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CITY OF MIDDLETON Middleton, Wisconsin FINANCIAL STATEMENTS Including Independent Auditors' Report December 31, 1999 ---PAGE BREAK--- Independent Auditors' Report CITY OF MIDDLETON TABLE OF CONTENTS December 31, 1999 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 Fund Balances - Actual and Budget - General and 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 Fire District Agency Fund - Statement of Cash Increases and Cash Decreases 1 2-3 4 5 6 7 8 - 32 33 - 34 35 - 37 38 39 40 41 42 43 44 45 46 ---PAGE BREAK--- Virchow, Krause & Company, LLP Certified Public Accountants & Consultants INDEPENDENT AUDITORS' REPORT To the City Council City of Middleton Middleton, Wisconsin We have audited the general purpose financial statements of the City of Middleton. Wisconsin as of and for the year ended December 31, 1999, 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 generally accepted auditing standards. 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 , 1999, and the results of its operations and cash flows of its proprietary fund types for the year then ended in conformity with generally accepted accounting principles . 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 17, 2000 VIRCHOW, KRAUSE & COMPANY, LLP ~~uP Page 1 ---PAGE BREAK--- CITY OF MIDDLETON COMBINED BALANCE SHEET - ALL FUND TYPES AND ACCOUNT GROUPS December 31, 1999 (With Comparative Totals for December 31,1998) Governmental Fund Types General Special Debt Fund Revenue Service ASSETS AND OTHER DEBITS Cash and investments $ 2,327,390 $ 2,100,347 $ 561,583 Receivables Taxes 6,438,399 Delinquent personal property taxes 97 Accounts 173,850 55,027 Loan receivable 138,867 Special assessments 33,392 Interest 87,488 Due from other funds 934,098 Due from other governmental units 62 Prepaid items Advances to other funds 1,286,197 Inventories 1,323 Restricted Assets Cash and investments Property, plant and equipment Accumulated depreciation Deferred charges 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 $ 11,280,973 $ 2,295,864 $ 561,583 Capital Projects $ 10,328,287 1,943,494 49,764 1,161,504 127,567 287,931 $ 13,898,547 ---PAGE BREAK--- Account Groups Proprietary Fiduciary General General Totals Fund Type Fund Type Fixed Long-Term (Memorandum Only) Enterprise Agency Assets Obligations 1999 1998 $ 1,994,944 $ 10,990,519 $ - $ - $ 28,303,070 $29,930,751 8,416,928 16,798,821 15,954,257 97 16,517 565,681 844,322 623,958 138,867 122,422 1,317,318 1,690,629 23,949 239,004 102,409 174,703 1,396,732 917,004 31,845 31,907 25,210 10,918 10,918 1,286,197 1,217,464 32,634 33,957 40,612 12,300 12,300 12,300 26,900,980 28,252,880 55,153,860 49,541,504 (4,442,099) (4,442,099) (4,015,715) 47,344 47,344 47,999 18,708 19,008 300 1,209,622 1,209,622 1,902,402 43,183,645 43,183,645 39,299,224 25,451,566 $ 19,450,210 $ 28,252,880 $ 44,393,267 $ 145,584,890 $ 137,306,825 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, 1999 (With Comparative Totals for December 31, 1998) Governmental Fund Types General Special Debt Fund Revenue Service LIABILITIES, EQUITY AND OTHER CREDITS Liabilities Accounts payable $ 278,303 $ 55,528 $ - Accrued liabilities 184,397 Due to other governmental units 25,743 Due to other funds 133,287 234,000 Deferred revenues 6,312,403 Deferred special assessments 33,392 Deferred interest income 463,218 Advances from other funds General obligation long-term debt payable Customer advances for construction Accrued compensated absences Other liabilities Total Liabilities 7,430,743 289,528 Equity and Other Credits Investment in general fixed assets Capital paid in by city Contributions in aid of construction Retained earnings Fund Balances Reserved for loan receivable 138,867 Reserved for advances 910,467 Reserved for noncurrent interfunds 893,309 Reserved for delinquent personal property taxes 97 Reserved for debt service 561,583 Reserved for encumbrances Reserved for inventories 1,323 Unreserved Designated 254,000 Undesignated 1,792,357 1,866,146 Total Equity and Other Credits 3,850,230 2,006,336 561,583 TOTAL LIABILITIES, EQUITY AND OTHER CREDITS $ 11,280,973 $ 2,295,864 $ 561,583 Capital Projects $ 687,340 899,303 1,943,494 1,161,504 127,567 1,286,197 6,105,405 648,039 135,818 7,009,285 7,793,142 $ 13,898,547 ---PAGE BREAK--- Account Groups Proprietary Fiduciary General General Totals Fund Type Fund Type Fixed Long-Term (Memorandum Only) Enterprise Agency Assets Obligations 1999 1998 $ 548,110 $ 24,412 $ - $ - $ 1,593,693 $927,250 325,181 509,578 441,207 19,407,447 19,433,190 18,787,936 111,791 18,351 1,396,732 917,004 8,255,897 7,800,163 1,194,896 1,517,818 590,785 428,956 1,286,197 1,217,464 4,255,000 41,435,480 45,690,480 43,128,923 335,328 335,328 244,420 59,625 59,625 50,339 2,957,787 2,957,787 2,032,703 5,635,035 19,450,210 44,393,267 83,304,188 77,494,183 28,252,880 28,252,880 25,855,792 3,738,921 3,738,921 3,493,094 10,914,675 10,914,675 10,004,847 5,162,935 5,162,935 4,658,774 138,867 910,467 910,467 893,309 97 16,517 1,209,622 1,902,402 135,818 29,111 1,323 1,927 254,000 2,443,301 10,667,788 10,496,410 19,816,531 28,252,880 62,280,702 59,812,642 $ 25,451,566 $ 19,450,210 $ 28,252,880 $ 44,393,267 $ 145,584,890 $ 137,306,825 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 Health and social services 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, 1999 (With Comparative Totals for the Year Ended December 31, 1998) Governmental Fund Types Special Debt Capital General Revenue Service Projects $ 6,399,216 $ 258,546 $ - $ 1,348,178 1,682,223 30,269 77,379 422,868 190,928 498,468 1,703,388 127,224 75,668 450,509 431,547 31,105 44,101 413,476 218,975 16,086 156,893 10,047,117 2,039,394 44,101 2,446,435 816,741 3,315,504 5,030 233 1,692,696 1,613,303 1,281,488 192,385 73,712 7,605,423 4,533,443 1,981,259 7,630,629 1,360,463 6,514,702 7,605,423 Totals (Memorandum Only) 1999 1998 $ 8,005,940 $ 7,462,634 1,789,871 1,738,079 422,868 345,563 190,928 202,159 2,201,856 2,422,924 127,224 125,282 526,177 343,018 920,229 1,686,649 391,954 293,171 14,577,047 14,619,479 816,741 770,764 3,320,534 2,879,618 233 218,106 1,692,696 1,735,609 2,894,791 2,656,518 266,097 159,670 7,605,423 8,741,242 4,533,443 4,570,145 1,981,259 1,898,829 23,111,217 23,630,501 < ---PAGE BREAK--- COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - ALL GOVERNMENTAL FUND TYPES For the Year Ended December 31, 1999 (With Comparative Totals for the Year Ended December 31, 1998) Governmental Fund Types Special Debt General Revenue Service Capital Projects Totals (Memorandum Only) 1999 1998 Excess (deficiency) of revenues over expenditures $ 2,416,488 $ 678,931 $ (6,470,601) $ (5,158,988) $ (8,534,170) $ (9,011,022) OTHER FINANCING SOURCES (USES) Proceeds from long-term debt Proceeds from land contract Debt discount and issuance costs Operating transfers in Operating transfers out Total Other Financing Sources (Uses) Excess (deficiency) of revenues and other sources over expenditures and other uses FUND BALANCES - Beginning of Year (as restated) FUND BALANCES - END OF YEAR 6,800,000 6,800,000 9,675,000 1,000,000 (1,236) (135,033) (136,269) (148,987) 