Document Middleton_doc_228e8f0d02

CITY OF MIDDLETON Middleton, Wisconsin FINANCIAL STATEMENTS December 31, 2002 ---PAGE BREAK--- Independent Auditors' Report CITY OF MIDDLETON TABLE OF CONTENTS December 31,2002 General Purpose Financial Statements Combined Balance Sheet - All Fund Types and Account Groups Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - All Governmental Fund Types Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - Actual and Budget - General, Certain Special Revenue, Debt Service, and Capital Projects Funds Combined Statement of Revenues, Expenses, and Changes in Retained Earnings - All Proprietary Fund Types and Discretely Presented Component Unit Combined Statement of Cash Flows - All Proprietary Fund Types and Discretely Presented Component Unit Notes to Financial Statements Supplemental Information General Fund - Detailed Schedule of Revenues General Fund - Detailed Schedule of Expenditures Special Revenue Funds - Combining Balance Sheet Special Revenue Funds - Combining Statement of Revenues, Expenditures and Changes in Fund Balances Capital Projects Funds - Combining Balance Sheet Capital Projects Funds - Combining Statement of Revenues, Expenditures and Changes in Fund Balances Enterprise Funds - Combining Balance Sheet Enterprise Funds - Combining Statement of Revenues, Expenses and Changes in Retained Earnings Enterprise Funds - Combining Statement of Cash Flows Agency Funds - Combining Balance Sheet 2-5 6-7 8-9 10 11 - 12 13 - 41 42 - 43 44 - 45 46 - 47 48 - 49 50 51 52 - 53 54 55 - 56 57 ---PAGE BREAK--- To the City Council City of Middleton Middleton, Wisconsin VirchowKrause 8i..company INDEPENDENT AUDITORS' REPORT We have audited the general purpose financial statements of the City of Middleton, Wisconsin as of and for the year ended December 31, 2002 , as listed in the table of contents. These general purpose financial statements are the responsibility of the city's management. Our responsibility is to express an opinion on these general purpose 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 general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose 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 a reasonable basis for our opinion . In our opinion , the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the City of Middleton, Wisconsin at December 31, 2002 , and the results of its operations and cash flows of its proprietary fund types and discretely presented component unit for the year then ended in conformity with accounting principles generally accepted in the United States of America. As described in Note 23, the City of Middleton began reporting its component unit as a discretely presented component unit during 2002. It had previously been reported as a blended component unit in the Tax Incremental Financing District NO.3. Our audit was made for the purpose of forming an opinion on the general purpose financial statements taken as a whole. The supplemental information listed in the table of contents is presented for purposes of additional analysis and is not a required part of the general purpose financial statements of the City of Middleton, Wisconsin . The supplemental information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion , is fairly stated in all material respects in relation to the general purpose financial statements taken as a whole. Madison, Wisconsin March 14, 2003 Virchow, Krause & Company, LLP Certified Public Accountants & Consu ltants. An Independent Member of Baker Tilly International Page 1 ---PAGE BREAK--- CITY OF MIDDLETON COMBINED BALANCE SHEET - ALL FUND TYPES AND ACCOUNT GROUPS December 31,2002 (With Comparative Totals - Reporting Entity for December 31,2001) Governmental Fund T1'[2es General Special Debt Capital Fund Revenue Service Projects ASSETS AND OTHER DEBITS Cash and investments / $ 1 ,623,469~ $ 1,897,851 $ - $ 4,051,637 Receivables Taxes 8,084,246/ 3,772,743 Delinquent personal property taxes 35,068" Accounts 206,975/ 168,275 280,522 Loans 53,468 Special assessments 107,545 163,545 Delinquent special assessments 683 Interest 942 Due from other funds 1,095,163 Due from component unit 11,929 14,658,961 Lease receivable from primary government Due from other governmental units Prepaid items Advances to other funds 2,614,396 682,804 Inventories Restricted Assets Cash and investments Fixed assets Accumulated depreciation Deferred charges Other property Other assets Other Debits Amount available in debt service and capital projects funds for retirement of long-term obligations Amount to be provided for retirement of long-term obligations TOTAL ASSETS AND OTHER DEBITS $ 13,767,545 $ 2,132,465 $ 682,804 $ 22,927,408 Proprietary Fund T1'[2e Enter[2rise $ 3,513,675 590,299 2,352,054 50,726 192,870 15,164 24,600 29,592,401 (5,783,038) 30,229 622,421 4,729 $ 31,206,130 Page 2 ---PAGE BREAK--- Totals Account Grouj2s (Memorandum Fiduciary General General Onl:tl Fund T:tj2e Fixed Long-Term Primary Agenc:t Assets Obligations Government $ 11,921,689 $ - $ - $ 23,008,321 $ 10,929,640 22,786,629 35,068 1,246,071 53,468 2,623,144 683 51,668 1,288,033 14,670,890 76,050 76,050 3,297,200 15,164 24,600 37,191,878 66,784,279 (5,783,038) 30,229 622,421 4,729 3,388,688 3,388,688 69,591,892 69,591,892 Component Unit COA 562,097 $ 67,482 318,729 16,475,000 14,658,962 287,268 Totals Continued on Next Page (Memorandum Onl:tl Rej20rting Entit:t 2002 2001 23,570,418 $ 24,380,900 22,786,629 19,223,458 35,068 17,943 1,246,071 1,562,009 120,950 122,433 2,623,144 3,080,233 683 370,397 108,889 1,288,033 1,703,328 14,670,890 16,475,000 76,050 103,275 5,118 3,297,200 1,735,070 15,164 36,510 14,683,562 24,600 66,784,279 68,545,164 (5,783,038) (5,247,936) 317,497 35,934 622,421 622,421 4,729 15,929 3,388,688 633,276 69,591,892 51,507,275 $ 22,927,379 $ 37,191,878 $ 72,980,580 $ 203,816,189 $ 32,369,538 $ 236,185,727 $168,215,829 See accompanying notes to financial statements. Page 3 ---PAGE BREAK--- CITY OF MIDDLETON COMBINED BALANCE SHEET - ALL FUND TYPES AND ACCOUNT GROUPS December 31,2002 (With Comparative Totals - Reporting Entity for December 31,2001) Governmental Fund T~(2es General Special Debt Capital Fund Revenue Service Projects LIABILITIES, EQUITY AND OTHER CREDITS Liabilities Accounts payable $ 712,696 $ 23,375 $ - $ 1,739,405 Accrued liabilities Due to other governmental units 6,606- Due to other funds 126,865 78,220 284,337 732,606 Due to primary government Deferred revenues 7,962,569 3,772,743 Deferred special assessments 108,228 163,545 Deferred investment income - TIF 24,744 Customer advances for construction Deferred interest income 581,929 Advances from other funds 1,804,804 1,492,396 General obligation bonds and notes payable Lease revenue bonds payable Capital leases payable Accrued compensated absences Unfunded pension liability Other liabilities Total Liabilities 9,523,637 1,906,399 284,337 7,900,695 Equity and Other Credits Investment in general fixed assets Capital paid in by city Contributions in aid of construction Retained earnings Reserved for equipment replacement Unreserved Fund Balances Reserved for loans receivable 53,468 Reserved for advances 2,032,467 682,804 Reserved for noncurrent interfunds 783,488 Reserved for delinquent personal property taxes 35,068 Reserved for debt service 3,388,688 Reserved for encumbrances 4,743,772 Reserved for prepaid items and inventories Unreserved Designated 240,000 Undesignated (Deficit) 1,152,885 172,598 (284,337) 6,894,253 Total Equity and Other Credits 4,243,908 226,066 398,467 15,026,713 TOTAL LIABILITIES, EQUITY AND OTHER CREDITS $ 13,767,545 $ 2,132,465 $ 682,804 $ 22,927,408 Proprietary Fund T~(2e Enter(2rise $ 237,324 350,945 66,005 2,400 3,450,000 77,785 4,184,459 4,303,276 15,187,256 24,600 7,506,539 27,021,671 $ 31,206,130 Page 4 ---PAGE BREAK--- Totals Account Groul2s (Memorandum Fiduciary General General OnlY') Component Fund TY'l2e Fixed Long-Term Primary Unit AgencY' Assets Obligations Government CDA $ 91,674 $ - $ - $ 2,804,474 $ - 350,945 316,355 22,835,705 22,842,311 1,288,033 14,670,890 11,735,312 271,773 24,744 2,400 581,929 3,297,200 54,480,324 57,930,324 16,475,000 16,475,000 16,475,000 1,127,621 1,205,406 311,420 311,420 586,215 586,215 22,927,379 72,980,580 119,707,486 31,462,245 37,191,878 37,191,878 4,303,276 15,187,256 24,600 7,506,539 907,293 53,468 2,715,271 783,488 35,068 3,388,688 4,743,772 240,000 7,935,399 37,191,878 84,108,703 907,293 $ 22,927,379 $ 37,191,878 $ 72,980,580 $ 203,816,189 $ 32,369,538 See accompanying notes to financial statements. $ Totals Continued From Previous Page {Memorandum OnlY') Rel20rting EntitY' 2002 2001 2,804,474 $ 2,009,050 667,300 556,885 22,842,311 20,673,319 1,288,033 1,703,328 14,670,890 11,735,312 10,817,442 271,773 686,025 24,744 50,543 2,400 2,400 581,929 513,196 3,297,200 1,735,070 57,930,324 53,731,311 16,475,000 16,475,000 1,205,406 1,175,528 311,420 398,850 586,215 632,065 151,169,731 94,685,012 37,191,878 39,743,288 4,303,276 3,921,526 15,187,256 15,187,256 24,600 24,600 8,413,832 6,779,847 53,468 122,433 2,715,271 910,467 783,488 810,039 35,068 17,943 3,388,688 633,276 4,743,772 782,942 2,972 240,000 122,000 7,935,399 4,472,228 85,015,996 73,530,817 $ 236,185,727 $168,215,829 Page 5 ---PAGE BREAK--- CITY OF MIDDLETON COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - ALL GOVERNMENTAL FUND TYPES REVENUES Taxes Intergovernmental Licenses and permits Fines, forfeitures and penalties Public charges for services Intergovernmental charges for services Special assessments Investment income Miscellaneous revenues Total Revenues EXPENDITURES Current General government Public safety Public works Leisure activities Conservation and development Capital Outlay Debt Service Principal retirement Interest and fiscal charges Total Expenditures For the Year Ended December 31,2002 (With Comparative Totals for the Year Ended December 31,2001) $ General 7,934,580 2,141,032 516,127 211,729 939,443 292,432 96,823 218,507 394,387 12,745,060 1,140,506 4,124,939 2,108,704 2,042,454 227,169 9,643,772 $ Governmental Fund Tyees Special Debt Revenue Service 261,780 $ - 114,847 1,605,711 22,368 10,782 33,994 2,038,700 10,782 1,104 2,258,818 129,387 14,850 4,100,987 45 2,310,695 2,404,204 6,411,682 Capital Projects $ 2,771,513 296,511 563,409 167,729 274,985 4,074,147 12,794,949 422,373 13,217,322 Totals {Memorandum OnlYl 2002 2001 $ 10,967,873 $ 9,608,985 2,552,390 2,382,460 516,127 485,286 211,729 193,620 2,545,154 2,023,964 292,432 173,245 660,232 446,966 419,386 788,726 703,366 898,829 18,868,689 17,002,081 1,140,506 1,078,041 4,126,043 3,796,061 2,108,704 1,945,610 4,301,272 3,791,641 356,556 358,265 12,809,799 8,383,445 4,100,987 4,018,360 2,733,113 2,411,537 31,676,980 25,782,960 Page 6 ---PAGE BREAK--- CITY OF MIDDLETON COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - ALL GOVERNMENTAL FUND TYPES For the Year Ended December 31,2002 (With Comparative Totals for the Year Ended December 31,2001) Governmental Fund T}(~es Totals Special Debt Capital (Memorandum Onl}(l General Revenue Service ~ects 2002 2001 Excess (deficiency) of revenues over expenditures $ 3,101,288 $ (365,504) $ (6,400,900) $ (9,143,175) $ (12,808,291) $ (8,780,879) OTHER FINANCING SOURCES (USES) Proceeds from refunding bonds 6,005,000 6,005,000 Proceeds from long-term debt 8,420,000 8,420,000 10,000,000 Proceeds from capital leases 16,475,000 16,475,000 Premium on long-term debt 61,741 52,121 113,862 Payment to refunding escrow (6,005,792) (6,005,792) Debt discount and issuance costs (62,250) (62,250) (92,439) Operating transfers in 80,000 6,350,727 245,585 6,676,312 6,353,838 Operating transfers out (2,572,650) (682,804) (245,585) (3,175,273) (6,676,312) (6,353,838) Total Other Financing Sources (Uses) (2,572,650) (602,804) 6,166,091 21,955,183 24,945,820 9,907,561 Excess (deficiency) of revenues and other sources over expenditures and other uses 528,638 (968,308) (234,809) 12,812,008 12,137,529 1,126,682 FUND BALANCES - Beginning of Year (as restated) 3,715,270 1,194,374 633,276 2,214,705 7,757,625 6,747,618 FUND BALANCES - END OF YEAR $ 4,243,908 $ 226,066 $ 398,467 $ 15,026,713 $ 19,895,154 $ 7,874,300 See