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Paris Economic Development Corp. FY 2011-12Paris Economic Development Corporation (A Component Unit of the City of Paris, Texas) Independent Auditors' Report and Financial Statements For the Year Ended September 30, 2012 Paris Economic Development Corporation (A Component Unit of the City of Paris, Texas) Table of Contents September 30, 2012 Independent Auditors' Report 1 Financial Statements: Governmental Funds Balance Sheet/Statement of Net Assets 3 Statement of Revenues, Expenditures, and Changes in Fund Balances/ Statement of Activities 4 Notes to Financial Statements 5 Required Supplementary Information — Budgetary Comparison Schedule - General Fund 10 Notes to Required Supplementary Information 11 Continuing Disclosure Information (Unaudited) 12 McClanahan and Holmes, LLP CERTIFIED PUBLIC ACCOUNTANTS R. E. BOSTWICK, CPA STEVEN W.MOHUNDRO,CPA GEORGE H. STRUVE, CPA ANDREW B. REICH, CPA RUSSELL P. WOOD, CPA DEBRA J. WILDER, CPA Inde�endent Auditors' Report Board of Directors Paris Economic Development Corporation Paris, Texas 228 SIXTH STREET S.E. PARIS, TEXAS 75460 903-784�316 FAX 903-784-4310 304 WEST CHESTNUT DENISON, TEXAS 75020 903-465-6070 FAX 903-465-6093 1400 WEST RUSSELL BONHAM, TEXAS 75418 903-583-5574 FAX 903-583-9453 We have audited the accompanying financial statements of Paris Economic Development Corporation (PEDC), a component unit of the City of Paris, Texas, as of and for the year ended September 30, 2012, as listed in the table of contents. These financial statements are the responsibility. of PEDC's management. Our responsibility is to express an opinion 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. 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 significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides us with a reas,onable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of PEDC as of September 30, 2012, and the results of its activities for the year then ended in conformity with accounting principles generally accepted in the United States of America. Our audit was conducted for the purpose of forming an opinion on the financial statements taken as a whole. The Continuing Disclosure Information is presented for purposes of additional analysis and is not a required part of the financial statements. Such information has not been subjected to the auditing procedures applied in the audit of the financial statements, and accordingly, we express no opinion on it. Accounting principles generally accepted in the United States of America require that the budgetary comparison information on page 10 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 imancial 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. AMERICAN INSTITUTE OF CERTIFIED PUBL�C ACCOUNTANTS Board of Directors Paris Economic Development Corporation Page 2 Management has not presented Management's Discussion and Analysis that governmental accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing 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. Our opinion on the basic financial statements is not affected by this missing information. March 25, 2013 Paris, Texas `��,�G��°� � ��� ,1� Certified Public Accountants 2 AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS Paris Economic Development Corporation (A Component Unit of the City of Paris, Texas) Govemmental Funds Balance Sheet/Statement of Net Assets September 30, 2012 ASSETS Cash and Cash Equivalents Investments in Certificates of Deposit Accounts Receivable - Sales Tax Restricted Assets Bond Debt Service Fund Cash and Cash Equivalents Bond Reserve Fund Cash and Cash Equivalents Land Development Costs Unamortized Bond Expense Total Assets LIABILITIES Accounts Payable Liabilities Payable from Restricted Assets Current Portion of Bonds Payable Accrued Interest Payable Bonds Payable - Net of Current Portion Total Liabilities FUND BALANCES/NET ASSETS Fund Balances: Nonspendable - Land Development Costs Restricted for Debt Service Committed to Industrial Incentives Unassigned Total Fund Balances Total Liabilities and Fund Balances Net Assets: Nonspendable - Land Development Costs Restricted for Debt Service Committed to Industrial Incentives Unassigned Total Net Assets General Debt Service Fund Fund Total Adjustments* $ 2,413,639 $ - $ 2,413,639 $ - 572,344 - 572,344 - 205,000 - 205,000 - 73,964 73,964 - Governmental Activities $ 2,413,639 572,344 205,000 73,964 - 470,977 470,977 - 470,977 