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HomeMy WebLinkAbout; ; 1969-70 Audit Report of Examination; 1970-09-18CARLSBAD MUNICIPAL WATER DISTRICT REPORT ON EXAMINATION FOR THE YEAR ENDED JUNE 30, 1970 ********** JAMES GAISER & CO. CERTIFIED PUBLIC ACCOUNTANTS JAMES M. GAISER.C.P, A. HAROLD D. MICKEY. C. P. A. JAMES GAISER & Co. CERTIFIED PUBLIC ACCOUNTANTS P. O. BOX 37, 2965 ROOSEVELT STREET CARLSBAD, CALIFORNIA 92OOS (714) 729-2343 M EM BERS AMERICAN INSTITUTE: OF c. P A's CALIFORNIA SOCIETY OF C P A'S CARLSBAD MUNICIPAL WATER DISTRICT CARLSBAD, CALIFORNIA BOARD OF DIRECTORS JUNE 30, 1970 MEMBER FRED W. MAERKLE JOHN T. PALMER W. D. CARMICHAEL ALLAN 0. KELLY DONALD A. MAC LEOD OFFICE PRESIDENT VICE-PRESIDENT SECRETARY TREASURER ASSISTANT SECRETARY AND ASSISTANT TREASURER TERM EXPIRES 1-1973 1-1975 1-1975 1-1975 1-1973 GENERAL MANAGER-ENGINEER - JACK Y. KUBOTA JAMES GAISER & Co. CERTIFIED PUBLIC ACCOUNTANTS P. O. BOX 37. 2965 ROOSEVELT STREET CARLSBAD, CALI FORNIA 92OOS (714) 739-2343 A M F. R i C A N THE BOARD OF DIRECTORS CARLSBAD MUNICIPAL WATER DISTRICT CARLSBAD, CALIFORNIA We have examined the balance sheet - all funds - of Carlsbad Municipal Water District as of June 30, 1970 and the related statements of revenues and expenses, and changes in fund balances and reserve for construction for the year then ended. Our examination was made in accord- ance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered neces- sary in the circumstances. In our opinion, the accompanying balance sheet - all funds - and the statements of revenues and expenses, and changes in fund balances and reserve for construction present fairly the financial position of Carlsbad Municipal Water District at June 30, 1970 and the results of its operations for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. EXPLANATORY COMMENTS The supplementary information which follows has been subjected to the tests and other auditing procedures applied in the examination of the financial statements mentioned above and, in our opinion, is fairly stated in all material respects relating to the financial statements taken as a whole. HISTORY AND ORGANIZATION Carlsbad Municipal Water District was formed on March 22, 1954, under the provisions of the Municipal Water District Act of 1911 to provide water for the City of Carlsbad and the adjacent, surrounding areas. On May 20, I9b4, the District became a member of the San Diego County Water Authority and thus a member of the Metropolitan Water District of Southern California. The District functions as a wholesaler to the City of Carlsbad, which maintains its own facilities for distribution within the City, and also retails its water to consumers in the La Costa Development and rural areas. One dam, seven reservoirs, and numerous transmission lines are owned and operated by the District, which constitutes the major portion of its waterworks system. ACCOUNTS AND RECORDS The District employs the fund system of accounting and maintains its accounts on the accrual basis. The District's chart of accounts conforms to the Uniform System of Accounts for Water Utility Districts as prescribed by the Controller of - 2 - JAMES GAISER S, CO. CERTIFIED PUBLIC ACCOUNTANTS the State of California. The accounting records maintained were suitable and well kept, reflecting reasonably adequate internal control. Interim financial statements and information are pre- pared and presented to the Board of Directors. We found the minutes of the Board of Directors in excellent condition. INSURANCE AND SURETY BOND COVERAGE The District had the following insurance coverage at June 30, 1970: Primary comprehensive liability - all business, including $ 5,000 medical payments, non-owned auto- mobiles, and uninsured motorists: Bodily injury $ 500,000/$ 500,000 Property damage 500,000 Excess comprehensive liability 500,000 excess of 500,000 Fire insurance coverage on buildings, Including extended coverage, vandalism, and malicious mischief 109,000 Employee dishonesty 50,000 All risk insurance on equipment and records 25,000 Depositors forgery coverage 10,000 Fire insurance - caretaker's trailer 5,000 Comprehensive - glass panes and doors - $ 75 