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Audit Report - 2001COMPREHENSIVE ANNUAL FINANCIAL REPORT of the SALINA AIRPORT AUTHORITY A Component Unit of the City of Salina, Kansas For the Fiscal Year Ended December 31, 2001 Prepared by the Management of the Salina Airport Authority Salina Airport Authority ��AiM, Salina Municipal Airport / Industrial Center SALINA AIRPORT AUTHORITY TALE OF CONTENTS COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended December 31, 2001 INTRODUCTORY SECTION Page Letter of Transmittal ................................................. ............................... 1 PrincipalOfficers ........................................................ .............................16 Authority Staff Members ............................................... .............................17 Organizational Chart ................................................... .............................18 Certificate of Achievement ........................................... .............................19 Salina Municipal Airport Aerial View ............................... .............................20 FINANCIAL SECTION Independent Auditor's Report ................................... ............................... 21 Financial Statements Comparative Balance Sheet .............................. ............................... 24 -25 Comparative Statements of Revenues, Expenses and Changes in Retained Earnings .......................... ............................... 26 Comparative Statements of Cash Flows (Direct Method) ........................ 27 -28 Notes to Financial Statements, December 31, 2001 and 2000 ..................... 29 Supplemental Information Schedule of Operations and Changes in Retained Earnings .................. 44 -45 Capital Expenditures ....................................... ............................... 46 -47 T General Obligation Bonds — Series 1993- A .............. ............................... 48 General Obligation Bonds — Series 1993- B .............. ............................... 49 General Obligation Bonds — Series 1998- A .............. ............................... 50 General Obligation Refunding Bonds — Series 1999- B ............................... 51 General Obligation Improvement Bonds — Series 2001- A ........................... 52 Supplemental Information (continued) Leasehold Revenue Bonds — Series 1991 ................. ...:........................... 53 KDOCH Contract Payable ...................................... ............................... 54 Insurance in Force ................................................ ............................... 55 STATISTICAL SECTION Operating Revenue History ......................................... ............................... 57 Operating Expense History ......................................... ............................... 58 Federal Financial Assistance History ............................ ............................... 59 Capital Expenditure History ......................................... ............................... 60 RevenueBond Coverage ........................................... ............................... 61 Principal Customers .................................................. ............................... 62 Local Government Property Tax Rates, Direct & Overlapping ........................... 63 Property Tax Revenue .............................................. ............................... 64 Air Traffic, Fuel Flowage, Enplanement Trends ............... ............................... 65 MajorEmployers .............................................. ............................... . ....... 66 Saline County Population, Demographic and Labor Statistics ........................... 67 Saline County Employment Data .................................. ............................... 68 C 11 AAL Salina Airport Authority v I*eMAA\ Salina Municipal Airport/ Industrial (;enter Chairman Vice - Chairman Secretary Treasurer Past Chairman JOHN K. VANIER, II DONALD E. MORRIS ROBERT H. MILLER DR. RANDY D. HASSLER PAT BOLEN Executive Director: TIMOTHY F. ROGERS, A.A.E. Mgr. of Administration & Finance: MICHELLE R. SWANSON Mgr. of Operations, Maintenance & ARFF: Ryan E. Rocha Board Attorney: GREG A. BENGTSOv June 14, 2002 Salina Airport Authority Board of Directors 3237 Arnold Ave. Salina, KS 67401 To the Board of Directors of the Salina Airport Authority: The Comprehensive Annual Financial Report (CAFR) of the Salina Airport Authority (the "Authority ") for the fiscal year ended December 31, 2001 is hereby submitted in accordance with the Kansas Statutes Annotated (K.S.A. 27 -324). As required by the statute, tho City of Salina will be furnished copies of the Authority's 2001 CAFR. Responsibility for both the accuracy of the data presented and the completeness and fairness of the presentation, including all disclosures, rests with the Executive Director of the Authority. To the best of my knowledge and belief, the data as presented is accurate in all material aspects, it is presented in a manner designE:d to fairly set forth the fiscal position and results of the operation of the Authority as measured by its financial activity, and that all disclosures necessary to enable the reader to gain maximum understanding are included in the report. ORGANIZATION OF THE REPORT The Authority applies the standards for preparation of local government financial reports recommended by the Government Finance Officers of the United States and Canada (GFOA). The Authority's 2001 Comprehensive Annual Financial Report is presented in three sE.ctions: Introductory Section - contains this letter of transmittal, a list of the Authority's principal officers, a listing of Authority staff members, an organizationall chart, the GFOA Certificate of Achievement for Excellence in Financial Reporting for fiscal year 2000, and an aerial photo of the Salina Municipal Airport and Airport Industrial Center. Financial Section - includes the independent auditor's report, the Authority's 2001 financial statements and supplemental schedules. Statistical Section - includes selected financial and demographic linformation which highlights economic and demographic trends. REPORTING ENTITY The Salina Airport Authority is a body corporate and politic. The Authority was created by the City of Salina in April, 1965 (Sec. 4 -16, Salina City Code) pursuant to the Authority granted by the City 3237 ARNOLD • SALINA, KS 67401- 8190.Off: (785) 827 -3914 • Fax: (785) 827 -2221 • www.salair.org by the Surplus Property and Public Airport Authority Act of the State of Kansas (KSA 27 -315 et seq.) Pursuant to GASB Statement No. 14, the Authority is a component unit of the City of Salina. The Authority was created for the purpose of accepting as surplus property, portiDns of the former Schilling A.F.B. which was closed by the United States Department of Defense in June, 1965. By quitclaim deed the Authority received over 2,700 acres of land and numerous buildings for the purpose of operating and developing the Salina Municipal Airport and the Salina Airport Industrial Center. The Authority is managed and controlled by a five- member Board of Directors appointed by the Salina City Commission. The Board appoints the Executive Director, who is the chief executive and administrative officer of the Authority. The Executive Director hires the remaining employees of the Authority. The Executive Director and his staff of fourteen employees manage and operate the Salina Municipal Airport and the Salina Airport Industrial Center. The Salina Municipal Airport is the only commercial service airport serving Salina /Saline County and the 22- county area which comprises North Central Kansas. The Airport also services the corporate, business, private aviation and flight training needs of industry, business and individuals in the area. The Airport is also used by the Kansas State University - Salina College of Technology and Aviation. The campus of K -State Salina is located adjacent to the airport. The K -State Salina College of Technology and Aviation offers degrees in professional flight training, airframe and power plant maintenance, and avionics technology. The Salina Airport Industrial Center is home for 76 businesses and organizations. Forty -four of the businesses and organizations are tenants of the Authority. One of the primary functions of the Authority is to facilitate the continued growth of jobs and payroll at the Salina Airport Industrial Center. The Authority works in partnership with the City of Salina, Saline County and the Salina Area Chamber of Commerce for the retention of existing business and industry and the recruitment of new business and industry. ECONOMIC CONDITIONS AND OUTLOOK Local Economy The Salina /Saline County economy has continued to demonstrate economic strength, as compared to other regions of the state. Growth in the areas of construction, manufacturing, transportation, retail trade, and services confirms Salina's position as one of Kansas' strongest regional economic centers. According to the April 2002 Strength Index report published by K -State Research and Extension, Department of Agricultural Economics, Saline County ranked third out of the 105 counties in "strength index" for 2000 -2001, following only Johnson County and Miami County. The index is a measure of economic prosperity in Kansas counties, and is made up of three components; wealth index, employment index and personal income index. The three components are given equal weight. Saline County's index is 3.15 following Miami County at 3.24 and Johnson County at 4.75. The 105 county average is 2.43. In this report only 6 of the 105 counties have strength index numbers of 3.0 or higher. The source for the strength index data was provided by the Bureau of the Census, Kansas Department of Revenue, Kansas Department of Human Resources, and the Governor's Economic and Demographic Report, 2001 -2002. AV\ Salina Airport Authority 111.VaA\ Salina Municipal Airport/ Industrial Center -2- Economic Condition of the Airport and Airport Industrial Center As of December 31, 2001, seventy -six businesses and organizations at the Airport and Airport Industrial Center employed an estimated 4,531 employees. Total payroll for 2001 was an estimated $131 million. Total business volume during this time surmounted $677 million. Future Economic Outlook The future economic outlook for both Salina and the Authority continues -to look favorable. Continued growth in service, retail and manufacturing sectors is expected. The Salina Area Chamber of Commerce forecasts that approximately 700 new jobs per year will be added to the economy with emphasis on growth in primary jobs during the 1998 -2003 time period. Airport Industrial Center businesses such as Schwan's Sales, Inc., Ovation Cabinetry, Vidricksen Distributing, Kansas State University Salina, Salina Area Technical School (USD #305), ElDorado National of Kansas, Inc. (THOR Industries) and Aerospace Systems and Technologies, Inc., continue to work on expansion plans that will result in additional jobs, payroll, and increased revenue opportunities for the Authority. INITIATIVES AND DEVELOPMENT Salina Municipal Airport • Air Traffic 2001 was another outstanding year for air traffic at the Salina Municipal Airport. Airport operations during this year reached 92,870. In October, the tower recorded 12,941 operations for the month, which was the highest monthly total on record at the Salina Municipal Airport. Of significance is that traffic kept pace with 2000's outstanding yearly total following the tragic terrorist attacks on September 11. All segments of air traffic contributed to the significant year, including full enrollment at Kansas State University's professional flight training program and an increase in general aviation traffic and military activity. • Air Service Development Air service at the Salina Municipal Airport during 2001 underwent