1,655,772 - 1,655,772 - 1,655,772 _ _ - 59,231 59,231 $ 4,846,755 $ 544,941 $ 5,391,696 $ 59,231 $ 5,450,927 $ 111,126 $ � - $ 111,126 $ - $ 111,126 _ - (290,000) 290,000 _ - (5,439) 5,439 _ _ - (1,570,000) 1,570,000 111,126 - 111,126 (1,865,439) 1,976,565 1,655,772 - 1,655,772 1,655,772 - - 544,941 544,941 544,941 - 1,565,177 - 1,565,177 1,565,177 - 1,514,680 - 1,514,680 1,514,680 - 4,735,629 544,941 5,280,570 5,280,570 - $ 4,846,755 $ 544,941 $ 5,391,696 - - *Primarily long-term liabilities not reported in the funds (1,655,772) 1,655,772 (249,502) 249,502 (1,565,177) 1,565,177 (3,911) 3,911 $(3,474,362) $ 3,474,362 The accompanying notes to the financial statements are an intergral part of this statement. 3 Paris Economic Development Corporation (A Component Unit of the City of Paris, Texas) Statement of Revenues, Expenditures, and Changes in Fund Balances/Statement of Activities For the Year Ended September 30, 201 Z General Debt Service Statement of Fund Fund Total Adjustments* Activities Revenues: Sales Tax $ 1,198,772 $ - $ i,198,772 $ - $ 1,198,772 Investment Earnings 9,860 1,972 11,832 - 11,832 Miscellaneous 7,500 - 7,500 - 7,500 Total Revenues 1,216,132 1,972 1,218,104 - 1,218,104 Expenditures: Industrial Support and Incentives 1,757,106 - 1,757,106 - 1,757,106 Office Supplies and Postage 8,616 - 8,616 - 8,616 Communications - Telephone 6,525 - 6,525 - 6,525 Car Allowance 12,000 - 12,000 - 12,000 Insurance and Bonds 2,859 - 2,859 - 2,859 TravelExpenses 23,651 - 23,651 - 23,651 Utilities and Miscellaneous 2,054 - 2,054 - 2,054 Contractual - Associations 9,410 - 9,410 - 9,410 Training 7,626 - 7,626 - 7,626 Promotional Advertising 39,811 - 39,811 - 39,811 Chamber Administration Fee 60,000 - 60,000 - 60,000 Personnel Compensation 238,396 - 238,396 - 238,396 Industrial Park 9,855 - 9,855 - 9,855 Sundry Charges 4,900 - 4,900 - 4,900 Equipment 4,834 - 4,834 - 4,834 Civil Management and Leadership 13,160 - 13,160 - 13,160 Global Recruiting Attraction 60,493 - 60,493 - 60,493 Advanced Manufacturing Academy 37,264 - 37,264 - 37,264 Entrepreneurial Resources 29,991 - 29,991 - 29,991 RuralInnovation 28,158 - 28,158 - Z8,158 Diversity Initiative 44,908 - 44,908 - 44,908 Paris Living Agreement 10,000 - 10,000 - 10,000 Research 360 Analyst 15,995 - 15,995 - 15,995 Richard Sale Phase I and II 48,904 - 48,904 - 48,904 Contract Labor 10,939 - 10,939 - 10,939 Debt Service - Principal - 280,000 280,000 (280,000) - Debt Service - Interest - 71,088 71,088 (546) 70,542 Total Expenditures 2,487,455 351,088 2,838,543 (280,546) 2,557,997 Excess (Deficit) of Revenues Over Expenditures Other Financing Sources (Uses): Transfer - Intemal Activities Amortization Total Other Financing Sources (Uses) Excess (Deficit) of Revenues and Other Sources Over Expenditures and Other Uses Fund BalancesMet Assets: Beginning of Year Fund Balances/Net Assets: End of Year *Primarily long-term liabilities not reported in the funds (1,271,323) (349,116) (1,620,439) (280,546) (1,339,893) (315,120) 315,120 - - ' _ _ _ (16,145) (16,145) (315,120) 315,120 - (16,145) (16,145) (1,586,443) (33,996) (1,620,439) (264,401) (1,356,038) 6,322,072 _ � %�,937 6,901,009 2,070,609 4,830,400 $ 4,735,629 $ 544,941 $ 5,280,570 $ 1,806,208 $ 3,474,362 The accompanying notes to the financial statements are an intergral part of this statement. 4 Paris Economic Development Corporation (A Component Unit of the City of Paris, Texas) Notes to Financial Statements September 30, 2012 Note 1: Organization The Paris Economic Development Corporation (PEDC) is a governmental non-profit corporation established July 19, 1993, funded by a quarter percent sales taY. PEDC was organized exclusively for the purpose of benefiting and accomplishing public purposes of the City of Paris, Texas, by promoting, assisting, and enhancing economic development activities as provided by the Development Corporation Act of 1979. PEDC is a component unit of the City of Paris, Texas, and the business and affairs are managed by a fve-member board of directors appointed by the governing body of the City of Paris, Texas. Note 2: Summary of Significant Accounting Policies A. Measurement Focus, Basis of Accounting, and Basis of Presentation The accounting policies of PEDC conform to accounting principles generally accepted in the United States of America as applicable to governments. The following is a summary of the more significant accounting policies: Financial Statements — Combined Governmental Funds and