Comprehensive Annual Financial Report 2007 - MSD

Management’s Discussion and AnalysisAs management of the Louisville and Jefferson County MetropolitanSewer District (MSD), we offer readers of MSD’s financial statements thisnarrative overview and analysis of the financial activities for the fiscal year endedJune 30, 2007. We encourage readers to consider the information presentedhere in conjunction with additional information that we have furnished in our letterof transmittal, which can be found on pages 1-6 of this report.Financial Highlights• MSD’s net assets decreased by $18.1 million (3.2%) as a result of this year’soperations.• Operating revenues increased by $2.7 million (2.1%) to $132.4 million.• Operating expenses excluding depreciation increased by $2.4 million (4.0%).• Non-operating revenues (investment income) increased by $.71 million(17.8%) and non-operating expenses increased by $6.0 million (11.9%).Overview of the Financial StatementsThis annual report consists of three parts: Introductory Section, FinancialSection, and Supplementary Information. The Financial Section includes notesthat provide additional information relating to MSD’s financial condition. Readersare encouraged to read the notes to better understand the financial statements.Required Financial StatementsThe Statement of Net AssetsThe Statement of Net Assets includes all of MSD’s assets and liabilitiesand provides information about the nature and amounts of investments inresources (assets) and the obligations to creditors (liabilities). It also providesthe basis for computing rate of return, evaluating the capital structure of MSDand assessing the liquidity and financial flexibility of the organization.The Statement of Revenues, Expenses and Changes in Net AssetsThe Statement of Revenues, Expenses, and Changes in Net Assetsidentifies the revenues generated and expenses incurred during the fiscal year.11