significant changes. After ending CY 2000 with a 25% decrease in passenger enplanements from the prior year, the SAA was pleased to start the year with positive news from both air carriers serving Salina. Air Midwest had secured a codeshare agreement with Midwest Express doubling the number of joint fare connecting flights at Kansas City International Airport slated to take effect for Salina travelers in March. Great Lakes Aviation announced it would return to an independent air carrier while maintaining a codeshare with United Airlines and pursuing other codeshares with airlines such as Frontier. The news of exclusive marketing and code sharing agreements from both carriers was well received Salina Airport Authority ,J, Salina Municipal Airport/ Industrial Center WIM and would allow more options for Salina travelers and allow the carriers to take control of their own pricing structure. At this time, the SAA Board was compellE:d to increase air service promotion. SAA staff established a campaign that was comprised of radio, television, internet and print advertising throughout North Central Kansas. In March, Air Midwest announced that it had to delay offering the Midwest Express code share until objections by US Airways were resolved. At the same time, Great Lakes was implementing its new agreement with United Airlines that would allow them to restructure their local fares and make them more attractive for passengers flying to Denver as a final destination or for building itineraries with United and other airlines serving Denver. In April, Great Lakes lowered its Salina to Denver fares drastically. The SAA promoted the fares with specific advertising and by hosting a special "Business After Hours" at the terminal building. Fares as low as $208 round trip were being offered and the westbound travelers responded. At the same time, the SAA, together with other Kansas communities, joined the Regional Airline Partnership (RAP) designed to increase the focus on issues facing air service in rural communities. At mid -year, Air Midwest reduced the Salina eastbound flight scheduled to two flights per day with stops in Manhattan. The SAA knew travelers would not be able to take advantage of the Midwest Express codeshare with the decrease in frequency. Year to date, passenger enplanements were down 35% from the previous year. In April, Air Midwest and Midwest Express successfully launched their codeshare program and the SAA included the news and began to promote the service to North Central KS travelers. In July, Air Midwest announced that beginning October 6, it would increase frequency at Salina from two daily flights to four daily flights with three being nonstop service to Kansas City International Airport. During this same time, Great Lakes Aviation filed its 90 notice to terminate scheduled air service at Salina for financial reasons. Great Lakes was re- negotiating their Essential Air Service subsidies with the Department of Transportation, and in doing so, terminated service at some of the non EAS communities on their route map, including Salina. Following the Sept. 11 tragedy, as anticipated, enplanements dropped. However, SAA officials were pleased to learn that Air Midwest was still going to increase the frequency at Salina; not to the anticipated four daily flights, but to three daily flights with two being nonstop to KCI. The SAA staff worked to follow Federal Aviation Administration security directives as they were passed down. The SAA Board approved a security budget and the SAA took the necessary measures to enhance security at and around the terminal building. The SAA received outstanding support and cooperation from local law enforcement. In addition, the SAA was able to acquire the security equipment left behind by Great Lakes Aviation. On October 26, 2001, a team of Army National Guardsmen were deployed and began providing additional security to the airport terminal building and airfield. On November 16, the newly established air service focus group comprised of local community leaders, held their first meeting. This goal of the group is to identify air service priorities for Salina and North Central KS travelers and what methods of pursuing the priorities are in the best interest of the community and region. Salina Airport Authority ,A Salina Municipal Airport/ Industrial Center Z� • FAA Airport Certification Inspection and RIAT Site Visit As done on an annual basis, the Federal Aviation Administration conducted its airport certification inspection of the Salina Municipal Airport during March 5 -8. This in depth inspection resulted in only two minor items of correction. In addition, the week also included a visit by the RIAT (Runway Incursion Action Team) created to prevent runway incursions. During the visit to Salina, the RIAT team looked for potential problem areas that could result in a runway incursion at the Salina Airport. As a result of the RIAT report, the SAA published a "Hot Spot" brochure that alerts airport users to potential problem areas on the airport. In addition, the SAA has developed a new Airport Operations Area (AOA) Driver's Guide and AOA driver's course designed to educate individuals with AOA access. • Airport Tenants Meeting In September, the SAA began the first of the quarterly meetings to be held with all flight line tenants of the airport. This meeting was created in order to keep the tenants informed of upcoming construction projects and to receive feedback from the tenants regarding airport operations. • Airfield Improvements During 2001, the SAA completed several airfield improvement projects including the upgrading of the rotating beacon to Federal Aviation Regulation (FAR) Part 139 standards. During the third quarter, the SAA contracted with APAC Shears for the milling and patching of various pavement heaves in the movement areas on the airfield. During 2001, the SAA invested over $140,000 in airfield pavement repairs. ARFF Services Improvements During the first quarter, the SAA replaced the protective gear worn by the members of the Aircraft Rescue and Fire Fighting crew in the event of an aircraft emergency. Total replacement cost for seven sets of gear equaled $8,085. • Employee Retention /Training During March, 3 members from the SAA's ARFF crew and 3 members of the Salina Fire Department attended the five day Aircraft Rescue and Fire Fighting School in Dallas, TX. This intense training included aircraft familiarization and live fire drills. During the year, as required by FAA, each member of the ARFF crew logged over 30 hours of in -house training and 8 hrs of CPR training as conducted by the Red Cross. The Salina Fire Department began participating in at least one in -house training class per month. In addition, the SAA was successful in securing dates to host the Mobile Aircraft Rescue and Fire Fighting Trainer ( MARRFT). The MARRFT is a unique 50 -ft long realistic aircraft mock -up that simulates fire in and on the aircraft via propane burners. This MARFFT owned by the University of Missouri, Fire Training Rescue Institute, will provide affordable Salina Airport Authority ,�A�� Salina Municipal Airport / Industrial Center -5- training for the SAA and other surrounding airports and allow them to complete annual FAR Part 139 training requirements. The SAA will host the training event at Salina on April 1 -5, 2002. • Aircraft Emergencies In early June, the SAA was faced with two aircraft emergency situations that fortunately resulted in no loss of life and only minor injuries in one instance. Aircraft incidents are by no means accomplishments, but the successful response and fulfillment of responsibilities of the SAA staff are. On June 12, a Learjet with two passengers on board crashed short of runway 17 threshold. The rescue attempt of both passengers by SAA ARFF and the Salina Fire Dept. was successful. On June 14, a TWA MD -80 was diveri:ed to Salina after the captain reported a fire indication light in a cargo bin. The flight with 132 passengers on board landed safely at the Salina Airport. In both instances, SAA emergency plans went into effect and the response and resources received from the NTSB, FAA, KHP, Salina Police Dept., National Guard, and the Red Cross provided the effective handling of the incidents and a smooth restoration to normal operations at the airporl`. • Air Traffic Control Construction on Salina Airport's New Air Traffic Control Tower began January 3, 2001. The new ATCT project took off with a partnering meeting including representatives from the Salina Airport Authority, City of Salina, Federal Aviation Administration, Raytheon, and Mortenson Company, the general contractor for the project. The project design was originally developed in the Southern Region for the Ft. Lauderdale Airport and was site adapted for Salina. The site adaptation was completed by the Kansas City Implementation Center's Terminal Platform (ANI -540) with additional support from Leo A. Daly Engineers of Omaha, Nebraska. Raytheon Services Company is providing resident engineer and support services. The general contractor, M.A. Mortenson out of Colorado Springs, Colorado, has employed several local and area sub contractors to assist in the construction process. Included in the list of subs are the following: FERCO, B & W Electric, Central Mechanical, Central Steel, Salina Concrete, Waffle Crete International, Inc., Ambassador Steel, River City Elevator and Danford Fire Sprinkler Company, Inc. Now finished, the ATCT rests on twenty -four, two -foot diameter concrete piles, is about 120 feet tall, and has a 350 square foot control cab. The cab floor is approximately 97 feet above the ground floor, which provides optimum visibility to all runways, taxiways, and critical aircraft movement areas. Throughout the year, construction progressed successfully and on April 19; 2001, FAA Central Region Administrator, John Turner spoke at the formal "skybreaking" ceremony held at the site. During 2002, the FAA will install the necessary equipment and work towards a fourth quarter commissioning date. Every year, the Federal Aviation Administration assigns a benefit/cost ratio to the towers throughout the country that are part of the FAA's Contract Tower Program. During 2001, the Salina Air Traffic Control tower received a 4.09 b/c ratio. The targeted benefit cost IIIAVAiAL Salina Airport Authority A\ Salina Municipal Airport/ Industrial Center a Me ratio is 1.0 or above. This positive number reassures us that we will continue to receive federal funding under the Contract Tower Program. • Airport Improvement Projects (AIP) 20 and 21 During 2001, the SAA began laying the groundwork for AIP 20 and 21. These projects will include the design of the rehabilitation of Runway 17/35; Salina's primary runway. In addition, AIP 20 will include the purchase of two rollover snowplows. AIP 21 consists of an update to the Airport Layout Plan (ALP). The work accomplished throughout 2001 included working with the FBOs and collecting data concerning the number and type of aircraft that use the airport in order to determine our critical aircraft for establishing the necessary runway length. After negotiations with the FAA, the amount of grant dollars available for the project was determined as well as what the cost share would be based upon shortening the runway from 13,337 feet to 12,300 feet. The SAA worked with its engineering firm in developing the best possible design option and cost estimate. The SAA's five -year contract with its engineering firm, Bucher, Willis & Ratliff expired; therefore, during the third quarter, the SAA formed a selection panel that interviewed prospective engineering consulting firms. In early September the panel finished its work and made their recommendation to the SAA Board. The SAA expects the design process to begin in 2002 with construction commencing in 2003. • The Airport's two aviation fuel outlets, Flower Aviation and Midway Aviation delivered 4,396,429 gallons of fuel to a wide variety of private, air carrier, corporate, government, and military aircraft. As a result, the Authority realized $252,942 in fuel flowage fee revenue. Salina Airport Industrial Center The Authority proved to be very successful during 2001 in our efforts to sell and market available property. The following summarizes the 2001 real estate transactions: 01 -19 -01 The SAA closed on the sale of Lot 2, Block 1 of Schilling Subdivision No. 8 to ECAPER, Inc. (Bob Pace). The 2.32 acre tract is located between Power Ad and the new Anheuser -Bush Distribution facility. 