accompanying notes to financial statements. Page 7 ---PAGE BREAK--- CITY OF MIDDLETON COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - ACTUAL AND BUDGET - GENERAL, CERTAIN SPECIAL REVENUE, DEBT SERVICE, AND CAPITAL PROJECTS FUNDS For the Year Ended December 31,2002 General Fund Variance - Favorable Actual Budget (Unfavorable) REVENUES Taxes $ 7,934,580 $ 7,928,480 $ 6,100 Intergovernmental 2,141,032 2,050,164 90,868 Licenses and permits 516,127 482,800 33,327 Fines, forfeitures and penalties 211,729 194,000 17,729 Public charges for services 939,443 699,616 239,827 Intergovernmental charges for services 292,432 192,720 99,712 Special assessments 96,823 26,190 70,633 Investment income 218,507 244,300 (25,793) Miscellaneous revenues 394,387 387,500 6,887 Total Revenues 12,745,060 12,205,770 539,290 EXPENDITURES Current General government 1,140,506 1,402,999 262,493 Public safety 4,124,939 4,063,107 (61,832) Public works 2,108,704 2,049,111 (59,593) Leisure activities 2,042,454 2,060,526 18,072 Conservation and development 227,169 249,371 22,202 Capital Outlay Debt Service Principal Interest and Fiscal Charges Total Expenditures 9,643,772 9,825,114 181,342 Excess (deficiency) of revenues over expenditures 3,101,288 2,380,656 720,632 OTHER FINANCING SOURCES (USES) Proceeds from refunding bonds Proceeds of long-term debt Proceeds of capital lease Premium on long-term debt Payment to refunding escrow Debt discount and issuance costs Operating transfers in Operating transfers out (2,572,650) (2,492,656) (79,994) Total Other Financing Sources (Uses) (2,572,650) (2,492,656) (79,994) Excess (deficiency) of revenues and other sources over expenditures and other uses 528,638 (112,000) 640,638 FUND BALANCES - Beginning of Year 3,715,270 3,715,270 FUND BALANCES· END OF YEAR $ 4,243,908 $ 3,603,270 $ 640,638 Page 8 ---PAGE BREAK--- Certain Special Revenue Funds Debt Service Fund Variance - Variance - Favorable Favorable Actual Budget (Unfavorable) Actual Budget (Unfavorable) $ 261,780 $ 245,000 $ 16,780 $ - $ - $ - $ 114,847 58,500 56,347 1,499,925 2,055,383 (555,458) 22,368 46,215 (23,847) 10,782 10,782 23,770 27,000 (3,230) 1,922,690 2,432,098 (509,408) 10,782 10,782 21,822 21,822 1,631,027 2,186,383 555,356 128,235 49,000 (79,235) 14,850 (14,850) 4,100,987 4,380,986 279,999 45 (45) 2,310,695 2,429,206 118,511 1,774,157 2,257,205 483,048 6,411,682 6,810,192 398,510 148,533 174,893 (26,360) (6,400,900) (6,810,192) 409,292 6,005,000 6,005,000 61,741 61,741 (6,005,792) (6,005,792) 80,000 80,000 6,350,727 6,810,192 (459,465) (682,804) (641,215) (41,589) (245,585) (245,585) (602,804) (641,215) 38,411 6,166,091 6,810,192 (644,101 ) (454,271) (466,322) 12,051 (234,809) (234,809) 1,259,874 1,259,874 633,276 633,276 $ 805,603 $ 793,552 $ 12,051 $ 398,467 $ 633,276 $ (234,809) $ See accompanying notes to financial statements. Continued From Previous Page Ca~ital Projects Funds Variance - Favorable Actual Budget (Unfavorable) 2,771,513 $ 3,068,000 $ (296,487) 296,511 258,700 37,811 563,409 656,257 (92,848) 167,729 42,000 125,729 274,985 86,000 188,985 4,074,147 4,110,957 (36,810) 12,794,949 23,677,700 10,882,751 422,373 (422,373) 13,217,322 23,677,700 10,460,378 (9,143,175) (19,566,743) 10,423,568 8,420,000 20,873,000 (12,453,000) 16,475,000 16,475,000 52,121 52,121 (62,250) (62,250) 245,585 245,585 (3,175,273) (3,274,802) 99,529 21,955,183 17,598,198 4,356,985 12,812,008 (1,968,545) 14,780,553 2,214,705 2,214,705 15,026,713 $ 246,160 $ 14,780,553 Page 9 ---PAGE BREAK--- CITY OF MIDDLETON COMBINED STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN RETAINED EARNINGS - ALL PROPRIETARY FUND TYPES AND DISCRETELY PRESENTED COMPONENT UNIT For the Year Ended December 31, 2002 (With Comparative Totals - Primary Government for December 31, 2001) Prima!}:: Government Proprietary Component Fund Til2e (Memorandum Unit Enterl2rise Onli) CDA 2002 2001 2002 OPERATING REVENUES Charges for services $ 3,043,617 $ 2,901,440 $ CDA revenues 14,247 Total Operating Revenues 3,043,617 2,901,440 14,247 OPERATING EXPENSES Operation and maintenance 1,667,658 1,559,601 11,929 Depreciation 540,678 521,814 Taxes 311,693 281,850 Total Operating Expenses 2,520,029 2,363,265 11,929 Operating Income 523,588 538,175 2,318 NONOPERATING REVENUES (EXPENSES) Investment income 154,112 202,899 320,725 Interest expense (176,167) (184,336) (316,355) Gain on sale of fixed assets 420,455 Amortization of debt issuance costs (5,705) (5,705) (4,122) Miscellaneous revenues 291,390 Total Nonoperating Revenues (Expenses) (27,760) 12,858 712,093 Income before contributions 495,828 551,033 714,411 CAPITAL CONTRIBUTIONS 230,864 537,247 NET CHANGE IN RETAINED EARNINGS 726,692 1,088,280 714,411 RETAINED EARNINGS - Beginning of Year (as restated) 6,804,447 5,716,167 192,882 RETAINED EARNINGS - END OF YEAR $ 7,531,139 $ 6,804,447 $ 907,293 See accompanying notes to financial statements. Page 10 ---PAGE BREAK--- CITY OF MIDDLETON COMBINED STATEMENT OF CASH FLOWS- ALL PROPRIETARY FUND TYPES AND DISCRETELY PRESENTED COMPONENT UNIT For the Year Ended December 31,2002 (With Comparative Totals - Primary Government for the Year Ended December 31, 2001) Primar:t: Government Proprietary Fund T:t:l2e (Memorandum Component Enterl2rise Onl:t:} Unit 2002 2001 CDA CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 2,723,607 $ 2,566,362 $ 14,247 Cash received from city for services 357,650 353,323 Cash paid to suppliers for goods and services (1,348,681 ) (1,263,695) (11,929) Cash paid to employees for services (310,491 ) (287,288) Cash paid for tax equivalent {265,099) {265,417) Net Cash Flows From Operating Activities 1,156,986 1,103,285 2,318 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal paid (280,000) (265,000) Interest paid (180,467) (188,436) Paid to other funds (519,946) Acquisition and construction of fixed assets (287,286) (689,519) Cost of removal of capital assets (20,500) Special assessments received 620 256,610 Sale of property 420,455 Net Cash Flows From Capital and Related Financing Activities {1,267,079) {906,845) 420,455 CASH FLOWS FROM INVESTING ACTIVITIES Investment income 161,208 215,372 4,370 Investments sold and matured 1,995,043 Marketable securities purchased {3,338,953) {87,913) Cash Flows From Investing Activities {1,182,702) 127,459 4,370 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Proceeds from lease revenue bonds 16,243,630 Cash paid to primary government - TIF NO.3 {1,575,528) Cash Flows From Noncapital Financing Activities 14,668,102 Net Increase (Decrease) in Cash and Cash Equivalents (1,292,795) 323,899 15,095,245 CASH AND CASH EQUIVALENTS - Beginning of Year 1,492,117 1,168,218 125,814 CASH AND CASH EQUIVALENTS- END OF YEAR $ 199,322 $ 1,492,117 $ 15,221,059 Page 11 ---PAGE BREAK--- RECONCILIATION OF OPERATING INCOME TO Primary Government Proprietary Fund Type (Memorandum Enterprise 2002 Only) 2001 NET CASH PROVIDED BY OPERATING ACTIVITIES Operating income $ 523,588 $ 538,175 $ Adjustments to Reconcile Operating Income to Net Cash Provided From Operating Activities Depreciation expense Depreciation charged to sewer utility Changes in Assets and Liabilities Accounts receivable Other accounts receivable Due from other funds Inventories Accounts payable Accrued taxes Accrued compensated absences Due to other funds Deferred revenues Other current liabilities 540,678 37,646 (28,223) 2,386 38,831 18,374 (17,873) 29,746 10,582 14,251 (13,000) 1,156,986 NET CASH FLOWS FROM OPERATING ACTIVITIE: NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES 521,814 31,652 12,185 (1,349) (37,243) 5,004 (318) 5,534 12,411 13,000 2,420 $ 1,103,285 $ Component Unit CDA 2,318 2,318 During 2002, capital additions of $230,864 were contributed to the water and sewer utilities by developers and customers. During 2002, capital additions of $381,750 were contributed to the water and sewer utilities by the city. In 2002, the CDA entered into capital lease agreements with the primary government for $16,475,000. In 2002, the CDA issued lease revenue bonds, of which the net costs of $231,370 were deducted from the bond proceeds. See accompanying notes to financial statements. Page 12 ---PAGE BREAK--- CITY OF MIDDLETON INDEX TO NOTES TO FINANCIAL STATEMENTS December 31,2002 NOTE 1. Summary of Significant Accounting Policies A. Reporting Entity B. Description of Fund and Account Group Structure C. Totals (Memorandum Only) D. Comparative Data E. Basis of Accounting F. Measurement Focus G. Cash and Cash Equivalents H. Inventories I. Long-Term Obligations/Conduit Debt J. General Fixed Assets K. Fixed Assets - Proprietary Funds L. Advances to Other Funds M. Encumbrances N. Budgets O. Compensated Absences P. Allowance for Uncollectible Accounts Q. Contributions in Aid of Construction - Proprietary Funds R. Claims and Judgments S. Fund Balance Terminology T. Economic Development Loans Receivable U. Other Assets V. Interfund Transactions W. Basis for Existing Rates 2. Cash and Investments 3. Long-Term Obligations 4. Employees' Retirement System 5. Interfund Receivables/Payables and Interfund Transfers 6. Advances To/From Other Funds 7. Fixed Assets 8. Segments of Enterprise Activities 9. Designated Fund Balance ~ 15 15 15 18 18 18 20 20 20 20 21 21 22 23 23 24 24 24 24 25 25 25 26 26 26 28 31 32 33 33 34 34 Page 13 ---PAGE BREAK--- CITY OF MIDDLETON INDEX TO NOTES TO FINANCIAL STATEMENTS (cont.) December 31,2002 NOTE 10. Tax Incremental Financing District NO.3 11. Commitments and Contingencies 12. Lease Disclosures 13. Joint Ventures 14. Other Postemployment Benefits 15. Capital Paid in By City 16. Risk Management 17. Deficit Fund Balance 18. Effect of New Accounting Standards on Current - Period Financial Statement 19. Restricted Assets 20. Excess Expenditures Over Appropriations 21. Middleton Area Development Corporation 22. Restatement of Fund Balances/Retained Earnings 23. Component Unit 34 35 36 36 37 37 38 38 39 39 39 39 40 40 Page 14 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2002 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the City of Middleton (city), Wisconsin conform to generally accepted accounting principles as applicable to governmental units. A. REPORTING ENTITY This report includes all of the funds and account groups of the City of Middleton. The reporting entity for the city consists of the primary government, organizations for which the primary government is financially accountable, and other organizations for which the nature and significance of their relationship with the primary government are such that their exclusion would cause the reporting entity's financial statements to be misleading or incomplete. Component units are legally separate organizations for which the elected officials of the primary government are financially accountable. The primary government is financially accountable if it appoints a voting majority of the organization's governing body and it is able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits to or burdens on the primary government. The primary government may be financially accountable if an organization is fiscally dependent on the primary government. See Note 13 regarding joint ventures. Included with the reporting entity: Community Development Authority of the City of Middleton The general purpose financial statements include the Community Development Authority of the City of Middleton ("CDA") as a component unit. The CDA is a legally separate organization. The board of the CDA is appointed by the mayor. Wisconsin Statutes provide for circumstances whereby the city can impose its will on the CDA and also create a potential financial benefit to or burden on the city. As a component unit, the CDA's financial statements have been presented as a discrete column in the general purpose financial statements. In 2001, the CDA's transactions were blended into Tax Incremental District No. 3 which is a capital projects fund. Separately issued financial statements of the CDA are not prepared. Excluded from the reporting entity: The Middleton Area Development Corporation is a separate legal organization that is not reported in these financial statements. See also Note 