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CITY OF MIDDLETON Middleton, Wisconsin FINANCIAL STATEMENTS December 31, 2001 ---PAGE BREAK--- Independent Auditors' Report CITY OF MIDDLETON TABLE OF CONTENTS December 31, 2001 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, Debt Service, Certain Special Revenue Funds, and Certain Capital Projects Funds Combined Statement of Revenues, Expenses, and Changes in Retained Earnings - All Proprietary Fund Types Combined Statement of Cash Flows - All Proprietary Fund Types 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 2-3 4 5 6 7 8 - 34 35 - 36 37 - 39 40 41 42 43 44 45 46 47 ---PAGE BREAK--- To the City Council City of Middleton Middleton, Wisconsin ~ VirchoWKrause &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 , 2001, 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 , 2001, and the results of its operations and cash flows of its proprietary fund types for the year then ended in conformity with accounting principles generally accepted in the United States of America. The City of Middleton adopted the provisions of Governmental Accounting Standards Board Statement No. 33, Accounting and Financial Reporting for Nonexchange Transactions, as of January 1, 2001 . This results in a change to the accounting for capital contributions. See Note 19. 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 15, 2002 Virchow, Krause & Company, LLP Certified Public Accou nta nts & Consultants. An Independent Member of Baker Till y Internationa l Page 1 ---PAGE BREAK--- CITY OF MIDDLETON COMBINED BALANCE SHEET - ALL FUND TYPES AND ACCOUNT GROUPS December 31,2001 (With Comparative Totals for December 31,2000) Governmental Fund T~l2es General Special Debt Fund Revenue Service ASSETS AND OTHER DEBITS Cash and investments $ 2,340,956 $ 1,696,373 $ 321,869 Receivables Taxes 7,674,014 Delinquent personal property taxes 17,943 Accounts 338,871 81,641 Loans 81,390 Special assessments 12,820 Interest 51,067 Due from other funds 991,154 Due from other governmental units 26,266 Prepaid items Advances to other funds 1,423,663 311,407 Inventories 2,972 Restricted Assets Cash and investments Fixed assets Accumulated depreciation Deferred charges Other property Other assets 300 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 $ 12,876,754 $ 1,862,676 $ 633,276 Capital Projects $ 4,438,151 3,023,962 579,096 41,043 673,205 519,946 $ 9,275,403 ---PAGE BREAK--- Account Grou~s Proprietary Fiduciary General General Totals Fund Tx:~e Fund Tx:~e Fixed Long-Term {Memorandum OnlX:l Enterprise Agencx: Assets Obligations 2001 2000 $ 3,462,560 $ 12,120,991 $ - $ - $ 24,380,900 $21,483,034 8,525,482 19,223,458 19,080,488 17,943 12,041 562,401 1,562,009 923,623 122,433 153,423 2,394,208 3,080,233 3,635,319 57,822 108,889 149,253 192,228 1,703,328 1,206,101 77,009 103,275 57,270 5,118 5,118 10,578 1,735,070 1,354,930 33,538 36,510 36,510 24,600 24,600 24,600 28,801,876 39,743,288 68,545,164 63,289,466 (5,247,936) (5,247,936) (4,840,021) 35,934 35,934 41,639 622,421 622,421 15,629 15,929 11,200 633,276 633,276 649,037 51,507,275 51,507,275 45,521,067 $ 30,955,281 $ 20,728,600 $ 39,743,288 $ 52,140,551 $168,215,829 $152,799,558 See accompanying notes to financial statements. Continued on Next Page Page 2 ---PAGE BREAK--- CITY OF MIDDLETON COMBINED BALANCE SHEET - ALL FUND TYPES AND ACCOUNT GROUPS December 31,2001 (With Comparative Totals for December 31,2000) Governmental Fund T:i~es General Special Debt Fund Revenue Service LIABILITIES, EQUITY AND OTHER CREDITS Liabilities Accounts payable $ 405,739 $ 190,419 $ - Accrued liabilities 231,386 Due to other governmental units 26,846 Due to other funds 140,474 166,476 Deferred revenues 7,780,480 Deferred special assessments 12,820 Deferred investment income 50,543 Deferred interest income 513,196 Advances from other funds 311,407 General obligation bonds and notes payable Customer advances for construction Accrued compensated absences Unfunded pension liability Other liabilities Total Liabilities 9,161,484 668,302 Equity and Other Credits Investment in general fixed assets Capital paid in by city Contributions in aid of construction Retained earnings Reserved Unreserved Fund Balances Reserved for loans receivable 81,390 Reserved for advances 910,467 Reserved for noncurrent interfunds 810,039 Reserved for delinquent personal property taxes 17,943 Reserved for debt service 633,276 Reserved for encumbrances Reserved for prepaid items and inventories 2,972 Unreserved Designated 122,000 Undesignated 1,854,821 1,110,012 Total Equity and Other Credits 3,715,270 1,194,374 633,276 TOTAL LIABILITIES, EQUITY AND OTHER CREDITS $ 12,876,754 $ 1,862,676 $ 633,276 Capital Projects $ 1,013,154 810,039 3,023,962 673,205 1,423,663 6,944,023 41,043 782,942 1,507,395 2,331,380 $ 9,275,403 ---PAGE BREAK--- Proprietary Fiduciary Fund Tl:~e Fund Tl:~e Enterprise Agencl: $ 332,250 $ 67,488 325,499 20,646,473 571,700 14,639 13,000 3,730,000 2,400 67,203 5,042,052 20,728,600 3,921,526 15,187,256 24,600 6,779,847 25,913,229 $ 30,955,281 $ 20,728,600 Account Grou~s General General Totals Fixed Long-Term (Memorandum Onll:l Assets Obligations 2001 2000 $ - $ - $ 2,009,050 $ 1,961,216 556,885 527,010 20,673,319 20,064,601 1,703,328 1,206,101 10,817,442 9,227,699 686,025 999,362 50,543 78,958 513,196 444,463 1,735,070 1,354,930 50,001,311 53,731,311 48,014,671 2,400 2,400 1,108,325 1,175,528 1,125,200 398,850 398,850 397,633 632,065 632,065 686,849 52,140,551 94,685,012 86,091,093 39,743,288 39,743,288 35,318,503 3,921,526 3,738,921 15,187,256 15,187,256 24,600 24,600 6,779,847 5,691,567 122,433 153,423 910,467 910,467 810,039 847,281 17,943 12,041 633,276 649,037 782,942 974,428 2,972 3,272 122,000 60,000 4,472,228 3,137,669 39,743,288 73,530,817 66,708,465 $ 39,743,288 $ 52,140,551 $168,215,829 $152,799,558 See accompanying notes to financial statements. Continued From Previous Page Page 3 ---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, 2001 (With Comparative Totals for the Year Ended December 31,2000) $ General 7,226,696 1,899,176 485,286 193,620 533,179 173,245 71,924 571,593 206,796 11,361,515 1,078,041 3,746,244 1,945,610 1,928,833 235,243 8,933,971 $ Governmental Fund TYQes Special Revenue 253,407 120,674 1,490,785 21,283 52,324 1,938,473 49,817 1,862,808 123,022 2,035,647 Debt Service $ - 57,305 57,305 4,018,360 2,342,804 6,361,164 Capital Projects $ 2,128,882 362,610 375,042 138,545 639,709 3,644,788 8,383,445 68,733 8,452,178 Totals {Memorandum Only} 2001 2000 $ 9,608,985 $ 8,641,087 2,382,460 2,596,506 485,286 423,389 193,620 185,162 2,023,964 2,220,077 173,245 169,880 446,966 418,545 788,726 1,056,946 898,829 302,716 17,002,081 16,014,308 1,078,041 1,031,620 3,796,061 3,453,018 1,945,610 1,790,482 3,791,641 3,119,512 358,265 581,138 8,383,445 13,992,017 4,018,360 4,215,809 2,411,537 2,027,949 25,782,960 30,211,545 ---PAGE BREAK--- CITY OF MIDDLETON COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - ALL GOVERNMENTAL FUND TYPES For the Year Ended December 31,2001 (With Comparative Totals for the Year Ended December 31, 2000) Governmental Fund TYf2es Totals Special Debt Capital {Memorandum Only} General Revenue Service Projects 2001 2000 Excess (deficiency) of revenues over expenditures $ ~27,544 _(97,174) $ (6,303,8~ ~~07,390) L(8,780,87jD $ j14,197,237) OTHER FINANCING SOURCES (USES) Proceeds from long-term debt 10,000,000 10,000,000 6,800,000 Debt discount and issuance costs (92,439) (92,439) (66,436) Operating transfers in 6,353,838 6,353,838 6,180,631 Operating transfers out {2,552,910) {583,175) p,217,753) {6,353,838) 180,631) Total Other Financing Sources (Uses) (2,552,910) (583,175) 6,353,838 6,689,808 9,907,561 6,733,564 Excess (deficiency) of revenues and other sources over expenditures and other uses (125,366) (680,349) 49,979 1,882,418 1,126,682 (7,463,673) FUND BALANCES - Beginning of Year 3,774,896 1,874,723 583,297 514,702 6,747,618 14,211,291 Equity transfers 65,740 (65,740) FUND BALANCES - END OF YEAR $ 3,715,270 $ 1,194,374 $ 633,276 $ 2,331,380 $ 7,874,300 $ 6,747,618 See accompanying notes to financial statements. Page 4 ---PAGE BREAK--- CITY OF MIDDLETON COMBINED STATEMENT OF REVENUES. EXPENDITURES. AND CHANGES IN FUND BALANCES- ACTUAL AND BUDGET - GENERAL. DEBT SERVICE. CERTAIN SPECIAL REVENUE. AND CERTAIN CAPITAL PROJECTS FUNDS For the Year Ended December 31.2001 General Fund Variance - Favorable Actual Budget (Unfavorable) REVENUES Taxes $ 7.226.696 $ 7.162.877 $ 63.819 Intergovernmental 1.899.176 1.893.936 5.240 Licenses and permits 485.286 496.900 (11.614) Fines. forfeitures and penalties 193.620 194.000 (380) Public charges for services 533.179 691.385 (158.206) Intergovernmental charges for services 173.245 164.720 8.525 Special assessments 71.924 13.063 58.861 Investment income 571.593 482.000 89.593 Miscellaneous revenues 206.796 231.000 (24.204) Total Revenues 11.361,515 11.329.881 31,634 EXPENDITURES Current General government 1.078,041 1.021.221 (56.820) Public safety 3.746.244 3.749.502 3.258 Public works 1.945.610 1.952.874 7.264 Leisure activities 1.928.833 1.954.640 25.807 Conservation and development 235.243 212.558 (22.685) Capital Outlay Devt service Principal Interest and Fiscal Charges Total Expenditures 8,933.971 8.890.795 (43.176) Excess (deficiency) of revenues over expenditures 2,427,544 2,439.086 (11.542) OTHER FINANCING SOURCES (USES) Proceeds of long-term debt Debt discounts and Issuance costs Operating transfers in Operating transfers out (2.552.910) (2,499.086) (53.824) Total Other Financing Sources (Uses) (2.552.910) (2,499.086) (53.824) Excess (deficiency) of revenues and other sources over expenditures and other uses (125.366) (60,000) (65.366) FUND BALANCES - Beginning of Year 3.774.896 3,774,896 Equity transfers 65,740 65.740 FUND BALANCES (DEFICIT) - END OF YEAR $ 3.715.270 $ 3.714.896 $ 374 ---PAGE BREAK--- $ $ Certain S[!ecial Revenue Funds Variance - Favorable Actual Budget (Unfavorable) Actual 253,407 $ 265,500 $ (12,093) $ - 112,849 75,000 37,849 1,266,186 1,547,964 (281,778) 21,283 21,283 57,305 4,293 38,000 (33,707) 1,658,018 1,926,464 (268,446) 57,305 1,741,040 1,851,121 110,081 4,018,360 2,342,804 1,741,040 1,851,121 110,081 6,361,164 (83,022) 75,343 (158,365) (6,303,859) 6,353,838 (583,175) (583,175) (583,175) (583,175) 6,353,838 (666,197) 75,343 (741,540) 49,979 700,383 700,383 583,297 Debt Service Fund Variance - Favorable Budget (Unfavorable) $ - $ - $ 57,305 57,305 4,018,360 2,142,670 (200,134) 6,161,030 (200,134) (6,161,030) (142,829) 6,161,030 192,808 6,161,030 192,808 49,979 583,297 Continued From Previous Page Certain Ca[!ital Projects Funds Variance - Favorable Actual Budget (Unfavorable) 2,128,882 $ 2,128,882 $ 362,610 362,610 138,545 250,000 (111,455) 639,709 621,118 18,591 3,269,746 3,000,000 269,746 8,383,445 9,313,670 930,225 68,733 2,714,195 2,645,462 8,452,178 12,027,865 3,575,687 (5,182,432) (9,027,865) 3,845,433 10,000,000 5,675,000 4,325,000 (92,439) (92,439) (2,879,953) (2,879,953) 7,027,608 5,675,000 1,352,608 1,845,176 (3,352,865) 5,198,041 1,296,243 1,296,243 34,186 $ 775,726 $ (741,540) $ 633,276 $ 583,297 $ 3,141,419 $ (2,056,622) $ 5,198,041 See accompanying notes to financial statements. Page 5 ---PAGE BREAK--- CITY OF MIDDLETON COMBINED STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN RETAINED EARNINGS - ALL PROPRIETARY FUND TYPES For the Year Ended December 31, 2001 (With Comparative Totals for the Year Ended December 31,2000) Proprietary Fund Type (Memorandum Enterprise Only) 2001 2000 OPERATING REVENUES Charges for services $ 2,901,440 $ 2,819,999 OPERATING EXPENSES Operation and maintenance 1,559,601 1,459,047 Depreciation 521,814 497,609 Taxes 281,850 283,392 Total Operating Expenses 2,363,265 2,240,048 Operating Income 538,175 579,951 NONOPERATING REVENUES (EXPENSES) Investment income 202,899 185,819 Interest expense (184,336) (212,538) Amortization of debt issuance costs (5,705) Total Nonoperating Revenues (Expenses) 12,858 (26,719) Income before contributions 551,033 553,232 CAPITAL CONTRIBUTIONS 537,247 NET CHANGE IN RETAINED EARNINGS 1,088,280 553,232 RETAINED EARNINGS - Beginning of Year 5,716,167 5,162,935 RETAINED EARNINGS - END OF YEAR $ 6,804,447 $ 5,716,167 See accompanying notes to financial statements. Page 6 ---PAGE BREAK--- CITY OF MIDDLETON COMBINED STATEMENT OF CASH FLOWS- ALL PROPRIETARY FUND TYPES For the Year Ended December 31, 2001 (With Comparative Totals for the Year Ended December 31,2000) CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers Cash received from city for services Cash paid to suppliers for goods and services Cash paid to employees for services Cash paid for tax equivalent Net Cash Flows From Operating Activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal paid Interest paid Acquisition and construction of fixed assets Cost of removal of capital assets Contributions in aid of construction received/(returned) Special assessments received Net Cash Flows From Capital and