3 -13 -01 The SAA closed on the sale of the 4.54 acre tract located on Lot 2, Block 1 of the Airport Industrial Center Subdivision, to Ovation Cabinetry, Inc. Ovation acquired the property for the construction of their new custom cabinet manufacturing facility. 9 -28 -01 A 1982 Lease Agreement for a 43,000 sq. ft. tract of ground located on Lot 3, Block 13 of Schilling Subdivision No. 5 provided the Lessee'the option to purchase the land. D. Craig Walker exercised his option under the lease agreement and purchased the tract located at 3037 Centennial Road. 10 -31 -01 With the construction of Ovation Cabinetry's new manufacturing facility nearing completion, they realized the need to acquire the balance of the lot they had purchased in the spring. Therefore, the SAA negotiated a Salina Airport Authority ,1A 6, Salina Municipal Airport/ Industrial Center -7- Contract for Sale of Real Estate with Ovation for the remaining 2.80 Acres of Lot 2, Block 1 of the Airport Industrial Center Subdivision. • Parking Lot Improvements During 2001, the SAA worked with several tenants to improve and upgrade parking lots. The SAA invested $52,308 out of its capital improvement budget in parking lot repairs at Waddle's Manufacturing, Scientific Engineering and at the Blue Beacon corporate hangar. The SAA negotiated cost sharing agreements with Waddle's Manufacturing, Scientific Engineering, as well as with KPL for the improvements. In September, the SAA assisted Kansas State University Salina with a major parking lot and driveway improvement project. Although the project was fully funded by the University, the SAA served as the project sponsor and oversaw the construction. The project was a success and KSUS Salina was pleased to have the renovations completed prior to their 10th anniversary celebration that occurred in October. • Site Redevelopment As has become clear in recent years, the underlying land in several areas of the Airport Industrial Center is worth more than the older air force base buildings that are situated on the land. The SAA made significant progress in removing old facilities that have outlived their useful lives. During 2001 we continued with this work in demolishing three old wooden warehouses located along General Jim Rd. • Long -Term Airport Industrial Center Development During 2001, the SAA analyzed the future growth of the Airport Industrial Center and identified areas available for long -term development that would take us 10 -20 years into the future. With the rapid development of the 80 acres comprising the ,Airport Industrial Center Subdivision in recent years, the SAA proceeded with the preliminary platting of the additional 80 acres that the SAA's owns south of Waterwell Road. In addition, the SAA has contracted with Wilson and Co. to prepare a development plan -for the currently vacant southwest portion of the Airport Industrial Center. The SAA is also working with Wilson & Company to complete a drainage study that will provide a plan for long -term drainage improvements. • Building & Improvement Additions Outside of the airfield, the SAA completed over $170,000 worth of facility improvement design and construction projects during 2001. Some of the projects included roof repairs, boiler replacement and repair, improvements to HVAC, ' pumphouse modifications, building painting, FBO improvements and parking lot improvements. AAL Salina Airport Authority OAVAA\ Salina Municipal Airport/ Industrial Center IRM Financial Affairs • Economic Impact Study In September, the SAA conducted an Economic Impact Study involving the 76 businesses and organizations located within the Airport/Airport Industrial Center. This study provides the SAA with very valuable data including types of businesses, number of jobs, total payroll, business volume, capital expenditures, and annual number of visitors. Having this information is critical for the continued development of the Airport/Airport Industrial Center. • 2001 - Series A Facility Improvement Bond Issue In August, the SAA identified 13 facility improvement projects totaling over $1.3 million. These identified improvements would continue the process of cleaning -up and improving the Airport and Airport Industrial Center facilities providing the appearance of a modern, urban industrial center and less like a former military facility. The proposed facilities improvements assist the SAA in accomplishing the role of providing facilities that retain and create jobs for Salina and Saline County. In November, the SAA issued $1.385 million in General Obligation Improvement Bonds to finance the identified projects. Each project on its own would not have easily been financed with GO Bonds due to their small size. By grouping them, the SAA minimized bond issue costs and was able to obtain a very competitive true interest cost of 5.25 %. • Moody's Rating Upgrade On October 4, 2001, the SAA gave a ratings presentation to Moody's Investor Service. During the presentation, we covered every aspect of the SAA's past, current and future financial condition. We also discussed current and future economic development for the City of Salina. Our last rating was an A3 for the SAA's 1999 Refunding Issue. All SAA ratings since 1990 have been A3. On October 11, Moody's upgraded the SAA's rating, not one, but two notches, to Al. The SAA's Al rating now matches the City of Salina's Al rating. A Moody's municipal issuer rating represents Moody's opinion about debt service repayment capacity of a government entity. The rating is assigned based on Moody's independent evaluation of the entity's specific credit characteristics. • Protecting Navigable Airspace - Partnership with the City and County During the first quarter of 2001, the SAA took a more proactive role in the process of determining that Salina /Saline County construction projects do not pose a hazard to navigable airspace surrounding the Airport. SAA staff met with City and County staff to explain the federal requirements for air space reviews for all new construction projects as far away as 20,000 ft. from the Airport. The newly established Design Review Team at the City includes this issue with every new project they review. In addition, the staff of the Salina Airport Authority attended training classes presented by the FAA in order to allow Salina Airport Authority Salina Municipal Airport / Industrial Center "0 the SAA to act as the clearing -house for all necessary reporting requirements and airspace determinations. Environmental The Authority continues to work with the U.S. Army Corps of Engineers, the U.S. Environmental Protection Agency and the Kansas Department of Health and Environment to investigate the environmental status of the Salina Municipal Airport and the Salina Airport Industrial Center. Pursuant to the Defense Environmental Restoration Program /Formerly Used Defense Sites, the U.S. Army Corps of Engineers continued work on Site Investigation and Remedial Investigation reports. The reports address previous U.S. Department of Defense use of Airport and Airport Industrial Center land during the operations of Schilling Air Force Base. During May 2002, the Corps of Engineers released a draft work plan for more investigative work in several areas of the former Schilling Air Force base. Although the process is moving slowly, we continue to encourage the Corps of Engineers to take the lead on remediating contamination left behind by the military. Administration On April 6, 2001, Don Kneubuhl, the SAA's Director of Operations, Maintenance, & ARFF retired after working for the Salina Airport Authority for 35 years. During the first part of 2001, the SAA conducted an extensive national search to seek a qualified replacement. Fortunately, the Authority was able to negotiate an employment contract with Don, which has allowed him, following his retirement and a short separation, to return to the SAA as a part-time Manager of Special Projects. This contract allows the SAA the opportunity to utilize Don's expertise and knowledge for up to eight years on a part -time basis. In May, the SAA was pleased to end the search for Director of Operations with the hiring of Ryan Rocha. Rocha began work at the SAA on May 30, and brought with him experience in working at two other former U.S. Air Force base redevelopment projects where he held active roles in the redevelopment and planning efforts. Rocha had most recently served as an airport operations officer at John Wayne Airport in Orange County, CA. During 2001, Rocha and Kneubuhl worked together to ensure a seamless and successful transition. In July, Rocha established a renewed job performance evaluation program for the ARFF, Maintenance and Custodial Staff. The program consisted of evaluating core responsibilities and a new evaluation format. The core responsibilities' have been designed to ensure the SAA is proactive in correcting certain criticall FAR Part 139 requirements, maintaining equipment and property, and controlling costs. The new evaluation format effectively measures staff responsibility and has a direct effect on their quarterly performance bonuses. AAL Salina Airport Authority �AVAA\ Salina Municipal Airport / Industrial Center -10- INTERNAL CONTROL STRUCTURE AND BUDGETARY CONTROLS The Authority follows generally accepted accounting principles applicable to governmental unit enterprise funds. Accordingly, the financial statements are prepared on the accrual basis. Management of the Authority is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the Authority are protected from loss, theft, or misuse and to ensure that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. An annual budget is prepared in accordance with the Authority's By -laws. The Authority is specifically exempt from the budget laws of the State of Kansas (K.S.A. 27 -322). The Authority is not required to demonstrate statutory compliance with its annual operating budget. Accordingly, budgetary data is not included in the accompanying financial statements. RESULTS OF OPERATIONS Revenues The Authority's rental revenues decreased by 9.33% from the previous year. The majority of the decrease can be attributed to the significant gain on the sale of assets during the previous year. Although 2001 was a successful year for marketing available real estate, 2000 was an exceptional year in which the SAA closed on the single largest real estate transaction in its history by selling a 53,000 sq. ft. manufacturing facility and 26.5 acres of land to ElDorado National for construction of a multi - million dollar bus manufacturing plant. Landing fees decreased due to the reduced commercial service flight schedule as previously discussed. A summary of operating revenues follows: Operating Revenues 2001 Rental revenues $1,111,662 Fixed base operator 252,942 Landing fees 7,250 Gain (loss) on sale of assets 86,719 Other operating revenues 33,162 Total $1,491,735 AAL Salina Airport Authority Salina Municipal Airport/ Industrial Center - 11 - Increase (Decrease) Percentage 2000 From 2000 Change $1,121,194 ($9,532) -0.85% 263,264 (10,322) -3.92% 12,133 (4,883) - 40.25% 222,664 (135,945) - 61.05% 25,992 7,170 27.59% $1,645,247 ($153,512) -9.33% AAL Salina Airport Authority Salina Municipal Airport/ Industrial Center - 11 - Expenses Total operating expenses before depreciation increased 6.71%. Office and administrative expenses increased by 1.82% due to increases in airport