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financial statements statement of operations and changes in net assets Year ended December 31 2007 2006 (in thousands of dollars) $ $ revenues Terminal and passenger security fees 13,063 11,875 Landing fees 9,009 9,148 Concessions 8,563 8,301 Parking 6,559 6,260 Interest 3,164 1,756 Rental 1,753 1,825 Other 852 312 42,963 39,477 Airport improvement fees (note 6) 13,637 12,316 56,600 51,793 expenses Salaries, wages and benefits 12,668 11,655 Materials, services and supplies 12,004 11,276 Amortization 9,192 6,530 Interest on long-term debt (note 5) 8,125 2,762 Ground lease rent 4,093 4,271 General and administrative 4,075 3,588 Property taxes 1,306 1,265 51,463 41,347 Excess of revenues over expenses for the year 5,137 10,446 Net assets, beginning of year 87,015 76,569 Opening adjustment (note 3) (2,681) – Net assets, end of year (note 3) 89,471 87,015 statement of cash flows Year ended December 31 2007 2006 (in thousands of dollars) $ $ operating activities Excess of revenues over expenses for the year 5,137 10,446 Items not involving cash: Amortization 9,192 6,530 Net change in non-cash working capital balances related to operations (10,143) (7,559) Cash provided by operating activities 4,186 9,417 investing activities Expenditures on capital assets (20,542) (54,008) Cash used in investing activities (20,542) (54,008) financing activities Proceeds of bond issue – 150,000 Repayment - CIBC term loan – (26,000) Deferred rent - Transport Canada (81) (81) Debt service reserve fund – (4,127) Deferred financing costs – (3,912) Cash (used in) provided by financing activities (81) 115,880 Net (decrease) increase in cash during the year (16,437) 71,289 Cash, beginning of year 77,354 6,065 Cash, end of year 60,917 77,354 See accompanying notes See accompanying notes HALIFAX INTERNATIONAL AIRPORT AUTHORITY 2007 ANNUAL REPORT 14
notes to financial statements December 31, 2007 1. general Halifax International Airport Authority (the “Authority”) was incorporated on November 23, 1995 as a corporation without share capital under Part II of the Canada Corporations Act. On February 1, 2000, the Authority signed a 60-year ground lease with Transport Canada and assumed responsibility for the management, operation and development of the Halifax Robert L. Stanfield International Airport. Excess revenues over expenses are retained and reinvested in airport operations and development. The Authority is a dynamic and multi-faceted aviation enterprise that provides air access to the world, facilitates personal and business connections and promotes regional economic growth. The Authority is governed by a Board of Directors whose members are nominated by the Halifax Regional Municipality, the Province of Nova Scotia and the Federal Government, as well as the Halifax Chamber of Commerce. The nominated members can also appoint additional members who represent the interests of the community. The Authority is exempt from federal and provincial income tax, federal large corporation tax, and Nova Scotia capital tax. 2. summary of significant accounting policies The Authority’s financial statements have been prepared in accordance with Canadian generally accepted accounting principles. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities at the date of the financial statements and the reported amounts of certain revenues and expenses during the year. Actual results could differ from those estimates. Inventories Inventories consist of materials, parts and supplies and are stated at the lower of cost, determined on an average cost basis, and estimated replacement cost. Ground lease The ground lease with Transport Canada is accounted for as an operating lease. Capital assets Capital assets are recorded at cost including interest on funds borrowed for capital purposes, net of contributions and government assistance and are amortized over their estimated useful lives on a straight-line basis as follows: 2. summary of significant accounting policies (continued) Assets Rate Computer hardware and software 20% - 33% Leasehold improvements 2.5% - 10% Machinery, equipment, furniture and fixtures 5% - 20% Vehicles 5% - 17% Construction in progress is recorded at cost and is transferred to leasehold improvements when the projects are complete and the assets are placed into service. Revenue recognition Landing fees, terminal fees, parking revenues and passenger security fees are recognized as the airport facilities are utilized. Concession revenues are recognized on the accrual basis and calculated using agreed percentages of reported concessionaire sales, with specified minimum guarantees where applicable. Rental revenues are recognized over the lives of respective leases, licenses and permits. Airport improvement fees (“AIF”) are recognized when originating departing passengers board their aircraft as reported by the airlines. Deferred revenue consists primarily of a portion of the common-use terminal equipment fee required for future capital acquisitions. Employee benefit plans The Authority sponsors a pension plan on behalf of its employees which has defined benefit and defined contribution components. In valuing pension obligations for its defined benefit component, the Authority uses the accrued benefit actuarial method prorated on services and best estimate assumptions. Pension plan assets are valued at current market values. The excess of the accumulated net actuarial gain or loss over 10% of the greater of the accrued benefit obligation and the fair value of the plan assets is amortized over the average remaining service life of employees. Defined contribution component amounts are expensed as incurred. Derivative financial instruments Derivative financial instruments, including interest rate swaps, may be used from time to time to reduce exposure to fluctuations in interest rates. These financial instruments will be accounted for under the deferral method if the Authority meets the hedging requirements set out in existing accounting pronouncements and the Authority chooses to designate these financial instruments as hedges. Accordingly, the book value will not be adjusted to reflect the current market values. Payments and receipts under interest rate swap agreements will be recognized as adjustments to interest and financing costs where the underlying instrument is an Authority debt issue. HALIFAX INTERNATIONAL AIRPORT AUTHORITY 2007 ANNUAL REPORT 15
Page 2 and 3: OUR PEOPLE - Burton Wright, Ken Cha
Page 5 and 6: 2007 also marked the beginning of t
Page 7 and 8: w Not all our efforts last year wer
Page 9 and 10: Eighty per cent of our passenger tr
Page 11 and 12: Scheduled and Charter Passenger Ser
Page 13 and 14: w Firefighter Tim Bull worked on th
Page 15: financial statements auditors’ re
Page 19 and 20: notes to financial statements Decem
Page 21 and 22: notes to financial statements Decem
Page 23 and 24: CORPORATE GOVERNANCE HALIFAX INTERN
Page 25 and 26: BOARD OF DIRECTORS Peter McDonough,

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