Related Financing Activities CASH FLOWS FROM INVESTING ACTIVITIES Investment income Marketable securities purchased Cash Flows From Investing Activities Net Increase (Decrease) in Cash and Cash Equivalents CASH AND CASH EQUIVALENTS - Beginning of Year CASH AND CASH EQUIVALENTS- END OF YEAR $ $ Proprietary Fund Type Enterprise 2001 2,566,362 353,323 (1,263,695) (287,288) (265,417) 1,103,285 (265,000) (188,436) (689,519) (20,500) 256,610 (906,845) 215,372 (87,913) 127,459 323,899 1,168,218 1,492,117 (Memorandum Only) 2000 $ 2,528,548 327,556 (1,191,875) (263,658) (251,397) 1,149,174 (260,000) (210,133) (739,995) (8,439) 1,032,178 (186,389) 105,319 (1,098,217) (992,898) (30,113) 1,198,331 $ 1,168,218 ---PAGE BREAK--- RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating income $ Adjustments to Reconcile Operating Income to Net Cash Provided From Operating Activities Rental income 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 NET CASH FLOWS FROM OPERATING ACTIVITIES $ NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES Proprietary Fund Type Enterprise 2001 538,175 521,814 31,652 12,185 (1,349) (37,243) 5,004 (318) 5,534 12,411 13,000 2,420 1,103,285 (Memorandum Only) 2000 $ 579,951 34,154 497,609 24,809 (7,153) (403) (15,302) (904) 8,088 8,036 (590) 20,665 214 $ 1,149,174 During 2001, capital additions of $377,889 were contributed to the water and sewer utilities by developers and customers. During 2001, capital additions of $171 ,471 were contributed to the water and sewer utilities by the city. See accompanying notes to financial statements. Page 7 ---PAGE BREAK--- CITY OF MIDDLETON INDEX TO NOTES TO FINANCIAL STATEMENTS December 31, 2001 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 Page 10 10 10 13 13 13 15 15 15 15 16 16 17 17 18 19 20 20 20 20 20 21 21 21 22 23 26 27 28 28 28 29 Page 8 ---PAGE BREAK--- CITY OF MIDDLETON INDEX TO NOTES TO FINANCIAL STATEMENTS (cont.) December 31, 2001 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. Adoption of New Accounting Standard 20. Subsequent Event 21. Restricted Assets 22. Excess Expenditures Over Appropriations 23. Middleton Area Development Corporation Page 29 30 30 31 32 32 32 32 33 33 34 34 34 34 Page 9 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2001 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 transactions have been blended with Tax Incremental Financing District No.3. 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 23. 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 10 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2001 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 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.1 Tax Incremental Financing (TIF) District NO.3 Southwest Quadrant Other Capital Projects Page 11 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2001 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 12 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2001 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. COMPARATIVE 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 - 2001 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 - 2001 delinquent real estate taxes December, 2001 December, 2001 January 31, 2002 January 31, 2002 July 31,2002 January 31, 2002 October, 2004 Page 13 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2001 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 14 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2001 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 Cash and Cash Equivalents - Combined Statement of Cash Flows H. INVENTORIES Enterprise Funds $ 3,462,560 24,600 (1,995,043) $1,492,117 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 OBLIGATIONS/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 15 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2001 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) I. LONG- TERM OBLIGA nONs/CONDUIT DEBT (cont.) The city has approved 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. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. The total amount of IRB's outstanding at the end of the year is $744,847, made up of one series. 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 2001. Utility fixed assets in service are depreciated using the straight-line method over the following useful lives: Page 16 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2001 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) K. FIXED ASSETS - PROPRIETARY FUNDS (cont.) 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 Total Enterprise Fund Fixed Assets $ L. ADVANCES TO OTHER FUNDS 12-31-01 Years 383,523 33 1,653,873 20 - 40 343,242 33 - 40 14,231,263 16 - 90 439,245 4 - 15 17,051,146 10,184,258 30 - 100 1,215,786 20 - 40 350,686 7- 40 11,750,730 28,801,876 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, 2001. Deferred interest income in the general fund at December 31, 2001 is $513,196. The debt service fund advanced funds to the Pleasant View Golf Course special revenue fund for debt payments due in 2001. No repayment schedule has been established and interest is not being charged. 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. Page 17 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2001 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) 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 certain capital projects funds, and comparisons of actual to budget are presented in the general purpose financial statements. Since budgets have not been prepared for all special revenue funds and capital projects 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 and capital projects funds as presented on page 4 and the budgeted special revenue funds and capital projects on page 5 is as follows: All special revenue funds (page 4) Less: Unbudgeted special revenue funds Subdividers' Deposits Land and Park Donations Drug Evidence Youth Commission Donations EMS Railroad Depot Depot Restoration Library Gift EMS Equipment Replacement Economic Development Alcohol Awareness Drug Forfeitures Railroad Fund Total Unbudgeted Special Revenue Funds Budgeted Special Revenue Funds (page 5) Excess (Deficiency) of Revenues Over Expenditures $ $ (97,174) 69,471 (437) 4,028 1,005 (1,996) 27,464 1,000 2,532 (40,052) (5,557) 1,049 (935) (71,724) (14,152) (83,022) Page 18 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2001 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) N. BUDGETS (cont.) Revenues Expenditures All capital projects funds (page 4) $ 3,644,788 $ 8,452,178 Less: Un budgeted capital projects funds Southwest Quadrant 375,042 Total Unbudgeted Capital Projects Funds 375,042 Budgeted Capital Projects Funds (Page 5) $ 3,269,746 $ 8,452,178 Excess (Deficiency) of Revenues Over Expendi- tures $ (4,807,390) 375,042 375,042 $ (5,182,432) 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. 