B E A U R E G A R D P A R ISH W A T E R W O R K S D IST R IC T N O. 2 N O TES TO TH E FIN AN CIAL STA TEM EN I'S (CON TINU ED ) (3) RE C EIV A BLE S T he follow ing is a sum m ary of receivables at D ecem ber 3 1, 2002 : C lass of R eceivable C urrent A ssets C u stom er accounts A d valorem taxes $ 25 369 234.106 T otal $ 259.475 U ncollectable am ounts due for ad valorem taxes and custom er's utility receivables are recognized as bad debts through the direct w rite-of m ethod at the tim e inform ation becom es available w hich w ould indicate that a particular account is not collectible. T he allow ance m ethod for uncollectible accounts is notused due to im m ateriality based on prior years experience. (4) PA Y A BLE S T he follow ing is a sum m ary of accounts payable as of D ecem ber 3 1, 2 002 : V endors and suppliers $17.820 (5) PR O PER TY,PLA N T A N D EQ U IPM EN T A sum m ary of property,plant,and equipm ent at D ecem ber 3 1, 2002 is as follow s: B alance D ecem ber 3 1 A cccum ulated 200 1 A dditions N et L and l $ $ 5,324 T ransportation equipm ent l 56 188 22 4 0 1 B uildings l 8 44 7 32 882 Furniture,fi xtures,and equipm ent 9,0 12 73 4 55 53 9 13 D isribution system 2 8.384 1.663.334 2.2 95.3 17 T otal $ 4,173,865 $ 37 396 $ 1,801,424 $ 2,409.837-12-

B E A U R E G A R D P A R ISH W A T E R W O R K S D IST R IC T N O. 2 N O TES TO TH E FIN AN CIAL STA TEM EN TS (CON I'INU ED ) A lldepreciable assets are depreciated using the straight-line m ethod of depreciation. T he plant and distribution system uses a 30 to 40 year life;the furniture, fixtures and equipm ent,uses 5 to 10 year life;pum ps and com pressors are depreciated over 5 to 10 years. (6) LO N G -TERM D EB T T he follow ing is a sum m ary of the long-term debt transactions of the D istrict for the year ended D ecem ber 3 1,2002 : G eneral O bligation B onds R evenue B onds T otal B onds payable January 1,2002 $ 3 10,000 $ 1,790,320 $ 2,100,320 B onds retired (35,000) (1,598,951) (1,633,951) D eferred am ount on refunding (11,723) (32,706) (44,429) B ond proceeds 1.4 12.000 1.4 12.000 B onds payable D ecem ber 31,2002 $ 263, 277 $ 1,570,663 $ 1.833.940 B onds payable at D ecem ber 3 1, 2002 are com prised of the follow ing individualissues: G eneralobligation bonds: $3 75,000 G eneralo bligation R efunding B onds, Series 1998, dated June 1, 1998,due m annual installm ents of $30,000 to $45,000 through M arch 1,2009;in. terest at 5. 00%,~ssue secured by levy and collection of ad valorem tax $ 275. 000 R evenue refunding bonds: $245,000 T axable W ater R evenue R efunding B onds, Series 1998, dated June 1, 1998,due in annualinstallm ents of $7,83 5 to $26, 3 19. through A pril 1,20 10;in terest at 7. 00% $ 191. 369 R evenue refunding bonds: d$1,412~000w aterrevenuerefunding Bonds,Series2002, ated eptem ber 1,2002,due in annualinstallm ents of $20,000 to $157,000 beginning A pril 1,2003 through A pril 1, 2 0 17; interest at 5.00% $ 1.4 12,.000-13-