maximum Auto collision - $ 100 deductible JAMES GAISER S. CO. CERTIFIED PUBLIC ACCOUNTANT; The District also has the statutory amount of Workmen's Compensation Insurance and carries group medical insurance for its employees. The insurance program is currently under review by the Board of Directors, the insurance broker and the District's legal counsel to assure adequate coverage for the District. BUDGETARY PROCEDURES The operating budget for the year under review, which was approved by the Board of Directors, was based on the actual operations of the preceding year. A comparison of the budgeted revenue and expense amounts and the actual revenue and expense resulting from the year's operations are shown with the comments on budget comparison and operations appearing later in this report. - 4 - JAMES GAISER & CO. CERTIFIED PUBLIC ACCOUNTANTS BUDGET COMPARISON A comparison of the budgeted revenue and expenditure amounts, as adopted by the Board of Directors, and the actual revenue and expenditures resulting from the operations for the year under review, is shown below: REVENUES: Water sales, net of cost District property taxes Bond proceeds and other Total Revenues OPERATING EXPENSES: Salaries - office Salaries - operational Operation and maintenance - pipeline Legal and auditing Directors' fees Utilities and telephone Payroll taxes and employee benefits Office expense Engineering Operation and maintenance - equipment Auto and truck expense Insurance and bonds Meetings, conventions, and dues Advertising and publications Bad debts Laboratory tests Total Operating Expenses EXCESS OF REVENUES OVER OPERATING EXPENSES NON-OPERATING EXPENSES: Debt service - principal and interest Capital expenditures and work in progress Payments on pipeline contracts Total Non-Operating Expenses INCREASE OR (DECREASE) OVER (UNDER) ACTUAL BUDGET BUDGET $ 164,317 $ 140,000 $ 24,317 220,813 226,198 (5,385) 18,564 186,300 (167,736) 403,694 31,001 18,540 8,233 10,473 5,950 5,875 5,014 2,405 866 2,438 1,855 2,566 1,726 2,396 -0- 125 99,463 552,498 27,000 24,000 10,000 8,000 6,000 5,800 4,500 2,500 1,500 2,500 2,200 2,500 1,400 500 200 100 98,700 (148,804) 4,001 (5,460) (1,767) 2,473 (50) 75 514 (95) (634) (62) (345) 66 326 1,896 (200) 25 763 304,231 217,961 169,319 2,172 389,452 453,798 (149.567) 230,500 328,718 1,889 (12,539) (159,399) 283 561,107 (171,655) $ (85.221) $ (107.309) $ (22.088) - 5 - JAMES GAISER & CO. CERTIFIED PUBLIC ACCOUNTANTS During the year, increased revenues resulted from increased water sales volume and decreased revenues resulted from greater tax delinquencies and delays in obtaining long-term financing and reimbursements from other agencies which were not antici- pated at the time of budget preparation. OPERATIONS A summary of the results of operations for the year ended June 30, 1970 is shown below: Operating revenues (net) $ 164,317 Operating expenses 99,463 Net income from operations 64,854 Other revenue (primarily District property taxes) 239,377 Net income before interest, depreciation, and extraordinary credit 304,231 Interest $ 132,961 Provision for depreciation 65,918 198,879 Net income before extra- ordinary credit 105,352 Extraordinary credit - settlement on anti-trust lawsuit 3,7 95 Net income $ 109,147 CASH - $ 129.795 The fund cash balances at June 30, 1970, were as follows: On deposit: General fund $ 53,024 General revolving fund 5,093 Improvement District No. 1 fund 15,389 Improvement District No. 2 fund 18,900 Improvement District No. 3 fund 25,905 Improvement District No. 4 fund 11,434 On hand: Petty cash fund 50 Total $ 129.795 - 6 - JAMES GAISER & CO. CERTIFIED PUBLIC ACCOUNTANTS The cash on deposit was verified by direct correspondence with the depositary banks and by reconciliation of the amounts confirmed to the amounts as shown by the records of the District. Cash on hand was verified by count. TIME CERTIFICATE OF DEPOSIT - $ 100.000 A Time Certificate of Deposit in the amount of $ 100,000 was held by Security Pacific National Bank, Carlsbad. Details of this deposit were confirmed by the depositary bank and are presented below: PURCHASE SETTLEMENT FACE INTEREST INTEREST DATE AMOUNT TERM RATE PAYABLE 6-1-70 $ 