21. B. DESCRIPTION OF FUND AND ACCOUNT GROUP STRUCTURE The accounts of the city are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. The various funds are summarized by type in the financial statements. The following fund types and account groups are used by the city. Page 15 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2002 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) B. DESCRIPTION OF FUND AND ACCOUNT GROUP STRUCTURE (cont.) Governmental Funds General Fund The general fund is the general operating fund of the city. It is used to account for all financial resources except those required to be accounted for in another fund. Special Revenue Funds Special revenue funds are used to account for the proceeds of specific revenue sources (other than major capital projects) that are legally restricted to expenditures for specified purposes. The following special revenue funds are included in these statements: Pleasant View Golf Course Subdividers' Deposits Land and Park Donations Drug Evidence Cable TV Youth Commission Donations EMS Railroad Depot Depot Restoration Lost and Damaged Book Oebt Service Funds Library Gift EMS Equipment Replacement Library Endowment Economic Development Economic Development Grant Alcohol Awareness Drug Forfeitures Senior Citizen Railroad Hotel Room Tax Debt service funds are used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest, and related costs. Capital Projects Funds Capital projects funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by proprietary funds). The following capital projects funds are included in these statements: Tax Incremental Financing (TIF) District NO.3 Southwest Quadrant Other Capital Projects Page 16 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2002 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) B. DESCRIPTION OF FUND AND ACCOUNT GROUP STRUCTURE (cont.) Proprietary Funds Enterprise Funds Enterprise funds are used to account for operations that are financed and operated in a manner similar to private business enterprises - where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. The following enterprise funds are included in these statements: Water Utility Sewer Utility Fiduciary Funds Agency Funds Agency funds are used to account for assets held by the city as an agent for individuals, private organizations, other governmental units, and/or other funds. The following agency funds are included in these statements: Fire District Tax Collection Fund Account Groups General Fixed Assets Account Group This account group is established to account for all fixed assets of the city other than those accounted for in the proprietary funds. General Long-Term Obligations Account Group This account group is established to account for all long-term obligations of the city other than those obligations accounted for in the proprietary funds. Page 17 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31,2002 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) C. TOTALS (MEMORANDUM ONL Y) The columns captioned Totals (Memorandum Only) in the general purpose financial statements are an aggregation of the columnar statements by fund type and account group. The totals column is not comparable to a consolidation and does not present financial position, results of operations and cash flows in conformity with generally accepted accounting principles because the same basis of accounting is not used by all funds and interfund transactions and balances and account group balancing accounts have not been eliminated. D. COMPARA TlVE DATA Comparative total data for the prior year has been presented in the accompanying financial statements in order to provide an understanding of changes in the city's financial position, operations and cash flows. However, comparative presentation of prior year totals by fund type) data has not been presented in all statements since their inclusion would make the statements unduly complex and difficult to read. E. BASIS OF ACCOUNTING The modified accrual basis of accounting is followed by the governmental funds and agency funds. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual, i.e., both measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on long-term debt, claims, judgments, compensated absences, and pension expenditures, which are recorded as a fund liability when expected to be paid with expendable available financial resources. Property taxes are recorded in the year levied as receivables and deferred revenues. They are recognized as revenues in the succeeding year when services financed by the levy are being provided. In addition to property taxes for the city, taxes are collected for and remitted to the state and county governments as well as the local school district and technical college district. Taxes for all state and local governmental units billed in the current year for the succeeding year are reflected as deferred revenues and due to other taxing units on the accompanying balance sheet. Taxes are levied in December on the assessed value as of the prior January 1. Property tax calendar - 2002 tax roll: Lien date and levy date Tax bills mailed Payment in full, or First installment due Second installment due Personal property taxes in full Tax sale - 2002 delinquent real estate taxes December 2002 December 2002 January 31, 2003 January 31, 2003 July 31, 2003 January 31, 2003 October 2005 Page 18 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31,2002 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) E. BASIS OF ACCOUNTING (cont.) Intergovernmental aids and grants are recognized as revenues in the period the city is entitled to the resources and the amounts are available. Amounts owed to the city which are not available are recorded as receivables and deferred revenues. Amounts received prior to the entitlement period are also recorded as deferred revenues. Special assessments are recorded as revenues when they become measurable and available as current assets. Annual installments due in future years are reflected as receivables and deferred revenues. Revenues susceptible to accrual include property taxes, miscellaneous taxes, public charges for services, and interest. Other general revenues such as fines and forfeitures, inspection fees, recreation fees, and miscellaneous revenues are recognized when received in cash or when measurable and available under the criteria described above. The city reports deferred revenues on its combined balance sheet. Deferred revenues arise when a potential revenue does not meet both the "measurable" and "available" criteria for recognition in the current period. Deferred revenues also arise when resources are received before the city has a legal claim to them, as when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the city has a legal claim to the resources, the liability for deferred revenue is removed from the combined balance sheet and revenue is recognized. Proprietary funds are accounted for on the accrual basis. Revenues such as user fees are recognized in the accounting period in which they are earned; expenses are recognized in the period incurred. Unbilled receivables are not recorded as they are not considered material. The proprietary funds have elected to follow Financial Accounting Standards Board pronouncements issued before November 30, 1989, and all pronouncements of the Governmental Accounting Standards Board. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. Page 19 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2002 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) F. MEASUREMENT Focus The measurement focus of all governmental funds is the flow of current financial resources concept. Under this concept, sources and uses of financial resources, including capital outlays, debt proceeds and debt retirements are reflected in operations. Resources not available to finance expenditures and commitments of the current period are recognized as deferred revenue or a reservation of fund equity. Liabilities for claims, judgments, compensated absences and pension contributions which will not be currently liquidated using expendable available financial resources are shown in the general long-term obligations account group. The related expenditures are recognized when the liabilities are liquidated. The measurement focus of proprietary funds is the flow of economic resources. Under this concept, revenues and expenses are matched using the accrual basis of accounting. All fixed assets are capitalized at historical cost and depreciated over their useful lives. G. CASH AND CASH EQUIVALENTS For purposes of the statement of cash flows, the city considers all highly liquid investments with an initial maturity of three months or less when acquired to be cash equivalents. Reconciliation of cash and cash equivalents: Cash and investments - combined balance sheet Restricted cash and investments - combined balance sheet Less: Non-cash equivalents Primary Government Enterprise Funds $ 3,513,675 $ 24,600 Component Unit CDA 562,097 14,658,962 (3,338,953) _ Cash and Cash Equivalents - Combined Statement of Cash Flows $ 199,322 $ 15,221,059 H. INVENTORIES Proprietary fund inventories are generally used for construction and for operation and maintenance work, they are not for resale. They are charged to construction and operation and maintenance expense at average cost when used. Governmental fund inventory items are charged to expenditures accounts when purchased. Governmental fund year end inventory was not significant. I. LONG- TERM OBLIGA TIONS/CONDUIT DEBT Short-term and proprietary fund long-term liabilities are recorded as fund liabilities. All other long- term liabilities are recorded in the general long-term obligations account group. Proceeds of long-term debt issues not recorded as fund liabilities are reflected as "Other Financing Sources" in the operating statement of the recipient fund. Retirement of these issues is reported as an expenditure in the year in which the debt matures or is repaid, whichever is earlier. Page 20 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2002 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) I. LONG- TERM OBLIGA nONs/CONDUIT DEBT (cont.) The city may approve the issuance of industrial revenue bonds (IRB) for the benefit of private business enterprises. IRB's are secured by mortgages or revenue agreements on the associated projects, and do not constitute indebtedness of the city. No industrial revenue bonds were outstanding as of the end of the year. J. GENERAL FIXED ASSETS General fixed assets acquired for governmental purposes are recorded as expenditures in the governmental funds. Purchased fixed assets are capitalized at cost or estimated cost including capitalized interest during construction in the general fixed assets account group. Contributed fixed assets are recorded at fair market value at the time received. Interest incurred during construction is not capitalized. Fixed assets consisting of certain improvements other than buildings, including roads, bridges, curbs and gutters, streets and sidewalks, drainage systems, and lighting systems are not capitalized. Such assets normally are immovable and of value only to the city. Therefore, the purpose of stewardship for capital expenditures is satisfied without recording these assets. Generally accepted accounting principles do not require depreciation to be recorded on general fixed assets. Therefore, depreciation on general fixed assets is not reported in the financial statements. K. FIXED ASSETS - PROPRIETARY FUNDS Additions to and replacements of utility fixed assets are recorded at original cost, which includes material, labor, overhead, and an allowance for the cost of funds used during construction when significant. Utility fixed assets are recorded at cost or fair market value at the time of contribution to the utility. The cost of renewals and betterments relating to retirement units is added to fixed asset accounts. The cost of property replaced, retired or otherwise disposed of, is deducted from fixed asset accounts and, generally, together with removal costs less salvage, is charged