6,380,637 377,430 6,758,067 5,202,318 (2,417,591) (903,245) (3,437,231) (6,758,067) (5,202,318) (2,417,591) (903,245) 6,379,401 3,605,166 6,663,731 10,526,013 (1,103) (224,314) (91,200) (1,553,822) (1,870,439) 1,514,991 3,851,333 2,230,650 652,783 9,346,964 16,081,730 14,285,144 $3,850,230 $2,006,336 $ 561,583 $ 7,793,142 $ 14,211,291 $ 15,800,135 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 AND CAPITAL PROJECTS FUNDS For the Year Ended December 31, 1999 General Fund Variance - Favorable Actual Budget (Unfavorable) REVENUES Taxes $ 6,399,216 $ 6,328,003 $ 71,213 Intergovernmental 1,682,223 1,665,237 16,986 Licenses and permits 422,868 280,925 141,943 Fines, forfeitures and penalties 190,928 192,000 (1,072) Public charges for services 498,468 524,409 (25,941) Intergovernmental charges for services 127,224 120,800 6,424 Special assessments 75,668 39,200 36,468 Investment income 431,547 507,600 (76,053) Miscellaneous revenues 218,975 195,440 23,535 Total Revenues 10,047,117 9,853,614 193,503 EXPENDITURES Current General government 816,741 854,940 38,199 Public safety 3,315,504 3,217,106 (98,398) Public works 1,692,696 1,816,672 123,976 Leisure activities 1,613,303 1,545,081 (68,222) Conservation and development 192,385 228,785 36,400 Capital Outlay Total Expenditures 7,630,629 7,662,584 31,955 Excess (deficiency) of revenues over expenditures 2,416,488 2,191,030 225,458 OTHER FINANCING SOURCES (USES) Proceeds of long-term debt Debt discount and issuance costs Operating transfers in Operating transfers out (2,417,591) (2,416,350) (1,241) Total Other Financing Sources (Uses) (2,417,591 ) (2,416,350) (1,241) Excess (deficiency) of revenues and other sources over expenditures and other uses (1,103) (225,320) 224,217 FUND BALANCES - Beginning of Year (as restated) 3,851,333 3,851,333 FUND BALANCES - END OF YEAR $ 3,850,230 $ 3,626,013 $ 224,217 ---PAGE BREAK--- Capital Projects Funds Variance - Favorable Actual Budget (Unfavorable) $ - $ - $ 77,379 39,005 116,384 2,119,833 2,119,833 (2,003,449) 2,800,000 (27,300) 377,430 3,150,130 1,146,681 1,336,905 $ 2,483,586 $ 220,307 220,307 2,857,013 2,857,013 (2,636,706) 1,600,000 1,600,000 (1,036,706) 1,336,905 77,379 (181,302) (103,923) 737,180 737,180 633,257 1,200,000 (27,300) 377,430 1,550,130 2,183,387 300,199 $ 2,183,387 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 31,1999 (With Comparative Totals for the Year Ended December 31, 1998) Proprietary Fund Type Enterprise (Memorandum Only) 1998 OPERATING REVENUES Charges for services $ 2,682,061 $ 2,553,623 OPERATING EXPENSES Operation and maintenance Depreciation Taxes Total Operating Expenses Operating Income NONOPERATING REVENUES (EXPENSES) I nvestment income Interest expense Allowance for funds used during construction Total Nonoperating Revenues (Expenses) NET INCOME RETAINED EARNINGS - Beginning of Year RETAINED EARNINGS - END OF YEAR $ See accompanying notes to financial statements. 1,447,710 1,514,884 451,332 402,076 279,580 257,274 2,178,622 2,174,234 503,439 379,389 202,705 185,778 (201,983) (205,837) 20,000 722 (59) 504,161 379,330 4,658,774 4,279,444 5,162,935 $ 4,658,774 Page 6 ---PAGE BREAK--- CITY OF MIDDLETON COMBINED STATEMENT OF CASH FLOWS- ALL PROPRIETARY FUND TYPES For the Year Ended December 31, 1999 (With Comparative Totals for the Year Ended December 31,1998) Proprietary Fund Type Enterprise CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 2,362,771 Cash received from city for services 395,857 Cash paid to suppliers for goods and services (1,204,566) Cash paid to employees for services (251,235) Cash paid for tax equivalent (239,396) Net Cash Flows From Operating Activities 1,063,431 CASH FLOWS FROM INVESTING ACTIVITIES Investment income 118,598 Marketable securities purchased (652,846) Marketable securities redeemed 540,857 Cash Flows From Investing Activities 6,609 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal paid (205,000) I nterest paid (193,978) Acquisition and construction of capital assets (1,959,451) Customer advances 90,908 Special assessments received 42,148 Proceeds from debt issued 500,000 Debt issuance costs (5,050) Net Cash Flows From Capital and Related Financing Activities (1,730,423) Net Increase (Decrease) in Cash and Cash Equivalents (660,383) CASH AND CASH EQUIVALENTS - Beginning of Year 1,858,714 CASH AND CASH EQUIVALENTS- END OF YEAR $ 1,198,331 (Memorandum Only) 1998 $ 2,223,286 337,857 (1,308,745) (241,841) (231,674) 778,883 139,778 525,825 665,603 (195,000) (202,136) (535,624) 192,615 190,254 (549,891 ) 894,595 964,119 $ 1,858,714 ---PAGE BREAK--- Proprietary (Memorandum Fund Type Only) Enterprise 1998 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating income $ 503,439 $ 379,389 Adjustments to Reconcile Operating Income to Net Cash Provided From Operating Activities Rental income 60,158 46,000 Noncash items included in income Depreciation expense 451,332 402,076 Depreciation charged to sewer utility 19,788 16,945 Changes in Noncash Components of Working Capital Accounts receivable (44,179) 6,366 Other accounts receivable 3,924 Due from other funds 36,876 (61,791) Inventories 6,051 (982) Accounts payable (6,775) 23,925 Accrued taxes 17,985 7,722 Accrued compensated absences 4,970 Due to other funds 5,546 (40,767) Other current liabilities 4,316 NET CASH FLOWS FROM OPERATING ACTIVITIES $ 1,063,431 $ 778,883 NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES During 1999, capital additions of $558,548 were contributed to the water utility by developers, customers and the city. During 1999, capital additions of $597,107 were contributed to the sewer utility by developers, customers and the city. See accompanying notes to financial statements. Page 7 ---PAGE BREAK--- CITY OF MIDDLETON INDEX TO NOTES TO FINANCIAL STATEMENTS December 31, 1999 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 J. General Fixed Assets K. Property, Plant and Equipment - 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 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 12 13 13 14 15 15 15 15 16 17 17 17 18 19 19 19 19 20 20 22 25 26 26 26 27 27 Page 8 ---PAGE BREAK--- CITY OF MIDDLETON INDEX TO NOTES TO FINANCIAL STATEMENTS (cont.) December 31, 1999 NOTE 10. Tax Incremental Financing Districts 11. Commitments and Contingencies 12. Lease Disclosures 13. Joint Ventures 14. Other Postemployment Benefits 15. Contributed Capital 16. Risk Management 17. Deficit Fund Balance 18. Restatement of Fund Balances 19. Subsequent Events Page 27 28 29 29 30 31 31 31 32 32 Page 9 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31,1999 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. This report does not contain any component units. See Note 13 regarding joint ventures. 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. 