100,000 90 days 6.75% Quarterly The deposit was secured by collateral (California Municipal bonds in the face amount of $ 407,000) owned by Security Pacific National Bank. These collateral securities, which we confirmed by direct correspondence with the depositary bank, had a market value on June 30, 1970 of $ 327,064. U. S. TREASURY BILL (at cost which approximates market) - $ 48.200 As of the close of business on June 30, 1970, Security Pacific National Bank, Carlsbad, held in safekeeping for the account of Carlsbad Municipal Water District, a U. S. Treasury Bill in the face amount of $ 50,000. Details of the U. S. Treasury Bill were confirmed by the depositary bank and are presented below: - 7 - JAMES GAISER &, CO. CERTIFIED PUBLIC ACCOUNTANTS PURCHASE SETTLEMENT MATURITY MATURITY DATE VALUE DATE COST 5-14-70 $ 50.000 11-12-70 $ 48.200 ACCOUNTS RECEIVABLE - WATER CUSTOMERS - $ 47.012 Requests for confirmation of accounts receivable were mailed to 48 water consumers or approximately 97% of the total dollar amount of accounts receivable. Replies were received from 42 debtors, of which 37 owing $ 44,714 reported no differences. Conditional replies were received from 5 debtors owing $ 538, and these differences were investigated and explained to our satis- faction. The District does not provide for an allowance for doubtful accounts on the books since all accounts are considered collec- tible and prior experience has not indicated a necessity for such a valuation account- ACCOUNTS RECEIVABLE - OTHER - $ 2.313 The accounts receivable - other - may be summarized as follows: Accounts receivable - consumer connections $ 1,292 Accrued interest receivable , 1,021 Total $ 2.313 AGRICULTURAL REBATES RECEIVABLE - $ 17.896 The agricultural rebates receivable represents the amount due the District from the San Diego County Water Authority for - 8 - JAMES GAISER & CO. CERTIFIED PUBLIC ACCOUNTANTS water consumed for agricultural purposes during the period April 1, 1970 through June 30, 1970. INVENTORIES - $ 19.347 Inventories of water and materials at June 30, 1970 are shown below: Water $ 10,629 Materials (meters, pipe, etc.) 8,718 Total $ 19.347 The water inventory is valued at the lower of cost (last-in, first-out) or market and the materials inventory is valued at the lower of cost (first-in, first-out) or market. We were present to observe the taking of the water and materials inventories by District personnel at the end of the fiscal year. We made substantial verification of valuations and of the arithmetical accuracy of the inventory amounts. PROPERTY AND EQUIPMENT, at cost (less accumulated depreciation of $ 571.893) - $ 3.220.631 Changes during the year under review to property and equip- ment accounts, which are stated at cost, can be summarized as follows: ACCOUNT Cost of parti- cipation - San Diego County Water Authority Land and ease- ments Reservoirs and dams Totals (Forward) BALANCE 7-1-69 $ 33,174 120,848 1,071,758 $ 1,225,780 — ADDITIONS RETIREMENTS $ $ 254,048 $ 254,048 $ -0- 9 - BALANCE 6-30-70 $ 33,174 120,848 1,325.806 $ 1,479,828 JAMES GAISER & CO. CERTIFIED PUBLIC ACCOUNTANTS BALANCE BALANCE ACCOUNT 7-1-69 ADDITIONS RETIREMENTS 6-30-70 Totals (Forward) $ 1,225,780 $ 254,048 $ -0- $ 1,479,828 Pipelines and pump stations 2,037,804 2,037,804 Chlorination stations 56,730 56,730 Meters and accessories 42,101 10,604 52,705 Buildings 114,842 590 115,432 Machinery and equipment 30,715 6,543 37,258 Office fixtures and equipment 11,734 1,033 12,767 Totals $ 3.519.706 $ 272.818 $ -0- 3,792,524 Less accumulated depreciation 571,893 Net property and equipment $ 3.220.631 The property and equipment are being depreciated on the basis of the estimated useful life of each individual item on the straight-line method. The District has consistently taken a full year's depreciation during the year of disposition of an asset and no depreciation is taken during the year of acquisition. The estimated useful lives of the property and equipment groups that are being depreciated are shown below: ESTIMATED ASSETS USEFUL LIFE Reservoirs and dams 75 years Pipelines and pump stations 50 years Chlorination stations 25 to 40 years Meters and accessories 