The Brazos River Authority Waco Texas

BRAZOS RIVER AUTHORITYMANAGEMENT’S DISCUSSION AND ANALYSISAUGUST 31, 2008, 2007 AND 2006 (in thousands)The Authority’s ability to generate future cash flowsThe Authority’s ability to pay its debt as the debt maturesReasons for the difference between the Authority’s operating cash flows and operating incomeThe effect on the Authority’s financial position of cash and non-cash transactions from investing,capital and financing activitiesThe Combined Statement of Fiduciary Net Assets summarizes all of the Authority’s agency fund transactions.Generally, an agency fund is created to act as a custodian for other funds, governmental entities, or privateentities. Assets are recorded by the agency fund, held for a period of time as determined by a legal contract orcircumstance and then returned to their owners. Generally, only assets and a liability representing the partiesthat are entitled to the assets are presented in the Combined Statement of Fiduciary Net Assets. TheCombined Statement of Fiduciary Net Assets can be found on Page 20.The Notes to the Basic Financial Statement provides additional information that is essential to a fullunderstanding of the data provided in the basic financial statements. The Notes to the Financial Statementscan be found starting on Page 21 of this report.Financial AnalysisStatement of Net Assets - As noted earlier, net assets may serve over time as a useful indicator of theAuthority’s financial position. In the case of the Authority, assets exceeded liabilities for Fiscal Year 2008,2007 and 2006 by $141,754, $131,291 and $126,263, respectively.The largest portion of the Authority’s net assets, 59%, in Fiscal Year 2008, reflects its investment in capitalassets (e.g., land, reservoirs, water treatment and sewerage facilities, and buildings and equipment) less anyrelated debt used to acquire those assets that is still outstanding. Although the Authority’s investment in itscapital assets is reported net of related debt, it should be noted that the resources needed to repay this debtmust be provided from other resources, since the capital assets themselves cannot be used to liquidate theseliabilities.8