to accumulated depreciation. Interest is capitalized on enterprise fund property acquired with tax exempt debt. The amount of interest to be capitalized is calculated by offsetting interest expense incurred from the date of the borrowing until completion of the project with interest earned on invested proceeds over the same period. Capitalized interest cost is amortized on the same basis as the related asset is depreciated. No interest costs were capitalized during 2002. Page 21 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2002 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) K. FIXED ASSETS - PROPRIETARY FUNDS (cont.) Utility fixed assets in service are depreciated using the straight-line method over the following useful lives: Water Fixed Assets Source of supply plant Pumping plant Water treatment plant Transmission and distribution plant General plant Total Sewer Fixed Assets Collection system Collection system pumping plant General plant Total Construction in progress Total Enterprise Fund Fixed Assets Other Property - Property Held for Future Use $ $ 12-31-02 383,523 1,658,508 343,242 14,695,873 459,450 17,540,596 10,441,950 1,215,786 347,568 12,005,304 46,501 29,592,401 In 2001, the water utility acquired property for future use of $622,421. L. ADVANCES TO OTHER FUNDS Years 33 20 - 40 33 - 40 16 - 90 4 - 15 30 - 100 20 - 40 7 - 40 N/A Noncurrent portions of long-term interfund loan receivables are reported as advances and are offset by deferred revenue for unavailable interest earnings and by a fund balance reserve account which indicates that they do not constitute expendable available financial resources and therefore are not available for appropriation. The general fund advanced funds to TIF District No.3 and is charging interest on the advance at a rate which is 2% over the city's cost of funds. No repayment schedule has been established. Interest on the interfund advance is recorded as a deferred revenue in the general fund until paid by the TIF District. Interest costs on the advance are recorded as an expenditure of the TIF District when the expenditure is incurred. See Note 6 for the advance balance at December 31, 2002. Deferred interest income in the general fund at December 31, 2002 is $581,929. The general fund advanced funds to the Hotel Room Tax, Railroad, and Pleasant View Golf Course in 2002. The debt service fund advanced funds to the Pleasant View Golf Course special revenue fund for debt payments. No repayment schedules have been established and interest is not being charged on the above advances to Pleasant Prairie Golf Course. Repayment of the advances, the Hotel Room Tax and Railroad funds, will be made over four years at an interest rate of Page 22 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2002 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) M. ENCUMBRANCES Encumbrances outstanding represent the estimated amount of expenditures ultimately to result if unperformed contracts and open purchase orders at year end are fulfilled. Encumbrances outstanding at year end are reported as reservations of fund balance and do not represent liabilities or expenditures. Encumbrance accounting applies only to governmental fund types. N. BUDGETS Budgetary information is derived from the annual operating budget and is presented using the same basis of accounting for each fund as described in Note 1.E. A budget has been adopted for the general fund, debt service fund, certain special revenue funds, and capital projects funds, and comparisons of actual to budget are presented in the general purpose financial statements. Budgets have not been formally adopted for other governmental funds. Wisconsin Statute 65.90 requires that an annual budget be adopted for all funds. Budgetary comparisons are not required for proprietary funds. Since budgets have not been prepared for all special revenue funds, comparisons between the actual columns in the combined statement of revenues, expenditures and changes in fund balances and the combined statement of revenues, expenditures and changes in fund balances - actual and budget are not meaningful. A reconciliation of the results of operations for all special revenue funds as presented on page 7 and the budgeted special revenue funds on page 9 is as follows: All special revenue funds (page 7) Less: Unbudgeted special revenue funds Depot Restoration Alcohol Awareness Drug Forfeitures Senior Citizen Railroad Fund Total Unbudgeted Special Revenue Funds Budgeted Special Revenue Funds (page 9) Excess (Deficiency) of Revenues Over Expend itures $ $ (365,504 ) (1,152) 886 2,196 (515,967) (514,037) 148,533 The budgeted amounts presented include those amendments properly approved by the governing body. During the year, department heads may authorize limited transfers of budgeted amounts within departments. The city administrator can approve transfers between departments in amounts up to $1,000. Transfers exceeding $1,000 between departments and changes to the overall budget must be approved by city council action. There were no material supplemental appropriations during the year. Appropriations lapse at year end unless specifically carried over. Budgets are adopted at the departmental level of expenditure. Page 23 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2002 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) O. COMPENSATED ABSENCES Governmental Funds Under terms of employment, employees are granted sick leave, vacations and floating holidays in varying amounts. Only benefits considered to be vested are disclosed in these statements. The amount of accumulated sick leave and vacation that will not be repaid with expendable available resources is $1,127,621 and is recorded in the general long-term obligations account group. Enterprise Funds Vested sick leave is recorded as a liability by the individual fund when it is earned by the employee. The same is true for vacation pay. $77,785 of vested sick leave and vacation pay is recorded as accrued liabilities at year end. All Funds Payments for vacation and sick leave will be made at rates in effect when the benefits are used. Accumulated vacation and sick leave liabilities at December 31, 2002 are determined on the basis of current salary rates, and includes salary related payments. P. ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS General accounts receivable have been adjusted for all known uncollectible accounts. No allowance is necessary at year end. Ambulance service accounts receivable have been adjusted by an allowance for uncollectible accounts of $30,965. Delinquent real estate taxes as of July 31 are paid in full by the county, which assumes the collection thereof. No provision for uncollectible accounts receivable has been made in the enterprise funds because the water and sewer utilities have the right by law to place delinquent bills on the tax roll. Q. CONTRIBUTIONS IN AID OF CONSTRUCTION - PROPRIETARY FUNDS Contributions in aid of construction represent amounts received from customers for construction and the value of property (plant) contributed to the utility. These amounts are not subject to repayment. R. CLAIMS AND JUDGMENTS Claims and judgments are recorded as liabilities if all the conditions of Governmental Accounting Standards Board pronouncements are met. Claims and judgments that would normally be liquidated with expendable available financial resources are recorded during the year as expenditures in the governmental funds. If they are not to be liquidated with expendable available financial resources, a liability is recorded in the general long-term obligations account group. The related expenditure is recognized when the liability is liquidated. Claims and judgments are recorded in the proprietary funds as expenses when the related liabilities are incurred. Page 24 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2002 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) S. FUND BALANCE TERMINOLOGY Fund balances are segregated into three separate classifications. Reservations represent the portion of fund balances which may not be appropriated for expenditure or have been segregated for specific future uses by legal mandate. Designations of fund balances represent tentative plans by the city for financial resource utilization in a future period as documented in the minutes or budgeting process for a succeeding year. Such plans are subject to change from original authorizations and may never result in expenditures. Undesignated fund balance represents the amount available for appropriation after reservations and designations. It also is a measurement of current working capital position. T. ECONOMIC DEVELOPMENT LOANS RECEIVABLE The city has received federal grant funds for economic development loan programs to various businesses. The city records a loan receivable when the loan has been made and funds have been disbursed. It is the city's policy to record revenue when the initial loan is made from the federal grant funds. The net amount of the loan receivable balance is offset by a reserve for loans receivable. As loans are repaid, the reserve for loans receivable is reduced and the designated fund balance is increased. When new loans are made from loan repayments, the reserve for loans receivable is increased and the designated fund balance is decreased. Interest received from loan repayments is recognized as revenue when received in cash. Any unspent loan repayments at year end are presented as designated fund balance in the general purpose financial statements. For economic development loans, the city is limited by the Wisconsin Department of Commerce to the amount of program income from economic development loans it may retain and loan to other businesses. Program income includes the principal and interest received from economic development loans repayments. Based upon its current population, the city may retain $750,000. At December 31, 2002, the city has not exceeded its maximum retention cap. When it does, a liability to the state will be recorded. U. OTHER ASSETS The water utility has other assets recorded on their books for preliminary survey and investigation expenses. Page 25 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2002 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) V. INTERFUND TRANSACTIONS Quasi-external 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, except quasi-external transactions and reimbursements, are reported as transfers. Nonrecurring or nonroutine permanent transfers of equity are reported as residual equity transfers. All other interfund transfers are reported as operating transfers. W. BASIS FOR EXISTING RATES Current water rates were placed into effect on March 15, 1997 and are designed to provide a 7.00% return on rate base. Sewer rates are adjusted annually to account for rate changes from Madison Metropolitan Sewerage District. 2002 rates were approved in November 2001 and became effective January 1, 2002. NOTE 2 - CASH AND INVESTMENTS Investment of city funds is restricted by state statutes. Available investments are limited to: 1. Time deposits in any credit union, bank, savings bank, trust company or savings and loan association maturing in three years or less. 2. Bonds or securities of any county, city, drainage district, technical college district, village, town, or school district of the state. Also, bonds issued by a local exposition district, a local professional baseball park district, or by the University of Wisconsin Hospitals and Clinics Authority. 3. Bonds or securities issued or guaranteed by the federal government. 4. The local government investment pool. 5. Any security maturing in seven years or less and having the highest or second highest rating category of a nationally recognized rating agency. 6. Securities of an open-end management investment company or investment trust, subject to various conditions and investment options. 