promotion, computer /network support, engineering, medical insurance, payroll taxes, property /liability insurance, other administrative expenses, postage, property appraisals, property taxes, and travel and meetings. Maintenance expenses increased by 16.08% due to increases in airfield maintenance, equipment, gas, oil and repairs, fire department expense, grounds maintenance, maintenance salaries, other maintenance expenses, snow removal expense, utilities, and the addition of airfield security as a budget line item. A summary of operating expenses follows: Operating Expenses Office and Administration Maintenance Total DEBT ADMINISTRATION 2001 2000 $754,003 $740,530 448,189 386,096 $1,202,192 $1,126,626 Increase (Decrease) From 2000 $13,473 62,094 $75,567 Percentage Change 1.82% 16.08% 6.71 The outstanding long -term debt of the Authority was $5,791,588 at December 31, 2001. This debt consists of general obligation bonds, leasehold revenue bonds and a HUD Community Development Block Grant loan of the Authority. Maturities range from 2003 through 2012. Both principal and interest are payable from proceeds of a direct financing lease and the general revenues of the Authority. Details are shown in Note III (E): Long -Term Liabilities. CASH MANAGEMENT All cash temporarily idle during 2001 was invested by the Executive Director of the Authority in short-term investments to attain the highest possible return consistent with the Authority's liquidity needs. All investments are in compliance with K.S.A. 12 -1675 which controls the investment of public funds by Kansas governmental units. All funds are deposited daily and all accounts are interest bearing. RISK MANAGEMENT The Authority is exposed to risks of loss associated with the operation of a public use airport and the operation of an airport industrial center. To handle the associated risks of loss, the Authority uses available tort liability legislation and purchases the appropriate types of insurance coverage. It is the policy of the Authority to eliminate or transfer risk of loss where possible. Salina Airport Authority I.VAA\ Salina Municipal Airport / Industrial Center -12- The Authority is covered by the Kansas Tort Claims Act. (K.S.A. 75 -6101, et seq.). The act provides that a governmental entity shall be liable for damages caused by the negligent or wrongful act or omission of any of its employees while acting within the scope of their Employment under circumstance where the governmental entity, if a private person, would be liable under the laws of Kansas. At the same time, the act (1) provides for 22 categories of exemptions from liability for a governmental entity or an employee acting within the scope of the employee's employment and (2) limits liability for any other claims within the scope of the act to $500,000 for any number of claims arising out of a single occurrence or accident. The Authority carries $500,000 of comprehensive general liability insurance which matches the limit established by the Kansas Tort Claims Act. During 2001 the Authority carried $8,360,232 of insurance on airport commercial properties. The Authority's commercial property insurance included $1,198,602 in loss of rents coverage. All contractors and lessees are required to carry amounts of insurance with limits and deductibles approved by the Authority. A schedule of insurance in force at December 31, 2001 . is included in this report. In addition, the Authority uses various risk management techniques. All contracts and leases are reviewed by the Authority's legal counsel. All contractors and subcontractors are required to submit evidence of insurance coverage naming the Salina Airport Authority and the City of Salina as named additional insured parties. INDEPENDENT AUDIT Pursuant to K.S.A. 27 -324, an audit of the books, accounts and financial statements has been completed by the Authority's independent certified public accountants, Harrison & Arnett, Chartered. The independent audit is in accordance with the Kansas Municipal Audit Guide. GFOA CERTIFICATE OF ACHIEVEMENT The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Salina Airport Authority for its comprehensive annual financial report (CAFR) for the fiscal year ended December 31, 2000. This was the ninth consecutive year that the Salina Airport Authority has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe' our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements, and we are submitting it to GFOA to determine its eligibility for another certificate. Salina Airport Authority Salina Municipal Airport/ Industrial Center -13- MILL LEVY As provided for in the Authority's Enabling Statute (KSA 27 -315 et seq.), the Authority is able to use a property tax mill levy to fund matching funds for federal grants or general obligation bond debt service. During 2001, with the consent of the Salina City Commission, the Authority adopted a 2.424 mill levy in order to provide matching funds for Federal Aviation Administration Airport Improvement Program grant funds and to provide debt service funds for the Authority's Series 1998A general obligation internal improvement bonds. The .501 mills for Federal Aviation Administration Airport Improvement Program matching funds will provide the Authority an estimated $150,000 in calendar year 2002. The 1.923 mills for debt service related to the Series 98A general obligation internal improvement will provide the Authority an estimated $575,398 in calendar year 2002. ACKNOWLEDGEMENTS The support of the Authority's Board of Directors has been instrumental in the preparation of this report. The Board has been actively involved in the preparation and review of this report and is committed to responsible and progressive financial reporting. Also acknowledged is the assistance of the Authority's auditor, Harrison & Arnett, Chartered, Certified Public Accountants, Saline County Clerk's Office, Gerald Cook, President of the Salina Area Chamber of Commerce, Rod Franz, Director of Finance for the City of Salina, former Salina Airport Authority Board of Directors Chairman, R. Michael Beatty, the University of Kansas Institute for Public Policy and Business Research and the Kansas Department of Human Resources Labor Market Information Services, in the preparation of this report. Respectfully submitted, SALINA AIRPORT AUTHORITY Timothy F. Rogers, A.A.E. Executive Director Salina Airport Authority cc: The City of Salina Board of Commissioners .(/; cjav- X �. elli Swanson Manager of Administration and Finance Salina Airport Authority Salina Airport Authority JA A4%\ Salina Municipal Airport/ Industrial Center -14- (THIS PAGE INTENTIONALLY LEFT BLANK) 15 SALINA AIRPORT AUTHORITY BOARD OF DIRECTORS Pat Bolen Chairman John K. Vanier, II Vice Chairman Donald E. Morris Secretary Robert H. Miller Treasurer R. Michael Beatty Asst. Secretary/Treasurer AUTHORITY'S COUNSEL Greg A. Bengtson Clark, Mize & Linville, Chartered Salina, Kansas AUTHORITY'S BOND COUNSEL Gilmore & Bell Kansas City, Missouri AUTHORITY'S FINANCIAL ADVISOR George K. Baum & Company Kansas City, Missouri AUTHORITY'S AUDITOR Thomas G. Arnett Harrison & Arnett, Chartered Salina, Kansas 16 SALINA AIRPORT AUTHORITY ADMINISTRATION STAFF Timothy F. Rogers, A.A.E. Executive Director Ryan E. Rocha Manager of Operations, Maintenance & ARFF Michelle R. Swanson Manager of Administration & Finance Donald C. Kneubuhl Manager of Special Projects Cathy Lentz Administrative Assistant Desirae Toth Intern OPERATIONS, MAINTENANCE, AIRCRAFT RESCUE & FIRE FIGHTING STAFF Loren Carleton Operations, Maintenance & ARFF Kim Colby Operations, Maintenance & ARFF Gary Hansen Operations, Maintenance & ARFF Dale Mattison Operations, Maintenance & ARFF David Nease Operations, Maintenance & ARFF Rob Pejsha Operations, Maintenance & ARFF Jason Pinnick Operations, Maintenance & ARFF TERMINAL BUILDING CUSTODIAL STAFF Vachel Keaton Custodian Francis Vestal Custodian 17 w 0�� Q V N a � � � � m Q m m z0� J Q U) Y Certificate of Achievement for Excellence in Financial Reporting Presented to Salina Airport Authority, Kansas For its Comprehensive Annual Financial Report for the Fiscal Year Ended December 31, 2000 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. AGE THE k�a f �j• NREO STA y w AND H g "4WMQ A"Wr CANADA PORATION Pr sident 6 COR " - CNICA66 �` Q Executive Director 19 20 DG O a O C. oc a a z a ix W N z W U J a H D 0 z O L a 0 z a O L cc R a L U z a z Z HARRISON & ARNETT CHARTERED CERTIFIED PUBLIC ACCOUNTANTS EUGENE O. HARRISON, C.P.A. 717 ROACH STREET • SALINA, KANSAS 67401 PHONE: (785) 827 -7244 THOMAS G. ARNETT, C.P.A. FAX: (785) 827 -0048 INDEPENDENT AUDITOR'S REPORT To the Board of Directors Salina Airport Authority Salina, Kansas We have audited the accompanying financial statements of Salina Airport Authority, a component unit of the City of Salina, Kansas, as of and for the years ended December 31, 2001 and 2000, as listed in the table of contents. These financial statements are the responsibility of Salina Airport Authority management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the Kansas Municipal Audit Guide. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluatil-ig the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Salina Airport Authority as of December 31, 2001 and 2000, and the results of its operations and the cash flows of its proprietary fund types for the years then ended in conformity with generally accepted accounting principles. Our audit was conducted for the purpose of forming an opinion on the general purpose financial statements taken as a whole. The schedules and additional information listed in the "Supplemental Information" section of the table of contents to the financial section are presented for purposes of additional analysis and are not a required part of the general purpose financial statements. Such additional information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole. The other data included in this report, designated as the "Statistical Section" in the table of contents, has not been audited by us and, accordingly, we express no opinion on that data. `.f/ ,( Harrison & Arnett, Chartered Salina, Kansas May 15, 2002 21 MEMBERS OF DIVISION FOR CPA FIRMS PRIVATE COMPANIES PRACTICE SECTION AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS KANSAS SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS (THIS PAGE INTENTIONALLY LEFT BLANK) 22 (THIS PAGE INTENTIONALLY LEFT BLANK) a3 SALINA AIRPORT AUTHORITY COMPARATIVE BALANCE SHEETS ASSETS CURRENT ASSETS: Cash Accounts and note receivable Prepaid expenses Taxes receivable Total Current Assets RESTRICTED ASSETS: Cash and cash equivalents NET INVESTMENT IN FINANCING LEASE NET INVESTMENT IN FIXED ASSETS OTHER ASSETS: Bond issue costs, less accumulated amortization of $104,597and $82,424 respectively TOTAL ASSETS December 31 2001 2000 $ 1,877,628 97,949 4,804 750,398 2,730,779 85,000 1,126,305 22,559,358 110,782 $ 26,612,224 (continued) See notes to financial statements. 24 $ 511,730 126,202 502 692,370 1,330,804 85,000 1,195,973 23,094,510 111,688 $ 25,817,975 SALINA AIRPORT AUTHORITY COMPARATIVE BALANCE SHEETS (continued) LIABILITIES AND EQUITY December 31 2001 2000 CURRENT LIABILITIES: Accounts payable- operations $ 17,907 $ 23,821 Accounts payable - capital 34,479 37,235 Accrued payroll and expenses 20,517 30,550 Accrued property tax 68,145 60,118 Deferred tax revenue 750,398 692,370 Deferred maintenance agreement 37,092 23,243 Deferred rent 15,110 35,510 Total Current Liabilities 943,648 902,847 RESTRICTED LIABILITIES: Accrued interest payable 79,401 73,378 Deferred interest - financing.lease 59,889 68,666 Current maturities of long -term debt 680,966 663,998 Total Restricted Liabilities 820,256 806,042 LONG -TERM LIABILITIES: Bonds and note payable, less current maturities 5,110,622 4,417,553 Total Liabilities 6,874,526 6,126,442 EQUITY: Contributed capital, Federal Grants 8,927,372 9,510,507 Retained earnings 10,810,326 10,181,026 Total Equity 19,737,698 19,691,533 TOTAL LIABILITIES AND EQUITY $26,612,224 $25,817,975 See notes to financial statements. 