new arrivals bold departures

More documents

Recommendations

Info

NOTES TO FINANCIAL STATEMENTS December 31, 2006 6. commitments Transfer Agreement Effective February 1, 2000, the Authority signed a 60-year ground lease with Transport Canada (the “Landlord”) which provides for the Authority to lease the Halifax Robert L. Stanfield International Airport (the “Airport”). A 20-year renewal option may be exercised, but at the end of the term, unless otherwise extended, the Authority is obligated to return control of the Airport to the Landlord. On May 9, 2005, the Government of Canada announced the adoption of a new rent policy that will result in reduced rent for Canadian airport authorities, including the Halifax International Airport Authority. This reduced rent will be phased in over four years beginning in 2006, with the new formula achieving its full impact in 2010. The new formula is based on percentage of gross revenues on a progressive scale. The Authority finalized the amendment to its ground lease with Transport Canada in December 2005. Rent payable under the old ground lease with Transport Canada included base rent calculated on a formula reflecting annual passenger volumes, annual revenues, and predetermined base operating costs. Base rent was calculated on a capped passenger volume formula subject to adjustments for inflation. The estimated lease obligations under the amended ground lease over the next five years are approximately as follows (in thousands of dollars): 2007 $ 4,093 2008 3,825 2009 3,290 2010 3,454 2011 3,587 Long-Term Debt – Bond Issue The $150 million Series A Revenue Bonds yield interest of 5.503% per annum, payable on January 19 and July 19 of each year until maturity. The interest due over the next five years is as follows (in thousands of dollars): 2007 $ 8,255 2008 8,255 2009 8,255 2010 8,255 2011 8,255 Construction in Progress At December 31, 2006, the Authority had outstanding contractual construction commitments amounting to approximately $1.5 million (2005 - $11.0 million). 7. pension The Authority sponsors a pension plan (the “Plan”) on behalf of its employees, which has defined benefit and defined contribution components. The defined benefit component is for former Transport Canada continuing full-time employees who were employed by the Authority on February 1, 2000 and previously participated under the Public Service Superannuation Act (“PSSA”) Plan. However, these employees had the option to elect to become members of the defined contribution component in lieu of the defined benefit component. All other employees will become members of the defined contribution component. An actuarial valuation has been prepared as of January 1, 2006, for purposes of funding the Plan. The existing Government of Canada pension assets and accrued benefits obligation for certain employees have been transferred to the Authority. The pension transfer agreement between Transport Canada and the Authority was finalized during 2004 and the total pension liability has been transferred, fully funded to the Authority. The following table provides information concerning the accrued benefit obligation, plan assets, funded status and prepaid (accrued) pension costs of the plan as at December 31, 2006: 2006 2005 (in thousands of dollars) $ $ Plan assets 22,290 18,785 Accrued benefit obligation (23,093) (20,147) Funded status – plan (deficit) (803) (1,362) Unamortized net actuarial gain (loss) 1,229 (1,316) Accrued benefit asset (liability) 426 (46) The significant actuarial assumptions adopted in measuring the Authority’s accrued pension benefits are as follows: 2006 2005 % % Discount rate 5.25 5.25 Expected long-term rate of return on plan assets 6.75 6.75 Rate of compensation increase 4.00 4.00 H A L I F A X I N T E R N A T I O N A L A I R P O R T A U T H O R I T Y 2 0 0 6 A N N U A L R E P O R T 20
NOTES TO FINANCIAL STATEMENTS December 31, 2006 7. pension (continued) Other information related to the Authority’s defined benefit component is as follows: 2006 2005 (in thousands of dollars) $ $ Employer contribution 1,032 573 Employees’ contribution 203 205 Benefits paid 138 93 Pension expense for 2006 amounted to $165,000 (2005 - $136,000) for the defined contribution component and $556,000 (2005 - $618,000) for the defined benefit component. Plan Assets 2006 2005 % % Equity securities 60 57 Fixed income securities 32 32 Real estate securities 8 8 Other – 3 100 100 8. financial instruments (continued) Credit risk The Authority is subject to credit risk through its accounts receivable. A significant portion of the Authority’s revenues, and resulting receivable balances, are derived from airlines. The Authority performs ongoing credit valuations of receivable balances and maintains reserves for potential credit losses. 9. contingencies The Authority may, from time to time, be involved in legal proceedings, claims and litigation that arise in the ordinary course of business which the Authority believes would not reasonably be expected to have a material adverse effect on the financial condition of the Authority. 10. comparative figures The comparative financial information has been reclassified to conform to the presentation adopted for 2006. 8. financial instruments Fair value The Authority’s primary financial instruments consist of cash and cash equivalents, accounts receivable, long-term debt and accounts payable and accrued liabilities. The difference between the carrying values and the fair market values of the primary financial instruments, excluding long-term debt, are not material due to their short-term maturities. At December 31, 2006, the fair value of Transport Canada deferred rent was $547,285 (2005 - $641,000) relative to the carrying value of $724,167 (2005 - $724,000). The fair value of the Revenue Bonds was $139,698,000 (2005 - nil) relative to the carrying value of $150,000,000 (2005 - nil). The fair values of long-term debt were estimated based on the present value of contractual future payments of principal and interest, discounted at the current market rates of interest available to the Authority for similar debt instruments. H A L I F A X I N T E R N A T I O N A L A I R P O R T A U T H O R I T Y 2 0 0 6 A N N U A L R E P O R T 21
Page 1 and 2: Halifax International Airport Autho
Page 3 and 4: O U R P E O P L E Mark Bowser, Rand
Page 5 and 6: Message from the Chair Halifax Inte
Page 7 and 8: P 2006 will be remembered as a wate
Page 9 and 10: S E T T I N G T H E S TAG E Transfo
Page 11 and 12: R E WARDING EXPERIENCES Enhancing o
Page 13 and 14: What’s more, HIAA supported over
Page 15 and 16: U.S. preclearance means many new de
Page 17 and 18: Financial Statements AU D I TO R S
Page 19 and 20: NOTES TO FINANCIAL STATEMENTS Decem
Page 21: NOTES TO FINANCIAL STATEMENTS Decem
Page 25 and 26: BOARD OF DIRECTORS Peter McDonough,
Page 27 and 28: Five-Year Forecast A C T U A L F I

new arrivals bold departures

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?