City and County of Denver Municipal Airport System ANNUAL ...

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City and County of Denver Municipal Airport System MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) December 31, 2010 and 2009 Summary of Net Assets The following is a summary of assets, liabilities, and net assets as of December 31, 2010, 2009, and 2008 (in thousands): 2010 2009 * (as restated) 2008 * Assets: Current assets, unrestricted $ 301,899 $ 206,665 $ 320,948 Restricted assets, current 260,573 167,143 386,568 Noncurrent investments 263,705 299,258 170,301 Long-term receivables 4,885 2,000 2,000 Capital assets, net 3,198,235 3,314,609 3,400,133 Bond issue costs, net 45,594 51,457 52,204 Interest rate swaps 31,715 33,961 19,857 Investments - restricted 686,209 900,246 642,223 Assets held for disposition 9,620 12,799 13,073 Total assets 4,802,435 4,988,138 5,007,307 Deferred Outflows Acccumulated decrease in fair value of hedging derivatives 1,814 - - Liabilities: Current liabilities, unrestricted 110,395 114,180 122,371 Current liabilities payable from restricted assets 242,392 222,924 200,450 Bonds payable, noncurrent 3,649,442 3,808,388 3,767,329 Interest rate swaps, noncurrent 207,548 166,418 - Notes payable, noncurrent 20,640 33,207 69,137 Compensated absences payable, noncurrent 6,020 5,925 5,720 Total liabilities 4,236,437 4,351,042 4,165,007 Deferred inflows Accumualted increase in fair value of hedging derivatives 12,789 34,519 - Net assets (deficit): Invested in capital assets, net of related debt (388,461) (291,115) (213,290) Restricted 666,022 658,095 679,782 Unrestricted 277,462 235,597 375,808 Total net assets $ 555,023 $ 602,577 $ 842,300 * 2009 has been restated for the adoption of GASB 53. 2008 has not been restated for adoption of GASB 53 because it is not practical to do so. 18
City and County of Denver Municipal Airport System MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) December 31, 2010 and 2009 2010/2009 Total assets decreased by $185.7 million in 2010, compared to 2009. This was primarily due to a decrease in capital assets, (net) of $116.4 million, a decrease in bond issues costs and a decrease in restricted cash and cash equivalents and investments of $129.2 million spent on construction projects such as the South Terminal Redevelopment Program and removal of the baggage system offset by an increase in grants receivable and unrestricted cash and cash equivalents and investments. Total deferred outflows increased by $1.8 million due to the change in the fair value of the hedging derivatives. Total liabilities decreased by $114.6 million in 2010, compared to 2009. The decrease was primarily attributed to the payment of the revenue bonds of $138.2 million, a decrease in notes payable and due to other agencies since the other City personnel indirect cost study was paid before December 31, 2010, and not accrued. This decrease is offset by an increase in other liabilities and compensated absences. Deferred Inflows decreased by $21.7 due to the increase in the fair value for hedging derivatives. Of the Airport System’s 2010 total net assets, 120% was restricted for future debt service and capital construction. The bond reserve account and bond accounts that are externally restricted represent $643.1 million for debt service and $23.0 million for capital projects, respectively. At December 31, 2010, the remaining net assets include unrestricted net assets of $277.5 million, which may be used to meet any of the Airport System’s ongoing operations. Management of the Airport System has internally designated $67.3 million of its unrestricted net assets amount, as allowed in the 1984 Airport System General Bond Ordinance as supplemented and amended, to help meet debt covenant coverage requirements. In addition, ($388.5) million represents the Airport’s investment in capital assets, net of related debt. A negative investment results because the outstanding indebtedness exceeds the net book value of the capital assets funded by the indebtedness 2009/2008 Total assets decreased by $19.2 million in 2009, compared to 2008. This was primarily due to a decrease in capital assets, net, of $85.5 million, a decrease in bond issues costs and grants receivable, which was offset by an increase in cash, cash equivalents and investments associated with the 2009 bond series, and an increase in accounts receivable associated with the insurance recoveries of pollution remediation. Interest rate swap assets increased by $14.1 million, net of previously reported deferred loss on swap termination prior to implementation of GASB 53. Total liabilities increased by $186.0 million in 2009, compared to 2008. The increase was due to the $166.4 million for interest rate swaps related to the implementation of GASB 53, and an increase in revenue bonds payable associated with the 2009 new money revenue bonds issued which is offset by the payments of revenue bonds for 2009, and an increase in due to other City agencies of $5.6 million which is associated with the increase in other City personnel and the City’s indirect cost study increase for 2009 of $4.4 million. Deferred Inflows increased by $34.5 million due to the implementation of GASB 53 for derivative instruments. Of the Airport System’s 2009 total net assets, 109.2% was restricted for future debt service and capital construction. The bond reserve account and bond accounts that are externally restricted represent $645.0 million for debt service and $13.1 million for capital projects, respectively. 19
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City and County of Denver Municipal Airport System ANNUAL ...

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