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. 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 $1,108,325 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. $67,203 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, 2001 are determined on the basis of current salary rates, and includes salary related payments. Page 19 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2001 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) 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 $109,772. 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. 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. Page 20 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2001 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) T. ECONOMIC DEVELOPMENT LOANS RECEIVABLE (cont.) 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, 2001, 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. 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. Rates are adjusted annually to account for rate changes from Madison Metropolitan Sewerage District. 2001 rates were approved in November 2000 and became effective January 1, 2001. Page 21 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2001 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. 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. Categor~ Carrying 2 3 Total Amount Local and area banks $ 526,486 $ - $ 10,551,185 $ 11,077,671 $ 10,925,957 Federal securities 126,605 126,605 126,605 Government securities 1,004,690 1,004,690 1,004,690 Sub-Totals $ 1,657,781 $ - $ 10,551,185 $ 12,208,966 Local government investment pool 3,295,111 Mutual funds 9,050,889 Petty cash 2,248 Total Deposits and Investments $ 24,405,500 Page 22 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2001 NOTE 2 - CASH AND INVESTMENTS (cont.) 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. 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, 2001, 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 OBLIGA TlON 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 administers the collection of these levies and the subsequent payments of principal and interest. Page 23 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2001 NOTE 3 - LONG-TERM OBLIGATIONS (cont.) A. GENERAL OBLIGATION DEBT (cont.) The following is a summary of the long-term debt transactions for the year ended December 31, 2001 : Balance Balance 1-1-01 Increases Decreases 12-31-01 General Long-Term Obligations Account Group $ 44,019,671 $ 10,000,000 $ 4,018,360 $ 50,001,311 Proprietary Funds Enterprise 3,995,000 265,000 3,730,000 General Obligation Debt $ 48,014,671 $ 10,000,000 $ 4,283,360 $ 53,731,311 Original Date of Due Interest Indebted- Balance Title of Issue Issue Date Rates ness 12-31-01 1. General Obligation Debt 1992 General obligation promissory notes 7-15-92 6-01-02 4.70% - 5.25% $ 1,900,000 $ 350,000 1994 State trust fund loan 12-07-94 3-15-04 4.5% 500,000 191,311 1996 General obligation refunding bonds 10-01-96 10-01-96 4.00% - 5.65% 7,875,000 6,540,000 1996 General obligation promissory notes 6-01-96 6-01-06 4.00%- 5.15% 5,675,000 3,800,000 1997 General obligation prom issory notes 3-01-97 3-01-07 3.95%- 5.15% 9,250,000 5,890,000 1997 General obligation promissory notes 4-01-97 3-01-12 3.90% - 5.40% 6,480,000 5,175,000 1998 General obligation promissory notes 4-01-98 9-01-08 3.90% - 4.60% 9,675,000 7,975,000 1999 General obligation promissory notes 5-15-99 3-01-09 3.50% - 4.40% 7,300,00 7,010,000 2000 General obligation promissory notes 4-01-00 3-01-10 4.80%- 5.20% 6,800,000 6,800,000 2001 General obligation promissory notes 3-15-01 3-11-11 4.4% 10,000,0 10,000,000 Total General Obligation Debt 53,731,311 Less: Proprietary fund general obligation debt (3,730,000) Total General Long-Term Obligations Account Group Debt $ 50,001,311 Page 24 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2001 NOTE 3 - LONG-TERM OBLIGATIONS (cont.) B. OTHER LONG- TERM OBLIGA TlONS Balance 1-1-01 I ncreases Decreases Other Liabilities Long-term liability for accumulated vacation, floating hoi idays and vested sick leave (Note 1.0.) $ 1,065,951 $ 42,374 $ - Unfunded pension liability (Note 4) 397,633 29,544 28,327 City's share of landfill district deficit fund balance (Note 11) 686,849 54,784 Total Other Long-Term Liabilities $ 2,150,433 $ 71,918 $ 83,111 Debt service requirements to maturity are as follows: General Proprietary Fund Long-Term Debt Long-Term Debt Principal Interest Principal Interest 2002 $ 4,100,987 $ 2,248,742 $ 280,000 $ 180,467 $ 2003 4,693,731 2,055,422 290,000 167,393 2004 4,881,593 1,845,907 305,000 153,527 2005 5,285,000 1,618,406 315,000 138,784 2006 4,835,000 1,390,404 330,000 123,106 2007 and thereafter 26,205,000 4,360,872 2,210,000 355,000 $ $ Balance 12-31-01 1,108,325 398,850 632,065 2,139,240 Totals 6,810,196 7,206,546 7,186,027 7,357,190 6,678,510 33,130,872 Totals $ 50,001,311 $ 13,519,753 $ 3,730,000 $ 1,118,277 $ 68,369,341 Estimated payments of accumulated employee benefits and other commitments are not included in the above schedule. $633,276 is on deposit in the debt service fund which is available to meet the above debt service requirements as of December 31, 2001. 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, 2001 was $75,296,885. Total general obligation debt outstanding at year end was $53,731,311. Page 25 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2001 NOTE 3 - LONG-TERM OBLIGATIONS (cont.) 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 5.5% of their salary (4.1 % for Executives and Elected Officials, 4.1 % for Protective Occupations with Social Security, and 4.4% 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, 2001 was $4,167,357; the employer's total payroll was $4,649,690. The total required contribution for the year ended December 31, 2001 was $458,887 or 11.01 percent of covered payroll. Of this amount, 100 percent was contributed for the current year. Total contributions for the years ending December 31, 2000 and 1999 were $442,644 or 13.98 percent of covered payroll and $433,099 or 15.10 percent of covered payroll, respectively, equal to the required contributions for each year. 