7. Repurchase agreements with public depositories, with certain conditions. No significant violations of these restrictions occurred during the year. Page 26 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2002 NOTE 2 - CASH AND INVESTMENTS (cont.) The city's deposits and investments are categorized to give an indication of the level of custodial credit risk assumed by the entity at year end. Category 1 includes items that are insured or registered or which are collateralized by or evidenced by securities held by the city or its agent in the city's name. Category 2 includes deposits collateralized with securities held by the pledging institutions trust department or agent in the city's name, or uninsured and unregistered investments for which the securities are held by the counter party's trust department or agent in the city's name. Category 3 includes uncollateralized deposits, and uninsured and unregistered investments, with securities held by the counterparty or its trust department or agent but not in the city's name. Category 2 Local and area banks $ 401,123 $ - $ Sub-Totals $ 401,123 $ - $ Local government investment pool Mutual funds Petty cash Total Deposits and Investments - Reporting Entity 3 Total 11,326,807 $ 11,727,930 11,326,807 $ 11,727,930 $ $ Reporting Entity Carrying Amount 11,153,668 11,153,668 2,304,788 24,795,099 425 38,253,980 Investments are stated at fair value, which is the amount at which an investment could be exchanged in a current transaction between willing parties. Fair values are based on quoted market prices. No investments are reported at amortized cost. Adjustments necessary to record investments at fair value are recorded in the operating statement as increases or decreases in investment income. Investment income on commingled investments of municipal accounting funds is allocated based on average balances. The difference between the bank balance and carrying value is due to outstanding checks and/or deposits in transit. Interest earned on other capital projects fund investments is recorded in the general fund. Deposits in local and area banks are insured by the FDIC in the amount of $100,000 for each interest bearing account and $100,000 for each noninterest bearing account. Bank accounts are also insured by the State Deposit Guarantee Fund in the amount of $400,000. However, due to the relatively small size of the Guarantee Fund in relationship to the total deposits covered and other legal implications, recovery of material principal losses may not be significant to individual municipalities. This coverage has not been considered in computing the amounts in category 1 above. Page 27 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2002 NOTE 2 - CASH AND INVESTMENTS (cont.) The Wisconsin Local Government Investment Pool (LGIP) is part of the State Investment Fund (SIF), and is managed by the State of Wisconsin Investment Board. The SIF is not registered with the Securities and Exchange Commission, but operates under the statutory authority of Wisconsin Chapter 25. The SIF reports the fair value of its underlying assets annually. Participants in the LGIP have the right to withdraw their funds in total on one day's notice. At December 31,2002, the fair value of the LGIP's assets were substantially equal to the city's share as reported above. Investments in the local government investment pool are covered under a surety bond issued by Financial Security Assurance, Inc. The bond insures against losses arising from principal defaults on substantially all types of securities acquired by the pool except U.S. Government and agency securities. The bond provides unlimited coverage on principal losses, reduced by any FDIC and State of Wisconsin Guarantee Fund insurance. Fluctuating cash flows during the year due to tax collections, receipt of state aids and/or proceeds from borrowing may have resulted in temporary balances exceeding insured amounts by substantially higher amounts. NOTE 3 - LONG-TERM OBLIGATIONS A. GENERAL OBLIGATION DEBT All general obligation notes and bonds payable are backed by the full faith and credit of the city. Notes and bonds in the general long-term obligations account group will be retired by future property tax levies transferred to the debt service fund, or by tax increment district levies. Proprietary fund debt is payable by revenues from user fees of those funds, or if the revenues are not sufficient, by future tax levies. The city levies property taxes annually for the full amount of principal and interest due in the following year. The debt service fund receives the collection of these levies from other funds and makes the payments of principal and interest. The following is a summary of the long-term general obligation debt transactions for the year ended December 31, 2002: Balance Balance 1-1-02 Increases Decreases 12-31-02 General Long-Term Obligations Account Group $ 50,001,311 $ 14,425,000 $ 9,945,987 $ 54,480,324 Proprietary Funds Enterprise 3,730,000 280,000 3,450,000 General Obligation Debt $ 53,731,311 $ 14,425,000 $ 10,225,987 $ 57,930,324 Page 28 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2002 NOTE 3 - LONG-TERM OBLIGATIONS (cont.) A. GENERAL OBLIGA TlON DEBT (cont.) Original Date of Due Interest Indebted- Balance Title of Issue Issue Date Rates ness 12-31-02 1. General Obligation Debt 1994 State trust fund loan 12-07-94 3-15-04 4.5% $ 500,000 $ 130,324 1996 General obligation refunding bonds 10-01-96 10-01-06 4.00% - 5.65% 7,875,000 1,150,000 1996 General obligation prom issory notes 6-01-96 6-01-06 4.00%- 5.15% 5,675,000 2,195,000 1997 General obligation prom issory notes 3-01-97 3-01-07 3.95%- 5.15% 9,250,000 4,930,000 1997 General obligation promissory notes 4-01-97 3-01-12 3.90% - 5.40% 6,480,000 4,810,000 1998 General obligation prom issory notes 4-01-98 9-01-08 3.90% - 4.60% 9,675,000 7,175,000 1999 General obligation promissory notes 5-15-99 3-01-09 3.50% - 4.40% 7,300,000 6,615,000 2000 General obligation promissory notes 4-01-00 3-01-10 4.80% - 5.20% 6,800,000 6,600,000 2001 General obligation prom issory notes 3-15-01 3-11-11 4.00% - 4.40% 10,000,000 9,900,000 2002 General obligation promissory notes 3-15-02 3-01-12 2.125% - 4.50% 6,250,000 6,250,000 2002 General obligation refunding bonds 5-15-02 3-01-16 3.00% - 4.75% 6,005,000 6,005,000 2002 State trust fund loan 11-06-02 3-15-19 5.00% 2,170,000 2,170,000 Total General Obligation Debt 57,930,324 Less: Proprietary fund general obligation debt p,450,000) Total General Long-Term Obligations Account Group Debt $ 54,480,324 Page 29 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2002 NOTE 3 - LONG-TERM OBLIGATIONS (cant.) B. OTHER LONG- TERM OBLIGA TIONS Other Liabilities Balance 1-1-02 Increases Decreases Balance 12-31-02 Capital leases payable (Note 12) $ - $ 16,475,000 $ - $ 16,475,000 Long-term liability for accumulated vacation, floating holidays and vested sick leave (Note 1.0.) Unfunded pension liability (Note 4) City's share of landfill district deficit fund balance (Note 11) 1,108,325 398,850 632,065 19,296 1,127,621 23,068 110,498 311,420 45,850 586,215 Total Other Long-Term Liabilities $ 2,139,240 $ 16,517,364 $ 156,348 $ 18,500,256 Debt service requirements to maturity are as follows: General Proprietary Fund Long-Term Debt Long-Term Debt Princi~al Interest Princi~al Interest Totals 2003 $ 4,978,731 $ 2,380,103 $ 290,000 $ 167,393 $ 7,816,227 2004 5,223,104 2,194,708 305,000 153,527 7,876,339 2005 5,667,981 1,917,328 315,000 138,784 8,039,093 2006 5,222,880 1,674,961 330,000 123,106 7,350,947 2007 5,733,024 1,416,663 350,000 106,306 7,605,993 2008 and thereafter 27,654,604 4,090,991 1,860,000 248,694 33,854,289 Totals $ 54,480,324 $ 13,674,754 $ 3,450,000 $ 937,810 $ 72,542,888 Estimated payments of accumulated employee benefits and other commitments are not included in the above schedule. Also, the capital lease principal and interest requirements are not included. They are equal to the CDA's lease revenue bonds required payments. See Note 23 for a repayment schedule. $398,467 is on deposit in the debt service fund which is available to meet the above debt service requirements as of December 31, 2002. In accordance with Wisconsin Statutes, total general obligation indebtedness of the city may not exceed five percent of the equalized value of taxable property within the city's jurisdiction. The debt limit as of December 31, 2002 was $82,153,135. Total general obligation debt outstanding at year end was $57,930,324. Page 30 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2002 NOTE 3 - LONG-TERM OBLIGATIONS (cont.) B. OTHER LONG-TERM OBLIGATIONS (cont.) ADVANCE REFUNDING On May 15, 2002, the city issued $6,005,000 in general obligation bonds with an average interest rate of 4.52 percent to advance refund $5,845,000 of outstanding general obligation refunding bonds with an average interest rate of 5.46 percent. The net proceeds of $6,005,792 (after payment of $62,500 in underwriting fees, insurance and other issuance costs and reoffering premium of $61,741) plus an additional $77,336 sinking fund monies were used to purchase U.S. government securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the $5,845,000 bonds. As a result, these bonds are considered to be defeased and the liability for those bonds has been removed from the general long-term obligations account group. The cash flow requirements on the refunded bonds and notes prior to the advance refunding was $9,298,368 from 2007 through 2016. The cash flow requirements on the 2002 refunding bonds are $8,777,001 from 2003 through 2016. The advance refunding resulted in an economic gain (difference between the present values of the debt service payments on the old and new debt) of $186,469. There are a number of limitations and restrictions contained in the various bond indentures and loan agreements. The city believes it is in compliance with all significant limitations and restrictions. NOTE 4 - EMPLOYEES' RETIREMENT SYSTEM All eligible city employees participate in the Wisconsin Retirement System (System), a cost- sharing multiple-employer defined benefit public employee retirement system (PERS). All permanent employees expected to work over 600 hours a year are eligible to participate in the System. Covered employees in the General category are required by statute to contribute 5.2% of their salary (3.9% for Executives and Elected Officials, 3.8% for Protective Occupations with Social Security, and 3.3% for Protective Occupations without Social Security) to the plan. Employers generally make these contributions to the plan on behalf of employees. Employers are required to contribute an actuarially determined amount necessary to fund the remaining projected cost of future benefits. The payroll for city employees covered by the system for the year ended December 31, 2002 was $4,621,696; the employer's total payroll was $5,066,916. The total required contribution for the year ended December 31, 2002 was $513,672 or 11.1 percent of covered payroll. Of this amount, 100 percent was contributed for the current year. Total contributions for the years ending December 31, 2001 and 2000 were $458,887 and $442,644, respectively, equal to the required contributions for each year. Page 31 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2002 NOTE 4 - EMPLOYEES' RETIREMENT SYSTEM (cont.) Employees who retire at or after age 65 (62 for elected officials and 55 for protective occupation employees) are entitled to receive a retirement benefit. Employees may retire at age 55 (50 for protective occupation employees) and receive actuarially reduced benefits. The factors influencing the benefit are: final average earnings, years of creditable service, and a formula factor. Final average earnings is the average of the employee's three highest years earnings. Employees terminating covered employment before becoming eligible for a retirement benefit may withdraw their contributions and, by doing so, forfeit all rights to any subsequent benefit. For employees beginning participation on or after January 1, 1990 and no longer actively employed on or after April 24, 1998, creditable service in each of five years is required for eligibility for a retirement annuity. Participants employed prior to 1990 and on or after April 24, 1998 are immediately vested. The System also provides