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. Page 10 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31,1999 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) B. DESCRIPTION OF FUND AND ACCOUNT GROUP STRUCTURE (cont) Governmental Funds (cont.) Special Revenue Funds (cont.) The following special revenue funds are included in these statements: Pleasant View Golf Course Subdividers' Deposits EMS Fund Railroad Depot Fund Library Endowment Fund Economic Development Fund Economic Development Grant Alcohol Awareness Fund Lost and Damaged Book Fund Library Gift Fund EMS Equipment Replacement Fund Debt Service Funds Drug Forfeitures Hotel Room Tax Fund 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 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. Page 11 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 1999 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) B. DESCRIPTION OF FUND AND ACCOUNT GROUP STRUCTURE (cont.) Proprietary Funds (cont.) Enterprise Funds (cont.) 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. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. 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. C. TOTALS (MEMORANDUM ONL Y) The column captioned Totals (Memorandum Only) in the general purpose financial statements is 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. Page 12 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 1999 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D. COMPARA TlVE DATA Comparative total data for the prior year has been presented in the accompanying financial statements in order to provide an understanding of changes in the city's financial position and operations. 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 - 1999 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 - 1999 delinquent real estate taxes December, 1999 December, 1999 January 31, 2000 January 31, 2000 July 31, 2000 January 31, 2000 October, 2003 Intergovernmental aids and grants are recognized as revenues in the period the related expenditures are incurred, if applicable, or when the city is entitled to the aids. 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. Page 13 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 1999 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) E. BASIS OF ACCOUNTING (cont.) 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. 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. Page 14 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 1999 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) 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-current investments Cash and Cash Equivalents - Combined Statement of Cash Flows H. INVENTORIES Enterprise Funds $ 1,994,944 12,300 (808,913) $ 1,198,331 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 OSLIGA nONS 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. The city has approved the issuance of industrial revenue bonds (IRS) for the benefit of private business enterprises. IRS'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 IRS's outstanding at the end of the year is $953,478, 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. Page 15 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 1999 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) J. GENERAL FIXED ASSETS (cont.) 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 or general fixed assets is not reported in the financial statements. K. PROPERTY, PLANT AND EQUIPMENT- PROPRIETARY FUNDS Additions to and replacements of utility plant are recorded at original cost, which includes material, labor, overhead, and an allowance for the cost of funds used during construction when significant. The cost of renewals and betterments relating to retirement units is added to plant accounts. The cost of property replaced, retired or otherwise disposed of, is deducted from plant 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 1999. The provision for depreciation shown in the financial statements results from the application of straight-line rates to original cost. The rates used by the water utility were approved by the Public Service Commission. A summary of plant in service and average useful lives is as follows: Water Plant Source of supply plant Pumping plant Water treatment plant Transmission and distribution plant General plant Construction work in progress Total Sewer Plant Collection system Collection system pumping plant General plant Total Total Enterprise Fund Fixed Assets 12-31-99 $ 383,522 1,653,874 342,073 12,547,360 399,916 323,062 15,649,807 9,728,058 1,234,785 288,330 11,251,173 $ 26,900,980 Years 33 20 - 40 33 - 40 16 - 90 4 - 15 30 - 100 20 - 40 7- 40 Page 16 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 1999 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) L. ADVANCES TO OTHER FUNDS 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, 1999. 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. Encumbrances outstanding at year end in the capital projects fund were $135,818. 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 and the other capital projects fund and comparisons of actual to budget are presented in the general purpose financial statements. Annual budgets have not been legally adopted for other funds. Project length budgets have been formally adopted for TIF No.1 and 3. The TIF project budgets have not been included in these financial statements since the project length budgets are not comparable to annual TIF financial activity and the inclusion of the budget to actual comparison would be misleading. Budgets have not been formally adopted for other funds. Since budgets have not been prepared for all 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 capital projects funds as presented on page 4 and the budgeted capital projects on page 5 is as follows: Page 17 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 1999 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) N. BUDGETS (cont.) Revenues Expenditures All capital projects funds (page 4) $ 2,446,435 $ 7,605,423 Less: Unbudgeted capital projects funds TIF No.1 36,029 TIF NO.3 1,843,513 5,485,590 Southwest Quadrant 450,509 Total Unbudgeted Capital Projects Funds 2,330,051 5,485,590 Other Capital Projects Funds (Page 5) $ 116,384 $ 2,119,833 Excess (Deficiency) of Revenues Over Expendi- tures $ (5,158,988 ) 36,029 (3,642,077) 450,509 (3,155,539) $ (2,003,449 ) 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 $866,447 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. $59,625 of vested sick leave and vacation pay is recorded as accrued liabilities at year end. Page 18 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31,1999 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) O. COMPENSATED ABSENCES (cont.) 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, 1999 are determined on the basis of current salary rates, and Includes salary related payments. P. ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS General accounts receivable have been adjusted for all known uncollectible accounts. No allowance is necessary at year end. 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. At December 31, 1999, the city has recorded $41,000 as a current liability in the general fund for a claim related to the relocation of the Wisconsin Hoofers Riding Club. 