25 SALINA AIRPORT AUTHORITY COMPARATIVE STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS OPERATING EXPENSES BEFORE DEPRECIATION Office and administration January 1 to December 31 Maintenance 2001 2000 OPERATING REVENUES: 1,202,192 1,126,625 Rental revenues $ 1,111,662 $ 1,121,194 Fixed base operator fees 252,942 263,264 Gain on sale of assets 86,719 222,664 Landing fees 7,250 12,133 Other operating revenues 33,162 25,992 Total Operating Revenues 1,491,735 1,645,247 OPERATING EXPENSES BEFORE DEPRECIATION Office and administration 754,003 740,530 Maintenance 448,189 386,095 Total Operating Expenses Before Depreciation 1,202,192 1,126,625 OPERATING INCOME BEFORE DEPRECIATION 289,543 518,622 DEPRECIATION 934,270 906,198 OPERATING LOSS (644,727) (387,576) NON - OPERATING INCOME (EXPENSE): Mill levy 795,404 801,237 Interest on investments and financing lease 145,447 163,512 Interest expense (249,959) (276,092) Net Non - Operating Income 690,892 688,657 NET INCOME (LOSS) 46,165 301,081 ADD DEPRECIATION ON ASSETS ACQUIRED THROUGH FEDERAL CONTRIBUTIONS 583,135 583,134 INCREASE (DECREASE) IN RETAINED EARNINGS 629,300 884,215 RETAINED EARNINGS, January 1 10,181,026 9,296,811 RETAINED EARNINGS, December 31 $10,810,326 $10,181,026 See notes to financial statements 26 SALINA AIRPORT AUTHORITY COMPARATIVE STATEMENTS OF CASH FLOWS (DIRECT METHOD) Net Cash Provided (Used) in Capital and Related Financing Activities 880,790 (1,459,707) CASH FLOWS FROM INVESTING ACTIVITIES: Interest received on deposits 30,740 44,049 INCREASE (DECREASE) IN CASH January 1 to December 31 438,099 2001 2000 CASH FLOWS FROM OPERATING ACTIVITIES: CASH BALANCE - December 31 $1,962,628 Cash received from sales, commissions, fees and rents $1,668,782 $2,997,537 Cash paid to employees for services (463,501) (443,968) Cash paid to suppliers for goods and services (750,913) (699,812) Net Cash Provided (Used) in Operating Activities 454,368 1,853,757 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Purchase of property, plant and equipment (571,068) (720,694) Proceeds from property tax 795,403 801,237 Principal payments on debt (674,963) (1,408,978) Proceeds of new borrowing 1,385,000 - Principal received on financing lease 69,668 64,255 Interest received on financing lease 119,778 125,190 Bond defeasance costs paid - (29,745) Bond issue costs paid (21,266) - Interest paid on long -term debt (221,762) (290,972) Net Cash Provided (Used) in Capital and Related Financing Activities 880,790 (1,459,707) CASH FLOWS FROM INVESTING ACTIVITIES: Interest received on deposits 30,740 44,049 INCREASE (DECREASE) IN CASH 1,365,898 438,099 CASH BALANCE - January 1 596,730 158,631 CASH BALANCE - December 31 $1,962,628 $ 596,730 CASH AT END OF YEAR CONSISTS OF: Unrestricted cash $1,877,628 $ 511,730 Restricted cash 85,000 85,000 $1,962,628 $ 596,730 (continued) See notes to financial statements. 27 SALINA AIRPORT AUTHORITY COMPARATIVE STATEMENTS OF CASH FLOWS (DIRECT METHOD) (continued) RECONCILIATION OF OPERATING LOSS TO NET CASH FLOWS FROM OPERATING ACTIVITIES OPERATING LOSS ADJUSTMENTS RECONCILING OPERATING LOSS TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Depreciation Basis of assets sold CHANGES IN ASSETS AND LIABILITIES: Decrease (increase) in accounts receivable Increase (decrease) in accounts payable - operations Increase (decrease) in accrued payroll expenses Decrease (increase) in prepaid expense Increase (decrease) in accrued property tax Increase (decrease) in deferred rent NET CASH PROVIDED BY OPERATING ACTIVITIES See notes to financial statements. 28 December 31 2001 2000 $ (644,727) $ (387,576) 934,270 906,198 169,194 1,334,386 28,253 (4,690) (5,914) 5,932 (10,033) (2,565) (4,302) 2,022 8,027 (22,543) (20,400) 22,593 $ 454,368 $1,853,757 Salina Airport Authority NOTES TO FINANCIAL STATEMENTS December 31, 2001 and 2000 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The Salina Airport Authority was established by the City of Salina, pursuant to Chapter 27, Article 3, of the Kansas Statutes Annotated for the purpose of acquiring surplus federal government property, specifically the Schilling Air Force Base, located near the City of Salina. The Authority administers the airport commercial development and rental of associated real estate. The Authority is controlled by a five - member Board of Directors appointed by the Salina City Commission and, in accordance with Governmental Accounting Standards Board (GASB) Statement No. 14, the Authority is considered to be a component unit of the City of Salina. The Authority is discreetly presented in the City's comprehensive annual financial reports. B. Measurement Focus, Basis of Accounting and Basis of Presentation The Authority consists of an enterprise fund. Enterprise funds are classified as proprietary funds by the GASB and are accounted for using a total economic resource measurement focus. The enterprise fund is used to account for operations that are financed and operated in a matter similar to private business enterprises. The intent of the Authority is that the costs of providing services on a continuing basis be recovered through user fees and rents. The financial statements are prepared on the accrual basis of accounting. Under the accrual basis, revenues are recognized as earned and expenses as incurred. It is the Authority's policy to follow all Financial Accounting Standards Board (FASB) standards issued after November 30, 1989, for its proprietary activities unless those new FASB pronouncements conflict with GASB guidance. C. Assets, Liabilities and Equity 1. Cash and Investments The Authority's cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from date of acquisition. The Authority held no investments during these years. 2. Receivables Accounts Receivable. The Authority records revenues when services are provided. All receivables are shown net of an allowance for uncollectibles. Property taxes receivable. The determination of assessed valuations and the collections of property taxes for all political subdivisions in the State of Kansas is the responsibility of the various counties. The office of the County Appraiser annually determines assessed valuations and the County Clerk spreads the annual assessment on the tax rolls. The County Treasurer is the tax collection agent for all taxing entities within the county. In accordance with state statutes, property taxes are levied November 1 of the current year and are a revenue source to be used to finance the budget of the 29 Salina Airport Authority NOTES TO FINANCIAL STATEMENTS December 31, 2001, and 2000 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — continued C. Assets, Liabilities and Equity — continued ensuing year. One -half of the property taxes are due December 20, prior to the fiscal year for which they are budgeted, and the second half is due the following June 20. Collection of current year property tax by the County Treasurer is not completed, apportioned nor distributed to the various subdivisions until the succeeding year, such procedure being in conformity with governing state statutes. Consequently, current year property taxes receivable are not available as a resource that can be used to finance the current year operations of the Authority. It is the Authority's practice to record uncollected current year property tax as an account receivable and to record the same amount as deferred revenue. It is not practicable to apportion delinquent taxes held by the County Treasurer and, further, the amounts thereof are not material in relationship to the financial statements taken as a whole. 3. Inventories The Authority maintains no significant inventory of office and maintenance supplies. These items are expensed as purchased and no inventory is recorded in these financial statements. 4. Prepaid items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. 5. Restricted Assets Certain proceeds of leasehold revenue bonds are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. 6. Fixed Assets Fixed assets purchased or constructed are recorded at cost. The cost of normal maintenance and repairs that do not add to the value of the assets or materially extend assets' lives are not included in fixed assets cost. Fixed assets donated to the Authority are recorded at their estimated fair value at the date of donation. Donated assets include property and equipment transferred to the Authority from the United States of America, September 9, 1966 and recorded at fair value at that date. Fixed assets are depreciated using the straight -line method over the following estimated useful lives: Assets Years Buildings 5-50 Equipment 5-10 Vehicles 7-10 Airfield 10-30 30 Salina Airport Authority NOTES TO FINANCIAL STATEMENTS December 31, 2001 and 2000 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued C. Assets, Liabilities and Equity — continued 6. Fixed Assets - continued Depreciation applicable to certain property and equipment which have been funded by or contributed to the Authority by the federal government, is charged against the respective, capital grant equity balance. This charge is effected by transferring the applicable depreciation from retained earnings and has no effect on income. 7. Compensated Absences Substantially all full -time employees receive compensation for vacations, holidays, illness and certain other qualifying absences. The number of days compensated for various categories of absence is generally based on length of service. Liabilities relating to these absences are recognized as incurred and included in accrued expenses. The amount accrued for such liabilities at December 31, 2001 and 2000 was $12,841 and $14,664 respectively. II. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. Budgetary Information The Authority is specifically exempt from Kansas Budget Law. The Authority is not required to demonstrate statutory compliance with its annual operating budget. Accordingly,, budgetary data is not included in the financial statements. B. Compliance With Bond Reserve Requirements The Leasehold Revenue Bonds Series 1991 proceeds were used to construct a building that is leased to a state university. The lease is a financing lease that transfers ownership of the building at the end of the lease. The bond agreement established an $85,000 reserve requirement which the Authority has met. III. DETAILED NOTES A. Deposits The bank balance of deposits as of December 31, 2001 and 2000 were entirely insured or collateralized with securities held by third party banks in the Authority's name. At December 31, 2001 and 2000, the carrying amount of the deposits were $1,962,578 and $596,680 plus $50 cash on hand respectively, and the bank balance was $1,998,515 and $692,822 respectively. The difference between the carrying amount and the bank balance is outstanding checks. Of the bank balance, $200,000 and $166,055 respectively was covered by federal deposit insurance and the remaining $1,798,515 at December 31, 2001 was collateralized by pledged securities held under joint 31 Salina Airport Authority NOTES TO FINANCIAL STATEMENTS December 31, 2001 and 2000 III. DETAILED NOTES — continued A. Deposits -continued custody receipts issued by a third -party bank in the Authority's name. The third -party bank holding the pledged securities is independent of the pledging bank. The pledged securities are held under a tri- party custodial agreement signed by all three parties: the Authority, the pledging bank, and the independent third -party bank holding the pledged securities. SALINA AIRPORT AUTHORITY COMPARISON OF GROSS CASH BALANCES WITH DEPOSITORY SECURITY December 31, 2001 Xuvr- Amount Under - secured by Statute 32 National Bank Sunflower of America Bank Total Gross Cash Balances Demand deposit Cash in checking $107,175 $1,855,403 $1,962,578 Deposits in transit (2,379) - (2,379) Uncleared checks 35.865 2,451 38,316 Bank Balance 