07 CAFR cover FINAL.p65 - WMATA.com

Washington Metropolitan Area Transit AuthorityFY 2007 Comprehensive Annual Financial Report(6) Bonds Payable and Other Debt (Continued)(d) Commercial Paper Notes Payable, Series ANotes to Basic Financial StatementsJune 30, 2007 and 2006Pursuant to the Compact and the Note resolution of the Authority, Commercial Paper Notes, (Series A) wereissued during Fiscal Year 2007. The Series A Notes activity for the year ended June 30, 2007 was as follows(amounts in thousands):BeginningEndingBalance Issued Redeemed BalanceCommercial Paper Notes,Series A $ - $740,000 $525,000 $215,000The Series A Notes are authorized to be issued and reissued from time to time in denominations of anyintegral multiple of $5,000 equal to, or, in excess of $100,000 and to mature no later than 270 days from therespective dates of issuance. The maximum principal amount of Series A Notes currently authorized to beoutstanding at any time is $330,000,000. The principal and redemption price of and interest on the Series ANotes are special obligations of the Authority payable solely from and secured solely by the funds pledgedpursuant to the Note Resolution including the proceeds of sale of Series A Notes and Gross Revenues of theAuthority. Such pledge of Gross Revenues is subject and subordinate to pledges securing certainoutstanding and future indebtedness of the Authority. The Series A Notes are further secured by anirrevocable direct pay letter of credit issued by a major national bank. The issuance of Series A Notes doesnot constitute a debt or legal obligation and will not create a lien upon the revenues of the participatingjurisdictions or the Federal Government or Federal Government agencies.(e) Interest ExpenseInterest expense on bonds for the years ended June 30, 2007 and 2006 was $8,983,000 and $9,978,000.Interest expense on the Series A Notes for the year ended June 30, 2007 was $2,855,000.(7) Termination BenefitsThe General Manager may authorize a general reduction, in the work force, which is accomplished by areduction in positions and may result in the termination of personnel. This course of action is approved by theAuthority’s Board of Directors and outlined in the Authority’s Personnel Policies and Procedures Manualwhich details the basis for severance pay to be made to employees subject to a reduction-in-force. On June30, 2007, the financial statements of the Authority contained a liability and expense of $2,500,000representing benefits to be paid to employees affected by a reduction-in-force implemented in the fiscal yearended June 30, 2007.39