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 expend itu res. Undesignated fund balance represents the amount available for appropriation after reservations and designations. It also is a measurement of current working capital position. Page 19 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 1999 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) T. ECONOMIC DEVELOPMENT LOANS RECEIVABLE The city has received federal grant funds for economic development loan programs to various businesses. The city records a loan receivable when the loan has been made and funds have been disbursed. It is the city's policy to record revenue when the initial loan is made from the federal grant funds. The net amount of the loan receivable balance is offset by a reserve for loans receivable. As loans are repaid, the reserve for loans receivable is reduced and the designated fund balance is increased. When new loans are made from loan repayments, the reserve for loans receivable is increased and the designated fund balance is decreased. Interest received from loan repayments is recognized as revenue when received in cash. Any unspent loan repayments at year end are presented as designated fund balance in the general purpose financial statements. For economic development loans, the city is limited by the Wisconsin Department of Commerce to the amount of program income from economic development loans it may retain and loan to other businesses. Program income includes the principal and interest received from economic development loans repayments. Based upon its current population, the city may retain $750,000. At December 31, 1999, the city has not exceeded its maximum retention cap. When it does, a liability to the state will be recorded. NOTE 2 - CASH AND INVESTMENTS Investment of municipal 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. Page 20 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 1999 NOTE 2 - CASH AND INVESTMENTS (cont.) No 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 uncollateralized investments. Local and area banks Federal securities Commercial paper Category $ 300,000 $ 1,369,804 4,514,907 2 3 Total Carrying Amount - $ 14,198,501 $ 14,198,501 $ 15,506,816 1,369,804 1,369,804 4,514,907 4,514,907 Sub-Totals $ 6,814,711 $ - $ 14,198,501 $ 20,383,212 21,391,527 Local government investment pool Mutual funds Petty cash Total Deposits and Investments 856,967 6,066,330 546 $ 28,315,370 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 southwest quadrant fund investments, a capital projects fund, is recorded in the debt service fund. 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 non interest bearing account. Bank accounts are also insured by the State Deposit Guarantee Fund in the amount of $400,000. However, due to the relatively small size of the Guarantee Fund in relationship to the total deposits covered and other legal implications, recovery of material principal losses may not be significant to individual municipalities. This coverage has not been considered in computing the amounts in category 1 above. Page 21 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 1999 NOTE 2 - CASH AND INVESTMENTS (cont.) The Wisconsin Local Government Investment Pool (LGIP) is part of the State Investment Fund (SIF), and is managed by the State of Wisconsin Investment Board. The SIF is not registered with the Securities and Exchange Commission, but operates under the statutory authority of Wisconsin Chapter 25. The SIF reports the fair value of its underlying assets annually. Participants in the LGIP have the right to withdraw their funds in total on one day's notice. At December 31, 1999, the fair value of the LGIP's assets were substantially equal to the city's share as reported above. Investments in the local government investment pool are covered under a surety bond issued by Financial Security Assurance, Inc. The bond insures against losses arising from principal defaults on substantially all types of securities acquired by the pool except U.S. Government and agency securities. The bond provides unlimited coverage on prinCipal losses, reduced by any FDIC and State of Wisconsin Guarantee Fund insurance. Fluctuating cash flows during the year due to tax collections, receipt of state aids and/or proceeds from borrowing may have resulted in temporary balances exceeding insured amounts by substantially higher amounts. NOTE 3 - LONG-TERM OBLIGATIONS A. GENERAL OBLIGATION DEBT All general obligation notes and bonds payable are backed by the full faith and credit of the city. Notes and bonds in the general long-term obligations account group will be retired by future property tax levies accumulated by 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. The following is a summary of the long-term debt transactions for the year ended December 31, 1999: General obligation debt Balance 1-1-99 Increases Decreases Balance 12-31-99 $ 43,128,923 $ 7,300,000 $ 4,738,443 $ 45,690,480 Page 22 ' ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 1999 NOTE 3 - LONG-TERM OBLIGATIONS (cont.) A. GENERAL OBLIGATION DEBT (cont.) Title of Issue 1. General Obligation Debt 1985 Refunding bonds 1992 General obligation promissory notes 1994 General obligation promissory notes 1994 State trust fund loan 1995 General obligation promissory notes 1996 General obligation refunding bonds 1996 General obligation promissory notes 1996 General obligation promissory notes 1997 General obligation promissory notes 1997 General obligation promissory notes 1998 General obligation promissory notes 1999 General obligation Promissory notes Total General Obligation Debt Less: Proprietary fund general obligation debt Total General Long-Term Obligations Account Group Debt Date of Issue 11-05-85 7 -15-92 4-01-94 12-07 -94 5-01-95 10-01-96 11-01-96 6-01-96 3-01-97 4-01-97 4-01-98 5-15-99 Due Date 11-01-00 6-01-02 6-01-00 3-15-04 6-01-01 10-01-96 11-01-00 6-01-06 3-01-07 3-01-12 9-01-08 3-01-09 Interest Rates 8.00% - 9.50% 4.70% - 5.25% 3.10% - 4.25% 4.5% 4.55% - 4.95% 4.00% - 5.65% 4.40% - 4.85% 4.00% - 5.15% 3.95%- 5.15% 3.90% - 5.40% 3.90% - 4.60% 3.50% - 4.40% Original Indebted- ness $ 3,735,000 1,900,000 2,225,000 500,000 7,650,000 7,875,000 800,000 5,675,000 9,250,000 6,480,000 9,675,000 7,300,000 $ Balance 12-31-99 500,000 1,000,000 725,000 305,480 950,000 7,570,000 200,000 4,580,000 7,355,000 5,855,000 9,350,000 7,300,000 45,690,480 4,255,000 $ 41,435,480 Page 23 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 1999 NOTE 3 - LONG-TERM OBLIGATIONS (cont.) B. OTHER LONG- TERM OSLIGA nONS Other Liabilities Balance 1-1-99 Increases Decreases Balance 12-31-99 Unfunded prior service costs (Note 4) Long-term liability for accumulated vacation, floating holidays and vested sick leave (Note 1.0.) $ 387,023 $ 29,150 $ 22,647 $ 393,526 City's share of landfill district deficit fund balance (Note 11) Land contract - Morey Airport Dated December 28, 1998 to be repaid in 2000. 