B E A U R E G A R D P A R ISH W A T E R W O R K S D IST R IC T N O. 2 N O TES TO TH E FIN AN CIAL STA TEM EN TS (CON TINUED ) T he annualrequirem ents to am ortize alldebt outstanding as of D ecem ber 3 1, 2 002 including interestpaym ents of $ 774,011 are as follow s: G eneral O bligation Y ear E nding B onds R evenue B onds T otal 2003 $ 47 875 $ 177,693 2004 4 6 12 5 200 22 1 2 00 5 44,375 19 7 732 2006 47.500 2 00 94 1 2 007 4 5 500 197 85 1 2008-20 12 94 500 873 442 2 0 13-2 0 17 804.500 T otals $ 325.875 $ 2.326.505 $ 2.652.380 A sum m ary of bond issuance cost at D ecem ber 3 1, 2002 is as follow s: B ond issuance cost $ 45,145 less:accum ulated am ortization N et bond issuance cost $ 35.525 O n Septem ber 1,2002 B eauregard P arish W aterw orks D istrict N o. 2 issued $1,4 12,000 in W ater R evenue R efunding B onds,series 2002, w ith an interest rate of 5. 00% to com plete a cu rrent refunding Of $ l,556,26 1 of outstanding W ater R evenue B onds dated N ovem ber 18, 199 1 w ith an interest rate of T he current refunding resulted in a dif erence betw een the reacquisition price and the net carrying am ount of the old debt of $16,917. T his dif erence, reported in the accom panying financialstatem ents as a deduction from bonds payable, is being charged to operations through the year 20 17 using the ef ective interest m ethod. T he w aterw orks district com pleted the current refu nding to reduce its totaldebt service paym ents over the next 30 yearsby $1,512,821and to obtain an econom ic gain (diference betw een the presentvalues of the old and new debtservice paym ents)of $232,822. - 14 -

B E A U R E G A R D P A R ISH W A T E R W O R K S D IST R IC T N O. 2 N O TES TO TH E FIN AN CIAL STA TEM EN I'S (CON TINU ED ) T able 1 D ebt Service R equirem ents of the N ew D ebt and C alculation of the E f ective Interest R ate Interest D ebt Service D ate P rincipald ue R ate Interest P aym ents P resent V alue 1-A pr-03 2 0 000 4 1 183 6 1 183 59 479 1-O ct-03 34,800 34,800 33 006 1-A pt-04 53 000 34 800 87.800 8 1 242 1-O ct-04 33 475 33 475 30.2 19 1-A pr-05 56 000 33 475 89 475 78.803 1-O ct-05 32 07 5 32 07 5 2 7.560 1-A pr-06 60 000 32 07 5 92 07 5 77 186 1-O ct-06 30 57 5 30 57 5 2 5 006 1-A pt-07 63 000 30,575 93 575 74 664 1-O ct-07 29 000 29 000 22 57 5 1-A pt-08 66 000 29,000 95 000 72 150 1-O ct-08 2 7,350 27 350 20 265 1-A pt-09 69 000 27,350 96 350 69 649 1-O ct-09 2 5 62 5 2 5 62 5 18 072 1-A pr-10 73 000 2 5 62 5 9 8 62 5 67 859 1-O ct-10 2 3 800 23 800 15 976 1-A pr- 11 117 000 2 3 800 140,800 92,2 11 1-O ct- 11 20 875 20 875 13 33 8 1-A pt-12 123 000 20 875 143 875 89 685 1-O ct-12 17 800 17 800 10.82 5 1-A pt-13 12 9 000 17 800 146 800 87 100 1-O ct-13 14,575 14 575 8 437 1-A pr-14 135 000 14,575 149 575 84 47 1 1-O ct-14 11 2 00 11 2 00 6 17 1 1-A pr-15 142 000 11 2 00 153 200 82 3 50 1-O ct-15 7 6 50 7.650 4 0 12 1-A pr-16 149 000 7 650 156.650 3 80 147 1-O ct-16 3 92 5 3 92 5 1 959 1-A pr-17 157.000 3.92 5 160.92 5 78.367 $ 1.4 12.000 $ 666.633 $ 2.078.633 $ 1.4 12.784-15-

B E A U R E G A R D P A R ISH W A T E R W O R K S D IST R IC T N O.2 N O TES TO TH E FIN AN CIAL STA TEM EN TS (CON I'INU ED ) Table 1(Continued) D ebt Service R equirem ents of the N ew D ebt and C alculation of the E f ective Interest R ate C alculation of effective interest rate target am ount and rate: P rincipalam ount of new debt $ 1,4 12,000 P lu s: A ccru ed interest,9/1/02-9/5/02 E ffective interest rate target 7 84 $ 1.4 12.784 E ffective interest rate 4.999092% - 16-

