6.1. ERMUSR 05-11-2004 - Laserfiche WebLink

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Management's Discussion and Analysis This section of the Utilities' annual financial report presents our analysis of the Utilities' financial performance during the fiscal year that ended December 31, 2003. Please read it in conjunction with the financial statements, which follow this section. FINANCIAL HIGHLIGHTS • The assets of the Utilities exceeded its liabilities at the close of the most recent fiscal year by$35,055,298 (net assets). Net Assets increased by$1,669,805 or 5 percent before prior period adjustments. • The Utilities'cash balance at the close of the current fiscal year was$4,954,286. OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of three pans;Management's Discussion and Analysis,Financial Statements,and Supplementary Information. The Financial Statements also include notes that explain in more detail some of the information in the financial statements. REQUIRED FINANCIAL STATEMENTS The Financial Statements of the Utilities report information about the Utilities using accounting methods similar to those used by private sector companies. These statements offer short-and long-term financial information about its activities. The Statement of Net Assets includes all of the Utilities' assets and liabilities and provides information about the nature and amounts of investments in resources(assets)and the obligations to Utilities' creditors(liabilities). It also provides the basis for computing rate of return, evaluating the capital structure of the Utilities and assessing the liquidity and financial flexibility of the Utilities. All of the current year's revenues and expenses are accounted for in the Statement of Revenues, Expenses,and Changes in Net Assets. This statement measures the success of the Utilities' operations over the past year and can be used to determine whether the Utilities has successfully recovered all its costs through its user fees and other charges,profitability,and credit worthiness. The final required financial statement is the Statement of Cash Flows. The primary purpose of this statement is to provide information about the Utilities'cash receipts and cash payments during the reporting period. The statement reports cash receipts, cash payments,and net changes in cash resulting from operations,investing,and financing activities and provides answers to such questions as where did cash come from, what was cash used for,and what was the change in cash balance during the reporting period. FINANCIAL ANALYSIS OF THE UTILITIES Our analysis of the Utilities begins on pages 3-4 in the Financial Section. One of the most important questions asked about the Utilities' finances is"Is the Utilities as a whole better off or worse off as a result of this years activities?" The Statement of Net Assets, and the Statements of Revenues,Expenses and Changes in Net Assets report information about the Utilities' activities in a way that will help answer this question. These two statements report the net assets of the Utilities and changes in these net assets. You can think of the Utilities'net assets,(the difference between assets and liabilities),as one way to measure financial health or financial position. Over time, increases or decreases in the Utilities' net assets are one indicator of whether its financial health is improving or deteriorating. However,you will need to consider other non-financial factors such as changes in economic conditions,population growth,zoning and new or changed government legislation. -I-