death and disability benefits for employees. Eligibility for and the amount of all benefits is determined under Chapter 40 of Wisconsin Statutes. The System issues an annual financial report which may be obtained by writing to the Department of Employee Trust Funds, P.O. Box 7931, Madison, WI 53707-7931. The pension-related debt for the city as of December 31, 2002 was $311,420. This amount is included in the general long-term obligations account group as the city's best estimate of its unfunded commitment to the plan. This liability was determined in accordance with provisions of GASB Statement 27 regarding pension-related debt. Depending on actuarial assumptions, this estimate can vary significantly. NOTE 5 - INTERFUND RECEIVABLES/PAYABLES AND INTERFUND TRANSFERS The following is a schedule of interfund receivables and payables: Receivable Fund Payable Fund Amount General Alcohol Awareness $ 1,104 General Hotel room tax 77,116 General Debt service fund 284,337 General TIF District No.3 capital projects fund 233,455 General Southwest quadrant 499,151 Water utility General 126,865 Water utility Sewer utility 66,005 Total $ 1,288,033 The following is a schedule of amounts due from the component unit to the primary government: Railroad TI F No.3 capital projects fund Total Component unit - CDA Component unit - CDA $ 11,929 14,658,961 $ 14,670,890 Page 32 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2002 NOTE 5 - INTERFUND RECEIVABLES/PAYABLES AND INTERFUND TRANSFERS (cont.) The following is a schedule of interfund transfers: Fund Transferred To EMS equipment replacement Debt service fund Debt service fund Debt service fund Debt service fund Other capital projects fund Total Fund Transferred From General fund General fund Pleasant View Golf Course TIF District No.3 Southwest Quadrant fund Debt service fund NOTE 6 - ADVANCES To/FROM OTHER FUNDS The following is a schedule of interfund advances: Receivable Fund Payable Fund General fund Pleasant View Golf Course General fund Railroad General fund Hotel room tax General fund TIF District No.3 Debt service fund Pleasant View Golf Course Total NOTE 7 - FIXED ASSETS A summary of general fixed assets follows: Balance 1-1-02 Additions Land $ 17,310,173 $ 50,000 Golf course 7,163,936 47,308 Buildings 7,867,769 250,000 Improvements other than buildings 4,145,778 Equipment and vehicles 2,968,866 425,504 Furniture and fixtures 286,766 Totals $ 39,743,288 $ 772,812 Deletions $ 3,033,953 37,235 27,162 180,875 44,997 $ 3,324,222 $ Amount $ 80,000 2,492,650 682,804 2,849,923 325,350 245,585 $ 6,676,312 Amount 130,000 600,000 392,000 1,492,396 682,804 $ 3,297,200 Balance 12-31-02 $ 14,326,220 7,211,244 8,080,534 4,118,616 3,213,495 241,769 $ 37,191,878 Page 33 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2002 NOTE 8 - SEGMENTS OF ENTERPRISE ACTIVITIES There are services provided by the city which are financed by user charges. The key financial data for the year ended December 31, 2002 for those services are as follows: Operating revenues Depreciation expense Operating income Income before contributions Capital contributions Property, Plant, and Equipment Additions Deletions Net working capital Total assets Long-term debt payable Total equity NOTE 9 - DESIGNATED FUND BALANCE $ Water 1,682,748 349,085 438,118 461,465 142,168 510,006 20,556 2,723,764 17,727,474 2,030,000 15,290,220 Designated fund balance as of December 31,2002 includes the following item: General Fund Subsequent year's budget $ 240,000 NOTE 10 - TAX INCREMENTAL FINANCING DISTRICT No.3 Sewer $ 1,360,869 191,593 85,470 34,363 88,696 279,002 24,428 679,681 13,478,656 1,420,000 11,731,451 Following is the cumulative status of Tax Incremental Financing District No.3 transactions as of December 31, 2002: Expenditures Administration and promotion Relocation Capital expenditures Engineering Interest and fiscal charges Discounts on borrowing Total Expenditures $ 1,281,925 1,682,488 40,351,443 712,169 6,726,666 406,039 $ 51,160,730 Page 34 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2002 NOTE 10 - TAX INCREMENTAL FINANCING DISTRICT NO.3 (cont.) Revenues Tax increment Intergovernmental Investment income Miscellaneous revenues Premium on long-term debt Total Revenues Amount to be Recovered Through Increments $ 10,466,577 922,750 2,049,603 756,463 52,121 14,247,514 $ 36,913,216 State statutes allow the districts to receive tax increments until the net project costs are fully recovered or until recovery is statutorily ended. The amount to be recovered shown above will be increased by interest payments made in the future. The tax increment on the 2002 tax roll collected in 2003 is as follows: TIF NO.3 $ 3,616,925 NOTE 11 - COMMITMENTS AND CONTINGENCIES From time to time, the city party to various pending claims and legal proceedings. Although the outcome of such matters cannot be forecasted with certainty, it is the opinion of management and the city attorney that the likelihood is remote that any such claims or proceedings will have a material adverse effect on the city's financial position or results of operations. Funding for the operating budget of the city comes from many sources, including property taxes, grants and aids from other units of government, user fees, fines and permits, and other miscellaneous revenues. The State of Wisconsin provides a variety of aid and grant programs which benefit the city. Those aid and grant programs are dependent on continued approval and funding by the Wisconsin governor and legislature, through their budget processes. The State of Wisconsin is currently experiencing budget problems, and is considering numerous alternatives including reducing aid to local governments. Any changes made by the State to funding or eligibility of local aid programs could have a significant impact on the future operating results of the city. The city has received federal and state grants for specific purposes that are subject to review and audit by the grantor agencies. Such audits could lead to requests for reimbursements to the grantor agency for expenditures disallowed under terms of the grants. Management believes such disallowances, if any, would be immaterial. As stated in Note 13, the city jOintly operates the Metropolitan Refuse District, Inc. (district). For the year ending September 30, 1994, the district was required to adopt Governmental Standards Board Statement No. 18, "Accounting for Municipal Solid Waste Landfill Closure and Postclosure Care Costs." The district's fund balance at September 30, 2002 is a deficit of $984,897. Reporting standards require the city to report its share of the net deficit. The city's proportionate share in the operations of the district is 59%, which amounts to $586,215 of the district's net deficit. The city's share of the net deficit has been reported in the general long-term obligations account group. See also Note 3 and Note 13. Page 35 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2002 NOTE 12 - LEASE DISCLOSURES In March of 2000, the city entered into a 61 month operating lease agreement for golf carts. Annual lease payments total $29,353. On November 21, 2001, the city entered into a 120 month operating lease agreement for railroad equipment. Annual lease payments total $85,543. The CDA took over the train lease in November 2002 and negotiated a reduction in the operating lease payments for six months to $3,564/month. CDA/CITY LEASE The Tax Increment District No. 3 (TIF is leasing land and other fixed assets from the Community Development Authority (CDA). The CDA borrowed $16,475,000 in revenue bonds for these costs in 2002. The annual lease payments to be paid are the same as the CDA's annual debt service payments on the bonds. Revenues generated by TIF #3 are expected to be paid over to the CDA to make the debt payments. The city has no other material capital or operating leases. NOTE 13 - JOINT VENTURES METROPOLITAN REFUSE DISTRICT, INC. The City of Middleton and the Villages of Shorewood Hills and Waunakee jointly operate the local sanitary landfill, which is called the Metropolitan Refuse District, Inc. The landfill stopped accepting waste in 1997. The communities share in the operation of the district based on estimated population as follows: City of Middleton Village of Shorewood Hills Village of Waunakee 59% 7 34 The governing body is made up of citizens from each community. Local representatives are appointed by each city. The governing body has authority to adopt its own budget and control the financial affairs of the district. The city made payments totaling $77,792 to the district in 2002. The city will continue to support the district's postclosure care costs in the future. See also Note 11. Financial information of the district as of September 30, 2002 is available directly from the district's office. The transactions of the District are not reflected in these financial statements. The district's landfill is being monitored for possible groundwater contamination as required by the Wisconsin Department of Natural Resources. The costs for groundwater monitoring are being budgeted for on an annual basis. At the current time it is not possible to determine if extensive contamination has occurred and the effects, if any, on the District's financial statements. Page 36 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31,2002 NOTE 13 - JOINT VENTURES (cont.) MIDDLETON FIRE DISTRICT The City of Middleton and the Towns of Springfield, Westport and Middleton jointly operate the local fire district, which is called the Middleton Fire District, which provides fire protection. The communities share in the operation of the District based on the ratio of equalized values of each member. The governing body is made up of citizens from each community. Local representatives are appOinted by the municipalities. The governing body has authority to adopt its own budget and control the financial affairs of the district. The city has made payments totaling $287,570 to the district in 2002. The city believes that the District will continue to provide services in the future at similar rates. Financial information of the District as of December 31, 2002 is available directly from the District's office. The City of Middleton is the fiscal agent for the Middleton Fire District. Transactions of the district are accounted for in the fire district agency fund. NOTE 14 - OTHER POSTEMPLOYMENT BENEFITS The city provides postemployment health insurance benefits for all eligible employees. Eligibility is based on retiring from the city or becoming disabled and being eligible to receive social security benefits or Wisconsin Retirement benefits. The benefits are based on contractual agreements with employee groups, local ordinances, and employee benefit policies. Employees may convert their accumulated sick leave to pay for health care premiums. The cost of those premiums is recognized as an expenditure in the year of retirement. The entire cost is paid by the city. Funding for those costs is provided out of the current operating budget of the city's general fund. Total expenditures for retirees medical premiums during the year were $48,213. The number of participants currently eligible to receive benefits is eight. The total amount outstanding at year end to be paid in the future is $204,358 and is included in the general fund as an accrued liability. NOTE 15 - CAPITAL PAID IN By CITY During the year, contributed capital changed by the following amounts: Water Sewer Total Capital Paid in by City Balance - January 1, 2002 $ 2,104,131 $ 1,817,395 $ 3,921,526 Current contributions 196,854 184,896 381,750 Balance - December 31, 2002 $ 2,300,985 $ 2,002,291 $ 4,303,276 Page 37 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS Decem ber 31, 2002 NOTE 16 - RISK MANAGEMENT The city is exposed to various risks of loss related to torts; theft of, damage to, or destruction to assets; errors and omissions; workers compensation; and health care of its employees. All of these risks are covered through the purchase of commercial insurance, with minimal deductibles. Settled claims have not exceeded the commercial coverage