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. Retirement benefits are calculated as 1.6% (2.0% for Executives, Elected Officials, and Protective Occupations with Social Security and 2.5% for Protective Occupations without Social Security) of final average earnings for each year of creditable service. 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. Page 26 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2001 NOTE 4 - EMPLOYEES' RETIREMENT SYSTEM (cont.) 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, 2001 was $398,850. 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 General Land and parks donations General Railroad General Hotel room tax General Southwest quadrant General Fire district Other capital projects Water utility Other capital projects Sewer utility Water utility General Water utility Sewer utility Sewer utility General Total The following is a schedule of interfund transfers: Fund Transferred To Debt service fund Debt service fund Debt service fund Debt service fund Debt service fund Total Fund Transferred From General fund Pleasant View Golf Course special revenue fund Other capital projects fund TIF District NO.3 capital projects fund Southwest Quadrant capital projects fund Amount $ 55 6,721 159,700 810,039 14,639 464,746 55,200 138,917 51,754 1,557 $ 1,703,328 Amount $ 2,552,910 583,175 38,363 2,841,590 337,800 $ 6,353,838 A residual equity transfer was made to close the Tax Incremental District No.1 to the General Fund for $65,740. Page 27 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2001 NOTE 6 - ADVANCES To/FROM OTHER FUNDS The following is a schedule of interfund advances: Receivable Fund Payable Fund General fund Debt service fund TIF NO.3 capital projects fund Pleasant View Golf Course special revenue fund Total NOTE 7 - FIXED ASSETS A summary of general fixed assets follows: Balance 1-1-01 Additions Deletions Land $ 16,531,929 $ 1,028,244 $ 250,000 Golf course 5,180,197 1,983,739 Buildings 6,659,590 1,209,750 1,571 Improvements other than buildings 3,852,847 304,117 11,186 Equipment and vehicles 2,891,482 283,722 206,338 Furniture and fixtures 202,458 87,439 3,131 Totals $ 35,318,503 $ 4,897,011 $ 472,226 NOTE 8 - SEGMENTS OF ENTERPRISE ACTIVITIES Amount $ 1,423,663 311,407 $ 1,735,070 Balance 12-31-01 $ 17,31 d, 173 7,163,936 7,867,769 4,145,778 2,968,866 286,766 $ 39,743,288 There are services provided by the city which are financed by user charges. The key financial data for the year ended December 31, 2001 for those services are as follows: Operating revenues Depreciation expense Operating income I ncome (loss) before contributions Capital contributions Fixed Assets Additions Deletions Net working capital Total assets Long-term debt payable Total equity $ Water 1,610,485 331,832 495,841 565,894 377,889 1,360,208 85,005 2,202,250 17,602,077 2,185,000 14,489,733 Sewer $ 1,290,955 189,982 42,334 (14,861) 159,358 209,752 37,032 582,697 13,353,204 1,545,000 11,423,496 Page 28 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2001 NOTE 9 - DESIGNATED FUND BALANCE Designated fund balance as of December 31, 2001 includes the following items: General Fund Subsequent year's budget IT Consulting Total NOTE 10 - TAX INCREMENTAL FINANCING DISTRICT No.3 $ 112,000 10,000 $ 122,000 Following is the cumulative status of Tax Incremental Financing District No.3 transactions as of December 31, 2001: Expenditures Administration and promotion $ 1,088,595 Relocation 1,651,250 Capital expenditures 29,644,313 Engineering 636,535 Interest and fiscal charges 769,194 Discounts on borrowing 365,935 Total Expenditures $ 34,155,822 Revenues Tax increment $ 7,695,064 Intergovernmental 626,239 Investment income 2,011,876 Miscellaneous revenues 719,689 Total Revenues 11,052,868 Amount to be Recovered Through Increments $ 23,102,954 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 2001 tax roll collected in 2002 is as follows: TIF No.3 $ 2,771,513 Page 29 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2001 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, 2001 is a deficit of $1,061,940. 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 $632,065 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. 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 CDA entered into a 120 month operating lease agreement for railroad equipment. Annual lease payments total $85,543. The city has guaranteed these loan payments. The city has no other material capital or operating leases. Page 30 ---PAGE BREAK--- NOTE 13 - JOINT VENTURES CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2001 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 $54,784 to the district in 2001. The city will continue to support the district's postclosure care costs in the future. Financial information of the district as of September 30, 2001 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. 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 $226,929 to the district in 2001. 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, 2001 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. Page 31 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2001 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 $44,438. The number of participants currently eligible to receive benefits is seven. The total amount outstanding at year end to be paid in the future is $194,821 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, 2001 $ 1,932,660 $ 1,806,261 $ 3,738,921 Current contributions 171,471 11,134 182,605 Balance - December 31, 2001 $ 2,104,131 $ 1,817,395 $ 3,921,526 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, 2001, the following individual funds held a deficit balance: Special Revenue Fund Amount Reason Pleasant View Golf Course $ 185,298 Closure of golf course during the year for construction. Page 32 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2001 NOTE 17 - DEFICIT FUND BALANCE (cont.) The Pleasant View Golf Course fund deficit is anticipated to be funded with future revenues. Special Revenue Fund (cont.) Amou nt Reason Land and Park Donations $ 437 Excess expenditures over permits revenue. The Land and Parks Donations fund deficit is anticipated to be funded with future permits. Railroad 71,724 New fund in 2001, excess expenditures over revenue The Railroad deficit is anticipated to be funded with future revenues. Hotel Room Tax 200,677 Excess expenditures over revenue. The hotel room tax fund deficit is anticipated