852,157 793,523 1,000,000 14,290 866,447 46,761 746,762 48,948 951,052 Total Other Long-Term Liabilities $ 3,032,703 $ 43,440 $ 118,356 $ 2,957,787 Debt service requirements to maturity are as follows: General Proprietary Fund Long-Term Debt Long-Term Debt Principal Interest Principal Interest Totals 2000 $ 4,215,811 $ 1,979,287 $ 260,000 $ 211,862 $ 6,666,960 2001 4,018,360 1,670,121 265,000 194,683 6,148,164 2002 3,800,983 1,492,103 280,000 182,640 5,755,726 2003 4,168,731 1,316,184 290,000 167,392 5,942,307 2004 4,231,595 1,492,807 305,000 153,526 6,182,928 2005 and thereafter 21,000,000 3,824,852 2,855,000 616,891 28,296,743 Totals $ 41,435,480 $ 11,775,354 $ 4,255,000 $ 1,526,994 $ 58,992,828 Estimated payments of accumulated employee benefits and other commitments are not included in the above schedule. $561,583 is on deposit in the debt service fund which is available to meet the above debt service requirements as of December 31, 1999. In addition, $648,039 is available in the capital projects fund for future debt payments. 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 31,1999 was $61,417,870. Total general obligation debt outstanding at year end was $45,690,480. Page 24 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 1999 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 6.4% of their salary (4.7% for Executives and Elected Officials, 5.8% for Protective Occupations with Social Security, and 6.2% 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, 1999 was $2,868,349; the employer's total payroll was $3,728,460. The total required contribution for the year ended December 31, 1999 was $433,099 or 15.10 percent of covered payroll. Of this amount, 100 percent was contributed for the current year. Total contributions for the years ending December 31, 1998 and 1997 were $421,829 and $421,693, 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. 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 was $393,526. 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. Page 25 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 1999 NOTE 5 - INTERFUND RECEIVABLES/PAYABLES AND INTERFUND TRANSFERS The following is a schedule of interfund receivables and payables: Receivable Fund Payable Fund Amount General fund General fund General fund Southwest quadrant capital projects fund $ Water utility 893,303 22,444 18,351 6,000 234,000 47,931 130,291 34,348 2,996 7,068 Fire district agency fund Other capital projects TIF District No.1 capital projects fund Other capital projects Other capital projects Subdivider's deposits special revenue fund Water utility Water utility General fund Water utility Sewer utility Sewer utility General fund Sewer utility Water utility 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 Other capital projects fund Total Fund Transferred From General fund Pleasant View Golf Course special revenue fund TIF District No.1 capital projects fund TIF District NO.3 capital projects fund Southwest Quadrant capital projects fund Subdivider's deposits special revenue fund NOTE 6 - ADVANCES To/FROM OTHER FUNDS The following is a schedule of interfund advances: Receivable Fund Payable Fund General fund TIF NO.3 capital projects fund NOTE 7 - FIXED ASSETS A summary of general fixed assets follows: Balance 1-1-99 Additions Deletions Land $ 9,494,896 $ 1,050,000 $ - Golf course 5,063,100 Buildings 4,625,383 1,157,200 Improvements other than buildings 3,570,982 125,008 9,233 Equipment and vehicles 2,885,625 283,414 227,215 Furniture and fixtures 215,806 18,419 505 Totals $ 25,855,792 $ 2,634,041 $ 236,953 $ 1,396,732 Amount $ 2,417,591 525,815 637,609 1,715,390 1,084,232 377,430 $ 6,758,067 Amount $ 1,286,197 Balance 12-31-99 $ 10,544,896 5,063,100 5,782,583 3,686,757 2,941,824 233,720 $ 28,252,880 Page 26 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 1999 NOTE 8 - SEGMENTS OF ENTERPRISE ACTIVITIES There are services provided by the city which are financed by user charges. The key financial data for the year ended December 31, 1999 for those services are as follows: Operating revenues Depreciation Operating Income Net Income (Loss) Total Assets Net Working Capital (Deficit) Long-term Debt Payable Total Equity Current Capital Contributions Contributions in aid of construction Property, Plant and Equipment Additions Deletions NOTE 9 - DESIGNATED FUND BALANCE $ Water 1,515,888 299,826 481,182 520,996 15,595,063 2,018,882 2,470,000 12,652,853 558,548 820,872 32,600 Designated fund balance as of December 31, 1999 includes the following items: General Fund Subsequent year's budget $ 254,000 NOTE 10 - TAX INCREMENTAL FINANCING DISTRICTS Sewer $ 1,166,173 151,506 22,257 (16,835) 9,856,503 (483,572) 1,785,000 7,163,678 597,107 2,802,814 400 Following is the cumulative status of tax incremental financing district no. 3 transactions as of December 31, 1999: Expenditures Interest and fiscal charges Administration and promotion Relocation Capital expenditures Engineering Discount on borrowing Total Expenditures $ 631,728 584,283 309,935 15,917,715 543,875 247,795 18,235,331 Page 27 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 1999 NOTE 10 - TAX INCREMENTAL FINANCING DISTRICTS (cont.) Revenues Tax increment Investment income Miscellaneous revenues Total Revenues Amount to be Recovered Through Increments $ 3,893,138 1,427,047 175,882 5,496,067 $ 12,739,264 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 1999 tax roll collected in 2000 is as follows: TIF No.3 $ 1,673,044 NOTE 11 - COMMITMENTS AND CONTINGENCIES From time to time, the city is 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's legal counsel 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. 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, 1999 is a deficit of $1,204,455. 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 62%, which amounts to $746,762 of the district's net deficit. The city's share of the net deficit has been reported in the general long-term obligations account group. See also Note 3 and Note 13. Page 28 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 1999 NOTE 11 - COMMITMENTS AND CONTINGENCIES (cont.) On December 6, 1996, the city entered into a developer agreement with Western Center Properties, Inc. for developing Greenway Center Phase III. The agreement requires the developer to make land improvements sufficient enough to increase the taxable value of the property by $31,000,000 over an eight year period. The city has agreed to purchase land and public improvements outlined in the agreement throughout the life of the project for an amount not to exceed $3,150,500. On March 13, 1998, the developer assigned all rights, title and interest in the developer agreement with the city to Associated Bank - Green Bay. The water utility well #7 was redrilled due to the lack of alignment in its construction in 1993 and the contractor has filed suit to recover these costs. The water utility has filed a counter claim against the contractor for liquidated and consequential damages due to the delay and failure of completion of the well and additional engineering costs incurred. The outcome of the proceeding ranges form damages paid to the contractor of nearly $700,000 to the water utility recovering nearly $700,000. The case is scheduled for arbitration in 2000. The water utility has received a claim for a difference in appraisals for a valuation of an easement condemnation. The difference in appraisals is $75,000 with additional costs for attorney and