in any of the past three years. There were no significant reductions in coverage compared to the prior year. NOTE 17 - DEFICIT FUND BALANCE Generally accepted accounting principles require disclosure of individual funds that have deficit balances at year end. As of December 31, 2002, the following individual funds held a deficit balance: Special Revenue Funds Amount Reason Pleasant View Golf Course $ 776,533 Excess expenditures over revenue. The Pleasant View Golf Course fund deficit is anticipated to be funded by future operations. Railroad $ 587,691 Excess expenditures over revenue. The Railroad deficit is anticipated to be funded by room tax in future years. Hotel Room Tax 391,929 Excess expenditures over revenue. The hotel room tax fund deficit is anticipated to be funded by room tax in future years. Capital Projects Fund Southwest quadrant 499,151 Debt service costs in excess of cash flows from special assessments. The southwest quadrant fund deficit is anticipated to be funded by future special assessments and TIF revenues. Page 38 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2002 NOTE 18 - EFFECT OF NEW ACCOUNTING STANDARDS ON CURRENT-PERIOD FINANCIAL STATEMENTS The Governmental Accounting Standards Board (GAS B) recently approved Statement Nos. 34, 37, and 38. These statements require significant changes from the current method of financial reporting for all state and local governments in the United States. GASB Statement No. 34, Basic Financial Statements-and Management Discussion and Analysis-for State and Local Governments: Statement No. 37, Basic Financial Statements-and Management Discussion and Analysis-for State and Local Governments: Omnibus; and Statement No. 38, Certain Financial Statement Note Disclosures are effective for the city for the fiscal year beginning on January 1, 2003. These statements require retroactive application of certain accounting and reporting standards, which may restate portions of these financial statements. NOTE 19 - RESTRICTED ASSETS REPLACEMENT ACCOUNT The DNR requires the utilities to set aside operating funds for future repair and replacements to the sewer system. The replacement account currently has a balance of $24,600. NOTE 20 - EXCESS EXPENDITURES OVER ApPROPRIATIONS The following individual funds experienced excess expenditures over appropriations. Special Revenue Funds Subdivider's deposits Youth commission donation Lost and damaged book fund Hotel room tax $ 92,575 2,950 11,034 168,266 The city controls general fund expenditures at the department level. Some individual departments reported expenditures that exceeded appropriations. The detail of those departments can be found in the city's year-end budget to actual report. NOTE 21 - MIDDLETON AREA DEVELOPMENT CORPORATION (MADC) In 2001, the City of Middleton, through its Tax Incremental Financing District No.3, transferred property to MADC which was sold for $2,000,000. MADC is retaining these funds for economic development loans. Page 39 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2002 NOTE 22 - RESTATEMENT OF FUND BALANCES/RETAINED EARNINGS Fund balance has been restated due to CDA becoming a discretely presented unit. TIF DISTRICT #3 FUND TIF District #3 Fund Balance - December 31, 2002 (as reported) Less: CDA beginning retained earnings Fund Balance - January 1, 2002 (as reported) $ $ 2,552,006 (116,675) 2,435,331 Retained earnings have been restated due to CDA becoming a discretely presented unit. CDA Retained Earnings - December 31, 2002 (as reported) Add: Amount reported in TIF District #3 Loan receivable not previously reported Retained Earnings - January 1, 2002 (as restated) $ $ 116,675 76,207 192,882 Memorandum total columns of the previous year have not been restated to reflect these changes. NOTE 23 - COMPONENT UNIT This report contains the Community Development Authority (CDA), which is included as a component unit. Financial information is presented as a discrete column in the combined balance sheet, combined statement of revenues, expenses and changes in retained earnings and combined statements of cash flows. In addition to the general purpose financial statements and the preceding notes to financial statements which apply, the following additional disclosures are considered necessary for a fair presentation. a. Basis of Accounting/Measurement Focus The CDA follows the full accrual basis of accounting and the flow of economic resources measurement focus. Page 40 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2002 NOTE 23 - COMPONENT UNIT (cont.) b. Restricted Cash and Investments The bond ordinance relating to the CDA bonds requires the establishment of certain accounts. These are as follows: Construction fund Capitalized interest Debt reserve fund Total c. CDA Lease Revenue Bonds 2002 redevelopment lease revenue bonds dated August 15, 2002 with interest at 2.60%-4.75%. Principal payments vary. Bonds mature October 1,2020. $ 2002 redevelopment lease revenue bonds dated August 15, 2002 with interest at 4.3%-6.65%. Principal payments vary. Bonds mature October 1, 2020. Balance 1-1-02 $ 11,270,274 1,793,635 1,595,053 $ 14,658,962 Balance Increases Decreases 12-31-02 - $ 7,375,000 $ - $ 7,375,000 9,100,000 9,100,000 Totals $ 16,475,000 $ 16,475,000 Debt service requirements to maturity are as follows: Principal Interest Total 2003 $ $ 947,378 $ 947,378 2004 840,040 840,040 2005 840,042 840,042 2006 790,000 840,042 1,630,042 2007 815,000 812,532 1,627,532 2008 - 2020 14,870,000 6,285,214 21,155,214 Totals $ 16,475,000 $ 10,565,248 $ 27,040,248 Page 41 ---PAGE BREAK--- SUPPLEMENTAL INFORMATION ---PAGE BREAK--- CITY OF MIDDLETON GENERAL FUND DETAILED SCHEDULE OF REVENUES For the Year Ended December 31,2002 Actual Budget TAXES General property tax $ 7,530,855 $ 7,530,855 Omitted property tax 797 Fees in lieu of taxes 25,000 25,625 Taxes from city owned utility 265,099 270,000 Room tax 112,140 100,000 Interest on taxes 689 2,000 TOTALS $ 7,934,580 $ 7,928,480 INTERGOVERNMENTAL REVENUES Shared taxes from state $ 552,119 $ 780,249 State aid - road allotment 731,026 731,025 State aid - exempt computer aid 229,527 Federal and state aid - other 236,428 152,700 County aid - library 344,690 344,690 County aid - signals 9,155 7,500 County aid - senior citizens 38,087 34,000 TOTALS $ 2,141,032 $ 2,050,164 LICENSES AND PERMITS Liquor and malt beverage licenses $ 24,038 $ 20,500 Operators' licenses 7,575 6,500 Contractor's licenses 5,240 6,100 Alarm licenses 9,143 8,000 Cigarette licenses 155 200 Bicycle licenses 414 200 Dog and cat licenses 251 200 Cable TV franchise licenses 130,000 130,000 Other miscellaneous licenses 605 600 Building permits 223,982 200,000 Electrical permits 42,763 42,000 Plumbing permits 48,056 52,000 Erosion control permits 14,825 8,000 Park reservation permits 9,080 8,500 TOTALS $ 516,127 $ 482,800 FINES, FORFEITURES AND PENAL TIES Court penalties $ 135,078 $ 135,000 Parking violations 42,554 28,000 Court costs 34,097 31,000 TOTALS $ 211,729 $ 194,000 Page 42 ---PAGE BREAK--- CITY OF MIDDLETON GENERAL FUND DETAILED SCHEDULE OF REVENUES (cont.) For the Year Ended December 31,2002 Actual Budget PUBLIC CHARGES FOR SERVICES Clerk fees $ 20,410 $ 12,000 Police special services 11,104 Police department fees 28,273 30,000 Ambulance services 483,055 292,500 EMS fixed cost abatement 55,374 53,386 Plan commission charges 24,705 15,000 Senior citizens 11,197 5,000 Swimming pools 222,000 216,800 Summer recreation 48,949 45,430 Other recreation 33,376 28,500 Zoning 1,000 1,000 TOTALS $ 939,443 $ 699,616 INTERGOVERNMENTAL CHARGES FOR SERVICES Local general government services $ 292,432 $ 192,720 SPECIAL ASSESSMENTS Curb, gutter and sidewalks $ 95,529 $ 25,000 Interest on special assessments 1,294 1,190 TOTALS $ 96,823 $ 26,190 INVESTMENT INCOME Investment income $ 244,300 MISCELLANEOUS Rent of city buildings and offices $ 13,453 $ 12,000 Compensation for loss of fixed assets 14,537 Refund of prior year's expenditures 53,499 18,000 Sale of city property 285,690 330,500 Sale of materials 2,208 2,000 Pool contribution 25,000 25,000 TOTALS $ 394,387 $ 387,500 TOTAL REVENUES $ 12,745,060 $ 12,205,770 Page 43 ---PAGE BREAK--- CITY OF MIDDLETON GENERAL FUND DETAILED SCHEDULE OF EXPENDITURES For the Year Ended December 31,2002 Actual Budget GENERAL GOVERNMENT Council $ 41,462 $ 41,338 Police commission 2,278 5,000 Landmarks commission 1,000 600 Middleton youth commission 18,520 18,680 Municipal court 17,169 17,153 General administration 461,363 473,395 Information technology 42,027 40,100 IndependentaudWng 20,860 14,905 Legal counseling 125,221 125,000 Special legal counsel 8,478 2,000 Buildings and grounds 106,846 93,479 Illegal taxes and tax refunds 5,000 5,000 Reduction of prior years revenue 2,356 Property and liability insurance 238,282 189,342 Board of review 63 375 Additional expenditures - prior years 25,077 5,000 Emergency preparedness 5,631 4,920 Income continuation insurance 14,460 12,650 Group life insurance 4,413 4,000 Contingency 350,062 TOTALS $ 1,140,506 $ 1,402,999 PUBLIC SAFETY Police administration $ 374,120 $ 413,705 Police patrol 2,142,926 1,974,645 Training 23,123 20,600 Police uniform allowance and equipment 17,456 11,500 School patrol 11,682 11,727 Fire suppression 287,570 289,859 Public fire protection 359,636 340,000 Building inspector 71,972 74,189 Electrical inspector 71,460 69,779 Plumbing inspection 37,966 44,331 Sealer of weights and measures 2,640 2,640 Erosion control enforcement 11,331 10,000 EMS 435,512 546,927 Communications 277,545 253,205 TOTALS $ 4,124,939 $ 4,063,107 Page 44 ---PAGE BREAK--- CITY OF MIDDLETON GENERAL FUND DETAILED SCHEDULE OF EXPENDITURES (cont.) For the Year Ended December 31,2002 Actual PUBLIC WORKS Machinery $ 224,627 Garage 72,115 Protective equipment 1,919 Engineering 552,132 Street maintenance 125,531 Street cleaning 55,691 Snow and ice control 73,902 Traffic signs and markings 70,702 Traffic signals 26,046 Street lighting 58,146 Tree and brush 66,519 Sidewalk maintenance 7,669 Storm sewers 24,129 Mass transit 187,971 PW fringe benefits 57,220 Garbage collection 245,171 Sanitary landfill 77,792 Leaf pick-up 25,941 Recycling 155,481 TOTALS $ 2,108,704 LEISURE ACTIVITIES Library $ 944,512 Senior citizens center 227,287 Recreation administration 76,725 Swimming pool 269,279 Summer recreation 59,912 Other recreation 53,315 Parks 411,424 TOTALS $ 2,042,454 CONSERVATION AND DEVELOPMENT Weed control $ 4,048 Creek maintenance 1,062 Water resources 3,235 Conservancy land commission 66,969 Planning commission 151,855 TOTALS $ 227,169 TOTAL EXPENDITURES $ 9,643,772 Budget $ 203,934 44,023 2,300 531,953 125,243 34,508 78,069 49,700 28,106 54,700 67,638 10,267 189,600 115,865 257,830 77,792 30,313 147,270 $ 2,049,111 $ 929,251 261,471 80,483 246,580 55,130 42,190 445,421 $ 2,060,526 $ 2,756 24,100 57,200 165,315 $ 249,371 $ 9,825,114 Page 45 ---PAGE BREAK--- Pleasant View Golf Course ASSETS Cash and investments $ 3,265 Accounts receivable 34,036 Loan receivable Interest Due from component unit TOTAL ASSETS $ 37,301 LIABILITIES AND FUND BALANCES Accounts payable $ 1,030 Due to other funds Advances from other funds 812,804 Total Liabilities 813,834 Fund Balances Reserved for loan receivable Unreserved Undesignated (deficit) (776,533) Total Fund Balances (776,533) TOTAL LIABILITIES AND FUND BALANCES $ 37,301 CITY OF MIDDLETON SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET December 31,2002 Sub- Land and dividers' Park Drug Del20sits Donations Evidence $1,155,168 $ 2,372 $ 4,028 $1,155,168 2,372 $ 4,028 $ - $ - $ - 1,155,168 2,372 4,028 1,155,168 2,372 4,028 $1,155,168 $ 2,372 $ 4,028 Youth Lost and Cable Commission Railroad Damaged TV Donations EMS Del20t Book $ 13,805 $ 6,515 $18,379 $ 37,025 $ 12,516 43,837 354 $ 57,642 $ 6,515 $18,379 $ 37,025 $ 12,870 $ - $ - $ - $ - $ 1,804 1,804 57,642 6,515 18,379 37,025 11,066 57,642 6,515 18,379 37,025 11,066 $ 57,642 $ 6,515 $18,379 $ 37,025 $ 12,870 Page 46 ---PAGE BREAK--- Economic EMS Economic Develop- Library Equipment Library Develop- ment Alcohol Drug Senior Hotel Gift Re[!lacement Endowment ment Grant Awareness Forfeitures Citizen Railroad