Comprehensive Annual Financial Report June 30, 2011 - Western ...

Western Virginia Water Authority
Management’s Discussion and Analysis
For the Year Ended June 30, 2011
As management of the Western Virginia Water Authority, (the “Authority”), we offer readers of our financial
statements this narrative overview and analysis of the financial activities of the Authority for the fiscal year
ended June 30, 2011. We encourage readers to consider the information presented here in conjunction with
additional information that we have furnished in our letter of transmittal, which can be found on pages 2
through 10 of this report.
Financial Highlights
The assets of the Authority exceeded its liabilities at the close of the fiscal year by $281,693,827 for the
Water fund and $259,416,910 for the WPC fund. Of this amount $10,189,206 for the Water fund and
$21,982,391 for the WPC fund are unrestricted net assets and may be used to meet the Authority’s
ongoing obligations to customers and creditors.
Operating revenues for the Water fund increased $1,780,419 over 2010 levels due to a combination of
increases in user rates for customer charges, connections and fire service. Operating revenues for the
WPC fund increased $1,543,660 over 2010 due primarily to an increase in customer charges.
Operating expenses for the Water fund increased $311,660 from 2010 due to increases in depreciation
expense and meter operations. Expenses increased $350,986 for the WPC fund from 2010 primarily due
to increased costs for depreciation and biosolids handling.
Total long-term debt for the Authority decreased $7,851,556 in 2011 due to continued retirement of
outstanding debt. Water fund debt decreased $4,064,035 while the WPC fund debt decreased for the
year $3,787,521.
Overview of the Financial Statements:
This discussion and analysis is intended to serve as an introduction to the Authority’s basic financial
statements. Since the Authority is engaged only in business – type activities, its basic financial statements
are comprised of two components: 1) enterprise fund financial statements and 2) notes to the financial
statements. This report also contains other supplementary information in addition to the basic financial
statements.
Enterprise fund financial statements. The enterprise fund financial statements are designed to provide
readers with a broad overview of the Authority’s finances, in a manner similar to a private sector business.
The statement of net assets presents information on the Authority’s assets and liabilities, with the
difference between the two reported as net assets. Over time, increases or decreases in net assets may
serve as a useful indicator of whether the financial position of the Authority is improving or deteriorating.
The statement of revenues, expenses and changes in net assets presents information showing how the
Authority’s net assets changed during the most recent fiscal year. All changes in net assets are reported as
soon as the underlying event giving rise to the change occurs, regardless of the timing of cash flows. Thus,
revenues and expenses are reported in this statement for some items that will only result in cash flows in
future fiscal periods (e.g. earned but unused vacation leave).
The basic enterprise fund financial statements can be found on pages 27 through 32 of this report.
Notes to financial statements. The notes provide additional information that is essential to a full
understanding of the data provided in the financial statements. The notes to the financial statements can
be found on pages 34 through 60 of this report.
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