25 to 40 years Buildings 40 years Machinery and equipment 5 to 20 years Office fixtures and equipment 10 years - 10 - JAMES GAISER & CO. CERTIFIED PUBLIC ACCOUNTANTS The Cost of Participation - San Diego County Water Authority and the land and easements are not being depreciated. LONG-TERM CONTRACT AND NOTES RECEIVABLE - $ 142.232 The long-term receivable balances at June 30, 1970 were as follows: Contract receivable - San Marcos County Water District $ 132,629 Note receivable 2,782 Note receivable 6,821 Total $ 142.232 We confirmed the contract receivable directly with the San Marcos County Water District and verified the notes re- ceivable by other auditing procedures. The $ 132,629 represents the balance due on the sale of a pipeline to the San Marcos County Water District; the sale was consummated on November 6, 1963. The note receivable in the amount of $ 2,782 is a seven year, 5% note which constitutes the District's interest in notes issued by United Concrete Pipe Corporation and U. S. Industries, Inc. in settlement of an anti-trust suit. The note receivable in the amount of $ 6,821 is a six year, 5% note which constitutes the District's interest in a note issued by American Pipe and Construction Co. in settlement of an anti-trust suit. WORK IN PROGRESS - $ 97.411 On April 22, 1970, the District signed a construction agree- ment with Don Hubbard Contracting Co. in the amount of $ 187,906 - 11 - JAMES GAISER & CO. CERTIFIED PUBLIC ACCOUNTANTS for the construction and completion of the water system relocations and extensions for the El Camino Real Highway Project. Construc- tion commenced during the year under review and was in progress at June 30, 1970. The rehabilitation of the Santa Fe reservoir also commenced during the year under review and was in progress at June 30, 1970. ACCOUNTS PAYABLE - $ 83.748 Accounts payable generally represented amounts due to trade creditors in the ordinary course of business and to construction contractors at June 30, 1970. The accounts payable balance at June 30, 1970 consisted of the following: Accounts payable - trade creditors $ 30,301 Accounts payable - construction contractors 53,447 Total $ 83.748 CONSUMERS' DEPOSITS - $ 8.973 At June 30, 1970, the consumers' deposits consisted of the following items: Refundable bonds and inspection deposits $ 7,160 Refunds due on meter installations 1,813 Total $ 8.973 The refundable bonds and inspection deposits represent the unused portion of deposits received by the District, generally for construction. The refunds due on meter installations re- - 12 - JAMES GAISER & CO. CERTIFIED PUBLIC ACCOUNTANTS present amounts owing to consumers for the excess of their deposits over the actual cost of installation. BONDS PAYABLE - CONSTRUCTION CURRENT - $ 85,000 LONG-TERM - $ 2.874.000 Bonds in the principal amount of $ 85,000 matured during the year under review, all of which were redeemed by the District. The remaining bonds are due and payable as follows: YEARS OF RATE OF AMOUNT DUE CURRENT MATURITY INTEREST EACH YEAR Improvement District No. 1: 1971-only 4.00% 1972-only 4.00% 1973-1975 4.00% 1976-1977 4.00% 1978-1980 3.85% 1981-1982 3.85% 1983-only 3.85% 1984-1986 3.85% 1987-only 3.85% Improvement District No. 2: $ 40,000 40,000 45,000 50,000 55,000 60,000 65,000 70,000 45,000 Series 1: Series 2: 1971-only 1972-1976 1977-1983 1984-1987 1988-only 1971-only 1972-1973 1974-1975 1976-1982 1983-1987 1988-1991 5.00% 5.00% 5.00% 5.00% 5.00% 4.25% 4.25% 4.50% 4.50% 4.50% 4.50% 10,000 10,000 15,000 20,000 25,000 10,000 10,000 10,000 15,000 20,000 25,000 PORTION LONG-TERM PORTION $ 40,000 $ 10,000 10,000 -0- 40,000 135,000 100,000 165,000 120,000 65,000 210,000 45,000 -0- 50,000 105,000 80,000 25,000 -0- 20,000 20,000 105,000 100,000 100,000 Totals (Forward)$ 60,000 $ 1,485,000 - 13 - JAMES GAISER & CO. CERTIFIED PUBLIC ACCOUNTANTS YEARS OF RATE OF AMOUNT DUE CURRENT LONG-TERM MATURITY INTEREST EACH YEAR PORTION PORTION Totals (Forward)$ 60,000 $ 1,485,000 3: 1970-only 1971-1973 1974-1983 Improvement District No. 3: 1971-only 1972-1990 1991-only Improvement District No. 4: 1970-only 1971-only 1972-1977 1978-only 1979-1982 1983-1986 1987-1989 1990-1991 Total bonds outstanding at June 30, 1970 $ 85.000 $ 2.874.000 The bonding capacity of the District at June 30, 1970 was $ 5,838,535 as provided for on an assessed valuation of $ 58,385,352. Bonds outstanding at June 30, 1970, amounted to $ 2,959,000 leaving an unused bonding capacity of $ 2,879,535. The tax rates for the fiscal year ending June 30, 1970 were: 5.00% 5.00% 5 . 