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Elk River Utilities Electric Revenue Fund
<br /> Net Revenues Available For Debt Service
<br /> Fiscal Years Ended December 31, 2011 and 2012
<br /> December 31, 2011 December 31, 2012
<br /> Operating Revenue $ 28,583,986 $ 30,258,690
<br /> Operating Expense (26,433,050) (27,350,312)
<br /> Net Operating Income(Loss) $ 2,150,936 $ 2,908,378
<br /> Add Back Depreciation 2,041,717 2,099,594
<br /> Add Other Income 187,695 262,532
<br /> Available for Debt Service $ 4,380,348 $ 5,270,504
<br /> Average Available for Debt Service $ 4,825,426 $ 4,825,426
<br /> Average Annual Debt Service* $ 529,092
<br /> Coverage 9.12x
<br /> Includes a verage annual debt service for the Bonds and the Series 2007A Bonds.
<br /> Source., City of Elk River Comprehensive Annual Financial Reports, for the Years Ended
<br /> December 37,207 7 and 2072.
<br /> STRUCTURING At the direction of the Utility, the Bonds have been structured to provide for approximately
<br /> SUMMARY: level annual debt service over a term of five years. This structure results in a term of the
<br /> Bonds which is three years shorter than the remaining term of the Prior Bonds.
<br /> Consequently, the annual debt service requirements for the Bonds are higher than those of
<br /> the Prior Bonds over the same period. While the transaction is being undertaken to achieve
<br /> interest cost savings, 100%of the cash flow savings are realized through the shortening of
<br /> the term of the debt and occur in the years 2019 through 2021, after the final maturity of the
<br /> Bonds.
<br /> On May 1, 2014, the Utility will use the proceeds of the Bonds to redeem the remaining
<br /> $2,180,000 outstanding principal on the Prior Bonds and to pay interest accrued thereon from
<br /> February 1, 2014. Beginning with the August 1, 2014 principal and interest payment, the
<br /> Utility will begin to make debt service payments on the Bonds, realizing the interest cost
<br /> savings.
<br /> Based on current interest rates, this refunding is projected to result in total future value
<br /> savings of approximately$202,222, with a net present value of$166,732. These savings are
<br /> after payment of all expenses related to the transaction.
<br /> SCHEDULES Schedules attached include: a preliminary feasibility summary, proof of the debt service
<br /> ATTACHED: reserve requirement, estimated net debt service requirements, aggregate Electric Utility
<br /> system debt service after issuance of the Bonds and interest cost savings, given the current
<br /> interest rate environment.
<br /> SpringstQd Page
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