appraiser fees around $24,000. The outcome of this proceeding, as well as the damages paid by the water utility, are potentially $99,000. NOTE 12 - LEASE DISCLOSURES The city has no material capital or operating leases. NOTE 13 - JOINT VENTURES METROPOLITAN REFUSE DISTRICT, INC. The City of Middleton and the Villages of Shorewood Hills and Waunakee jointly operate the local sanitary landfill, which is called the Metropolitan Refuse District, Inc. The landfill stopped accepting waste in 1997. The communities share in the operation of the district based on estimated population as follows: City of Middleton Village of Shorewood Hills Village of Waunakee 62% 7 31 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 of $50,000 to the district in 1999. The city will continue to support the district's postclosure care costs at reduced costs in the future. Page 29 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS NOTE 13 - JOINT VENTURES (cont.) Financial information of the district as of September 30, 1999 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 $220,526 to the district in 1999. 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, 1999 is available directly from the district's office. The City of Middleton is the fiscal agent for the Middleton Fire District; however, transactions of the district are not reflected in these financial statements. 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 $25,199. The number of participants currently eligible to receive benefits is eight. The total amount outstanding at year end to be paid in the future is $184,397 and is included in the general fund as an accrued liability. Page 30 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 1999 NOTE 15 - CONTRIBUTED CAPITAL During the year, contributed capital changed by the following amounts: Water Sewer Capital Paid in by City Balance - January 1, 1999 $ 1,768,327 $ 1,724,767 City contributions 164,333 81,494 Balance - December 31, 1999 $ 1,932,660 $ 1,806,261 Contributions in Aid of Construction Balance - January 1, 1999 $ 5,887,464 $ 4,117,383 Developer contributions 394,215 515,613 Balance - December 31, 1999 $ 6,281,679 $ 4,632,996 NOTE 16 - RISK MANAGEMENT Total $ 3,493,094 245,827 $ 3,738,921 $ 10,004,847 909,828 $ 10,914,675 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. 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, 1999, the following individual fund held a deficit balance: Fund Southwest quadrant Amount Reason $ 893,303 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. Page 31 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 1999 NOTE 18 - RESTATEMENT OF FUND BALANCES Fund balance has been restated to record accrued cable TV franchise fee revenues. General fund Fund balance - December 31, 1998 (as reported) Add: Accrued cable TV revenue Fund balance - January 1, 1999 (as restated) $ 3,754,660 96,673 $ 3,851,333 Fund balance has been restated to correct prior year's errors in reporting. Hotel Room Tax Special Revenue fund Fund balance - December 31,1998 (as reported) Add: prior year's errors in revenues and expenditures Fund balance - January 1, 1999 (as restated) $ $ 70,731 35,422 106,153 Fund balance has been restated to recognize non-refundable subdivider deposits as revenue. Other Capital Projects fund Fund balance - December 31, 1998 (as reported) Add: Non-refundable subdivider deposits Fund balance - January 1, 1999 (as restated) $ 1,187,405 149,500 $ 1,336,905 Memorandum total columns of the previous year have not been restated to reflect these changes. NOTE 19 - SUBSEQUENT EVENTS On February 2, 2000, the city purchased property for $2,875,000. On March 21, 2000, the city issued $6,800,000 general obligation promissory notes for capital projects. Page 32 ---PAGE BREAK--- SUPPLEMENTAL INFORMATION ---PAGE BREAK--- CITY OF MIDDLETON GENERAL FUND DETAILED SCHEDULE OF REVENUES For the Year Ended December 31, 1999 Actual Budget TAXES General property tax $ 5,971,013 $ 5,971,003 Omitted property tax 69,387 Taxes from city owned utility 239,396 245.000 Room tax 110,805 110,000 Interest on taxes 8,615 2,000 TOTALS $ 6,399,216 $ 6,328,003 INTERGOVERNMENTAL REVENUES Shared taxes from state $ 562,882 $ 557,601 State aid - road allotment 582,632 582.793 Federal and state aid - other 199,760 190,900 County aid - library 298,043 298,043 County aid - signals 7,542 6,500 County aid - senior citizens 31,364 29,400 TOTALS $ 1,682,223 $ 1,665,237 LICENSES AND PERMITS Liquor and malt beverage licenses $ 23,005 $ 20,000 Operators' licenses 6,425 6,000 Contractor's licenses 5,420 5,600 Alarm licenses 5,360 3,500 Cigarette licenses 160 175 Bicycle licenses 78 250 Dog and cat licenses 298 200 Cable TV franchise licenses 112,103 85,000 Other miscellaneous licenses 2,113 2,200 Building permits 154,709 90,000 Electrical permits 46,390 30,000 Plumbing permits 57,120 31,000 Erosion control permits 1,800 Park reservation permits 7,887 7,000 TOTALS $ 422,868 $ 280,925 FINES, FORFEITURES AND PENAL TIES Court penalties $ 131,072 $ 135,000 Parking violations 24,698 26,000 Court costs 35,158 31,000 TOTALS $ 190,928 $ 192,000 Page 33 ---PAGE BREAK--- CITY OF MIDDLETON GENERAL FUND DETAILED SCHEDULE OF REVENUES (cont.) For the Year Ended December 31,1999 Actual Budget PUBLIC CHARGES FOR SERVICES Clerk fees Sale of materials and supplies 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 Pool contribution TOTALS $ $ $ $ $ $ $ $ 27,800 $ 9,000 7,044 2,000 21,945 30,000 130,643 109,550 20,364 21,669 8.405 40,000 1,291 10,000 192,604 222,725 50,120 40,525 37,052 37,940 1,200 1,000 498,468 $ 524,409 127,224 $ 120,800 75,113 $ 555 38,700 500 75,668 $ 39,200 431,547 $ 507,600 12,000 $ 17,000 36,867 20,940 90,553 25,000 54,555 107,500 25,000 25,000 218,975 $ 195,440 Page 34 ---PAGE BREAK--- ~ ~ ~ CITY OF MIDDLETON GENERAL FUND DETAILED SCHEDULE OF EXPENDITURES For the Year Ended December 31, 1999 Actual Budget GENERAL GOVERNMENT Council $ 26,313 $ 25,836 Police commission 2,523 800 Landmarks commission 7,575 600 Middleton youth commission 12,000 12,000 Municipal court 16,035 14,318 General administration 368,901 360,279 Independent auditing 12,229 13,000 Legal counseling 58,864 47,400 Special legal counsel 3,318 5,000 Buildings and grounds 79,683 90,886 Illegal taxes and tax refunds 5,000 5,000 Reduction of prior years revenue 22,611 Property and liability insurance 163,153 180,000 Board of review 95 375 Additional expenditures - prior years 16,323 5,000 Emergency preparedness 6,336 4,920 Income continuation insurance 11,876 12,650 Group life insurance 3,906 3,800 Reserve for contingencies 73,076 TOTALS $ 816,741 $ 854,940 PUBLIC SAFETY Police administration $ 302,357 $ 331,916 Police patrol 1,801,476 1,754,760 Training 20,586 21,000 Police uniform allowance and equipment 12,262 11,500 School patrol 10,881 10,948 Fire suppression 220,526 215,607 Public fire protection 347,556 320,000 Building inspector 83,229 81,242 Electrical inspector 73,603 42,600 Plumbing inspection 28,599 23,618 Sealer of weights and measures 2,640 2,640 Erosion control enforcement 2,304 EMS 109,709 119,179 Communications 299,776 282,096 TOTALS $ 3,315,504 $ 3,217,106 