00% 4.75% 4.75% 5.00% 4.50% 4.50% 4.50% 4.50% 4.00% 4.00% 4.00% 3.50% $ 5,000 5,000 10,000 5,000 5,000 614,000 15,000 15,000 20,000 25,000 25,000 30,000 35,000 40,000 5,000 -0- 15,000 100,000 5,000 -0- 95,000 614,000 15,000 -0- 15,000 120,000 25,000 100,000 120,000 105,000 80,000 DISTRICT General District Improvement District No. 1 Improvement District No. 2 Improvement District No. 3 Improvement District No. 4 SECURED TAX RATE .119 .092 .381 .895 .040 UNSECURED TAX RATE .120 .090 .400 .900 .040 At June 30, 1970, $ 300,000 in construction bonds, which were authorized by the voters of the various Improvement Districts, remained unissued. - 14 - JAMES GAISER S. CO. CERTIFIED PUBLIC ACCOUNTANTS We wish to express our sincere appreciation to the general manager and the personnel of Carlsbad Municipal Water District for the cooperation and courtesies extended to us during our examination. Yours very truly, September 18, 1970 // JAMES GAISER & CO. Certified Public Accountants - 15 - JAMES GAISER & CO. CERTIFIED PUBLIC ACCOUNTANTS CARLSBAD MUNICIPAL WATER DISTRICT EXHIBIT A BALANCE SHEET - ALL FUNDS JUNE 30, 1970 - - - ASSETS - - - ,_ CURRENT ASSETS: ( 1 Cash (Note I) Time Certificate of Deposit (Note 1) U. S. Treasury Bill (at cost which approximates market) Accounts receivable - water customers Accounts receivable - other Agricultural rebates receivable Inventories - water, pipe, etc. - at cost (Note 2) Prepaid insurance Total Current Assets PROPERTY AND EQUIPMENT, NET - at cost (Note 5) OTHER ASSETS AND OTHER DEBITS: Long-term contract and notes receivable Work in progress Future revenue required to retire bonded debt Unamortized bond discount Bonds authorized, unissued ^ Total Other Assets and Other Debits TOTALS - - - LIABILITIES, RESERVES, AND FUND BALANCE - CURRENT LIABILITIES: Accounts payable Current installments due on bond principal Unredeemed bond coupons Accrued payroll taxes and employee benefits Accrued interest on bonds Consumers' deposits Total Current Liabilities LONG-TERM DEBT, EXCLUDING CURRENT PORTION - Bonds payable RESERVES FOR: Construction (Schedule 6) Unamortized bond discount Work in progress Authorized expenditures 4^ Long-term receivables Investment in property and equipment Total Reserves FUND BALANCES (Exhibit C) TOTALS GENERAL DISTRICT TOTAL ALL FUNDS $ 129,795 100,000 48,200 47,012 2,313 17,896 19,347 300 364,863 3,220,631 142,232 97,411 2,959,000 4,562 300,000 3,503,205 $ 7*088.699 $ 83,748 85,000 5,438 2,384 35,903 8,973 221,446 2,874,000 1,879 4,562 97,411 300,000 142,232 3,220,631 3,766,715 226,538 $ 7,088.699 GENERAL FUND $ 53,074 47,012 1,853 17,896 17,468 300 ,137,603 318,725 9,603 66,788 76,391 $ 532.719 $ 83,748 2,384 8,973 95,105 66,788 9,603 318,725 395,116 42,498 $ 532,719 REVOLVING NO. 1 FUND (SCHEDULE 2) $ 5,093 $ 15,389 25,000 5,093 40,389 736,278 132,629 920,000 100,000 1,152,629 $ 5.093 $ 1,929.296 $ - $ - 40,000 581 11,964 E^ O ^ A ^O «£ * D 4r -3 op n n nn 100,000 132,629 736.278 968,907 5,093 27,844 S 5.093 $ 1.929.296 IMPROVEMENT DISTRICTS NO. 2 (SCHEDULE 3) $ 18,900 18,000 l,-879 38,779 824,735 30,623 745,000 4,562 780,185 $ 1,643.699 $ 25,000 1,275 10,150 36,425 720,000 1,879 4,562 30,623 824,735 861,799 25,475 $ 1.643.699 NO. 3 (SCHEDULE 4) $ 25,905 43,000 48,200 460 117,565 691,067 714,000 200,000 914,000 $ 1.722.632 $ 5,000 538 11,817 17,355 709,000 200,000 691,067 891,067 105,210 $ 1.722.632 NO. 4 (SCHEDULE 5) $ 11,434 14,000 25,434 649,826 580,000 580,000 $ 1.255.260 $ 15,000 3,044 1,972 20,016 565,000 649,826 649,826 20,418 $ 1.255.260 NOTE: The accompanying notes to financial statements are an integral part of this statement. JAMES GAlSER & CO. CERTIFIED PUBLIC ACCOUNTANTS EXHIBIT B CARLSBAD MUNICIPAL WATER DISTRICT STATEMENT OF REVENUES AND EXPENSES FOR THE YEAR ENDED JUNE 30, 1970 GENERAL DISTRICT REVENUES : Water sales. Less cost of water sold Net water sales District property taxes Interest income Miscellaneous Total Revenues OPERATING EXPENSES: Total Operating Expenses (Schedule 1) NET INCOME BEFORE INTEREST, DEPRECIATION AND EXTRAORDINARY CREDIT •^ OTHER EXPENSES: ' Interest expense Provision for depreciation (Note 5) Total Other Expenses NET INCOME BEFORE EXTRAORDINARY CREDIT EXTRAORDINARY CREDIT: Settlement on lawsuit (Note 3) NET INCOME (Exhibit C) TOTAL ALL FUNDS $ 422,873 258,556 164,317 220,813 9,610 8,954 403,694 99,463 304,231 132,961 65,918 198,879 105,352 3,795 $ 109.147 IMPROVEMENT DISTRICTS GENERAL REVOLVING - - - BOND AND INTEREST FUNDS - FUND FUND NO. 1 $ 272,108 $ 201,358 70,750 69,650 6,615 3,794 150,809 99,463 51,346 10,514 10,514 40,832 3,795 $ 44.627 $ 5,366 $ 34,744 2,061 13,140 3,305 21,604 52,410 2,565 3,305 76,579 3,305 76,579 36,959 18,394 55,353 3,305 21,226 3.305 $ 21.226 NO. 2 $ - 39,074 1,822 40,896 40,896 36,438 12,896 49,334 (8,438) $ (8.438) NO. 3 $ 26,201 10,048 16,153 37,043 2,995 773 56,964 56,964 35,607 14,228 49,835 7,129 S 7.129 CONSTRUCTION - - - FUNDS NO. 4 (SCHEDULE 6) $ 32,062 $ 12,110 19,952 22,636 42,588 42,588 23,957 9,886 33,843 8,745 $ 8.745 $ 52,392 19,839 32,553 32,553 32,553 - 32,553 32.553 NOTE: The accompanying notes to financial statements are an integral part of this statement. JAMES GAISER S. CO. CERTIFIED PUBLIC ACCOUNTANTS EXHIBIT C CARLSBAD MUNICIPAL WATER DISTRICT STATEMENT OF CHANGES IN FUND BALANCES AND RESERVE FOR CONSTRUCTION FOR THE YEAR ENDED JUNE 30, 1970 1 Fund balances, June 30, 1969 Reserve for construction, June 30, 1969 Additions or (Deductions) : Net income for the year (Exhibit B) Amortization of bond discount - a non-cash expense Depreciation - a non-cash expense (Note 5) Retirement of long-term debt - bonds Payments on pipeline contracts (Note 4) Capital expenditures for investment *"~\ in property and equipment Capital expenditures for work in progress GENERAL DISTRICT IMPROVEMENT DISTRICTS CONSTRUCTION T'OTZXT. r)T71'MT?T?ZlT "DTPT/nt X7TTsTr" ROTJri atJPi T'NTTiT?'DT?C rn TPTTNTPiC _ _ TPTTMFi ALL FUNDS FUND FUND NO. 1 NO. 2 NO. 3 NO. 4 (SCHEDULE 6) $ 263,026 $ 79,536 $ 3,960 $ 28,224 $ 45,666 $ 88,853 $ 16,787 $ - 46,466 - - - 46,466 109,147 44,627 3,305 21,226 (8,438) 7,129 8,745 32,553 351 - - 351 - 65,918 10,514 - 18,394 12,896 14,228 9,886 (85,000) ~ - (40,000) (25,000) (5,000) (15,000) (2,172) - (2,172) (92,179) (92,179) - _____ (77,140) - - - - - - (77,140) Fund balances, June 30, 1970 (Exhibit A) Reserve for construction, June 30, 1970 (Schedule 6) $ 226.538 $ 42.498 1.879 $ 5.093 $ 27.844 $ 25.475 $ 105,210 $ 20,418 $ 1.879 NOTE: The accompanying notes to financial statements are an integral part of this statement. JAMES GAISER & CO. CERTIFIED PUBLIC ACCOUNTANTS CARLSBAD MUNICIPAL WATER DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 1970 NOTE 1: The District maintains one general bank account for all of the funds. As a result, when investments are made, they are not set up in separate investment accounts unless it can be deter- mined that the cash for an investment came from a specific fund. At June 30, 1970, the investment in Time Certificates of Deposit was allocated to the various funds on the basis of available cash in excess of normal requirements in each fund. The balance in the sinking fund in Improvement District No. 3 was $ 72,400 at June 30, 1970. NOTE 2: The inventories consist of water and materials. The inventory of water is valued at the lower of cost (last-in, first-out) or market. The materials inventory is valued at the lower of cost (first-in, first-out) or market. NOTE 3: The District received $ 3,795 during the year on its long-term notes receivable in settlement of two price-fixing anti-trust suits. American Pipe and Construction Company paid $ 1,364, leaving a balance of $ 6,821 to be paid. United Concrete Pipe Corporation and U. S. Industries paid $ 2,431, leaving a bal- ance of $ 2,782 to be paid. NOTE 4: Under the provisions of Ordinance No. 10 of the Carlsbad Municipal Water District, the District may enter into a contract with a consumer to refund his cost of installing a pipeline, which will become a portion