140.661 1.857,854 1,998,515 Less FDIC Coverage 100.000 100,000 200,000 Balances Securable by Collateral $1,757,854 $1.798.515 Security Required (100 %) $ 40,661 $1,757,854 $1,798,515 Security Provided by Depositories 85,000 2,110,631 2,195.631 Amount Under - secured by Statute 32 Salina Airport Authority NOTES TO FINANCIAL STATEMENTS December 31, 2001 and 2000 III. DETAILED NOTES - continued B. Receivables Receivables as of year -end, including the applicable allowance for uncollectible accounts, are as follows: Total C. Net Investment in Financing Lease Net investment in financing lease is as follows: December 31 2001 2000 Total lease payments receivable $1,894,460 $2,083,963 Less: Unearned income 768,155 887,990 Net investment in financing leases $1,126,305 1,191973 Activity in net investment in financing leases was as follows: Beginning Balance Less: Collected principal Ending Balance 33 Year Ended December 31 2001 2000 $1,195,973 $1,260,228 69,668 64,255 1,126,305 1,195.973 December 31 2001 2000 Receivables: Accounts $100,394 $ 94,312 Note receivable - 36,142 Taxes 750,398 692,370 Gross receivable 850,792 822,824 Less: allowance for uncollectibles 2,445) (4,252) Total C. Net Investment in Financing Lease Net investment in financing lease is as follows: December 31 2001 2000 Total lease payments receivable $1,894,460 $2,083,963 Less: Unearned income 768,155 887,990 Net investment in financing leases $1,126,305 1,191973 Activity in net investment in financing leases was as follows: Beginning Balance Less: Collected principal Ending Balance 33 Year Ended December 31 2001 2000 $1,195,973 $1,260,228 69,668 64,255 1,126,305 1,195.973 Salina Airport Authority NOTES TO FINANCIAL STATEMENTS December 31, 2001 and 2000 III. DETAILED NOTES - continued D. Fixed Assets The following is a summary of the changes in the general fixed assets account group during the current year. Land Buildings and improvements Airfield and improvements Equipment Less: Accumulated depreciation Total Balance Reclassifi- Balance January 1, cations and December 31, 2001 Additions Dispositions Retirements 2001 $ 8,355,603 $ 202,248 $ (92,913) $ - $ 8,464,938 6,781,751 172,295 (77,778) ('77,596) 6,798,672 16,925,719 144,249 - 39,434 17,109,402 1,463,408 49,520 (6,367) 7,148 1,513,709 33,526,481 568,312 (177,058) (31,014) 33,886,721 10,431,971 934,270 7,864 X31,014 11,327,363 $ 23,094,510 $(365,958) $ (169,194) $ - $ 22,559,358 The following is a summary of proprietary fund -type fixed assets at December 31, 2001 and 2000: Land Buildings and improvements Airfield and improvements Equipment Less: Accumulated depreciation Net Fixed Assets December 31 2001 2000 $ 8,464,938 $ 8,355,603 6,798,672 6,781,751 17,109,402 16,925,719 1,513,709 1,463,408 33,886,721 33,526,481 11,327,363 10,431,971 $ 22,559,358 $ 23,094,510 34 Salina Airport Authority NOTES TO FINANCIAL STATEMENTS December 31, 2001 and 2000 III. DETAILED NOTES - continued E. Long -Term Liabilities Following is a summary of changes in long -term liabilities for year 2001: Balance 5.00% to 7.25% 380,000 Balance January 1, 321,588 December 31, 2001 Additions Reductions 2001 General obligations bonds $4,270,000 $1,385,000 $565,000 $5,090,000 Revenue bonds 440,000 - 60,000 380,000 KDOCH loan payable 371,551 - 49,963 321,588 5,081.551 $1,385,000 91 The following is a detailed listing of the Authority's long -term debt including general obligation bonds, revenue bonds and loan payable. Original Interest Bonds Issue Rates Outstanding General Obligation Bonds General Obligation 1993 -A, due 2003 General Obligation 1993 -B, due 2003 General Obligation 1998, due 2008 General Obligation 1999 -B, due 2010 General Obligation 2001 -A, due 2012 Revenue Bonds Leasehold revenue 1991, due 2006 Kansas Department of Commerce and Housing Loan, due 2007 Total Interest expense in 2001 is as follows: General Obligation Bonds Revenue Bonds Loan Add: Amortization of bonds costs Total 35 $ 375,000 3.40% to 5.00% $ 90,000 275,000 3.85% to 4.75% 65,000 4,440,000 4.05% to 5.50% 3,105,000 555,000 3.90% to 5.20% 445,000 1,385,000 4.45% to 5.60% 1,385,000 5,090,000 $ 850,000 5.00% to 7.25% 380,000 $ 468,543 2% 321,588 $ 189,741 30,954 7.091 227,786 22,173 $ 249,959 Salina Airport Authority NOTES TO FINANCIAL STATEMENTS December 31, 2001, and 2000 III. DETAILED NOTES - continued E. Long -Term Liabilities - continued In prior years, the Authority defeased certain general obligation bonds by placing funds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the Authority's financial statements. On December 31, 2001, $550,000 of bonds outstanding are considered defeased. Annual debt service requirements to maturity for general obligation bonds to be paid with tax levies and rental revenues: Annual debt service requirements to maturity for revenue bonds to be paid with rental revenues: Bonds Interest Year Outstanding Due Total 2002 $ 565,000 $ 218,352 $ 783,352 2003 670,000 207,152 877,152 2004 595,000 178,100 773,100 2005 605,000 152,056 757,056 2006 600,000 125,226 725,226 To maturity 2,055,000 272,853 2,327,853 $5,090,00 SL12.m 6.243.739 Annual debt service requirements to maturity for revenue bonds to be paid with rental revenues: 36 Bonds Interest Year Outstanding Due Total 2002 $ 65,000 $ 26,995 $ 91,995 2003 70,000 22,510 92,510 2004 75,000 17,610 92,610 2005 80,000 12,285 92,285 2006 90,000 6,525 96,525 36 Salina Airport Authority NOTES TO FINANCIAL STATEMENTS December 31, 2001 and 2000 III. DETAILED NOTES — continued E. Long -Term Liabilities - continued Annual debt service requirements to maturity for Kansas Department of Commerce and Housing Loan to be paid from rental revenues: Loan Interest Year Principal Due Total 2002 $ 50,967 $ 6,178 $ 57,145 2003 51,991 5,154 57,145 2004 53,036 4,109 57,145 2005 54,109 3,043 57,152 2006 55,185 1,955 57,140 To maturity 56,300 1,686 57,986 F. Retained Earnings and Contributed Capital Under the provision of bond agreements, certain assets are restricted for specific uses. Retained earnings which have been reserved relating to these restricted assets consist of the following: December 31 2001 2000 Retained earnings: Reserved under leasehold bond Series 1991 $ 85,000 $ 85,000 Unreserved retained earnings 10,725,326 10,096,026 Total retained earnings S10,810J26 10.181.026 Changes in grants and contributions are summarized as follows: Federal Grants Balance January 1, 2000 $10,093,641 Depreciation on property and equipment acquired by government grants (583,134) Balance December 31, 2000 9,510,507 Depreciation on property and equipment acquired by government grants (583,135) Balance December 31, 2001 S 8,927,372 37 Salina Airport Authority NOTES TO FINANCIAL STATEMENTS December 31, 2001 and 2000 IV. OTHER INFORMATION A. Defined Benefit Pension Plan Plan description — The Authority participates in the Kansas Public Employees Retirement System ( KPERS). The plan is a cost - sharing multiple - employer defined benefit pension plan as provided by Kansas statutes (KSA 74 -4901 et seq). KPERS provides retirement benefits, life insurance, disability income benefits and death benefits. Kansas law establishes and amends benefit provisions. KPERS issues a publicly available financial report that includes financial statements and required supplementary information. Those reports may be obtained by writing to KPERS (611 S. Kansas Avenue, Suite 100, Topeka, Kansas 66603 -3803) or by calling 1- 800 - 228 -0366. Funding policy — KSA 74 -4919 establishes the KPERS member - employee contribution rate at 4% of covered salary. The employer collects and remits member - employee contributions according to the provision of section 414(h) of the Internal Revenue Code. State law providers that the employer contribution rates be determined annually based on the results of an annual actuarial valuation. KPERS is funded on an actuarial reserve basis. State law sets a limitation on annual increases in the employer contribution rates. The KPERS employer rate established for calendar year 2001 is 2.77 %. The Authority employer contributions to KPERS for the years ending December 3 1, 2001, 2000, and 1999 were $11,005, $11,821, and $11,147 respectively, equal to the required contributions for each year. B. Deferred Compensation Plan The Authority offers its employees a deferred compensation plan ( "Plan ") created in accordance with Internal Revenue Code Section 457. The Plan, available to all Authority employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. Plan assets are transferred to a plan agent in a custodial trust and are not available to the claims of the Authority's general creditors. C. Flexible Benefit Plan (I.R.C. Section 125) The Authority has adopted by resolution a salary- reduction flexible benefit plan ( "Plan") under Section 125 of the Internal Revenue Code. All Authority employees working more than 20 hours per week are eligible to participate in the Plan beginning after thirty days of employment. Each participant may elect to reduce his or her salary to purchase benefits offered through the Plan. Benefits offered through the Plan include various insurance and disability benefits. D. Risk Management The Authority is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters for which the Authority carries commercial insurance. Settlements of claims did not exceed coverage for the years ended December 31, 2001, 2000 or 1999. 38 Salina Airport Authority NOTES TO FINANCIAL STATEMENTS December 31, 2001 and 2000 IV. OTHER INFORMATION — continued E. Contingent Liabilities The Authority receives significant financial assistance from numerous federal and state governmental agencies in the form of grants and state pass - through aid. The disbursement of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and is subject to audit. Any disallowed claims resulting from such ;iudits could become a liability of the Authority. However, in the opinion of management, any such disallowed claims would not have a material effect on any of the financial statements of the Authority at December 31, 2001. F. Environmental Matter The Authority has been involved in discussions with the Corps of Engineers, Environmental Protection Agency, and the Kansas Department of Health and Environment relative to the former Schilling Air Force Base (the 'Base ") in Salina, Kansas. The Base was operational from 1942 to 1965 when it was decommissioned and became the current Salina Municipal Airport and Salina Airport Industrial Center. During its period of operation, the Base was used for large aircraft including B -17s, B -29s, B- 47s and the refueling KC -97s and KC -135s. The Army Corps of Engineers (lid a removal of 107 former underground storage tanks at the former Base in 1995. In addition to efforts by the Corps of Engineers, the Environmental Protection Agency has conducted an Expanded Site Investigation (ESI) to determine all sources of potential contamination at the Site. Once the additional information gathering effort has been conducted and all parties know the nature and the extent of the contamination determined to exist on the property owned by the Authority and other public and private owners of property which make up the Airport Industrial Center, we anticipate that there will be a discussion with respect to cleanup options and allocation of responsibility. At this time, the Authority does not know specifically whether the City of Salina or the Authority will have cleanup obligations. However, we are following the investigation process closely and working toward the most environmentally sound, cost efficient alternatives to clean up the Site. The Corps of Engineers has released a draft work plan for more investigative work in several areas of the former Schilling Air Force Base. Although the process is moving slowly, we continue to encourage the Corps of Engineers to take the lead on remediating contamination left behind by the military. G. Rental Income Under Operating Leases A significant portion of the operating revenue of the Authority is generated through the leasing of airport and building space to airport fixed base operators and others on a fixed fee as well as a contingent rental basis. Ownership risks are retained by the Authority, and accordingly, such leases are treated as operating leases. 