Page 35 ---PAGE BREAK--- CITY OF MIDDLETON GENERAL FUND DETAILED SCHEDULE OF EXPENDITURES (cont.) For the Year Ended December 31, 1999 Actual PUBLIC WORKS Machinery $ 155,692 Garage 46,466 Protective equipment 3,168 Engineering 458,037 Street maintenance 153,783 Street cleaning 30,049 Snow and ice control 73,233 Traffic signs and markings 50,405 Traffic signals 24,423 Street lighting 43,329 Tree and brush 67,617 Sidewalk maintenance 7,384 Storm sewers 21,953 Mass transit 92,000 Garbage collection 214,594 Sanitary landfill 100,000 Leaf pick-up 34,299 Track and signal maintenance Recycling 116,264 TOTALS $ 1,692,696 LEISURE ACTIVITIES Library $ 804,472 Senior citizens center 97,086 Recreation administration 68,722 Swimming pool 254,424 Summer recreation 53,318 Other recreation 31,788 Parks 301,590 Cable television 1,903 TOTALS $ 1,613,303 Budget $ 194,749 45,209 3,180 444,314 191,355 40,762 75,852 42,180 24,418 41,200 53,625 12,195 22,426 161,341 217,489 100,000 26,262 300 119,815 $ 1,816,672 $ 799,721 109,239 67,191 222,180 51,470 42,190 253,090 $ 1,545,081 Page 36 ---PAGE BREAK--- CITY OF MIDDLETON GENERAL FUND DETAILED SCHEDULE OF EXPENDITURES (cont.) For the Year Ended December 31, 1999 Actual CONSERVATION AND DEVELOPMENT Forestry - parks $ 28,962 Weed control 3,148 Creek maintenance 705 Water resources 13,910 Water pollution abatement grant 22,701 Conservancy land commission 18,000 Planning commission 104,959 TOTALS $ 192,385 Budget $ 36,595 2,918 2,918 17,900 61,600 106,854 $ 228,785 Page 37 ---PAGE BREAK--- ASSETS Cash and investments Accounts receivable Loan receivable Inventory Other assets TOTAL ASSETS LIABILITIES AND FUND BALANCES Accounts payable Due to other funds Total Liabilities Fund Balances Reserved Unreserved Undesignated Total Fund Balances TOTAL LIABILITIES AND FUND BALANCES CITY OF MIDDLETON SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET December 31, 1999 Sub- Pleasant View dividers' Golf Course Deposits $ 239,131 $ 1,334,701 1,323 300 $ 240,754 $ 1,334,701 $ - $ - 234,000 234,000 1,323 239,431 1,100,701 240,754 1,100,701 $ 240,754 $ 1,334,701 Lost and Railroad Damaged EMS Depot Book Fund Fund Fund $ 11,293 $ 7,751 $ 15,957 $ 11,293 $ 7,751 $ 15,957 $ - $ - $ 11,293 7,751 15,957 11,293 7,751 15,957 $ 11,293 $ 7,751 $ 15,957 ---PAGE BREAK--- $ $ $ EMS Economic Economic Library Equipment Library Develop- Gift Replacement Endowment ment Fund 12,102 $ 12,102 $ - $ 12,102 12,102 Fund 54,158 $ 54,158 $ - $ 54,158 54,158 Fund Fund 149,449 $ 101,603 $ 149,449 $ 101,603 $ - $ 45,833 $ 149,449 149,449 45,833 55,770 55,770 Develop- Alcohol Hotel ment Awareness Drug Room Tax Grant Fund Forfeitures Fund Totals 62,037 $ 138,867 200,904 $ - $ 138,867 62,037 200,904 1,416 $ 1,416 $ - $ 1,416 1,416 5,953 $ 5,953 $ - $ 5,953 5,953 104,796 $ 2,100,347 55,027 55,027 138,867 1,323 300 159,823 $ 2,295,864 9,695 $ 55,528 234,000 9,695 150,128 150,128 289,528 140,190 1,866,146 2,006,336 $ 12,102 $ 54,158 $ 149,449 $ 101,603 $ 200,904 $ 1,416 $ 5,953 $ 159,823 $ 2,295,864 Page 38 ---PAGE BREAK--- CITY OF MIDDLETON SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES For the Year Ended December 31, 1999 Sub- Pleasant View dividers' EMS Golf Course Deposits Fund REVENUE Taxes $ - $ - $ - Intergovernmental Public charges for services 1,478,250 112,328 1,039 Investment income 13,181 Miscellaneous and contributions Total Revenues 1,491,431 112,328 1,039 EXPENDITURES Public safety Health and social services Leisure activities 964,589 1,734 Conservation and development 73,694 Total Expenditures 964,589 73,694 1,734 Excess (deficiency) of revenues over expenditures 526,842 38,634 (695) OTHER FINANCING USES Operating transfer out (525,815) (377,430) Total Other Financing Uses (525,815) (377,430) Excess (deficiency) of revenues and other sources over expenditures and other uses 1,027 (338,796) (695) FUND BALANCES - Beginning of Year (as restated) 239,727 1,439,497 11,988 FUND BALANCES - END OF YEAR $ 240,754 $ 1,100,701 $ 11,293 Lost and Railroad Damaged Depot Book Fund Fund $ - $ 29,054 1,415 1,415 29,054 331 26,269 331 26,269 1,084 2,785 1,084 2,785 6,667 13,172 $ 7,751 $ 15,957 ---PAGE BREAK--- EMS Economic Library Equipment Library Develop- Gift Replacement Endowment ment Fund Fund Fund Fund $ - $ - $ - $ - $ 30,269 25,000 3,000 5,773 3,943 12,171 12,171 25,000 36,042 6,943 210 7,102 12,500 7,102 12,710 5,069 25,000 36,042 (5,767) 5,069 25,000 36,042 (5,767) 7,033 29,158 113,407 61,537 Economic Develop- Alcohol ment Awareness Grant Fund - $ - 325 8,208 8,208 325 23 18 18 23 8,190 302 8,190 302 192,714 1,114 Hotel Drug Room Tax Forfeitures Fund $ - $ 258,546 54,392 2,500 2,500 312,938 5,030 268,963 5,030 268,963 (2,530) 43,975 (2,530) 43,975 8,483 106,153 $ Totals 258,546 30,269 1,703,388 31,105 16,086 2,039,394 5,030 233 1,281,488 73,712 1,360,463 678,931 (903,245) (903,245) (224,314) 2,230,650 $ 12,102 $ 54,158 $ 149,449 $ 55,770 $ 200,904 $ 1,416 $ 150,128 $ 2,006,336 Page 39 ---PAGE BREAK--- ASSETS Cash and investments Taxes receivable Accounts receivable Special assessments Interest receivable Due from other funds TOTAL ASSETS LIABILITIES AND FUND BALANCES Accounts payable Due to other funds Deferred revenues Deferred special assessments Deferred interest income Advances from other funds Total Liabilities Fund Balances Reserved for debt service Reserved for encumbrances Unreserved Undesignated (deficit) Total Fund Balances (Deficit) TOTAL LIABILITIES AND FUND BALANCES CITY OF MIDDLETON CAPITAL PROJECTS FUNDS COMBINING BALANCE SHEET December 31, 1999 TIF TIF District District No.1 NO.3 $ 648,039 $ 7,161,236 1,673,044 127,567 6,000 $ 648,039 $ 8,967,847 $ - $ 326,219 1,673,044 127,567 1,286,197 3,413,027 648,039 5,554,820 648,039 5,554,820 $ 648,039 $ 8,967,847 Other Southwest Capital Quadrant Projects Totals $ - $ 2,519,012 $ 10,328,287 270,450 1,943,494 49,764 49,764 1,161,504 1,161,504 127,567 281,931 287,931 $ 1,431,954 $ 2,850,707 $ 13,898,547 $ - $ 361,121 $ 687,340 893,303 6,000 899,303 270,450 1,943,494 1,161,504 1,161,504 127,567 1,286,197 2,325,257 367,121 6,105,405 648,039 135,818 135,818 (893,303) 2,347,768 7,009,285 (893,303) 2,483,586 7,793,142 $ 1,431,954 $ 2,850,707 $13,898,547 Page 40 ---PAGE BREAK--- CITY OF MIDDLETON CAPITAL PROJECTS FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES For the Year Ended December 31, 1999 TIF TIF Other District District Southwest Capital No.1 NO.3 Quadrant Projects REVENUES Taxes $ - $ 1,348,178 $ - $ - Intergovernmental 77,379 Special assessments 450,509 Investment income 36,029 377,447 Miscellaneous revenues 117,888 39,005 Total Revenues 36,029 1,843,513 450,509 116,384 EXPENDITURES Capital outlay 5,485,590 2,119,833 Total Expenditures 5,485,590 2,119,833 Excess (deficiency) of revenues over expenditures 36,029 (3,642,077) 450,509 (2,003,449) OTHER FINANCING SOURCES (USES) Proceeds from long-term debt 4,000,000 2,800,000 Debt discount and issuance costs (107,733) (27,300) Operating transfers in 377,430 Operating transfers out (637,609) (1,715,390) (1,084,232) Total Other Financing Sources (Uses) (637,609) 2,176,877 (1,084,232) 3,150,130 Excess (deficiency) of revenues and other