Government-Wide Statements PEDC's financial statements include both government-wide (reporting the unit as a whole) and fund financial statements (reporting PEDC's major funds). In the Statement of Net Assets, the governmental activities column is reported on a full accrual, economic resource basis, which recognizes all long-term assets and receivables as well as long- term debt and obligations, if any. Net assets are reported in various categories based on current financial reporting pronouncements. The reporting policy regarding committed classification is that when a contractual obligation is created, the amount of the incentive is considered committed. When payments are made, they are considered to have been paid from the fund balance classification in which they were accumulated. The Statement of Activities reports both the gross and net cost of PEDC's function (economic development). Economic development is supported by general government revenues (sales tax, interest on investments, etc.). The financial transactions of PEDC are reported in two individual funds in the combined financial statements. These funds are accounted for by providing a separate set of self-balancing accounts that comprise their assets, liabilities, fund equity, revenues, and expenditures/expenses. The focus of the governmental funds' measurement (in the fund statements column) is upon determination of financial position and changes in financial position (sources, uses, and balances of financial resources) rather than upon net income. PEDC considers all revenues available if they are collected within 60 days after year end and expenditures are recognized when the related liability is incurred. The following is a description of the governmental funds of PEDC: General Fund - The General Fund is the general operating fund and is used to account for all financial resources except those required to be accounted for in another fund. Debt Service Fund — The Debt Service Fund is used to account for the accumulation of resources for, and the payment of, general long-ter z debt. Paris Economic Development Corporation (A Component Unit of the City of Paris, Texas) Notes to Financial Statements (Continued) September 30, 2012 Note 2: Summary of Significant Accounting Policies (Continued) B. Assets, Liabilities, and Net Assets 1) Deposits and Investments Cash and cash equivalents are considered to be cash on hand, demand deposits, and short- term investments with original maturities of three months or less from the date of acquisition. Statutes authorize PEDC to invest in obligations of the U.S. Treasury, direct obligations of the State of Texas, other obligations guaranteed or insured by the State of Texas or the United States, obligations of states and political subdivisions of any state meeting certain rating requirements, certifcates of deposit, and fully collateralized direct repurchase agreements having a defined termination date. Investments are stated at market value. 2) Restricted Assets and Fund Balance Reserves Certain resources set aside for repayment of revenue bonds and related interest are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. The Debt Service Fund is used to accumulate resources for debt service payments over the next twelve months. Governmental funds report reservations of fund balances for amounts that are not considered a current financial resource. The Reserve Fund is accumulated for the purpose of retiring the last of any bonds as they become due or for debt service when the Debt Service Funds are insufficient. 3) Land Development Cost — Industrial Park PEDC has acquired land and added improvements to develop an industrial park which is to be divided and sold to businesses wanting to locate their facilities in such an area. Land and added improvements are not depreciated because they are expected to be sold or used as incentives and are not used in PEDC's ongoing activities. 4) Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 5) Excess of Expenditures Over Appropriations For the year ended September 30, 2012, expenditures exceeded budgeted amounts in the General Fund in Communications — Telephone ($25) and Diversity Initiative ($8). Paris Economic Development Corporation (A Component Unit of the City of Paris, Texas) Notes to Financial Statements (Continued) September 30, 2012 Note 3: Deposits and Investments PEDC maintains accounts in several fmancial institutions. At September 30, 2012, the carrying amount of demand deposits and certificates of deposit was $768,850 and the bank balance was $792,137, which was covered by federal depository insurance for $697,137. Note 4: Public Funds Investment Pools Public funds investment pools in Texas (Pools) are established under authority of the Interlocal Cooperation Act, Chapter 79 of the Texas Government Code, and are subject to the provisions of the Public Funds Investment Act (the Act), Chapter 2256 of the Texas Government Code. In addition to other provisions of the Act designed to promote liquidity and safety of principal, the Act requires Pools to: 1) have an advisory board composed of participants in the Pool and other persons who do not have a business relationship with the Pool and are qualified to advise the Pool; 2) maintain a continuous rating of no lower than AAA or AAA-m or an equivalent rating by at least one nationally recognized rating service; and 3) maintain the market value of its underlying investment portfolio within one-half of one percent of the values of its shares. PEDC's investments in Pools are reported at an amount determined by the fair value per share of the Pool's underlying portfolio, unless the Pool is 2a7-like, in which case they are reported at share value. A 2a7-like Pool is one which is not registered with the Securities and Exchange Commission (SEC) as an investment company, but nevertheless has a policy that it will, and does, operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. Temporary investments at September 30, 2012, are invested in Lone Star Investments, $390,863, (Texas Political Subdivisions Investment Pool) and MBIA Municipal Investors Service Corp., $2,370,911. These investments are reported with the bank accounts as Cash and Cash Equivalents. Note 5: Bonds Payable PEDC has outstanding Paris Economic Development Corporation Sales Tax Revenue Refunding Bonds, Series 2010, originally issued at $2,685,000, bearing interest at 2.32% to 439%. Principal payments are due serially in varying annual amounts to September l, 2018, from $290,000 to $340,000. Sales and Use Taxes (one-quarter of one percent) levied by the City of Paris, Texas, within its boundaries under the Development Corporation Act of 1979, are pledged for payment of bonds and interest. The resolution authorizing the issuance of the bonds requires that monthly deposits be made to the Debt Service Fund in an amount sufficient to pay the next maturing bonds and interest. A Reserve Fund is required to be maintained with a balance of at least $346,192, the average annual principal and interest requirements of the bonds. At September 30, 2012, the balances in the Debt Service Fund and Reserve Fund are $73,964 and $470,977, respectively. Paris Economic Development Corporation (A Component Unit of the City of Paris, Texas) Notes to Financial Statements (Continued) September 30, 2012 Note 5: Bonds Payable (Continued) Debt Service requirements related to these bonds are as follows for the years ended September 30: Bonded Debt Requirements Years Principal Interest 2013 2014 2015 2016 2017 2018 $ 290,000 $ 65,264 290,000 58,536 300,000 50,271 315,000 40,221 325,000 28,251 340,000 14,926 Total $ 355,264 348,536 350,271 355,221 353,251 354,926 $ 1,860,000 $ 257,469 $ 2,117,469 A summary of long-term liability transactions for the year ended September 30, 2012, is as follows: Balance Balance Due September 30, September 30, Within 2011 Additions Reductions 2012 One Year $ 2,140,000 $ - $ 280,000 $ 1,860,000 $ 290,000 Note 6: Commitments PEDC has extended several incentive agreements to various companies and other commitments: (1) Warehouse company - Company is to create 35 new jobs providing an incentive amount of $105,000. (2) Commercial dairy - The incentive is to provide cash payments for creating 150 new jobs in Paris and Lamar County for five years. This amount is estimated to be $664,300 and expected to begin in 2017. (3) Soup manufacturer - The incentive is to participate in the cost of a solar storage structure to the extent of $100,000. (4) Truck accessories - Company is to open a manufacturing facility in Paris, Texas, and create 15 new jobs. The incentive is for $324,250 for new jobs, training, and infrastructure. At September 30,2012, $226,118 of the incentive remains to be satisfied. PEDC has also executed a guaranty in connection with a$100,000 note to a bank. (5) Retail and office structure — Incentive is to participate in reimbursement of sewer line construction to the extent of $250,000. (6) Therapeutic proteins manufacturer and distributor — Facilities to be located in Paris Industrial Park to create ne� ;>bs. PEDC has committed $219,760 to complete a market analysis, a site and facilities plan, and a bridge loan. Additional incentives may be extended in the future. 