ERMUSR Financials 02-20-2007 - Laserfiche WebLink

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YEAR END NARRATIVE These financial statements are year end unaudited amounts. They include adjustments for year end accruals of payables, receivables, and capitalized items. The auditors will be here March 15t and 2°d to review our 2006 year and make any correcting entries or recommendations. I am sure there will be additional entries to be made, but the majority of the items should be accounted for. Electric We have commented all year that this had been a challenging one for the electric department. With an exceptional amount of work projects coming on board (downtown Elk River, Hwy 169, County Rd 33, street improvements, etc.) and the major Target project there was plenty to do and limited resources to do it with. To best manage the resources available, some scheduled projects were put on hold, such as a Connexus territory acquisition and some line improvements. At the beginning of the year, we had hoped to be able to increase our cash reserve balances by $600,000. As you can see by the cash flow statements, we ended up using an additional $127,000 instead. The adjustments made mid-year helped keep that number reasonable. All things considered, it wasn't too bad. Not great, but it could have been much worse. To look at just the Income Statement, it is a much more positive picture. Gross revenues came in at 4% over budget, with a 1.5% increase in electric sales. The other areas of security, investment income, the landfill, and connections items make up the rest of the increase. Expenses were up as well, though not as much. There was a 2% increase in total expenses. This left a margin of approximately $500,000 greater than what was budgeted for net income. Capital projects, however, as alluded to above, were almost $700,000 more that what was budgeted. (As a side note, the miscellaneous amount is from the restitution funds and IRS refunds.) Water The water department had a good year. Gross revenues were up almost 40% over budget. Water sales were up 15% and Connections were up 70%. Expenses were only up 3.7% and consequently, the ending cash position for the water department is an increase of $700,000. This puts water cash reserves at the investment committee's recommended balances, which we didn't think we would achieve until the next 3-5 years. We have one audit entry of "Contributions from Developers" that has not been recorded yet. This is from the infrastructure that the developers put in place when constructing a new development. This is typically a sizable audit adjustment (last year's amount was $533,000) that ends up being recorded as an asset with an offsetting revenue amount. (The miscellaneous amount is from the restitution funds and IRS refunds, as also identified above.)