to be funded with future revenues. Capital Projects Fund Southwest quadrant 810,039 Debt service costs in excess of cash flows from special assessments. The southwest quadrant fund deficit is anticipated to be funded with future collections of special assessments. NOTE 18 - EFFECT OF NEW ACCOUNTING STANDARDS ON CURRENT-PERIOD FINANCIAL STATEMENTS The Governmental Accounting Standards Board (GASB) 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: 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 - ADOPTION OF NEW ACCOUNTING STANDARD On January 1, 2001, the city adopted the provisions of Governmental Accounting Standards Board Statement No. 33, Accounting and Financial Reporting for Nonexchange Transactions. This statement requires that proprietary fund type capital contributions from external parties be presented as revenues beginning in 2001. The balance in Contributions in Aid of Construction reflects the accumulated contributions until adoption of Statement No. 33. This balance will remain until the city adopts Governmental Accounting Standards Board Statement No. 34, effective for the city on January 1, 2003, when it will become part of the Net Assets section. Page 33 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2001 NOTE 20 - SUBSEQUENT EVENT In March 2002, the city issued $6,250,000 general obligation promissory notes for various capital projects. NOTE 21 - 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 22 - EXCESS EXPENDITURES OVER ApPROPRIATIONS The following individual funds experienced excess expenditures over appropriations. Special Revenue Funds Lost and Damaged Book Library Endowment Hotel Room Tax Capital Projects Fund Other Capital Projects $ NOTE 23 - MIDDLETON AREA DEVELOPMENT CORPORATION (MADC) 12,336 51,799 397,135 2,386,462 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 34 ---PAGE BREAK--- SUPPLEMENTAL INFORMATION ---PAGE BREAK--- CITY OF MIDDLETON GENERAL FUND DETAILED SCHEDULE OF REVENUES For the Year Ended December 31,2001 Actual Budget TAXES General property tax $ 6,798,424 $ 6,797,877 Omitted property tax 26,229 Fees in lieu of taxes 25,000 Taxes from city owned utility 265,417 263,000 Room tax 108,603 100,000 Interest on taxes 3,023 2,000 TOTALS $ 7,226,696 $ 7,162,877 INTERGOVERNMENTAL REVENUES Shared taxes from state $ 672,948 $ 690,890 State aid - road allotment 635,675 636,046 Federal and state aid - other 168,831 141,060 County aid - library 385,698 385,698 County aid - signals 9,757 7,500 County aid - senior citizens 26,267 32,742 TOTALS $ 1,899,176 $ 1,893,936 LICENSES AND PERMITS Liquor and malt beverage licenses $ 20,548 $ 22,700 Operators' licenses 7,820 7,000 Contractor's licenses 6,504 5,000 Alarm licenses 8,590 3,500 Cigarette licenses 185 150 Bicycle licenses 281 200 Dog and cat licenses 187 200 Cable TV franchise licenses 130,001 130,000 Other miscellaneous licenses 468 2,400 Building permits 210,825 190,000 Electrical permits 30,452 55,000 Plumbing permits 49,047 65,000 Erosion control permits 12,400 8,000 Park reservation permits 7,978 7,750 TOTALS $ 485,286 $ 496,900 FINES, FORFEITURES AND PENAL TIES Court penalties $ 126,275 $ 135,000 Parking violations 35,027 28,000 Court costs 32,318 31,000 TOTALS $ 193,620 $ 194,000 Page 35 ---PAGE BREAK--- CITY OF MIDDLETON GENERAL FUND DETAILED SCHEDULE OF REVENUES (cont.) For the Year Ended December 31, 2001 PUBLIC CHARGES FOR SERVICES Clerk fees Sale of materials and supplies Police special services Police department fees Ambulance services EMS fixed cost abatement Public works charges Senior citizens Swimming pools Summer recreation Other recreation Zoning TOTALS INTERGOVERNMENTAL CHARGES FOR SERVICES Local general government services SPECIAL ASSESSMENTS Curb, gutter and sidewalks Interest on special assessments TOTALS INVESTMENT INCOME Investment income MISCELLANEOUS Rent of city buildings and offices Compensation for loss of fixed assets Refund of prior year's expenditures Sale of city property Act 11 refund Pool contribution TOTALS TOTAL REVENUES Actual $ 28,626 2,850 19,484 28,041 80,523 52,745 18,838 7,348 202,622 58,721 31,581 1,800 $ 533,179 $ 173,245 $ 70,107 1,817 $ 71,924 $ 571,593 $ 17,200 26,358 35,133 55,144 47,961 25,000 $ 206,796 $ 11,361,515 Budget $ 7,000 2,000 30,000 292,527 51,293 10,000 5,000 212,725 41,900 37,940 1,000 $ 691,385 $ 164,720 $ 10,900 2,163 $ 13,063 $ 482,000 $ 12,000 28,000 166,000 25,000 $ 231,000 $ 11,329,881 Page 36 ---PAGE BREAK--- CITY OF MIDDLETON GENERAL FUND DETAILED SCHEDULE OF EXPENDITURES For the Year Ended December 31,2001 GENERAL GOVERNMENT Council $ Police commission Landmarks commission Middleton youth commission Municipal court General administration Information technology Independent auditing Legal counseling Special legal counsel Buildings and grounds Illegal taxes and tax refunds Reduction of prior years revenue Property and liability insurance Board of review Additional expenses - prior years Emergency preparedness Income continuation insurance Group life insurance Contingency Act 11 credit - payment to Wisconsin Retirement Fund TOTALS $ PUBLIC SAFETY Police administration $ Police patrol Training Police uniform allowance and equipment School patrol Fire suppression Public fire protection Building inspector Electrical inspector Plumbing inspection Sealer of weights and measures Erosion control enforcement EMS Com m u n ications TOTALS $ Actual Budget 43,822 $ 41,500 2,248 5,000 1,500 600 20,125 14,500 16,782 16,870 408,837 397,164 53,294 40,000 19,084 14,196 115,559 100,000 7,873 2,000 103,908 78,034 5,000 5,000 117 189,466 170,000 215 375 16,616 5,000 6,453 4,920 15,425 12,650 3,756 4,000 109,412 47,961 1,078,041 $ 1,021,221 380,260 $ 382,729 1,938,353 1,825,684 19,799 20,100 11,995 11,500 11,362 11,331 226,929 238,290 354,920 340,000 75,832 73,651 67,591 65,949 41,620 39,241 2,640 2,640 11,004 5,000 341,483 493,703 262,456 239,684 3,746,244 $ 3,749,502 Page 37 ---PAGE BREAK--- CITY OF MIDDLETON GENERAL FUND DETAILED SCHEDULE OF EXPENDITURES (cont.) For the Year Ended December 31, 2001 Actual PUBLIC WORKS Machinery $ 217,638 Garage 53,473 Protective equipment 1,981 Engineering 467,206 Street maintenance 170,494 Street cleaning 48,356 Snow and ice control 80,341 Traffic signs and markings 55,052 Traffic signals 20,667 Street lighting 49,286 Tree and brush 65,837 Sidewalk maintenance 13,189 Storm sewers 24,840 Mass transit 177,174 PW fringe benefits Garbage collection 231,991 Sanitary landfill 84,439 Leaf pick-up 44,985 Track and signal maintenance Recycling 138,661 TOTALS $ 1,945,610 LEISURE ACTIVITIES Library $ 906,772 Senior citizens center 195,691 Recreation administration 74,617 Swimming pool 230,205 Summer recreation 68,920 Other recreation 38,675 Parks 413,953 Cable television TOTALS $ 1,928,833 Budget $ 184,076 39,321 2,000 505,114 178,285 36,004 72,464 48,170 24,805 48,700 67,428 10,116 153,095 99,830 234,500 85,000 29,759 300 133,907 $ 1,952,874 $ 903,173 229,530 77,328 244,180 53,620 42,190 402,119 2,500 $ 1,954,640 Page 38 ---PAGE BREAK--- CITY OF MIDDLETON GENERAL FUND DETAILED SCHEDULE OF EXPENDITURES (cont.) For the Year Ended December 31,2001 Actual CONSERVATION AND DEVELOPMENT Weed control $ 3,475 Creek maintenance 429 Water resources 21,137 Conservancy land commission 68,984 Public land 4 Planning commission 141,214 TOTALS $ 235,243 TOTAL EXPENDITURES $ 8,933,971 Budget $ 2,705 24,101 51,000 134,752 $ 212,558 $ 8,890,795 Page 39 ---PAGE BREAK--- Pleasant View Golf Course ASSETS Cash and investments $ 122,837 Accounts receivable Loan receivable Inventories 2,972 Other assets 300 TOTAL ASSETS $126,109 LIABILITIES AND FUND BALANCES Accounts payable $ - Due to other funds Advances from other funds 311,407 Total Liabilities 311,407 Fund Balances Reserved for loan receivable Reserved for inventories 2,972 Unreserved Undesignated (deficit) (188,270) Total Fund Balances (185,298) TOTAL LIABILITIES AND FUND BALANCES $ 126,109 CITY OF MIDDLETON SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET December 31,2001 Sub- Land and dividers' Park Drug Deposits Donations Evidence $1,052,892 $ - $ 4,028 $1,052,892 - $ 4,028 $ - $ 382 $ 55 437 1,052,892 (437) 4,028 1,052,892 (437) 4,028 $1,052,892 $ - $ 4,028 Youth Cable Commission Railroad TV Donations EMS Depot $ 23,805 $ 1,005 $14,157 $ 37,415 $ 23,805 $ 1,005 $14,157 $ 37,415 $ - $ - $ - $ 390 390 23,805 1,005 14,157 37,025 23,805 1,005 14,157 37,025 $ 23,805 $ 1,005 $14,157 $37,415 ---PAGE BREAK--- Economic Lost and EMS Develop- Depot Damaged Library Equipment Library ment Restoration Book Gift Replacement Endowment Grant $ 1,152 $ 22,163 $ 7,429 $ 39,106 $ 155,472 $ 70,833 $ 1,152 $ 22,163 $7,429 $ 39,106 $ 155,472 $ 70,833 $ - $ 1,676 $ 350 $ - $ - $ - 1,676 350 1,152 20,487 7,079 39,106 155,472 70,833 1,152 20,487 7,079 39,106 155,472 70,833 $ 1,152 $ 22,163 $ 7,429 $ 39,106 $ 155,472 $ 70,833 Economic Develop- Alcohol Drug ment Awareness Forfeitures $139,007 $ 2,905 $ 2,167 81,390 $220,397 $ 2,905 $ 2,167 $ - $ - $ - 81,390 139,007 2,905 2,167 220,397 2,905 2,167 $220,397 $ 2,905 $ 2,167 Railroad $ - 3,125 $ 3,125 $ 68,128 6,721 74,849 (71,724) (71,724) $ 3,125 Hotel Continued From Previous Page Room Tax Totals $ - $1,696,373 78,516 81,641 81,390 2,972 300 $ 78,516 $1,862,676 $ 119,493 $ 190,419 159,700 166,476 311,407 279,193 668,302 81,390 2,972 (200,677) 1,110,012 (200,677) 1,194,374 $ 78,516 $1,862,676 Page 40 ---PAGE BREAK--- CITY OF MIDDLETON SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES For the Year Ended December 31, 2001 ---PAGE BREAK--- EMS Economic Lost and Equipment Library Economic Develop- Depot Damaged Library Replace- Endow- Develop- ment Alcohol Drug Hotel Restoration Book Gift ment ment ment Grant Awareness Forfeitures Railroad Room Tax Totals $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 253,407 $ 253,407 73,750 39,099 120,674 28,860 3,758 2,793 34,416 97,840 1,490,785 10,043 10,542 21,283 1,000 7,785 3,895 839 398 52,324 1,000 28,860 7,785 83,793 3,758 14,437 2,793 839 34,416 390,744 1,938,473 40,052 1,744 1,774 49,817 19,658 5,253 126,799 106,140 662,635 1,862,808 9,315 123,022 19,658 5,253 40,052 126,799 9,315 1,744 1,774 106,140 662,635 2,035,647 1,000 9,202 2,532 (40,052) (43,006) (5,557) 14,437 1,049 (935) (71,724) (271,891) (97,174) (583,175) (583,175) 1,000 9,202 2,532 (40,052) (43,006) (5,557) 14,437 1,049 (935) (71,724) (271,891 ) (680,349) 152 11,285 4,547 79,158 198,478 76,390 205,960 1,856 3,102 71,214 1,874,723 $ 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 Page 41 ---PAGE BREAK--- ASSETS Cash and investments Taxes receivable Accounts receivable Loans receivable Special assessments Due from other funds TOTAL ASSETS CITY OF MIDDLETON CAPITAL PROJECTS FUNDS COMBINING BALANCE SHEET December 31, 2001 TIF District No.3 $ 3,926,987 Southwest Quadrant $ - 3,003,941 20,021 426,896 41,043 673,205 $ 7,398,867 $ 693,226 LIABILITIES AND FUND BALANCES Accounts payable $ 419,257 $ - Due to other funds Deferred revenues Deferred special assessments Advances from other funds Total Liabilities Fund Balances Reserved for loans receivable Reserved for encumbrances Unreserved Undesignated (deficit) Total Fund Balances (Deficit) 810,039 3,003,941 20,021 673,205 1,423,663 4,846,861 1,503,265 41,043 770,967 1,739,996 {810,039) 2,552,006 {810,039) $ Other Capital Projects 511,164 152,200 519,946 $ 1,183,310 $ 593,897 593,897 11,975 577,438 589,413 Totals $ 4,438,151 3,023,962 579,096 41,043 673,205 519,946 $ 9,275,403 $ 1,013,154 810,039 3,023,962 673,205 1,423,663 6,944,023 41,043 782,942 1,507,395 2,331,380 TOTAL LIABILITIES AND FUND BALANCES $ 7,398,867 $ 693,226 $ 1,183,310 $ 9,275,403 Page 42 ---PAGE BREAK--- CITY OF MIDDLETON CAPITAL PROJECTS FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES For the Year Ended December 31,2001 TIF TIF Other District District Southwest Capital No.1 No.3 Quadrant Projects Totals REVENUES Taxes $ - $ 2,128,882 $ - $ - $ 2,128,882 Intergovernmental 362,610 362,610 Special assessments 375,042 375,042 Investment income 138,545 138,545 Miscellaneous revenues 432,949 206,760 639,709 Total Revenues 3,062,986 375,042 206,760 3,644,788 EXPENDITURES Capital outlay 3,969,118 4,414,327 8,383,445 Interest and fiscal charges 68,733 68,733 Total Expenditures 4,037,851 4,414,327 8,452,178 Excess (deficiency) of revenues over expenditures (974,865) 375,042 (4,207,567) ( 4,807,390) OTHER FINANCING SOURCES (USES) Proceeds from long-term debt 6,400,000 3,600,000 10,000,000 Debt discount and issuance costs (59,520) (32,919) (92,439) Operating transfers out (2,841,590) (337,800) (38,363) (3,217,753) Total Other Financing Sources (Uses) 3,498,890 (337,800) 3,528,718 6,689,808 Excess (defiCiency) of revenues and other sources over expenditures and other uses 2,524,025 37,242 (678,849) 1,882,418 FUND BALANCES (DEFICIT) - Beginning of Year 65,740 27,981 (847,281) 1,268,262 514,702 Equity transfers (65,740) (65,740) FUND BALANCES (DEFICIT)- END OF YEAR $ - $ 2,552,006 $ (810,039) $ 589,413 $ 2,331,380 Page 43 ---PAGE BREAK--- ASSETS Current Assets Cash and investments Accounts receivable Interest receivable Due from other funds Inventories Total Current Assets Other Property and Investments Cash and investments Special assessments receivable Property held for future use Preliminary engineering CITY OF MIDDLETON ENTERPRISE FUNDS COMBINING BALANCE SHEET December 31,2001 Water Utility $ 2,820,953 133,083 57,822 190,671 33,538 3,236,067 40,812 622,421 15,629 Total Other Property and Investments 678,862 Utility Plant Property and equipment 17,051,146 Less: Accumulated depreciation (3,382,648) Total Property and Equipment 13,668,498 Deferred Charges Unamortized debt expenses 18,650 Total Deferred Charges 18,650 TOTAL ASSETS $ 17,602,077 Sewer Utility Totals $ 641,607 $ 3,462,560 429,318 562,401 57,822 1,557 192,228 33,538 1,072,482 4,308,549 24,600 24,600 2,353,396 2,394,208 622,421 15,629 2,377,996 3,056,858 11,750,730 28,801,876 (1,865,288) (5,247,936) 9,885,442 23,553,940 17,284 35,934 17,284 35,934 $ 13,353,204 $ 30,955,281 ---PAGE BREAK--- Water Sewer Utility Utility Totals LIABILITIES AND EQUITY Current Liabilities Accounts payable $ 103,373 $ 228,877 $ 332,250 Accrued taxes 265,099 265,099 Accrued interest 36,100 24,300 60,400 Accrued compensated absences 9,499 4,654 14,153 Due to other funds 464,746 106,954 571,700 Current portion of long-term debt 155,000 125,000 280,000 Total Current Liabilities 1,033,817 489,785 1,523,602 Deferred Credits Accrued compensated absences 35,527 17,523 53,050 Customer advances for construction 2,400 2,400 Total Deferred Credits 35,527 19,923 55,450 Other Liabilities Deferred revenues 13,000 13,000 Long-Term Debt Net of Current Maturities General obligation notes 2,030,000 1,420,000 3,450,000 Total Long-Term Debt 2,030,000 1,420,000 3,450,000 Total Liabilities 3,112,344 1,929,708 5,042,052 Equity Capital paid in by city 2,104,131 1,817,395 3,921,526 Contributions in aid of construction 6,443,898 8,743,358 15,187,256 Total Contributed Capital 8,548,029 10,560,753 19,108,782 Retained earnings Reserved 24,600 24,600 Unreserved 5,941,704 838,143 6,779,847 Total Retained Earnings 5,941,704 862,743 6,804,447 Total Equity 14,489,733 11,423,496 25,913,229 TOTAL LIABILITIES AND EQUITY $ 17,602,077 $ 13,353,204 $ 30,955,281 Page 44 ---PAGE BREAK--- CITY OF MIDDLETON ENTERPRISE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS For the Year Ended December 31,2001 Water Sewer Utility Utility OPERATING REVENUES Charges for services $ 1,610,485 $ 1,290,955 OPERATING EXPENSES Operation and maintenance 508,672 1,050,929 Depreciation 331,832 189,982 Taxes 274,140 7,710 Total Operating Expenses 1,114,644 1,248,621 Operating Income 495,841 42,334 NONOPERATING REVENUES (EXPENSES) Investment income 186,715 16,184 Interest expense (112,862) (71,474) Amortization of debt issuance costs (3,800) (1,905) Total Nonoperating Revenues (Expenses) 70,053 (57,195) Income before contributions 565,894 (14,861) CAPITAL CONTRIBUTIONS 377,889 159,358 NET CHANGE IN RETAINED EARNINGS 943,783 144,497 RETAINED EARNINGS - Beginning of Year 4,997,921 718,246 RETAINED EARNINGS - END OF YEAR $ 5,941,704 $ 862,743 Totals $ 2,901,440 1,559,601 521,814 281,850 2,363,265 538,175 202,899 (184,336) (5,705) 12,858 551,033 537,247 1,088,280 5,716,167 $ 6,804,447 Page 45 ---PAGE BREAK--- CITY OF MIDDLETON ENTERPRISE FUNDS COMBINING STATEMENT OF CASH FLOWS For the Year Ended December 31,2001 Water Sewer Utility Utility Totals CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 1,381,175 $ 1,185,187 $ 2,566,362 Cash received from city for services 353,323 353,323 Cash paid to suppliers for goods and services (332,800) (930,895) (1,263,695) Cash paid to employees for services (193,894) (93,394) (287,288) Cash paid for tax equivalent (265,417) (265,417) Net Cash Flows From Operating Activities 942,387 160,898 1,103,285 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal paid (145,000) (120,000) (265,000) Interest paid (115,162) (73,274) (188,436) Acquisition and construction of capital assets (681,578) (7,941) (689,519) Cost of removal of captial assets (20,500) (20,500) Special assessments received 40,805 215,805 256,610 Net Cash Flows From Capital and Related Financing Activities (921,435) 14,590 (906,845) CASH FLOWS FROM INVESTING ACTIVITIES Investment income 199,188 16,184 215,372 Marketable securities purchased (87,913) (87,913) Cash Flows From Investing Activities 111,275 16,184 127,459 Net Increase (Decrease) in Cash and Cash Equivalents 132,227 191,672 323,899 CASH AND CASH EQUIVALENTS- Beginning of Year 693,683 474,535 1,168,218 CASH AND CASH EQUIVALENTS- END OF YEAR $ 825,910 $ 666,207 $ 1,492,117 ---PAGE BREAK--- Water Sewer Utility Utility Totals RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating income $ 495,841 $ 42,334 $ 538,175 Adjustments to Reconcile Operating Income to Net Cash Provided From Operating Activities Depreciation expense 331,832 189,982 521,814 Depreciation charged to sewer utility 31,652 31,652 Changes in Noncash Components of Working Capital Accounts receivable 116,359 (104,174) 12,185 Other accounts receivable (1,312) (37) (1,349) Due from other funds (35,686) (1,557) (37,243) Accounts payable (14,310) 19,314 5,004 Accrued taxes (318) (318) Accrued compensated absences 3,691 1,843 5,534 Due to other funds 12,411 12,411 Deferred revenues 13,000 13,000 Other current liabilities 1,638 782 2,420 NET CASH FLOWS FROM OPERATING ACTIVITIES $ 942,387 $ 160,898 $ 1,103,285 NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES During 2001, capital additions of $170,658 were contributed to the water utility by developers and customers. During 2001, capital additions of $171 ,471 were contributed to the water utility by the city. During 2001, capital additions of $144,497 were contributed to the sewer utility by developers and customers. During 2001, capital additions of $11,134 were contributed to the sewer utility by the city. Page 46 ---PAGE BREAK--- ASSETS Cash and investments Taxes receivable CITY OF MIDDLETON AGENCY FUNDS COMBINING BALANCE SHEET December 31,2001 Fire District $ - Due from other governmental units 77,009 Prepaid items 5,118 TOTAL ASSETS $ 82,127 LIABILITIES Liabilities Accounts payable $ 67,488 Due to other governmental units Due to other funds 14,639 TOTAL LIABILITIES $ 82,127 Tax Collection Fund Totals $ 12,120,991 $ 12,120,991 8,525,482 8,525,482 77,009 5,118 $ 20,646,473 $ 20,728,600 $ - $ 67,488 20,646,473 20,646,473 14,639 $ 20,646,473 $ 20,728,600 Page 47