8 Paris Economic Development Corporation (A Component Unit of the City of Paris, Texas) Notes to Financial Statements (Continued) September 30, 2012 Note 6: Commitments (Continued) (7) In connection with a first lien loan by a bank to a commercial operation in the amount of $5,800,000, PEDC has entered into a Guaranty of Collection agreement. The loan payment is guaranteed by an individual (and a related company), and in addition, PEDC has guaranteed the full and prompt collection of the principal and interest due under the note together with limited cost of collection. If the lender makes demand under the Guaranty of Collection ageement, the lender will allow PEDC to satisfy its liability in monthly installments as specified in the original note. The agreement is dated September 23, 2010, and will terminate when the note is paid or the expiration of ten years. (8) In August 2012, the Board of Directors approved the renewal of a$2,000,000 revolving line of credit with a bank for future economic development projects. The note is dated September 18, 2012, and bears interest at the initial rate of 1.29% which is due monthly. The principal is due in one payment on September 18, 2014, and is secured by sales ta�c revenues and other income — received by PEDC except that portion of income currently obligated or subsequent bond issued as contemplated by the Series 2010 bonds. The interest rate is subject to change based on changes in an independent index and the rate charged is to be 1.96% under the index which at September 12, 2012, was 3.25%. The note documents also provide for right of setoff by the lender in all accounts the lender holds and other restrictions pertaining to issuance of additional debt, maintenance of liquidity, and furnishing of financial information. At September 30, 2012, no funds have been advanced under this line of credit. Subsequent to September 30, 2012, PEDC drew $2,000,000 under this line and loaned it to a manufacturing company locating in Paris. The lien note bears interest at the initial rate of 3.25%, is due September 18, 2014, and is secured by equipment. Additionally, an incentive agreement relating to payment for jobs and training is also being considered. (9) PEDC contributes to a simplified employee pension plan for its employees. The contribution rate is 5% and amounted to $7,915 during the year ended September 30, 2012. Note 7: Risk Management and Subsequent Events PEDC is exposed to various risks of loss and has obtained insurance related to general liability, loan enforcement liability, errors and omissions liability, and automobile liability. Management has evaluated subsequent events through the date on which the financial statements were available to be issued. Revenues: Sales Tax Investment Earnings Miscellaneous Total Revenues Expenditures: Industrial Support and Incentives Office Supplies and Postage Communications - Telephone Car Allowance Insurance and Bonds Travel Expenses Pubfications All Utilities Miscellaneous Contractual - Associations Training Promotional Advertising Chamber Administration Fee Personnel Compensation Industrial Park Sundry Charges Equipment Civil Management and Leadership Global Recruiting Attraction Advanced Manufacturing Academy Entrepreneurial Resources Rural Innovation Diversity Initiative Paris Living Agreement Research 360 Analyst Richard Sale Phase I and II Contract Labor Total Expenditures Paris Economic Development Corporation (A Component Unit of the City of Paris, Texas) Required Supplementary Information Budgetary Comparison Schedule - General Fund For the Year Ended September 30, 2012 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) $ 1,000,000 $ 1,000,000 $ 1,198,772 $ 198,772 17,500 17,500 9,860 (7,640) _ - 7,500 7,500 1,017,500 1,017,500 1,216,132 198,632 1,068,605 2,162,680 1,757,106 405,574 11,050 11,050 8,616 2,434 6,500 6,500 6,525 (25) I 2,000 12,040 12,000 - 3,200 3,200 2,859 341 24,000 24,000 23,651 349 500 500 - 500 2,700 2,700 1,130 1,570 1,000 1,000 924 76 10,000 10,000 9,410 590 8,000 8,000 7,626 374 40,000 40,000 39,811 189 60,000 60,000 60,000 - 229,945 241,200 238,396 2,804 18,000 18,000 9,855 8,145 5,000 5,000 