Room Tax Totals $12,864 $ 119,106 $ 239,265 $ 86,771 $169,454 $ 4,895 $ 2,167 $ 3,052 $ 7,204 $ - $ 1,897,851 2,231 87,817 168,275 53,468 53,468 942 942 11,929 11,929 $12,864 $ 119,106 $ 240,207 $ 86,771 $222,922 $ 4,895 $ 2,167 $ 3,052 $ 21,364 $ 87,817 $ 2,132,465 $ - $ - $ - $ - $ - $ - $ - $ 856 $ 9,055 $ 10,630 $ 23,375 1,104 77,116 78,220 600,000 392,000 1,804,804 1,104 856 609,055 479,746 1,906,399 53,468 53,468 12,864 119,106 240,207 86,771 169,454 3,791 2,167 2,196 (587,691) (391,929) 172,598 12,864 119,106 240,207 86,771 222,922 3,791 2,167 2,196 (587,691 ) (391,929) 226,066 $12,864 $ 119,106 $ 240,207 $ 86,771 $222,922 $ 4,895 $ 2,167 $ 3,052 $ 21,364 $ 87,817 $ 2,132,465 Page 47 ---PAGE BREAK--- CITY OF MIDDLETON SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES For the Year Ended December 31,2002 Youth Pleasant Sub- Land and Com- View dividers' Park Drug mission Railroad Golf Course Del20sits Donations Evidence Cable TV Donations EMS Del20t REVENUE Taxes $ - $ $ - $ - $ $ $ - $ Intergovernmental 4,222 Public charges for services 1,149,046 229,851 43,837 Investment income Miscellaneous and contributions 6,902 10,960 Total Revenues 1,149,046 229,851 6,902 43,837 10,960 4,222 EXPENDITURES Current Public safety Leisure activities 1,042,582 4,093 10,000 5,450 Conservation and development 127,575 Capital Outlay 14,850 Debt Service I nterest and fiscal charges 45 Total Expenditures 1,057,477 127,575 4,093 10,000 5,450 Excess (deficiency) of revenues over expenditures 91,569 102,276 2,809 33,837 5,510 4,222 OTHER FINANCING SOURCES (USES) Operating transfer in Operating transfer out (682,804) Total Other Financing Sources (Uses) (682,804) Excess (deficiency) of revenues and other sources over expenditures and other uses (591,235) 102,276 2,809 33,837 5,510 4,222 FUND BALANCES (DEFICIT) - Beginning of Year (185,298) 1,052,892 (437) 4,028 23,805 1,005 14,157 37,025 FUND BALANCES (DEFICIT) - END OF YEAR $ (776,533) $ 1,155,168 $ 2,372 $ 4,028 $ 57,642 $ 6,515 $ 18,379 $ 37,025 Page 48 ---PAGE BREAK--- EMS Economic Lost and Equipment Library Economic Develop- Depot Damaged Library Replace- Endow- Develop- ment Alcohol Drug Senior Hotel Restoration Book Gift ment ment ment Grant Awareness Forfeitures Citizen Railroad Room Tax Totals $ $ - $ - $ - $ - $ - $ $ - $ - $ $ - $ 261,780 $ 261,780 83,192 27,433 114,847 25,613 105,786 51,578 1,605,711 3,245 16,598 2,525 22,368 5,785 1,990 8,234 123 33,994 25,613 5,785 86,437 16,598 2,525 1,990 8,234 105,786 340,914 2,038,700 1,104 1,104 35,034 1,702 6,038 621,753 532,166 2,258,818 1,152 660 129,387 14,850 45 1,152 35,034 1,702 660 1,104 6,038 621,753 532,166 2,404,204 (1,152) (9,421) 5,785 84,735 15,938 2,525 886 2,196 (515,967) (191,252) (365,504) 80,000 80,000 (682,804) 80,000 (602,804) (1,152) (9,421) 5,785 80,000 84,735 15,938 2,525 886 2,196 (515,967) (191,252) (968,308) 1,152 20,487 7,079 39,106 155,472 70,833 220,397 2,905 2,167 (71,724) (200,677) 1,194,374 $ - $ 11,066 $ 12,864 $119,106 $240,207 $ 86,771 $222,922 $ 3,791 $ 2,167 $ 2,196 $(587,691) $ (391,929) $ 226,066 Page 49 ---PAGE BREAK--- ASSETS Cash and investments Taxes receivable Accounts receivable Special assessments Due from component unit TOTAL ASSETS CITY OF MIDDLETON CAPITAL PROJECTS FUNDS COMBINING BALANCE SHEET December 31, 2002 $ TIF District No. 3 2,708,353 3,616,925 44,292 14,658,961 $21,028,531 Southwest Quadrant $ - 155,818 163,545 $ 319,363 LIABILITIES AND FUND BALANCES Accounts payable $ 1,606,339 $ - Due to other funds 233,455 499,151 Deferred revenues 3,616,925 155,818 Deferred special asse~sments 163,545 Advances from other funds 1,492,396 Total Liabilities 6,949,115 818,514 Fund Balances Reserved for encumbrances 4,743,772 Unreserved Undesignated (deficit) 5,946,956 (499,151 ) Reserved for debt service 3,388,688 Total Fund Balances (Deficit) 14,079,416 (499,151) TOTAL LIABILITIES AND FUND BALANCES $21,028,531 $ 319,363 Other Capital Projects $ 1,343,284 236,230 $ 1,579,514 $ 133,066 133,066 1,446,448 1,446,448 $ 1,579,514 Totals $ 4,051,637 3,772,743 280,522 163,545 14,658,961 $ 22,927,408 $ 1,739,405 732,606 3,772,743 163,545 1,492,396 7,900,695 4,743,772 6,894,253 3,388,688 15,026,713 $ 22,927,408 Page 50 ---PAGE BREAK--- CITY OF MIDDLETON CAPITAL PROJECTS FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES For the Year Ended December 31,2002 REVENUES Taxes Intergovernmental Special assessments Investment income Miscellaneous revenues Total Revenues EXPENDITURES Capital Outlay Debt Service Interest and fiscal charges Total Expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Proceeds from long-term debt Proceeds from capital lease Premium on long-term debt Debt discount and issuance costs Operating transfers in Operating transfers out Total Other Financing Sources (Uses) Excess of revenues and other sources over expenditures and other uses FUND BALANCES (DEFICIT) - Beginning of Year (as restated) $ TIF District No.3 2,771,513 296,511 94,900 36,774 3,199,698 10,947,814 400,227 11,348,041 (8,148,343) 6,155,334 16,475,000 52,121 (40,104) {2,849,923) 19,792,428 11,644,085 2,435,331 Other Southwest Capital Quadrant Projects $ - $ - 563,409 72,829 238,211 636,238 238,211 1,847,135 22,146 1,869,281 636,238 (1,631,070) 2,264,666 (22,146) 245,585 {325,350) {325,350) 2,488,105 310,888 857,035 {81 0,039) Totals $ 2,771,513 296,511 563,409 167,729 274,985 4,074,147 12,794,949 422,373 13,217,322 (9,143,175) 8,420,000 16,475,000 52,121 (62,250) 245,585 p,175,273) 21,955,183 12,812,008 2,214,705 FUND BALANCES (DEFICIT) - END OF YEAR $ 14,079,416 $ {499,151) $ 1,446,448 $ 15,026,713 Page 51 ---PAGE BREAK--- ASSETS Current Assets Cash and investments Accounts receivable Interest receivable Due from other funds Inventories Total Current Assets Restricted Assets Total Restricted Assets Other Property and Investments Special assessments receivable Property held for future use Preliminary engineering CITY OF MIDDLETON ENTERPRISE FUNDS COMBINING BALANCE SHEET December 31,2002 Water Utilit:i $ 2,715,908 276,876 48,144 192,870 15,164 3,248,962 622,421 4,729 Total Other Property and Investments 627,150 Utility Plant Construction work in progress 46,501 Property and equipment 17,540,596 Less: Accumulated depreciation {3,750,585) Total Property and Equipment 13,836,512 Deferred Charges Unamortized debt expenses 14,850 Total Deferred Charges 14,850 TOTAL ASSETS $ 17,727,474 Sewer Utilit:i Totals $ 797,767 $ 3,513,675 313,423 590,299 2,582 50,726 192,870 15,164 1,113,772 4,362,734 24,600 24,600 24,600 24,600 2,352,054 2,352,054 622,421 4,729 2,352,054 2,979,204 46,501 12,005,304 29,545,900 {2,032,453) {5,783,038) 9,972,851 23,809,363 15,379 30,229 15,379 30,229 $ 13,478,656 $ 31,206,130 Page 52 ---PAGE BREAK--- Water Sewer Utility: Utility: Totals LIABILITIES AND EQUITY Current Liabilities Accounts payable $ 26,693 $ 210,631 $ 237,324 Accrued taxes 294,845 294,845 Accrued interest 33,600 22,500 56,100 Accrued compensated absences 10,060 4,955 15,015 Due to other funds 66,005 66,005 Current portion of long-term debt 160,000 130,000 290,000 Total Current Liabilities 525,198 434,091 959,289 Deferred Credits Accrued compensated absences 42,056 20,714 62,770 Customer advances for construction 2,400 2,400 Total Deferred Credits 42,056 23,114 65,170 Long-Term Debt Net of Current Maturities General obligation notes 1,870,000 1,290,000 3,160,000 Total Long-Term Debt 1,870,000 1,290,000 3,160,000 Total Liabilities 2,437,254 1,747,205 4,184,459 Equity Capital paid in by city 2,300,985 2,002,291 4,303,276 Contributions in aid of construction 6,443,898 8,743,358 15,187,256 Total Contributed Capital 8,744,883 10,745,649 19,490,532 Retained earnings Reserved for equipment replacement 24,600 24,600 Unreserved 6,545,337 961,202 7,506,539 Total Retained Earnings 6,545,337 985,802 7,531,139 Total Equity 15,290,220 11,731,451 27,021,671 TOTAL LIABILITIES AND EQUITY $ 17,727,474 $ 13,478,656 $ 31,206,130 Page 53 ---PAGE BREAK--- CITY OF MIDDLETON ENTERPRISE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS For the Year Ended December 31, 2002 Water Sewer Utility: Utility: Totals OPERATING REVENUES Charges for services $ 1,682,748 $ 1,360,869 $ 3,043,617 OPERATING EXPENSES Operation and maintenance 591,955 1,075,703 1,667,658 Depreciation 349,085 191,593 540,678 Taxes 303,590 8,103 311,693 Total Operating Expenses 1,244,630 1,275,399 2,520,029 Operating Income 438,118 85,470 523,588 NONOPERATING REVENUES (EXPENSES) Investment income 132,832 21,280 154,112 Interest expense (105,685) (70,482) (176,167) Amortization of debt issuance costs P,800) (1,905) (5,705) Total Nonoperating Revenues (Expenses) 23,347 (51,107) (27,760) Income before contributions 461,465 34,363 495,828 CAPITAL CONTRIBUTIONS 142,168 88,696 230,864 NET CHANGE IN RETAINED EARNINGS 603,633 123,059 726,692 RETAINED EARNINGS - Beginning of Year 5,941,704 862,743 6,804,447 RETAINED EARNINGS - END OF YEAR $ 6,545,337 $ 985,802 $ 7,531,139 Page 54 ---PAGE BREAK--- CITY OF MIDDLETON ENTERPRISE FUNDS COMBINING STATEMENT OF CASH FLOWS For the Year Ended December 31, 2002 Water Sewer Utility Utility Totals CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 1,244,564 $ 1,479,043 $ 2,723,607 Cash received from city for services 357,650 357,650 Cash paid to suppliers for goods and services (364,873) (983,808) (1,348,681) Cash paid to employees for services (208,574) (101,917) (310,491) Cash paid for tax equivalent (265,099) (265,099) Net Cash Flows From Operating Activities 763,668 393,318 1,156,986 CASH FLOWS FROM CAP IT AL AND RELATED FINANCING ACTIVITIES Principal paid (155,000) (125,000) (280,000) Interest paid (108,185) (72,282) (180,467) Paid to other funds (464,746) (55,200) (519,946) Acquisition and construction of capital assets (283,292) (3,994) (287,286) Special assessments received 620 620 Net Cash Flows From Capital and Related Financing Activities (1,011,223) (255,856) (1,267,079) CASH FLOWS FROM INVESTING ACTIVITIES Investment income 142,510 18,698 161,208 Investments sold and matured 1,995,043 1,995,043 Marketable securities purchased (2,629,027) (709,926) (3,338,953) Cash Flows From Investing Activities (491,474) (691,228) (1,182,702) Net Increase (Decrease) in Cash and Cash Equivalents (739,029) (553,766) (1,292,795) CASH AND CASH EQUIVALENTS- Beginning of Year 825,910 666,207 1,492,117 CASH AND CASH EQUIVALENTS- END OF YEAR $ 86,881 $ 112,441 $ 199,322 Page 55 ---PAGE BREAK--- Water Sewer Utilit:i Utilit:i Totals RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating income $ 438,118 $ 85,470 $ 523,588 Adjustments to Reconcile Operating Income to Net Cash Provided From Operating Activities Depreciation expense 349,085 191,593 540,678 Depreciation charged to sewer utility 37,646 37,646 Changes in Noncash Components of Working Capital Accounts receivable (144,035) 115,812 (28,223) Other accounts receivable 242 2,144 2,386 Due from other funds 38,613 218 38,831 Inventories 18,374 18,374 Accounts payable 1,789 (19,662) (17,873) Accrued taxes 29,746 29,746 Accrued compensated absences 7,090 3,492 10,582 Due to other funds 14,251 14,251 Deferred revenues (13,000) (13,000) NET CASH FLOWS FROM OPERATING ACTIVITIES $ 763,668 $ 393,318 $ 1,156,986 NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES During 2002, capital additions of $142,168 were contributed to the water utility by developers and customers. During 2002, capital additions of $196,854 were contributed to the water utility by the city. During 2002, capital additions of $88,696 were contributed to the sewer utility by developers and customers. During 2002, capital additions of $184,896 were contributed to the sewer utility by the city. Page 56 ---PAGE BREAK--- CITY OF MIDDLETON AGENCY FUNDS COMBINING BALANCE SHEET December 31, 2002 Tax Fire Collection District Fund Totals ASSETS Cash and investments $ 15,624 $ 11,906,065 $ 11,921,689 Taxes receivable 10,929,640 10,929,640 Due from other governmental units 76,050 76,050 TOTAL ASSETS $ 91,674 $ 22,835,705 $ 22,927,379 LIABILITIES Liabilities Accounts payable $ 91,674 $ - $ 91,674 Due to other governmental units 22,835,705 22,835,705 TOTAL LIABILITIES $ 91,674 $ 22,835,705 $ 22,927,379 Page 57