sources over expenditures and other uses (601,580) (1,465,200) (633,723) 1,146,681 FUND BALANCES (DEFICIT) - Beginning of Year (as restated) 1,249,619 7,020,020 (259,580) 1,336,905 FUND BALANCES (DEFICIT) - END OF YEAR $ 648,039 $ 5,554,820 $ (893,303) $ 2,483,586 Totals $ 1,348,178 77,379 450,509 413,476 156,893 2,446,435 7,605,423 7,605,423 (5,158,988) 6,800,000 (135,033) 377,430 (3,437,231 ) 3,605,166 (1,553,822) 9,346,964 $ 7,793,142 Page 41 ---PAGE BREAK--- CITY OF MIDDLETON ENTERPRISE FUNDS COMBINING BALANCE SHEET December 31, 1999 Water Sewer Utility Utility Totals ASSETS Current Assets Cash and investments $ 1,928,291 $ 66,653 $ 1,994,944 Accounts receivable 449,348 116,333 565,681 Interest receivable 23,949 23,949 Due from other funds 164,639 10,064 174,703 Inventories 32,634 32,634 Total Current Assets 2,598,861 193,050 2,791,911 Other Property and Investments Cash and investments 12,300 12,300 Special assessments receivable 122,422 122,422 Deferred special assessments 10,774 10,774 Preliminary engineering 7,934 7,934 Total Other Property and Investments 130,356 23,074 153,430 Utility Plant Property and equipment 15,326,745 11,251,173 26,577,918 Construction work in progress 323,062 323,062 Less: Accumulated depreciation (2,810,211) (1,631,888) (4,442,099) Total Property and Equipment 12,839,596 9,619,285 22,458,881 Deferred Charges Unamortized debt expenses 26,250 21,094 47,344 Total Deferred Charges 26,250 21,094 47,344 TOTAL ASSETS $ 15,595,063 $ 9,856,503 $ 25,451,566 ---PAGE BREAK--- Water Sewer Utility Utility Totals LIABILITIES AND EQUITY Current Liabilities Accounts payable $ 56,937 $ 491,173 $ 548,110 Accrued taxes 257,381 257,381 Accrued interest 40,500 27,300 67,800 Accrued compensated absences 7,718 3,801 11,519 Due to other funds 77,443 34,348 111,791 Current portion of long-term debt 140,000 120,000 260,000 Total Current Liabilities 579,979 676,622 1,256,601 Deferred Credits Accrued compensated absences 32,231 15,875 48,106 Customer advances for construction 335,328 335,328 Total Deferred Credits 32,231 351,203 383,434 Long-Term Debt Net of Current Maturities General obligation notes 2,330,000 1,665,000 3,995,000 Total Long-Term Debt 2,330,000 1,665,000 3,995,000 Total Liabilities 2,942,210 2,692,825 5,635,035 Equity Capital paid in by city 1,932,660 1,806,261 3,738,921 Contributions in aid of construction 6,281,679 4,632,996 10,914,675 Total Contributed Capital 8,214,339 6,439,257 14,653,596 Retained earnings 4,438,514 724,421 5,162,935 Total Equity 12,652,853 7,163,678 19,816,531 TOTAL LIABILITIES AND EQUITY $ 15,595,063 $ 9,856,503 $ 25,451,566 Page 42 ---PAGE BREAK--- CITY OF MIDDLETON ENTERPRISE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS For the Year Ended December 31,1999 Water Sewer Utility Utility OPERA TING REVENUES Charges for services $ 1,515,888 $ 1,166,173 OPERA TING EXPENSES Operation and maintenance 464,791 982,919 Depreciation 299,826 151,506 Taxes 270,089 9,491 Total Operating Expenses 1,034,706 1,143,916 Operating Income 481,182 22,257 NONOPERATING REVENUES (EXPENSES) Investment income 169,210 33,495 Interest expense (129,396) (72,587) Total Nonoperating Revenues (Expenses) 39,814 (39,092) NET INCOME (LOSS) 520,996 (16,835) RETAINED EARNINGS - Beginning of Year 3,917,518 741,256 RETAINED EARNINGS - END OF YEAR $ 4,438,514 $ 724,421 Totals $ 2,682,061 1,447,710 451,332 279,580 2,178,622 503,439 202,705 (201,983) 722 504,161 4,658,774 $ 5,162,935 Page 43 ---PAGE BREAK--- CITY OF MIDDLETON ENTERPRISE FUNDS COMBINING STATEMENT OF CASH FLOWS F or the Year Ended December 31, 1999 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 INVESTING ACTIVITIES Investment income Marketable securities purchased Marketable securities redeemed Cash Flows From Investing Activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal paid Interest paid Acquisition and construction of capital assets Customer advances Special assessments received Proceeds from debt issued Debt issue costs Net Cash Flows From Capital and Related Financing Activities Net Decrease in Cash and Cash Equivalents CASH AND CASH EQUIVALENTS- Beginning of Year CASH AND CASH EQUIVALENTS- END OF YEAR Water Utility $ 1,309,236 395,857 (311,958) (155,459) (239,396) 998,280 85,103 (652,846) (567,743) (135,000) (127,596) (385,414) 40,805 (607,205) (176,668) 1,296,046 $ 1,119,378 Sewer Utility $ 1,053,535 $ (892,608) (95,776) 65,151 33,495 540,857 574,352 (70,000) (66,382) (1,574,037) 90,908 1,343 500,000 (5,050) (1,123,218) (483,715) 562,668 78,953 $ $ Totals 2,362,771 395,857 (1,204,566) (251,235) (239,396) 1,063,431 118,598 (652,846) 540,857 6,609 (205,000) (193,978) (1,959,451 ) 90,908 42,148 500,000 (5,050) (1,730,423) (660,383) 1,858,714 1,198,331 ---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 Noncash items included in income Depreciation expense Depreciation charged to sewer utility Changes in Noncash Components of Working Capital Accounts receivable Other accounts receivable Due from other funds Inventories Accounts payable Accrued taxes Accrued compensated absences Due to other funds Other current liablilities NET CASH FLOWS FROM OPERATING ACTIVITIES NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES $ Water Utility 481,182 60,158 299,826 19,788 64,804 5,987 38,468 6,051 (2,162) 17,985 2,899 474 2,820 $ Sewer Utility 22,257 151,506 (108,983) (2,063) (1,592) (4,613) 2,071 5,072 1,496 $ Totals 503,439 60,158 451,332 19,788 (44,179) 3,924 36,876 6,051 (6,775) 17,985 4,970 5,546 4,316 $ 998,280 $ 65,151 $ 1,063,431 During 1999, capital additions of $558,548 were contributed to the water utility by developers, customers and the city. During 1999, capital additions of $597,107 were contributed to the sewer utility by developers, customers and the city. Page 44 ---PAGE BREAK--- ASSETS Cash and investments Taxes receivable CITY OF MIDDLETON AGENCY FUNDS COMBINING BALANCE SHEET December 31, 1999 Fire District $ - Due from other governmental units 31,845 Prepaid items 10,918 TOTAL ASSETS $ 42,763 LIABILITIES Liabilities Accounts payable $ 24,412 Due to other governmental units Due to other funds 18,351 TOTAL LIABILITIES $ 42,763 Tax Collection Fund Totals $ 10,990,519 $ 10,990,519 8,416,928 8,416,928 31,845 10,918 $ 19,407,447 $ 19,450,21 ° $ - $ 24,412 19,407,447 19,407,447 18,351 $ 19,407,447 $ 19,450,210 Page 45 ---PAGE BREAK--- CITY OF MIDDLETON FIRE DISTRICT AGENCY FUND CASH INCREASES STATEMENT OF CASH INCREASES AND CASH DECREASES For the Year Ended December 31, 1999 Intergovernmental fire protection charges Miscellaneous revenues Increase in payables and interfunds Total Cash Increases CASH DECREASES Salaries and wages Fringe benefits Inspections Office supplies Other materials and supplies Communications Equipment maintenance Building maintenance Gas and oil Training Insurance Utilities Miscellaneous Capital outlay Increase in receivables Increase in prepaids Total Cash Decreases Net Cash Decrease CASH BALANCE - Beginning of Year CASH BALANCE - END OF YEAR $ 518,227 7,127 3,304 528,658 103,410 53,091 60,386 21,391 3,099 3,281 19,022 2,835 2,882 5,482 19,031 7,936 2,589 220,919 6,697 10,918 542,969 (14,311) 14,311 $ Page 46