4,900 100 5,000 5,000 4,834 166 - 15,000 13,160 1,840 - 75,000 60,493 14,507 - 50,000 37,264 12,736 - 30,000 29,991 9 - 30,000 28,158 1,842 _ 44,900 44,908 (8) - 10,000 10,000 - - 15,995 15,995 - - 75,775 48,904 26,871 17,000 15,000 10,939 4,061 1,522,500 2,972,500 2,487,455 485,045 Excess (Deficit) of Revenues Over Expenditures (505,000) (1,955,000) (1,271,323) 683,677 Other Financing Sources (Uses): Transfer to Debt Service Fund Net Change (Decease) in Fund Balances Fund BalancesBeginnin^, _ f Year Fund BalancesBnd of Year (351,192) (351,192) (315,120) 36,072 (856,192) (2,306,192) (1,586,443) 719,749 6,322,072 6,322,072 6,322,072 �- _ $ 5,465,880 $ 4,015,880 $ 4,735,629 $ 719,749 10 Paris Economic Development Corporation (A Component Unit of the City of Paris, Texas) Notes to Required Supplementary Information September 30, 2012 Note 1: Budgetary Data PEDC's fiscal year commences October lst and ends September 30th. A budget for the forthcoming fiscal year shall be submitted to, and approved by the Board of Directors in June and delivered to the City of Paris on or before June 30th. After Board approval, the budget on appropriate forms is submitted to the City Manager for inclusion in the annual budget of the City of Paris. The budget is to include projected operating expenses and such other budgetary information as shall be useful to or appropriate for the Board and the City. The proposed budget shall contain such classifications and shall be in such form as may be prescribed from time to time by the Council of the City of Paris. The budget shall not be effective until it has been approved by the City Council. The Budgetary Comparison Schedule presented as Required Supplementary Information for the General Fund is presented to provide a meaningful comparison of actual results with the budget. For the year ended September 30, 2012, expenditures exceeded budgeted amounts in the General Fund in Communications — Telephone and Diversity Initiative. 11 Paris Economic Development Corporation (A Component Unit of the City of Paris, Texas) Continuing Disclosure Information September 30, 2012 (Unaudited) Sales Tax Collections The following table shows Sales Tax Collections for the Paris Economic Development Corporation's 1/4% sales tax for the five years ended September 30: October November December January February March April May June July August September Totals Fiscal Year 2011-12 $ 95,42037 107,894.61 85,472.54 95,60434 128,112.10 86,791.28 89,313.73 116,340.62 90,696.91 97,350.69 111,539.71 98,234.76 $1,202,771.66 Fiscal Year Fiscal Year Fiscal Year Fiscal Year 2010-11 2009-10 2008-09 2007-08 $ 93,160.73 $ 91,316.16 $ 88,922.28 $ 83,464.96 113,944.71 112,001.77 110,970.12 99,241.92 83,756.09 81,876.99 94,350.41 86,341.92 94,198.44 72,605.01 97,226.89 71,512.24 123,832.73 129,328.54 153,829.72 117,965.74 84,926.35 85,110.53 99,61121 81,093.26 91,263.32 77,960.05 97,990.36 81,133.33 118,937.01 118,561.33 118,995.69 104,144.40 93,615.93 90,12628 104,476.22 98,082.39 89,290.63 90,902.36 84,222.50 91,465.06 119,235.15 115,346.90 115,161.63 120,089.43 96,332.78 100,762.81 108,494.87 115,500.00 $1,202,493.87 $1,165,898.73 $1,274,251.90 $1,150,034.65 Pro Forma Bonded Debt Service Coverage Maximum Annual Debt Service Requirement (2013) Projected Annual Sales Tax Receipts 2012-13 (Pledged Revenues are gross 1/4 cent sales tax) Estimated Pro Forma Coverage Average Annual Remaining Debt Service at September 30, 2012 Projected Annual Sales Tax Receipts 2012-13 (Pledged Revenues are gross 1/4 cent sales tax) Estimated Pro Forma Coverage $ 355,264 $ 1,200,000 338 x $ 352,912 $ 1,200,000 3.40 x Condensed Corporation Operating Statement Fiscal Year Ended September 30, 2012 2011 2010 2009 2008 Operating Revenues: Sales Taxes Other Income (Loss) (1) Total Revenues Operating Expenses: Projects Administration and Promotion Total Expenses $ 1,198,772 $ 1,206,494 $ 1,168,612 $ 1,288,374 $ 1,139,115 (51,210) (13) 22,977 1,293 35,846 1,147,562 1,206,481 1,191,589 1,289,667 1,174,961 1,757,106 (2) 324,732 684,921 69,520 646,545 730,349 432,300 395,827 413,261 335,036 2,487,455 757,032 1,080,748 482,781 981,581 Net Availabte for Additional Economic Incentives or Debt Service $(1,339,893) $ 449,449 $ 110,841 $ 806,886 $ 193,380 Source: Information received from the Issuer. (1) The net of interest income, interest expense, and gain or loss on the sale of assets. (2) Includes a one-time contribution to a regional highway project for $1,488,588. 12