 31, Increase 2008 2007 (Decrease) Current assets $ 5,343,489 $ 584,908 $ 4,758,581 Capital assets 5,736,153 (5,736,153) Total assets $ 5,343,489 $ 6,321,061 $ (977,572) Total liabilities $ 5,093,180 $ 2,958,569 $ 2,134,611 Invested in capital assets, net of related debt 5,736,153 (5,736,153) Unrestricted assets 250,309 (2,373,661) 2,623,970 Total net assets 250,309 3,362,492 (3,112,183) Total liabilities and net assets $ 5,343,489 $ 6,321,061 $ (977,572) Current assets Total current assets increased $4.8 million from a year ago. This sizable increase is due primarily to the $4.6 million increase in receivables of $3 million from Pierce County for the sale of the airport and $1.6 million from the FAA for grant reimbursement. Capital assets This account has a zero balance due to the transfer of capital assets to Pierce County. Current liabilities Total liabilities increased $2.1 million to $5.1 million in 2008. The significant changes include the payable to Pierce County for $525,000 for the remaining cash balance and $1.6 million to various vendors primarily related to the runway construction. 4
A $2,850,000 General Fund loan is outstanding and will be repaid by the sale proceeds from Pierce County. The due date for the loan is 12/31/2011. Financial Analysis Condensed Statements of Revenues, Expenses and Changes in Net Assets Year to Date December Increase 2008 2007 (Decrease) Operating revenue $ 911,556 $ 737,746 $ 173,810 Operating expense 443,822 707,581 (263,759) Operating income (loss) 467,734 30,165 437,569 Net nonoperating income (loss) (3,579,917) 683,352 (4,263,269) Change in net assets (3,112,183) 713,517 (3,825,700) Total net assets beginning of year 3,362,492 2,648,975 713,517 Total net assets ending $ 250,309 $ 3,362,492 $ (3,112,183) Operating revenues In 2008, operating revenues increased $174,000, or 24%. This is mostly due to the rental rates increases and the new Northwest Hangar land lease that brought in $157,000 more revenues in 2008. Northwest Hangars switched to a land lease and began operations in late 2007. This land lease was approved by Resolution No. 36979 dated October 3, 2006. Operating expenses In 2008, operating expenses decreased $264,000, or 37%, over 2007. This decrease is largely due to a decrease of $149,000 in depreciation on assets which were fully depreciated at the end of 2007. Service and other charges decreased $95,000 or 22% over 2007 and personnel services charges decreased $21,000. 5
Operating Expenses ($ in thousands) Dollars in thousands 500 450 400 350 300 250 200 150 100 50-340 436 Service and Other Charges 7 28 Personnel Services 4 2 Supplies 93 242 Depreciation 2008 2007 Cost elements Nonoperating income (loss) Construction grant revenue for 2008 totaled $9.3 million, the loss on the sale of the Airport capital assets totaled $12.8 million, and interest expensed on the loan from the General Fund totaled $119,000. Financial Analysis Condensed Statements of Cash Flows Net cash from: Year to Date December Increase 2008 2007 (Decrease) Operating activities $ 486,078 $ 260,084 $ 225,994 Noncapital financing activities 44,656 (44,656) Capital and related financing activities (288,682) (242,023) (46,659) Investing activities 25,694 23,810 1,884 Change in cash and cash equivalents 223,090 86,527 136,563 Cash and equity in pooled investments, beginning balance 426,552 340,025 86,527 Cash and equity in pooled investments, ending balance $ 649,642 $ 426,552 $ 223,090 Operating activities In 2008, cash flow from operating activities is $226,000 more than in 2007. This is mostly due to the increase of cash receipts from customers of $161,000 due to increased revenue. Payments to suppliers decreased $66,000 and payments to employees decreased $21,000. Noncapital financing activities The $46,000 of cash received in 2007 was FEMA reimbursements for storm damage. Capital and related financing activities Cash used in capital and related financing activities increased $47,000 from 2007. $100,000 was due to the prepayment of interest to the General Fund in 2008. 6
Financial Statements 7
City of Tacoma, Washington Public Works Department Tacoma Narrows Airport Balance Sheets (Unaudited) December 31, Increase ASSETS 2008 2007 (Decrease) Current assets: Cash and equity in pooled investments $ 649,642 $ 426,552 $ 223,090 Accounts receivable 20,148 152,997 (132,849) Due from other fund 12 12 Due from other governmental units 4,573,687 4,573,687 Prepaid expenses 100,000 5,359 94,641 Total current assets 5,343,489 584,908 4,758,581 Capital assets: Land 2,371,494 (2,371,494) Buildings & improvements 2,637,042 (2,637,042) Airport infrastructure & equipment 3,689,825 (3,689,825) Less accumulated depreciation (4,396,274) 4,396,274 Assets in service 4,302,087 (4,302,087) Construction in progress 1,434,066 (1,434,066) Total capital assets (net of accumulated depreciation) 5,736,153 (5,736,153) Total assets $ 5,343,489 $ 6,321,061 $ (977,572) LIABILITIES Current liabilities: Accounts payable $ 1,697,791 $ 70,000 $ 1,627,791 Accrued taxes payable 27 21,163 (21,136) Deposits payable 19,625 17,059 2,566 Due to other funds 737 347 390 Due to other governmental units 525,000 525,000 Interfund loans 2,850,000 2,850,000 Total current liabilities 5,093,180 2,958,569 2,134,611 Total liabilities 5,093,180 2,958,569 2,134,611 NET ASSETS Capital assets 5,736,153 (5,736,153) Unrestricted 250,309 (2,373,661) 2,623,970 Total net assets 250,309 3,362,492 (3,112,183) TOTAL LIABILITIES AND NET ASSETS $ 5,343,489 $ 6,321,061 $ (977,572) These statements should be read in conjunction with the Notes to the Financial Statements contained in the 2008 Comprehensive Annual report (CAFR). 8
Tacoma Narrows Airport Statements of Revenues, Expenses, and Changes in Net Assets (Unaudited) Month of December Year to Date December 2008 2007 2008 2007 % Chg OPERATING REVENUES Landing fees $ 701 $ 892 $ 3,504 $ 2,839 23% Land leases 20,643 7,141 248,439 91,206 172% FBO rent 10,240 8,683 108,825 103,686 5% Commercial rent 10,353 4,655 123,028 118,409 4% Aircraft tie down 3,035 1,790 22,923 24,197 (5%) Fuel flow fees 2,168 1,267 27,325 25,776 6% Hangar rentals 40,292 30,967 376,965 371,381 2% Airport late fees 157 547 252 117% Total operating revenues 87,589 55,395 911,556 737,746 24% OPERATING EXPENSES Service and other charges 91,269 23,891 340,393 435,743 (22%) Personnel services 5,411 6,690 27,838 (76%) Supplies 637 3,667 1,973 86% Depreciation 7,756 7,973 93,072 242,027 (98%) Total operating expenses 105,073 31,864 443,822 707,581 (37%) Operating income (loss) (17,484) 23,531 467,734 30,165 1,451% NONOPERATING REVENUES (EXPENSES) Investments revenue 2,692 966 25,056 15,192 65% Construction grant revenues 1,589,780 66,984 9,281,207 651,860 1,324% Gain/loss on disposal of asset (15,767,670) (15,767,670) N/A Proceeds from assets sale 3,000,000 3,000,000 N/A Interest on interfund loan (9,066) (11,147) (119,148) (122,987) (3%) FEMA reimbursements 130,669 130,669 (100%) GASB 31 gain/loss 638 8,618 638 8,618 (93%) Total nonoperating revenue (expense) (11,183,626) 196,090 (3,579,917) 683,352 (624%) CHANGE IN NET ASSETS Change in net assets $ (11,201,110) $ 219,621 (3,112,183) 713,517 (536%) Total net assets beginning 3,362,492 2,648,975 27% Total net assets ending $ 250,309 $ 3,362,492 (93%) These statements should be read in conjunction with the Notes to the Financial Statements contained in the 2008 Comprehensive Annual report (CAFR). 9
City of Tacoma, Washington Public Works Department Tacoma Narrows Airport Statements of Cash Flows (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Year to Date December Source 2008 2007 (Use) Receipts from customers $ 893,628 $ 732,221 $ 161,407 Payments to suppliers (379,654) (445,598) 65,944 Payments to employees (6,660) (27,929) 21,269 Taxes paid (21,236) 1,390 (22,626) Net cash provided (used) by operating activities 486,078 260,084 225,994 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES FEMA reimbursement 44,656 44,656 Net cash provided (used) by noncapital financing activities 44,656 44,656 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Grant proceeds for capital construction 8,475,009 584,876 7,890,133 Acquisition and construction of capital assets (8,544,543) (703,912) (7,840,631) Interest paid (219,148) (122,987) (96,161) Net cash provided (used) by capital and related financing activities (288,682) (242,023) (46,659) CASH FLOWS FROM INVESTING ACTIVITIES Interest and dividends received 25,056 15,192 9,864 GASB 31 gain/loss 638 8,618 Net cash provided by investing activities 25,694 23,810 1,884 Net increase in cash and equity in pooled investments 223,090 86,527 136,563 Cash and equity in pooled investments at beginning of year 426,552 340,025 86,527 Cash and equity in pooled investments ending $ 649,642 $ 426,552 $ 223,090 These statements should be read in conjunction with the Notes to the Financial Statements contained in the (CAFR) 2008 Comprehensive Annual Report. 10
City of Tacoma, Washington Public Works Tacoma Narrows Airport Statements of Cash Flows (Unaudited) Year to Date December Source 2008 2007 (Use) Reconciliation of operating income to net cash provided from operating activities: Net operating income (expense) $ 467,734 $ 30,165 $ 437,569 Adjustments to reconcile operating income to net cash from operating activities: Depreciation expense 93,072 242,027 (148,955) Change in operating assets: Accounts receivable (20,148) (20,148) Prepaid expenses 5,359 (275) 5,634 Due from other funds (12) (12) Due to other funds 390 (7,607) 7,997 Accounts payable (41,746) (41,746) Accrued wages, benefits, and long term compensated absences (91) 91 Accrued taxes payable (21,136) 1,390 (22,526) Deferred revenue (4,986) 4,986 Deposits payable 2,565 (539) 3,104 Total adjustments 18,344 229,919 (211,575) Net cash from operating activities $ 486,078 $ 260,084 $ 225,994 These statements should be read in conjunction with the Notes to the Financial Statements contained in the (CAFR) 2008 Comprehensive Annual Report. 11
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