B E A U R E G A R D P A R ISH W A T E R W O R K S D IST R IC T N O.2 N O TES TO THE FIN AN CIAL STA TEM EN TS (CON TINU ED ) T able 2 D ebt Service R equirem ents of the O ld D ebt D ebt Service D ate Interest R ate Interest P resent V alue 3 1-D ec-02 $ 5,858 $ 35,305 $ 4 1,163 $ 39,203 3 1-D ec-03 18 384 105 105 12 3 4 89 112 008 3 1-D ec-04 19,664 103 82 5 123 4 89 106 674 3 1-D ec-05 2 1,033 102.,4 56 12 3 4 89 10 1 594 3 1-D ec-06 22.497 100 99 1 123 488 96 7 57 3 1-D ec-07 24,064 99 42 5 123 4 89 92 150 3 1-D ec-08 2 5,739 97 749 123 4 88 87 76 1 3 1-D ec-09 27,53 1 95 957 123 4 88 83 582 3 1-D ec- 10 29,44 8 94 040 123 4 88 79 602 3 1-D ec- 11 3 1 499 9 1 890 123 3 89 75 8 11 3 1-D ec- 12 33 692 89.796 12 3 4 88 72 20 1 3 1-D ec- 13 36.038 87.4 50 12 3 4 88 6 8 763 3 1-D ec- 14 3 8 547 84 94 1 12 3 4 88 6 5 4 88 3 1-D ec- 15 4 1 23 1 82 2 57 123 4 88 62 3 70 3 1-D ec- 16 443102 79.386 123 4 88 59 4 00 3 1-D ec- 17 47 173 76.3 16 123 4 89 56 57 1 3 1-D ec- 18 50.4 57 73 03 1 123 4 88 53 878 3 1-D ec- 19 53 97 1 69 5 18 123 4 89 5 1 308 3 1-D ec-20 57 72 8 65 760 123 4 88 4 8 868 3 1-D ec-2 1 6 1 748 6 1 740 123 488 46.542 3 1-D ec-22 66 047 57 44 1 123 4 88 44,32 5 3 1-D ec-23 70 646 6.75% 52 842 123 4 88 42.2 15 3 1-D ec-24 75 565 47 923 123 4 88 40.204 3 1-D ec-2 5 80 826 42 662 12 3 4 88 3 8 290 3 1-D ec-26 86 4 54 37 034 123 4 88 36.4 66 3 1-D ec-27 92 4 74 3 1 0 15 123 4 89 34,730 3 1-D ec-2 8 98 9 13 24 576 123 4 89 33 076 3 1-D ec-29 105 800 l 7 689 123 4 89 3 1 50 1 3 1-D ec-30 113 166 10 32 1 123 4 87 30 002 3 1-D ec-3 1 75.966 2.600 7 8_566 18.177 $ 1.556,261 $ 2.02 1,04 1 $ 1,809,517-17-

B E A U R E G A R D P A R ISH W A T E R W O R K S D IST R IC T N O.2 N O TES TO TH E FIN AN CIAL STA TEM EN TS (CON TIN U ED ) T able 3 C alculation of D if erence in C ash Flow R equirem ents and E conom ic G ain C A SH F L O W D IF F E R E N C E O ld debt service cash fl ow s $ 3,577,402 N ew debt service cash fl ow s $ 2,078,633 L ess accru ed interest included in 9/1/02 paym ent (784) P lus w aterw orks district contribution from sinking fund resources 164 _69 5 2 _242 _544 $ 1.334.858 E C O N O M IC G A IN P resent value of old debt service cash fl ow s $ 1,809,517 P resent value of new debt service cash fl ow s $ 1,4 12,784 L ess accru ed interest included in 9/1/02 paym ent (784) P lus w aterw orks district contribution from sinking fund resources 164.695 1.576.69 5 $ 232.822 (7) C O M M ISSIO N ER FEE S T he follow ing is a breakdow n of com m issioner's fees for the year ended D ecem ber 3 1, 2002. N um ber of A m ount of N am es T otalp aid R onnie C agle 12 $ 35 P aul C ooley 15 35 M.B.F ranks 15 3 5 M elvin C rabtree 10 35 R u ssellh avens 14 3 5 T otal $ 2.310-18-