of the District's primary distri- bution system. The annual payments on these contracts amounts to 50% of the actual consumption charges received by the District from the sale and delivery of water through the fa- cilities but no annual payment may exceed 20% of the cost of the facilities. The payments continue for a period of ten years or until the total cost of the line has been refunded, whichever occurs first. After ten years, the District has no further obligation, even though the entire cost has not been refunded. At June 30, 1969, the District had signed contracts with un- paid balances totaling $ 14,108. At June 30, 1970, two of three remaining contracts exceeded ten years and therefore were terminated. The remaining contract had a balance of $ 6,002 at June 30, 1970. On September 2, 1970, the District paid $ 428 as its final payment on the remaining contract since this contract then exceeded ten years. (Continued) - 1. JAMES GAISER & CO. CERTIFIED PUBLIC ACCOUNTANTS CARLSBAD MUNICIPAL WATER DISTRICT NOTES TO FINANCIAL STATEMENTS JUNE 30, 1970 NOTE 5: The property and equipment owiieu by the District at June 30, 1970 is valued at cost and may be summarized as follows: Cost of participation - San Diego County Water Authority Land and easements Reservoirs and dams Pipelines and pump stations Chlorination stations Meters and accessories Buildings Machinery and equipment Office fixtures and equipment Total Less accumulated depreciation Net Property and Equipment $ 33,174 120,848 1,325,806 2,037,804 56,730 52,705 115,432 37,258 12,767 3,792,524 571,893 $ 3.220.631 Depreciation of the property and equipment is provided by the straight-line method and is based on the estimated useful lives of the related assets as follows: ASSETS Reservoirs and dams Pipelines and pump stations Chlorination stations Meters and accessories Buildings Machinery and equipment Office fixtures and equipment ESTIMATED USEFUL LIFE 75 years 50 years 25 to 40 years 25 to 40 years 40 years 5 to 20 years 10 years The District has consistently taken a full year's depreciation during the year of disposition of an asset and no depreciation is taken during the year of acquisition. The cost of participation - San Diego County Water Authority and the land and easements are not being depreciated. NOTE 6: On August 5, 1970, the District borrowed $ 100,000 from Security Pacific National Bank. The loan proceeds are to be used for the construction and completion of water system relocations and ex- tensions for the El Camino Real Highway Project. The loan is evidenced by a 7% unsecured note with interest pay- able quarterly beginning November 5, 1970. Principal is to be paid in annual installments of $ 20,000 or more on the fifth day of August each year, beginning August 5, 1971. The District may prepay any unpaid principal balance of the note at any time, without any penalty. (Concluded) - 2, JAMES GAISER & CO. CERTIFIED PUBLIC ACCOUNTANTS CARLSBAD MUNICIPAL WATER DISTRICT SCHEDULE OF OPERATING EXPENSES - GENERAL FUND FOR THE YEAR ENDED JUNE 30, 1970 SCHEDULE 1 PUMPING: Supervision, labor, and expense Fuel and power WATER TREATMENT: Supervision, labor, and expense Chlorine Power usage Chlorine equipment - repairs and maintenance Laboratory services - testing TRANSMISSION - DISTRIBUTION: Supervision, labor, and expense Repairs and maintenance - pipelines Meter repairs Telemetering Repairs and maintenance - plant Utilities Miscellaneous supplies CUSTOMER ACCOUNTS: Meter reading and supervision ADMINISTRATIVE AND GENERAL: Salaries Legal and auditing Directors' fees Payroll taxes and employee benefits Utilities and telephone Insurance Office expense Advertising and promotion Auto and truck expense Meetings, conventions, and dues Maintenance - general plant Small tools and equipment maintenance Printing and reproduction Engineering Miscellaneous Total Operating Expenses (Exhibit B) 813 689 1,980 1,898 725 345 125 14,016 4,254 2,081 702 363 178 43 31,001 10,473 5,950 5,014 4,283 2,566 2,296 1,922 1,855 1,726 929 801 474 164 66 $ 1,502 5,073 21,637 1,731 69,520 $ 99.463 JAMES GAISER & CO. CERTIFIED PUBLIC ACCOUNTANTS SCHEDULE 2 CARLSBAD MUNICIPAL WATER DISTRICT IMPROVEMENT