39 IV Salina Airport Authority NOTES TO FINANCIAL STATEMENTS December 31, 2001 and 2000 OTHER INFORMATION - continued G. Rental Income Under Operating Leases - continued The following is a schedule of minimum future rentals on non - cancellable operating leases to be received in each of the next five years and thereafter: Years Ended December 31 2002 $ 676,571 2003 523,079 2004 431,524 2005 385,034 2006 306,967 Later years 283,562 Total $2,606,737 H. Major Customers The Authority receives significant operating and financing lease revenue from Raytheon Aircraft Company, Kansas State University- Salina, Flower Aviation, Midway Aviation, Schwan's Sales, and KASA Fab, Inc.. Rentals from these six tenants equals 60% of operating and capital lease revenue for the year ended December 31, 2001. I. Non - Operating Income Net non - operating income consisted of the following for the years ended December 31, 2001 and 2000: Interest expense Revenue bond 30,954 35,005 General obligation bonds 189,741 212,768 Other debt 7,091 8,167 Amortization of bond issue costs 22,173 20,152 Total 249,959 276,092 Net non - operating income 40 2001 2000 Mill levy $795,404 $801,237 Interest and investment income Financing lease 114,707 119,493 Other interest 30,740 44,019 Total 940,851 964,749 Interest expense Revenue bond 30,954 35,005 General obligation bonds 189,741 212,768 Other debt 7,091 8,167 Amortization of bond issue costs 22,173 20,152 Total 249,959 276,092 Net non - operating income 40 Salina Airport Authority NOTES TO FINANCIAL STATEMENTS December 31, 2001 and 2000 IV. OTHER INFORMATION - continued J. Commitment Under Operating Lease The Authority has entered into a non - cancellable operating lease agreement fbr the rental of office equipment. Minimum rentals, on an annual basis are as follows: Years Ended December 31 2002 $ 4,260 2003 4,260 2004 2,130 41 (THIS PAGE INTENTIONALLY LEFT BLANK) 42 (THIS PAGE INTENTIONALLY LEFT BLANK) CPC. SALINA AIRPORT AUTHORITY SCHEDULES OF OPERATIONS AND CHANGES IN RETAINED EARNINGS (continued) 44 January 1 to December 31 2001 2000 OPERATING REVENUES Building rents $ 658,609 $ 711,591 Ramp rents 58,285 63,343 Land rents 226,084 195,687 Agri land rents 47,926 56,808 Hangar rents 111,387 86,453 Tank farm rents 9,371 7,312 Fuel flowage fees 252,942 263,264 Gain on sale of assets 86,719 222,664 Landing fees 7,250 12,133 Commissions 22,590 20,039 Other income 10,572 5,953 Total Operating Revenues 1,491,735 1,645,247 OPERATING EXPENSES BEFORE DEPRECIATION ADMINISTRATIVE EXPENSES Airport promotion 51,960 49,515 Computer/Network Administration 5,840 5,132 Dues and subscriptions 14,676 15,095 Employees retirement 11,005 11,823 Engineering 8,982 3,487 FICA tax 34,590 32,337 Industrial development 20,000 19,999 Insurance - medical 82,765 75,980 Insurance - property /liability 63,503 56,616 Kansas unemployment tax 461 417 Legal and accounting 24,897 38,919 Office salaries 214,358 219,527 Office supplies 9,795 9,836 Other administrative 12,199 11,724 Postage 4,411 4,661 Property appraisals 5,650 2,760 Property taxes 158,406 140,648 Telephone 9,047 11,795 Travel and meetings 21,458 30,259 Total Administrative Expenses 754,003 740,530 (continued) 44 SALINA AIRPORT AUTHORITY SCHEDULES OF OPERATIONS AND CHANGES IN RETAINED EARNINGS (continued) NON - OPERATING INCOME (EXPENSE) Mill levy 795,404 801,237 Interest income - capital lease 114,707 119,493 Interest income 30,740 44,019 Bond interest - expense (227,786) (255,940) Amortization of bond costs (22,173) (20,152) Net Non - Operating Income 690,892 688,657 NET INCOME (LOSS) 46,165 301,081 ADD DEPRECIATION ON ASSETS ACQUIRED THROUGH FEDERAL CONTRIBUTIONS (Note 1) 583,135 583,134 INCREASE (DECREASE) IN RETAINED EARNINGS 629,300 884,215 RETAINED EARNINGS, January 1 10,181,026 9,296,811 RETAINED EARNINGS, December 31 $10,810,326 $10,181,026 45 January 1 to December 31 2001 2000 MAINTENANCE EXPENSES Airfield maintenance 13,687 8,516 Airfield security 10,756 - Building maintenance 36,978 41,365 Equipment gas, oil & repairs 30,215 24,416 Fire department expense 8,901 3,737 Grounds maintenance 3,248 2,081 Maintenance salaries 239,110 221,876 Other maintenance expenses 13,509 12,585 Snow removal expense 11,848 3,906 Utilities 79,937 67,613 Total Maintenance Expenses 448,189 386,095 Total Operating Expenses Before Depreciation 1,202,192 1,126,625 OPERATING EARNINGS BEFORE DEPRECIATION 289,543 518,622 DEPRECIATION EXPENSE 934,270 906,198 OPERATING PROFIT (LOSS) (644,727) (387,576) NON - OPERATING INCOME (EXPENSE) Mill levy 795,404 801,237 Interest income - capital lease 114,707 119,493 Interest income 30,740 44,019 Bond interest - expense (227,786) (255,940) Amortization of bond costs (22,173) (20,152) Net Non - Operating Income 690,892 688,657 NET INCOME (LOSS) 46,165 301,081 ADD DEPRECIATION ON ASSETS ACQUIRED THROUGH FEDERAL CONTRIBUTIONS (Note 1) 583,135 583,134 INCREASE (DECREASE) IN RETAINED EARNINGS 629,300 884,215 RETAINED EARNINGS, January 1 10,181,026 9,296,811 RETAINED EARNINGS, December 31 $10,810,326 $10,181,026 45 SALINA AIRPORT AUTHORITY CAPITAL EXPENDITURES LAND Industrial center landscaping Environmental assessment and costs Foundation removal/building demolition Preliminary plat - 80 acres S. Waterwell Road Asbestos removal SW Industrial Center concept plan ATCT site preparation Total Land EQUIPMENT Office computer equipment Security screening equipment Elite gate openers Boom flail mower Light bars for AOA vehicles Idaho plow modification Radios DVS X -Ray monitor Signage Total Equipment BUILDINGS AND IMPROVEMENTS Roof repairs Painting Bi -fold hangar -Bldg. 506 doors Bldgs. 313 & 394 -A/E services New boiler -Bldg. 939 KSU aeronautics center HVAC Entrance doors @ Midway Aviation FBO Parking lots Terminal building 2nd floor remodel design Pumphouse fuel flowage meters Industrial Bldg. 1021 Improvements Boiler improvements -Bldg. 122 Total Buildings and Improvements (continued) 46 January 1 to December 31 2001 $ 8,700 65,966 59,100 25,245 6,710 13,230 23,297 202,248 6,191 6,120 4,275 18,131 1,810 1,326 5,412 1,676 4,579 49,520 8,690 13,653 4.,675 25.,200 15.,850 15.,104 5.,391 52,308 8.,650 16,897 4.269 1.608 172,295 SALINA AIRPORT AUTHORITY CAPITAL EXPENDITURES (continued) AIRFIELD AND IMPROVEMENTS Mill & inlay Mill patching joints Airservice development Profile mill pavement & patch Total Airfield and Improvements TOTAL CAPITAL EXPENDITURES 47 January 1 to December 31 2001 100,110 36,261 1,155 6,723 144,249 $568,312 Date of issue: Amount of issue: Interest rate: Maturity date: Principal paid: Outstanding balance: SALINA AIRPORT AUTHORITY GENERAL OBLIGATION BONDS SERIES 1993 - A December 31, 2001 December 6, 1993 $ 375,000 3.40% to 5.00% September 1, 2003 $ 285,000 $ 90,000 Schedule of Bond Interest and Principal Pam Due in Bond Bond Year Interest Principal 2002 $ 3,892 $ 45,000 2003 1,980 45,000 $ 5,872 $ 90,000 MR Date of issue: Amount of issue: Interest rate: Maurity date: Principal paid: Outstanding balance: SALINA AIRPORT AUTHORITY GENERAL OBLIGATION BONDS SERIES 1993 - B December 31, 2001 December 6, 1993 $ 275,000 3.85% to 4.75% September 1, 2003 $ 210,000 $ 65,000 Schedule of Bond Interest and Principal Payments Due in Bond Bond Year Interest Principal 2002 $ 2,895 $ 30,000 2003 1,575 35,000 $ 4,470 $ 65,000 49 Date of issue: Amount of issue: Interest rate: Maurity date: Principal paid: Outstanding balance: SALINA AIRPORT AUTHORITY GENERAL OBLIGATION BONDS SERIES 1998 - A December 31, 2001 June 29, 1998 $4,440,000 4.05% to 5.50% September 1, 2008 $1,335,000 $3,105,000 Schedule of Bond Interest and Principal Payments Due in Bond Bond Year Interest Principal 2002 $ 130,398 $ 445,000 2003 112,375 445,000 2004 94,130 445,000 2005 75,662 445,000 2006 56,972 445,000 Thereafter 57,200 880,000 $ 526,737 $3,105,000 :�C Date of isue: Amount of issue: Interest rate: Maturity date: Principal paid: Outstanding balance: SALINA AIRPORT AUTHORITY GENERAL OBLIGATION REFUNDING BONDS SERIES 1999 - B December 31, 2001 June 29, 1999 $ 555,000 3.90% to 5.20% September 1, 2010 $ 110,000 $ 445,000 Schedule of Bond Interest and Principal P4Ments Due in Bond Bond Year Interest Principal 2002 $ 21,325 $ 45,000 2003 19,412 40,000 2004 17,672 40,000 2005 15,872 40,000 2006 14,032 30,000 Thereafter 33,173 250,000 $ 121,486 $ 445,000 51 Date of issue: Amount of issue: Interest rate: Maturity date: Principal paid: Outstanding balance: SALINA AIRPORT AUTHORITY GENERAL OBLIGATION IMPROVEMENT BONDS SERIES 2001 - A December 31, 2001 October 31, 2001 $ 1,385,000 4.45% to 5.60% September 1, 2012 $ 1,385,000 Schedule of Bond Interest and Principal Payments Due in Bond Bond Year Interest Principal 2002 $ 59,842 $ - 2003 71,810 105,000 2004 66,298 110,000 2005 60,522 120,000 2006 54,222 125,000 Thereafter 182,480 925,000 $ 495,174 $ 1,385,000 52 Date of issue: Amount of issue: Interest rate: Maturity rate: Principal paid: Outstanding balance: SALINA AIRPORT AUTHORITY LEASEHOLD REVENUE BONDS SERIES 1991 December 31, 2001 Schedule of Bond Interest and Principal Payments Due in Year November 1, 1991 $ 850,000 5.00% to 7.25% September 1, 2006 $ 470,000 $ 380,000 Bond Bond Interest Principal 2002 $ 26,995 $ 65,000 2003 22,510 70,000 2004 17,610 75,000 2005 12,285 80,000 2006 6,525 90,000 53 $ 85,925 $ 380,000 SALINA AIRPORT AUTHORITY KANSAS DEPARTMENT OF COMMERCE AND HOUSING, LOAN PAYABLE December 31, 2001 Date of loan: Amount of loan: Interest rate: Maturity date: Principal paid: Outstanding balance: Schedule of Loan Interest and Principal Payments Due in Year October 1, 1997 $468,542 2% October 1,2007 $146,954 $321,588 Loan Loan Interest Principal 2002 $ 6,178 $ 50,967 2003 5,154 51,991 2004 4,109 53,036 2005 3,043 54,109 2006 1,955 55,185 Thereafter 846 56,300 54 $ 21,285 $321,588 SALINA AIRPORT AUTHORITY INSURANCE IN FORCE December 31, 2001 Insurance Policy Type of Coverage Employers Insurance of Wausau Workmen's Compensation on behalf of USAIG and Employer's Liability Policy # 711200070135 National Union Fire Ins. Co. of Bodily Injury & Liability Pittsburgh, PA Hangar Keepers Pol. # AP3229456 -07 The Travelers Insurance Co. Fire & Lightning, Policy #P630594X3132TILO1 extended coverage, vandalism & malicious mischief Business Personal Property Loss of Rents The Travelers Insurance Co. Boiler & Machinery Policy # BMG696X7490 The Travelers Insurance Co. Vehicles & Equipment Policy # 810306K2188 Liability Medical payments Uninsured motorists ITT Hartford Public Employees Blanket Bond Policy # 37BPEAG4896 Honesty blanket position bond coverage Northland Insurance Public Officials & Empl. Liability Policy #AY040496 Errors & ommissions American Alliance Ins. Co. Kansas UST Liability Pol. # KST 788- 29 -33 -07 Environmental Incident Annual aggregate Limit of Defense 55 Amount of Coverage $ 500,000 $ 500,000 $ 500,000 $ 8,360,232 $ 985,563 $ 1,198,602 $ 3,899,055 $ 500,000 $ 2,000 $ 500,000 $ 100,000 $ 500,000 $ 1,000,000 $ 1,000,000 $ 100,000 (THIS PAGE INTENTIONALLY LEFT BLANK) 56 57 0) N O O 00 _ ON N C M M V - 'mot M (D N d- •- N I-- ti N O L O O 00 LO (D (fl CD i- I- 6i Q> 0) m O .- N M M ct CD (D L(0 O 69 �? Efl K3 GO. ELT 69 Efl 6q 64 57 0) N C ++ d r It ti N •� O M O CA ++ Ci (D M to LO Lo 0) N NU?- (D L(0 M Q. EfT 6�9 E!T � 6N�? 6s 6N9 � O N � O N O +�+ N M (D (0 °) N O O O N 66 � IQ � EfT d N 000 .� = Q 61) 604 , EfT a) O 0) C y Ln CO � � L() M �t C) CM O d% (D t(1 O O � Ln O O LO 00 t- LA N = a% LO I- O Cl) — OO OO O N ti J69 61)- E/T v), 64 � O 3 N O M 07 O 00 M (O N 't O dl M Cl) tf) N M Lo 00 M N m LL LL ONO ti 0) � C4 cli C6 M co M LN E9 64 EfT �? _� EA 69 EfT � LL O d d Ln M ti (D (D CA eh N O ��+ i O Li O Lt? * N O O VN d i O Lri co v ao r-- 'T U') C4 O N N _ - O fl- O O O .