B E A U R E G A R D P A R ISH W A T E R W O R K S D IST R IC T N O.2 N O TES TO THE FIN AN CIAL STATEM EN TS (CON CLUD ED ) T he schedule of com pensation paid board m em bers is presented in com pliance w ith H ouse C oncurrent R esolution N o.54 of the 1979 Session of the L ouisiana L egislature and w ithin the provisions of R.S.33 :3 8 19. (8) R ETIR EM EN T C O M M EN TS A llem ployees of the D istrict are m em bers of the F ederalsocialsecurity System. T he D istrict contributes 7.65% of gross salaries up to appropriate statutory lim its to that system. T he F ederalsocialsecurity adm inistration adm inisters the plan and pays benefits. (9) PRIO R A U D IT FIN D IN G S T here w ere no prior year audit findings as of the year-end D ecem ber 3 l,2002. (10) C H A N G E S IN C O N TRIBU TED CA PITA L T he follow ing is a sum m ary of changes in contributed capitalfor the year ended D ecem ber 3 1 2002 : B alance D ecem ber 3 1,200 1 $ 454,750 A dditions: State of L ouisiana D epartm ent of T ransportation and D evelopm ent W aterline Relocation Project B alance D ecem ber 3 1,2002 23 857 $ 478,607 (11) RE SER V ED RE TA IN ED EA R N IN G S R E ST R IC T E D A S SE T S R evenue bonds sinking funds R evenue bonds reserve fund R evenue bonds depreciation and contingency funds T otal $ 195,361 6 809 68.6 10 $ 270,780 L ess: L IA B IL IT IE S P A Y A B L E FR O M R E ST R IC T E D A SSE T S C urrent portion of revenue bonds A ccru ed interest on revenue bonds $ 41 180 2 6_974 T otal R eserved R etained E arnings $ 202,626-19-

J oh n A.W in d h am.c P A A ProfessionalCorporation 1620 N orth P in e Street D er id d er,l A 70634 Tel:(337)462-3211 F ax:~337) 462-0640 Joh n A.W in d h am,c P A R E P O R T O N C O M P L IA N C E A N D O N IN T E R N A L C O N T R O L O V E R F IN A N C IA L R E P O R T IN G B A SE D O N A N A U D IT O F FIN A N C IA L ST A T E M E N T S P E R F O R M E D IN A C C O R D A N C E W IT H G O V E R N M E N T A U D IT IN G ST A N D A R D S B oard of C om m issioners B eauregard P arish W aterw orks D istrict N o.2 Singer,L ouisiana I have audited the generalpurpose financialstatem ents of B eauregard P arish W aterw orks D istrict N o.2,a com ponent unit of the B eauregard P arish P olice Jury,D er idder,l ouisiana,as of and for the year ended D ecem ber 3 1,2002,and have issued m y reportthereon dated June 25,2003. I conducted m y audit in accordance w ith auditing standards generally accepted in the U nited States of A m erica and the standards applicable to financialaudits contained in G overnm enta uditing Standards,issued by the C om ptroller G eneralof the U nited States. A s part of obtaining reasonable assurance about w hether B eauregard P arish W aterw orks D istrict N o.2's generalpurpose financialstatem ents are free of m aterialm isstatem ent,i perform ed tests of its com pliance w ith certain provisions of law s,regulations,contracts and grants,noncom pliance w ith w hich could have a direct and m aterialef ect on the determ ination of financialstatem ent am ounts. H ow ever,providing an opinion on com pliance w ith those provisions w as not an objective of m y auditand,accordingly,ido notexpresssuch an opinion. The resultsof m y tests disclosed no instances of noncom phance that are required to be reported under G overnm ent A uditing Standards. InternalC ontrolo ver F inancialr edortin In planning and perform ing m y audit,i considered B eauregard P arish W aterw orks D istrict N o.2's internalcontrolover financialreporting in order to determ ine m y auditing procedures for the purpose - 2 0-

B oard of C om m issioners B eauregard P arish W aterw orks D istrict N o.2 Singer,L ouisiana of expressing m y opinion on the generalpurpose financialstatem ents and not to pro vide assurance on the in ternalcontrolover financialreporting. M y consideration of the internalcontrolover financ!alreporting wouldnotnecessarily disclosealmatersm theinternalcontroloverfinancial. rep d ȯrtmg thatm!ghtbematerialweaknesses.a materialweaknessisaconditioninwhichthe esign or operation of one or m ore of the internalcontrolstructure elem ents does not reduce to a relanvely low levelthe risk that m isstatem ents in am ounts that w ould be m aterialin relati on to the generalpurpose financialstatem ents being audited m ay occur and not be detected w ithin a tim ely period by em ployees in the norm alcourse of perform ing their assigned functions.. I noted no m atters re volving the internalcontrolover financialreporting and its operation that I consider to b e m aterialw eaknesses. D er idder,l ouisiana June 2 5,2003-2 1-