DISTRICT NO. 1 BALANCE SHEET JUNE 30, 1970 COMBINED ASSETS - - - FUNDS BOND AND INTEREST FUND PROPERTY AND EQUIPMENT BONDED DEBT Cash Time Certificate of Deposit Long-term contract receivable Property and equipment, net Future revenue required to retire bonded debt Bonds authorized, un- issued Totals 15,389 $ 15,389 $ 25,000 25,000 132,629 132,629 736,278 920,000 100,000 - 736,278 920,000 100,000 $ 1.929.296 $ 173.018 $ 736.278 $ 1.020.000 LIABILITIES, RESERVES, AND - - - FUND BALANCE - - - Unredeemed bond coupons Accrued interest on bonds Bonds payable Reserves for: Authorized expenditures Long-term receivable Investment in property and equipment Fund balance $581 11,964 920,000 100,000 132,629 736,278 27,844 $ 581 11,964 132,629 27,844 $ - - 736,278 920,000 100,000 Totals (Exhibit A) $ 1.929.296 $ 173.018 $ 736.278 $ 1.020.000 JAMES GAISER & CO. CERTIFIED PUBLIC ACCOUNTANTS CARLSBAD MUNICIPAL WATER DISTRICT IMPROVEMENT DISTRICT NO. 2 BALANCE SHEET JUNE 30, 1970 SCHEDULE 3 - - - ASSETS - - - Cash Time Certificate of Deposit Inventory Property and equipment, net Work in progress Future revenue required to retire bonded debt Unamortized bond discount Totals COMBINED FUNDS $ 18,900 18,000 1,879 824,735 30,623 745,000 4,562 $ 1.643.699 BOND AND INTEREST FUND $ 18,900 18,000 4,562 $ 41.462 BOND CONSTRUCTION FUND $ - 1,879 30,623 $ 32.502 PROPERTY AND EQUIPMENT $ - 824,735 $ 824.735 BONDED DEBT $ - 745,000 $ 745.000 LIABILITIES, RESERVES, AND - - - FUND BALANCE - - - Unredeemed bond coupons Accrued interest on bonds Bonds payable Reserves for: Construction (Schedule 6) Work in progress Unamortized bond discount Investment in property and equipment Fund balance Totals (Exhibit A) 1,275 10,150 745,000 1,879 30,623 4,562 824,735 25,475 $ 1.643.699 $ 1,275 10,150 4,562 25,475 $ 41.462 $ - 745,000 1,879 30,623 $ 32.502 824,735 $ 824.735 $ 745.000 JAMES GAISER & CO. CERTIFIED PUBLIC ACCOUNTANTS CARLSBAD MUNICIPAL WATER DISTRICT IMPROVEMENT DISTRICT NO. 3 BALANCE SHEET JUNE 30, 1970 __ SCHEDULE 4 - - - ASSETS - - - Cash U. S. Treasury Bill (at cost which approximates market) Time Certificate of Deposit Accrued interest receivable Property and equipment, net Future revenue required to retire bonded debt Bonds authorized, unissued Totals COMBINED FUNDS 48,200 BOND AND INTEREST FUND 48,200 PROPERTY AND EQUIPMENT 25,905 $ 25,905 $ BONDED DEBT 43,000 460 691,067 714,000 200,000 43,000 460 691,067 : : _ 714,000 200,000 $ 1.722.632 $ 117.565 $ 691.067 $ 914.000 LIABILITIES, RESERVES, AND - - - FUND BALANCE - - - Unredeemed bond coupons Accrued interest on bonds Bonds payable- Reserves for: Authorized expenditures Investment in property and equipment Fund balance Totals (Exhibit A) 538 11,817 714,000 200,000 691,067 105,210 538 $ 11,817 105,210 691,067 714,000 200,000 $ 1.722.632 $ 117.565 $ 691.067 $ 914.000 JAMES GAISER S. CO. CERTIFIED PUBLIC ACCOUNTANTS CARLSBAD MUNICIPAL WATER DISTRICT IMPROVEMENT DISTRICT NO. 4 BALANCE SHEET JUNE 30, 1970 • SCHEDULE 5 - - - ASSETS - - - Cash Time Certificate of Deposit Property and equipment, net Future revenue required to retire bonded debt Totals BOND AND PROPERTY COMBINED INTEREST AND FUNDS FUND EQUIPMENT ? 11,434 $ 11,434 $ 14,000 14,000 649,826 - 649,826 580,000 - - BONDED DEBT 580,000 $ 1.255.260 $ 25.434 $ 649.826 $ 580.000 LIABILITIES, RESERVES, AND v - - - FUND BALANCE - - - Unredeemed bond coupons Accrued interest on bonds Bonds payable Reserve for investment in property and equipment Fund balance Totals (Exhibit A) 3,044 $ 3,044 $ 1,972 1,972 580,000 649,826 20,418 20,418 649,826 580,000 $ 1.255.260 $ 25.434 $ 649.826 $ 580.000 JAMES GAISER & CO. CERTIFIED PUBLIC ACCOUNTANTS SCHEDULE 6 CARLSBAD MUNICIPAL WATER DISTRICT ANALYSIS OF CHANGES IN RESERVE FOR CONSTRUCTION FOR THE YEAR ENDED JUNE 30, 1970 BOND CONSTRUCTION FUND IMPROVEMENT DISTRICT NO. 2 BALANCE, JUNE 30, 1969 REVENUE: Water sales Less cost of water sold Net water sales Total Funds Available EXPENDITURES: Engineering, supplies, and progress payments to construction contractors Total Expenditures BALANCE, JUNE 30, 1970 (Exhibit C) $ 46,466 52,392 19,839 32,553 79,019 77,140 77,140 $ 1.879 JAMES GAISER & CO. CERTIFIED PUBLIC ACCOUNTANTS