- N W M a/ ELT 64 EfT 69- ER ELT 69 EfT 69 GrT L 5 O O .fl Z W U -C w 0- Q o Op C o C LU_ CL H i'^0 Q L co vJ CU C W} d V j N M � LO CD i-- 00 a7 O U cu (n rn (n rn n 0) ) 0) O O O co O CA O O A A CY) O O O CD N N 0 57 Salina Airport Authority OPERATING EXPENSE HISTORY Ten Years Ended December 31, 2001 �:3 Office & Total Administrative Maintenance Operating Fiscal Year Expense Expense Expense 1992 $415,819 $347,498 $763,317 1993 $458,918 $361,412 $820,330 1994 $467,803 $370,266 $838,069 1995 $481,914 $375,594 $857,508 1996 $497,561 $398,287 $895,848 1997 $568,606 $367,530 $936,136 1998 $631,072 $377,551 $1,008,623 1999 $726,651 $377,457 $1,104,108 2000 $740,530 $386,095 $1,126,625 2001 $754,003 $448,189 $1,202,192 �:3 Salina Airport Authority FEDERAL FINANCIAL ASSISTANCE HISTORY Ten Years Ended December 31, 2001 NOTE: 1. The use of Federal Aviation Administration Airport Improvement Program Grant Funds are limited to use for funding specific airfield capital improvements. Airfield capital improvements are detailed in program grant agreements entered into by the Salina Airport Authority and the Federal Aviation Administration The grant funds finance 90% of total project costs. 2. During 1998, the SAA was awarded a Community Development Block Grant from the Kansas Department of Commerce and Housing in the amount Df $1,031,219. The proceeds were used to reconstruct over 6.5 miles of secondary streets within the Salina Airport Industrial Center. 50% of the awarded amount was a true grant. The other 50% was a loan which is recorded as a long term liability under Bonds and Note Payable on the Balance Sheet. 3. During 1999, the SAA closed out two (2) Airport Improvement Projects. AIP No. 18 closeout resulted in the SAA refunding the Federal Aviation Administation in the amount of $11,132. The SAA received a final reimbursment in the amount of $3,212 to closeout AIP No. 19. 59 Federal Aviation Housing & Urban Administration Development Airport Community Development Fiscal Year Improvement Grants Block; Grant 1992 $335,349 1993 $30,162 1994 $270,191 1995 $3,210,933 1996 $2,006,786 1997 $1,640,967 1 998 $1,026,918 $841,700 1999 - $7,920 $189,520 2000 $0 $0 2001 $0 $0 NOTE: 1. The use of Federal Aviation Administration Airport Improvement Program Grant Funds are limited to use for funding specific airfield capital improvements. Airfield capital improvements are detailed in program grant agreements entered into by the Salina Airport Authority and the Federal Aviation Administration The grant funds finance 90% of total project costs. 2. During 1998, the SAA was awarded a Community Development Block Grant from the Kansas Department of Commerce and Housing in the amount Df $1,031,219. The proceeds were used to reconstruct over 6.5 miles of secondary streets within the Salina Airport Industrial Center. 50% of the awarded amount was a true grant. The other 50% was a loan which is recorded as a long term liability under Bonds and Note Payable on the Balance Sheet. 3. During 1999, the SAA closed out two (2) Airport Improvement Projects. AIP No. 18 closeout resulted in the SAA refunding the Federal Aviation Administation in the amount of $11,132. The SAA received a final reimbursment in the amount of $3,212 to closeout AIP No. 19. 59 N .a 01 M OD !O O IT r d 'mot Q@ m m O N L M M 000 I- M O N a? 00 M = LO M M (OD LO O O ti O � M U N (7 (D rl- N ti 64 M N x 64. c 69 � � � W, 69 69 64 64 M. .a 01 M OD !O O IT r 'mot Q@ m m O N M M m O 000 I- N M Ln N LO M M (OD 0M O ti O M � It Q 69 ER 64 M N N r 64. 6<i 69 69 64 64 d L ++ V N 00 O `— LO N r r N O fA d N N (.0 N r L CO 64 N 0) � 0) 000 000 � - N �I J r M O LO Q7 r N (D ti rt r r ' M N O r 64 N 69 r 64 N 69 r 64 r 64 r (f4 N 69 N 69 � N N - O O 0) 0) L ti 0) =N J T (D N r O CN Cl 00 LIj N N O M_ O O ~ N (0D a) ti r- � � 64 V> 609 � � 6�? 6q 69 } m C Q � U O O O C U = N E ti 0 00 � — ti ti O O N w LO ti N O 0 LQ O O r LC) CO .� i O r CO L(7 O 6q co LO (h m L 6 9 64 64 69 64 64 ca t L E fa w Q N Z 0) < O 0 w a X a _ Q rw c as cn cn Q @ (0 O c a} V L O Q N N rn co rn v rn LO rn (D m ti rn 00 rn O rn O o r O :3 cu F n U 0) CF) 0) CF) 0) 0) (3) 0 r N N fn M. Salina Airport Authority REVENUE BOND COVERAGE Ten Years Ended December 31, 2001 Fiscal Pledged Revenue Bond Year Revenue Debt Service Coverage 1992 $531,761 $286,024 1.86 1993 $414,514 $278,395 1.50 1994 $421,554 $280,578 1.50 1995 $189,446 $163,215 1.16 1996 $189,446 $163,790 1.16 1997 $189,446 $168,962 1.12 1998 $189,446 $163,938 1.16 1999 $189,446 $163,841 1.16 2000 $189,446 $185,013 1.02 2001 $189,446 $164,420 1.15 Notes: 1. During 1999, the Series 1990 -B Bonds were refinanced to remove IRS restrictions and achieve an interest rate savings. Source: Salina Airport Authority Records 61 Salina Airport Authority Principal Customers Year Ended December 31, 2001 Notes: Total Operating Lease and Direct Finance Lease Revenue for 2001 was $1,594,464 Source: Salina Airport Authority Records 62 % of Operating & Direct Company Revenue Finance Lease Revenue Raytheon Aircraft Co. $258,344 1620% Kansas State University $194,446 12.20% Midway Aviation $181,761 11.40% Flower Aviation $122,599 7.69% Schwan's Sales, Inc. $116,328 7.30% KASA Fab, Inc, $76,103 4.77% Federal Aviation Administration $22,350 1.40% Palleton of Kansas, Inc. $21,600 1.35% Waddle's Manufacturing & Machine $21,000 1.32% Geocore Services $20,640 1.29% Salina Vortex Corporation $19,625 1.23% Joe Kejr $19,118 1.20% Scientific Engineering $18,508 1.16% Two Rivers Vending Co., Inc. $18,234 1.14% Builders Choice Concrete $17,490 1.10% Hertz Corporation $15,759 0.99% Brent Laas $14,550 0.91% Salina Aircraft Sales, Inc. $13,750 0.86% WWC License, LLC $12,860 0.81% Aerospace Systems & Technologies, Inc. $12,820 0.80% Snak -Atak $12,774 0.80% Blicks Agri -Farm Center $12,000 0.75% Tiger Corp /Avis Rent -A -Car $11,617 0.73% Palmer Trucking Co., $11,220 0.70% Roto - Reclaimer Corporation $11,175 0.70% ElDorado National $10,859 0.68% ADM Milling Co. $10,151 0.64% Mesa Airlines /Air Midwest $9,204 0.58% Salina Snack Sales $9,180 0.53% Blue Beacon International $7,518 0.47% Land of OZ Meats $7,500 0.47% TVCN of Kansas $7,380 0.413% Civil Air Patrol, KS Wing HDQ $7,326 0.413% Salina Auto Auction $7,200 0.4!5% Triangle Trucking $5,619 0.3:5% Bostater Realty, Inc. $5,503 0.3:5% Sandpiper Yachts $5,340 0.33% Notes: Total Operating Lease and Direct Finance Lease Revenue for 2001 was $1,594,464 Source: Salina Airport Authority Records 62 M N O (p 0) 00 ti 00 (() N N M O O L() � � 00 Cl? i� O M CO T O �- M O O O O N T T T T T T T T L fC LA d i ct T LO M ((7 - O O Cl) O Ci 'L N T O (O O T T 00 O yr Gi X O T O M 0 M V et T � p 0 (O LO LO LO Cl) F- im d Q = �•^, V Z a a N C O O N LO O O M (O O Q O O ti 1` N LO L.0 N N N L 0) 0) M N T O (O Nt IT L co N N N O m Z N LO co a d O M N l!0 T P- N O O T M 01 W i 4a M O N N N O O co M 00 O N 0 OD It It It It M co In LCD O "O _N C7 LLI > (0 O 0 0 M T O to N CD O (D (D 00 i N to O � � O ti I� O T _ 00 1- 1- T O ti N 00 M N N N N 3 � (n N N N N N N N >' LLI N J_ J O J N n - 0 M � N to O to T 00 1` 1` O Na CC � f M � M Z LO i - M O cyi MO M N 4 W E N N N N N T Y N N N p N U G U -r O CD L L O Q > a) o U E — ci (D C o w Q - J cu _ co Q } m L (6 N V tN i I N M 't LO (O 1,- 00 A O (1) n . D O O CY) c0 _C O O O O m O O O N O = O n J F— tL � Z F— co U) M Salina Airport Authority MILL LEVY REVENUE Ten Years Ended December 31, 2001 Fiscal Year 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Source: Salina Airport Authority Records 64 Mill Levy Revenue 0 0 $301,829 $406,232 $357,887 $338,058 $322,270 $783,363 $801,237 $795,404 Salina Airport Authority AIR TRAFFIC, FUEL FLOWAGE AND ENPLANEMENT TRENDS Ten Years Ended December 31, 2001 Fiscal Air Traffic Year Operations 1992 71,697 1993 66,144 1994 61,215 1995 68,291 1996 62,021 1997 68,822 1998 80,338 1999 90,400 2000 87,709 2001 92,870 Fuel Flowage Gallons 2,552,156 2,126,230 2,424,880 2,435,656 2,907,894 3,577,650 3,603,673 3,808,886 4,472,164 4,396,429 Note: One air traffic operation equals one aircraft takeoff and landing Source: Salina Airport Authority Records 65 Scheduled Air Service Enplainements 5,799 5,591 7,175 7,813 8,652 9,153 12,909 13,436 10,270 6,507 Salina Airport Authority MAJOR EMPLOYERS IN THE SALINAISALINE COUNTY AREA December 31, 2001 Maior Private Emplovers Maior Public Emplovers Approx. # Public Organizations Employees Type of Public Bodv Unified School District #305 935 School System City of Salina 471 City Government Saline County 233 County Government US Postal Service 128 Postal Service Kansas State University - Salina 126 Engineering Technology & Aviation Technology Source: Salina Area Chamber of Commerce M. Approx. # Type of Company Employees Business Tony's Pizza 2,300 Frozen Foods Manufacturer Salina Reg. Med. Center 1,082 Health Care Exide Corporation 825 Battery Manufacturing Raytheon Aircraft Co. 653 Aircraft Sub - assemblies Manuf. Philips Lighting 600 Fluorescent Lamp Manufacture Great Plains Manufacturing 600 Farm Implements & Landscaping Equipment Solomon Corp. 272 Electrical Equipment Eldorado National, Inc. 260 Medium & Small Shuttle Buses OCCK 263 Plastic products, Subcontracting Wal -Mart 183 Retail KASA/KASA Fab 153 Electronic Controls & Steel Fabrication Advance Auto /Parts America 150 Warehouse Distribution Crestwood Cabinets, Inc. 144 Custom Made Cabinets Exline 130 Structural steel fabrication Salina Journal 130 Newspaper Publishing Sunflower Bank 120 Bank Premier Pneumatics 115 Pneumatic Convey Equipment Blue Beacon Int'I 104 Truck Wash PKM Steel 100 Steel Fabrication Maior Public Emplovers Approx. # Public Organizations Employees Type of Public Bodv Unified School District #305 935 School System City of Salina 471 City Government Saline County 233 County Government US Postal Service 128 Postal Service Kansas State University - Salina 126 Engineering Technology & Aviation Technology Source: Salina Area Chamber of Commerce M. Salina Airport Authority SALINE COUNTY POPULATION, DEMOGRAPHIC AND LABOR STATISTICS Year Population 1990* 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000* 49,301 50,245 50,984 51,748 52,240 52,892 53,140 53,168 53,182 53,485 53,597 Note: * Indicates decennial census 100% population counts. Other counts are population estimates. Demographics 2000 Median Age 36.1 Number of Households 20,928 Median Household Income $39,862 Per Capita Income $21,996 Employment and Civilian Labor Force Civilian Labor Year Force Employed Unemployed 1990 27,034 25,928 1,106 1991 27,638 26,583 1,055 1992 28,762 27,776 986 1993 28,603 27,415 1,188 1994 27,748 26,679 1,069 1995 29,580 28,376 1,204 1996 29,966 28,800 1,166 1997 30,178 29,082 1,096 1998 30,389 29,334 1,055 1999 30,904 30,142 762 2000 30,714 29,849 1,055 2001 29,821 28,770 759 Sources: Institute for Public Policy and Business Research, University of Kansas and Kansas Department of Human Resources Labor Market Information Services 67 Salina Airport Authority SALINE COUNTY EMPLOYMENT DATA Year 1990 4.1 1991 3.8 1992 3.4 1993 4.2 1994 3.9 1995 4.1 1996 3.9 1997 3.6 1998 3.5 1999 2.5 2000 2.8 2001 3.5 Unemployment Rate W 5 1989 Services 11,412 8,857 Retail Trade 7,861 6,192 Manufacturing 6,888 5,531 Government & Gov't Services 4,378 4 Construction 2,301 1,505 Finance, Insurance, Real Estate 2,068 1,570 Wholesale Trade 1,751 1,902 Transportation 1,521 1,210 Farm 794 890 Ag. Services (D) 228 Mining (D) 294 (D)= suppressed to avoid disclosure c 3 2 d 1 a 0 e �� C `v 5P �� Cbb �� 4' CP S§1 o� Nc Source: Institute for Public Policy and Business Research University of Kansas, Salina /Saline County Profile Report .: 1999 1989 Services 11,412 8,857 Retail Trade 7,861 6,192 Manufacturing 6,888 5,531 Government & Gov't Services 4,378 3,659 Construction 2,301 1,505 Finance, Insurance, Real Estate 2,068 1,570 Wholesale Trade 1,751 1,902 Transportation 1,521 1,210 Farm 794 890 Ag. Services (D) 228 Mining (D) 294 (D)= suppressed to avoid disclosure Source: Institute for Public Policy and Business Research University of Kansas, Salina /Saline County Profile Report .: