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CITY OF LAKELAND, FLORIDA

Comprehensive Annual Financial Reportfor the Year Ended September 30, 2003

COMPREHENSIVE ANNUAL FINANCIAL REPORT

of the


for the

FISCAL YEAR ENDED SEPTEMBER 30, 2003

Prepared by FINANCE DEPARTMENT

JERRY L. REYNOLDS, CPA

Finance Director

GREGORY M. FINCH, CPA Assistant Finance Director

THIS PAGE IS INTENTIONALLY BLANK

INTRODUCTORY SECTION

TABLE OF CONTENTS

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INTRODUCTORY SECTION

Introductory Information Table of Contents A-1 Letter of Transmittal A-3 Organization Chart A-7 City Officials A-8 Certificate of Achievement for Excellence in Financial Reporting A-9

FINANCIAL SECTION Independent Auditors’ Report B-1 Management’s Discussion and Analysis C-1 Basic Financial Statements Government-Wide Financial Statements: Statement of Net Assets D-1 Statement of Activities D-2 Fund Financial Statements: Balance Sheet – Governmental Funds D-4 Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Assets D-5 Statement of Revenues, Expenditures, and Changes in Fund Balance – Governmental Funds D-6

Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance of the Governmental Funds to the Statement of Activities D-7

Statement of Net Assets – Proprietary Funds D-8 Reconciliation of the Proprietary Funds Statement of Net Assets to the Government-Wide Statement of Net Assets D-9 Statement of Revenues, Expenses, and Changes in Fund Net Assets – Proprietary Funds D-10 Reconciliation of the Statement of Revenues, Expenses, and Changes in Fund Net Assets of the Proprietary Funds to the Statement of Activities D-11 Statement of Cash Flows – Proprietary Funds D-12 Statement of Fiduciary Net Assets – Fiduciary Funds D-13 Statement of Changes in Fiduciary Net Assets – Fiduciary Funds D-14 Notes to Financial Statements E-1 Other Required Supplemental Information Budgetary Comparison Schedule – Budget (GAAP Basis) and Actual with Comparative Amounts for Year Ended September 30, 2002 – General Fund F-1 Schedule of Employer Contributions – Pension Funds F-2 Combining Statements Combining Balance Sheet – Nonmajor Governmental Funds G-4 Combining Schedule of Revenues, Expenditures, and Changes in Fund Balance – Nonmajor Governmental Funds G-6 Combining Statement of Net Assets – Nonmajor Proprietary Funds G-8 Combining Schedule of Revenues, Expenses, and Changes in Fund Net Assets – Nonmajor Proprietary Funds G-9 Combining Statement of Cash Flows Nonmajor – Proprietary Funds G-10 Combining Statement of Net Assets – Internal Service Funds G-11

TABLE OF CONTENTS, Continued

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Combining Statements (continued) Combining Schedule of Revenues, Expenses, and Changes in Fund Net Assets – Internal Service Funds G-12 Combining Statement of Cash Flows – Internal Service Funds G-13 Combining Statement of Fiduciary Net Assets – Fiduciary Funds G-14 Combining Statement of Changes in Plan Net Assets – Pension Trust Funds G-15 Combining Statement of Net Assets – Component Units G-16 Combining Schedule of Revenues, Expenses, and Changes in Net Assets – Component Units G-17 Supplemental Information Schedule of Long-Term Debt – All Funds H-2 Schedules of Required Debt Payments to Maturity: Utilities Tax Revenue Refunding Bonds (series 2002A) and Utilities Tax Revenue Bonds (series 2002B) H-4 Tourist Development Tax and Utilities Tax Revenue Refunding Bonds (series 2002C) and Capital Improvement Revenue Bonds (series 1997) H-5 Water and Wastewater Revenue Refunding and Improvement Bonds (series 2002) H-6 Energy System Refunding Revenue Bonds (series 1999A) H-7 Energy System Refunding Revenue Bonds (series 1999B) and Energy System Refunding Revenue Bonds (series 1999C) H-8 Energy System Variable Rate Refunding Revenue Bonds (series 2003) H-9 Energy System Variable Rate Revenue Bonds (series 2001A) and Energy System Refunding Revenue Bonds (series 2001B) H-10 1992 Promissory Note – Airport Improvements and 1993 Promissory Note – Lakeland Community Redevelopment Agency and 1999 Promissory Note – Lakeland Community Redevelopment Agency H-11 Analysis of Sinking Fund and Reserve Account Requirements H-12 Summary of Required Debt Payments To Maturity – All Outstanding Revenue Bond Series H-13 Schedule of Expenditures of Federal Awards and State Financial Assistance H-15 Notes to the Schedule of Expenditures of Federal Awards and State Financial Assistance H-19

STATISTICAL SECTION Miscellaneous Statistical Information: Form of Government I-1 General Fund – Revenues and Other Financing Sources – Last Ten Fiscal Years I-2 General Fund – Governmental Expenditures and Other Uses – Last Ten Fiscal Years I-3 General Fund Property Tax Levies, Tax Collections, Assessed Valuations and Property Tax Rates Since 1961 I-4 Schedule of Property Tax Rates – Direct and Overlapping Governments – Last Ten Fiscal Years I-5 Computation of Direct and Overlapping Bonded Debt I-6 Schedule of Revenue Bonds Coverage – Last Ten Fiscal Years I-7 Socioeconomic Data – Last Ten Calendar Years I-8 Ten Largest Taxpayers I-9 Independent Auditor’s Reports and Schedules: Independent Auditors’ Report on Compliance and on Internal Control over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards J-1 Independent Auditors’ Report on Compliance and Internal Control Over Compliance Applicable to Each Major Federal Program and State Project J-2 Schedule of Findings and Questioned Costs J-4 Management Letter J-6 Management Responses to Independent Auditors’ Report on Compliance and Internal Control Over Compliance Applicable to Each Major Federal Program and State Project and Auditors’ Management Letter J-11

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Profile of the City of Lakeland (continued) City-funded public improvements in the downtown core have triggered over $200 million in private investment to Lakeland’s downtown area in the last 10 years. This includes a $1 million gift to the citizens of Lakeland from the Mark Hollis family to construct an elaborate garden area in downtown and a $2 million gift from the Carol and Barney Barnett family to construct the Barnett family park on Lake Mirror.

Economic Activity During the fiscal year ended September 30, 2003, taxable retail sales in the incorporated Lakeland city limits climbed 6.3 percent over the same period in the preceding year. By comparison, the average growth in taxable retail sales in the incorporated Lakeland city limits for the preceding 10 years was 4.15 percent. Taxable property values increased 6.5 percent during the fiscal year, which included $61 million in new construction. Unemployment rates for the Lakeland-Winter Haven area averaged 6.1 percent for the twelve months ended September 30, 2003, reflecting no change from the previous twelve month, and down slightly from the 10 year average of 6.3 percent. Major initiatives/ expansions that were undertaken or in process are as follows: The City has signed an agreement with a developer to redevelop a historic hotel in downtown Lakeland into 77 market-based housing units. The total project cost is expected to exceed $8.5 million. The City started construction on a $12 million project that will surround downtown’s Lake Mirror with a park system. Lakeland Regional Medical Center opened its $14.4 million, 33,000 square foot cancer treatment center. A $20 million Cancer & Research Center, which is jointly operated by Watson Clinic and Clark & Daughtery Medical Group, was opened. The University of South Florida announced plans to construct a new Lakeland campus by 2013. The project is estimated to cost $200 million and will accommodate 10,000 students. Construction is expected to commence within 3 years. The first phase of construction of the in-town bypass is nearly completed. This is a $61 million state-funded project to construct a new six lane highway around the north side of downtown Lakeland. Work continues on a $58.4 million expansion of the Lakeland Regional Medical Center. This expansion will accommodate an additional 300 beds when completed in 2005. A developer has announced plan to construct a $130 million residential, retail, and office complex in south Lakeland over the course of the next three years.

Reporting 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 City of Lakeland, Florida, for its Comprehensive Annual Financial Report for the fiscal year ended September 30, 2002. In order to be awarded a Certificate of Achievement for Excellence in Financial Reporting, a governmental unit must publish an easily readable and efficiently organized comprehensive annual financial report, which contents conform to program standards. Such reports must satisfy both generally accepted accounting principles and applicable legal requirements. We believe our current report continues to conform to Certificate of Achievement for Excellence in Financial Reporting Program requirements and we are submitting it to GFOA to determine its eligibility for another certificate.

Acknowledgements The preparation of the Comprehensive Annual Financial Report (CAFR) could not be achieved without many extra hours of work on the part of Finance Department staff. The City is fortunate to have such a fine group of professionals who are highly skilled and complete all tasks accurately and within schedule.

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I would like to thank Deidra Joseph, Chief Accountant; John Zuercher, Director of Internal Audit; and Mark Meeks, Supervisor of Utility Finance and Accounting for their efforts in assisting the external auditors in completing the audit, and for preparation of the CAFR. Their respective roles in coordinating the work of accountants and other professionals have proved to be invaluable to the report preparation process. I would also like to thank the external auditors, Carter Belcourt & Atkinson, P.A., for their cooperation and assistance during the audit process. I would like to express appreciation to the City Manager, his staff, and the City Commission for their continuing support of the Finance Department and for the leadership they have provided to make Lakeland the fine community that it is. This report reflects the favorable financial condition of the City, and we are proud to submit it to you for your review. Finally, I express my thanks to former Finance Director Jerry Reynolds, who retired from the City in December of 2003 after 25 years of dedicated service to the City of Lakeland. It has been a pleasure to work with Jerry over the years. He has provided guidance, inspiration, and I am proud to be to consider Jerry not only as a boss and mentor, but also as a friend.

Respectfully submitted,

Gregory Finch, CPA Finance Director

Michael Brossart, CPA Assistant Finance Director


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CITY OFFICIALS

COMMISSION-MANAGER FORM OF GOVERNMENT

CITY COMMISSION

R. L. (Buddy) Fletcher, Mayor

A. Dean Boring Gow B. Fields

James S. Verplanck Seth D. McKeel, Jr.

Glenn E. Higgins R. Howard Wiggs

CITY MANAGER

Roger D. Haar

FINANCE DIRECTOR

Jerry L. Reynolds, CPA

CITY ATTORNEY

Timothy J. McCausland

CITY CLERK

Kelly S. Koos


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FINANCIAL SECTION

MANAGEMENT’S DISCUSSION AND ANALYSIS



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The Management’s Discussion and Analysis section provides a narrative overview of the City of Lakeland’s (City’s) financial activities for fiscal year ending September 30, 2003. This discussion is broken down into three components:

• An overview of the financial statements, consisting of a narrative description of the type of information provided within the Comprehensive Annual Financial Report (beginning on page D-1 of this bound document).

• A concise, condensed financial report that summarizes the results of operations of the City as a whole.

• A narrative financial analysis of the City’s overall financial condition and results of operations, supported by

additional consolidated information about specific services provided by the City.

OVERVIEW OF THE FINANCIAL STATEMENTS The City’s basic financial statements are comprised of three sections: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. The nature of these three components of the report are described as follows: Government-wide financial statements There are two financial statements in this section that address the financial position and results of operations of the City taken as a whole: the Statement of Net Assets and the Statement of Activities. These two financial statements are prepared using the “full accrual” method (basis) of accounting. This is the same accounting method used by most private-sector companies to determine whether they earn a profit in any given year, and to measure the net worth of the company as of the end of the year. Under the full accrual basis of accounting, some cash flows into the company and some of the cash flows out are not considered operating revenues or operating expenses and accordingly do not appear on a profit and loss statement. For example, under the full accrual basis of accounting, the purchase of capital assets (e.g. equipment, land, buildings, that have a useful life beyond one year) are not considered operating expenses when purchased. The statement of net assets is similar to a balance sheet in that it separately identifies the assets (what the City owns) from the liabilities (what the City owes) and the net difference between the two. Cash, receivables, land, buildings and equipment are examples of assets. Bonds, notes, and payables are examples of liabilities. The increase or decrease in net assets from one year to the next indicates whether the City’s financial position is improving or deteriorating. The statement of activities explains how or why the net assets have increased or decreased during the year. The statement of activities resembles a profit and loss statement because it compares the total expenses of the government to the total revenues, with the difference between the two, equaling the increase or decrease in net assets over the course of the year. The information in each of these two statements is separated into three categories as follows:

Governmental activities – This category of the government-wide financial reporting represents those activities undertaken by the government which cannot, based on practical considerations, be financed by the imposition of a user fee assessed directly and exclusively against the users of those activities. These activities include the services provided by Police and Fire Departments; Public Works (road and drainage construction and maintenance); the Parks & Recreation Department; libraries; growth management; public utilities (such as street lighting); and administrative functions. Because these activities do not lend themselves to recovery of costs through a direct user charge, they are financed primarily from the proceeds of property taxes, sales taxes, franchise fees, interest income, intergovernmental revenues, and state and federal grants. Business-type activities – This category of the government-wide financial reporting includes those activities such as the Electric, Water, Wastewater, and Solid Waste Utilities. The cost of providing these services is directly recovered from a user charge assessed against the users of those services. This category also includes the operations of the City’s Lakeland Center, the Parking System, the Lakeland Linder Regional Airport and the Cleveland Heights Golf Course. The activities and services provided by these operations are also financed by a direct user fee that covers the majority, if not all, of the related costs of those activities. Component Units – This category of the government-wide financial reporting includes those activities that are provided by government entities that are legally separate from the City of Lakeland, but which provide services exclusively to the citizens of Lakeland and which are subject to a certain degree of oversight control by the governing board (the City Commission) of Lakeland. This includes a mass transit district and an economic development district serving the City’s downtown. Both of these activities are consolidated into a single column of information on the government-wide statements.



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Fund financial statements This is the second section of the basic financial statements. It presents information in more detail, centered on individual “Funds”. For record keeping and reporting purposes, the City separates many of its unique operations into separate accounting “companies” called funds. Separating the record keeping into individual funds enables the City to maintain accounting control over resources and expenses that are dedicated to specific activities. The City also uses fund accounting to separate financial transactions as needed to ensure and demonstrate compliance with finance-related legal requirements imposed on the City by other governments and bond covenants. All the funds of the City can be divided into three types: governmental funds, proprietary funds and fiduciary funds.

Governmental funds The governmental activities (as defined on the preceding page) are reported in governmental funds. There are two types of financial statements presented for governmental funds – a balance sheet (showing assets, liabilities, and the difference between the two – technically referred to as “fund balance”) and a statement of revenues, expenditures, and changes in fund balance. For purposes of preparing the financial statements for these governmental activities within this section of the report, the basis of accounting used to measure the value of assets, liabilities, revenues and expenditures is different than that used within the government-wide financial statements for these same activities. Although the government-wide financial statements are prepared using the same full accrual basis of accounting utilized in the private sector, the fund financial statements are prepared using the same basis of accounting used to prepare annual budgets. This basis of accounting tends to show cash inflows and outflows as revenues and expenses in the accounting year in which they actually occur, ignoring the fact that the inflow or outflow may have an effect over many years. The reason for this different accounting approach is that the activities in these funds are not financed from a direct user fee. As a result, there is no emphasis placed on measuring annual “net profit or loss” resulting from those operations. Instead, the accounting focuses on whether there will be enough cash flow available in a given year to finance the costs of providing services. The emphasis is much more focused on activities occurring within a one year budget period rather than the long-term. This methodology is referred to as the “modified accrual” basis of accounting. A reconciliation schedule is provided within these fund financial statements to identify differences between the modified accrual basis of accounting used in these fund financial statements and the full accrual basis of accounting used in the government wide statements. The City has one major governmental fund referred to as the General Fund. This fund serves as a “catch-all” used to capture the day-to-day operating costs associated with a variety of different programs and activities that are not financed from direct user charges. This fund appears in its own separate column on the fund financial statements. All of the other governmental funds of the City are consolidated into a single column of information labeled Other Governmental Funds. The activities in this column generally represent the cost of capital improvements required to support general governmental activities, plus certain activities that are legally required to be accounted for separately from the “catch-all” activities reported in the General Fund.

Proprietary funds Those services provided by the City which are classified as business-type activities in the government-wide financial statements, are labeled as proprietary funds within the fund financial statements. The basis of accounting used within these statements is the same, full accrual method used in the private sector, wherein the intent is that the costs of providing these goods and services are financed primarily through user charges. There is no difference between the basis of accounting used in the government-wide statements and the proprietary fund financial statements. The major proprietary funds of the City are the Lakeland Electric Utility Fund and the Water and Wastewater Utility Fund. Information for these two funds is presented in two separate columns within the fund financial statements. The remaining proprietary funds of the City that account for user-financed services provided to the general public are consolidated into a single column labeled Other Enterprise Funds within these statements. In addition there is a separate column on these financial statements which consolidates the activities that are provided exclusively to support operations of the City government itself, such as a motor pool, centralized purchasing and warehousing, and a self-insurance financing pool. These services are provided to the various City functions on a cost recovery basis. These are labeled Internal Service Funds within the fund financial statements.



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Fiduciary funds The City also maintains separate funds called fiduciary funds, which account for the activities of the City’s pension funds, private-purpose trust funds, and agency funds. These activities benefit private parties such as retired City employees and other governmental entities. The fact that these services are not provided to the general public mandates their accounting in this separate section of the report.

Notes to the financial statements The third section of the basic financial statements is the notes to the financial statements. This section provides a further level of detail necessary to better understand the information provided within the government-wide financial statements and fund financial statements. Included in the notes to the financial statements is detailed information regarding the financial condition and results of operations of the two “component units” of the City. The two component units included in the notes to the financial statements are the Lakeland Area Mass Transit District and the Lakeland Downtown Development Authority. Separate financial statements are also issued by these two government agencies, which can be obtained by contacting the City of Lakeland, City Hall. In addition to the three major types of data included in the basic financial statements (as defined on the preceding pages), this annual financial report also includes supplementary information regarding the financial condition and results of operations of the City. This information is organized within two tabbed sections of the report as follows:

Other required supplementary information Included in this section of the report is a schedule that compares the annual operating budget adopted by the City for the General Fund to the actual revenues and expenditures reported for the year. This section also includes information regarding the performance of those defined benefit pension funds that are sponsored by the City for the benefit of retired city employees.

Combining Statements

This section includes detailed financial information for each of the various funds maintained by the City that have been aggregated into consolidated columns within the fund financial statements. The level of detail appearing within these statements is generally compatible with the level of detail appearing in the fund financial statements, allowing for the totals to be traced back and forth from these two sections of the report.



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CONDENSED FINANCIAL INFORMATION

The following condensed information is derived from the government-wide financial statements for the City of Lakeland:

CONDENSED STATEMENT OF NET ASSETSSEPTEMBER 30, 2003

Business-typeGovernmental Activities Total

ASSETSCurrent assets 26,860,340$ 112,584,577$ 139,444,917$ Designated assets 7,466,783 121,785,288 129,252,071Restricted assets 20,149,979 97,356,004 117,505,983Capital assets 115,739,262 883,766,149 999,505,411Other noncurrent assets 2,885,873 12,265,810 15,151,683

Total assets 173,102,237 1,227,757,828 1,400,860,065

LIABILITIESCurrent liabilities 5,488,912 25,212,184 30,701,096 Designated liabilities 251,673 34,979,884 35,231,557Restricted liabilities 3,270,490 26,857,304 30,127,794Accrued liabilities, less current portion 4,758,206 14,732,240 19,490,446Long term debt payable, less current portion 35,101,145 613,909,880 649,011,025

Total liabilities 48,870,426 715,691,492 764,561,918

NET ASSETSInvested in capital assets, net of related debt 80,410,965 346,590,944 427,001,909 Restricted 16,879,489 10,683,102 27,562,591Unrestricted 26,941,357 154,792,290 181,733,647

Total net assets 124,231,811$ 512,066,336$ 636,298,147$



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Program Revenues Net (Expense)Operating Capital Revenue

Functions/Programs Charges Grants and Grants and and ChangesGovernmental activities Expenses for Services Contributions Contributions in Net Assets

General government 12,308,562$ 1,284,336$ 107,875$ - $ (10,916,351)$ Public safety 36,363,558 3,004,941 1,010,006 - (32,348,611) Physical environment 6,644,822 1,941,437 396,447 16,272 (4,290,666) Transportation 8,876,156 811,445 5,082,474 3,497,684 515,447 Economic environment 3,676,556 - 1,770,632 - (1,905,924) Human services 199,269 - - - (199,269) Culture/recreation 11,978,033 1,444,265 1,258,202 1,810,929 (7,464,637) Interest on long-term debt 1,900,311 - - - (1,900,311)

81,947,267 8,486,424 9,625,636 5,324,885 (58,510,322)Business-type activities:

Electric 272,518,405 294,362,255 - - 21,843,850 Water and wastewater 26,280,687 29,361,849 - 2,804,569 5,885,731 Parking 664,388 430,485 - - (233,903) Lakeland Center 6,564,427 3,136,167 25,375 10,000 (3,392,885) Lakeland Linder Regional Airport 5,556,415 4,083,233 - 3,230,466 1,757,284 Solid Waste 8,342,775 8,979,828 - 11,607 648,660 Cleveland Heights Golf Course 2,641,941 2,304,978 - - (336,963)

322,569,038 342,658,795 25,375 6,056,642 26,171,774

Combined totals 404,516,305$ 351,145,219$ 9,651,011$ 11,381,527$ (32,338,548)

General revenues:Property taxes 11,344,358Franchise fees 222,025Utility taxes 13,253,466Tourism taxes 440,004State shared revenues 6,409,955Rents and royalties 6,571,722Investment earnings 4,941,882Miscellaneous 8,822,510

Total general revenues 52,005,922Excess before transfers 19,667,374

Net transfers to/(from) component units (180,696)Change in net assets 19,486,678Net assets, beginning of year 616,811,469Net assets, end of year 636,298,147$

CONDENSED STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2003



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GOVERNMENT-WIDE FINANCIAL ANALYSIS The City’s statement of net assets serves as a useful indicator of a government’s financial position as of a specific point in time. The relative composition of assets versus liabilities as shown on this report is indicative of a healthy (versus a tenuous) financial position. This analysis is most easily accomplished by converting this data into ratios. One such ratio reflects the ability of the government to meet immediate cash demands – the ratio of current assets to current liabilities: Ratio of unrestricted current assets to unrestricted current liabilities as of September 30, 2003:

Other Water & OtherGeneral Governmental Electric Wastewater Business-type

Fund Activities Utility Utility Activities TotalUnrestricted:

Current assets 10,010,157$ 16,850,183$ 82,528,230$ 6,599,445$ 23,456,902$ 139,444,917$ Current liabilities 4,023,584 1,465,328 20,892,059 670,050 3,650,075 30,701,096 Net current assets 5,986,573$ 15,384,855$ 61,636,171$ 5,929,395$ 19,806,827$ 108,743,821$

FY 2003 Ratio 2.49 11.50 3.95 9.85 6.43 4.54

FY 2002 Ratio 2.65 4.87 4.05 11.96 6.31 4.44

Within the category of current assets, total unrestricted cash is down $10 million compared to the preceding fiscal year. This is the direct result of the under-recovery of fuel cost by Lakeland Electric during the year, which is evidenced by the $13.5 million increase in the value of deferred regulatory charges over the same year. The dollar value of net current assets as disclosed above includes those resources that must be set aside to finance any budget deficits appropriated for the following fiscal year. It also includes the dollar value of net current assets such as inventories and accounts receivable, which are not readily convertible to cash. For budgetary purposes, the City performs a separate calculation of net assets that are readily available to finance unforeseen expenditures which may present themselves during the course of an annual budget cycle. This calculation excludes assets already committed to finance predicted budget deficits, and excludes those assets that are not readily convertible to cash. The resulting amount is termed “unappropriated surplus”. The amount of unappropriated surplus as of September 30, 2003 (calculated after allowance for posting the following year budget and carryover of selected appropriations that lapsed as of September 30, 2003), is as follows:

Unappropriated surplus:Other Water & Other

General Governmental Electric Wastewater Business-typeFund Activities Utility Utility Activities

Value as ofSeptember 30, 2003 1,479,143$ 2,638,246$ 16,358,293$ 5,884,636$ 2,767,657$

September 30, 2002 1,133,513$ 3,328,822$ 3,769,221$ 3,763,022$ 1,119,342$

Another useful ratio evaluates the relationship of unpaid long term debt issued to finance capital assets. Given the City’s substantial investment in electric generation and distribution facilities, the largest portion of the City’s net assets (69 percent) reflects its investment in capital assets and the related debt issued to construct those capital assets. The ratio of capital assets to related long term debt is as follows:

Ratio of capital assets to related debt: Total Water & OtherGovernmental Electric Wastewater Business-type

Activities Utility Utility ActivitiesCapital assets 115,739,262$ 632,659,773$ 148,233,169$ 102,873,207$ Related long term debt 35,328,297 459,478,206 50,657,309 27,039,690 Net investment in capital assets, net of related debt 80,410,965$ 173,181,567$ 97,575,860$ 75,833,517$

FY 2003 Ratio 3.28 1.38 2.93 3.80

FY 2002 Ratio 4.25 1.37 2.79 3.65



C - 7

The majority of the long term debt outstanding represents revenue bonds issued by the Electric and Water/Wastewater Utilities. Payment of annual principal and interest on this outstanding debt is secured by a lien on the net operating revenues of those operations. A useful measure of the reasonableness of the dollar value of debt outstanding is a comparison of this secured, annual revenue stream to the amount of debt service payable in a given year. The resulting ratio is termed a coverage ratio. The calculation of the coverage ratio for the year ended September 30, 2003 for the revenue bonds secured by a pledge of net revenues is as follows:

Coverage ratio Water &Electric WastewaterUtility Utility

Operating revenue 294,362,255$ 30,233,397$ Investment and other income 4,434,678 293,122 Less: Operating expenses (excluding depreciation) (216,019,776) (16,689,144) Net operating revenues available to pay debt service 82,777,157 13,837,375

20 percent of Fund Balance (as defined in bond ordinance for Electric Utility bonds only) 25,085,056 N/A

Amount available for debt service 107,862,213$ 13,837,375$

Annual debt service requirementPrincipal 11,745,000$ 2,370,000$ Interest 23,940,419 3,342,075 Total 35,685,419$ 5,712,075$

Coverage ratio - FY 2003 3.02 2.42

Coverage ratio - FY 2002 2.81 5.70

In order to sell bonds in the municipal bond market, the City generally acquires bond ratings from one or more of three nationally recognized bond rating agencies—Moody’s Investor Services, Standard and Poor’s, and Fitch Ratings. These financial institutions assign high or low ratings based on their independent evaluation of the City’s financial position. The bond ratings have a significant influence in establishing the interest rates and interest expense the City will pay when the bonds are sold. The highest rating that may be assigned by any rating agency is triple “A” (Aaa, AAA). One strategy that can be used to obtain a high credit rating for a bond issue is to purchase bond insurance, which effectively insures a triple “A” rating when the bonds are sold. At September 30, 2003, all fixed rate debt of the City with the exception of the Water and Wastewater Utility was insured and, consequently, triple “A” rated. The rating assigned to uninsured the Water and Wastewater debt is Aa3/AA-/AA by Moody’s, Standard and Poor’s, and Fitch Rating services respectively. The City also had one uninsured variable rate bond issue outstanding at the year’s end that was rated VMIG1/A-1+/ F1+ by Moody’s, Standard and Poor’s and Fitch Ratings services respectively. The City obtains an “underlying” rating on bonds issued by Lakeland Electric. This represents the rating of the bonds had they been issued without the benefit of bond insurance. Currently, the underlying rating on Lakeland Electric debt is A1/AA-/AA- by Moody’s, Standard and Poor’s, and Fitch Rating services respectively. This rating was last confirmed by S&P on July 23, 2003 and by Fitch on September 17, 2003 All of the ratings assigned to the City’s outstanding debt classify the debt as high quality, investment grade debt. In February of 2003, the City advance-refunded its’ 1994 Utility Tax and Tourist Development Tax Revenue Bonds. The refunded bonds had a carrying value, net of debt service reserve and sinking funds, of $16,761,740 and carried an average interest rate of 5.9 percent. These were refunded by the Utilities Tax and Tourist Tax Refunding bonds series 2002A and 2002C. These bonds have a carrying value, net of debt service reserve fund of $18,720,124 , and an average interest rate of 3.55 percent. The transaction resulted in a Loss on Disposal of $1,958,385 which is being amortized over the remaining life of the refunding bond issue. The transaction resulted in a present value savings of $1,192,275. This transaction also included a new money portion – the Utilities Tax Revenue Bonds Series 2002B issued in the par amount of $15,355,000. This issue provided for $14,000,000 in proceeds to be used to finance a variety of public-purpose projects, including construction of the Lake Mirror park in downtown Lakeland, construction of a fire station, and major upgrades to the city’s radio system.



C - 8

The City also obtains financing through the Sunshine State Governmental Financing Commission, which operates a bond financing pool consisting of a number of large issuers in the state of Florida. The City has $17.7 million in outstanding loans through this financing pool, payable at variable rates of interest averaging below 1.5 percent. The City has no general obligation bonded debt outstanding. The business-type activities operated by the City of Lakeland generated a combined net profit of $26.2 million, broken down by the types of operations as follows:

Annual Net Revenue(Expense)

Electric 21,843,850$ Water and Wastewater 5,885,731 Parking (233,903) Lakeland Center (3,392,885) Lakeland Linder Regional Airport 1,757,284 Solid Waste 648,660 Cleveland Heights Golf Course (336,963)

Total 26,171,774$

From this profit earned from business-type activities, $23.7 million was dedicated towards financing a portion of the costs of basic governmental services. This was added to $46 million in taxes and investment income to finance these basic governmental services. The dollar value of these costs, measured using the full accrual basis of accounting (net of directly-related user charges or grant revenues) was as follows:

Overall, the revenues collected by the City during the fiscal year exceeded expenses (measured using the full accrual basis of accounting) by $19.5 million. This excess was used to finance costs such as capital improvements and debt retirement, and to increase the amount of unrestricted reserves.

Annual Net Revenue(Expense)

General government (10,916,351)$ Public safety (32,348,611) Physical environment (4,290,666) Transportation 515,447 Economic environment (1,905,924) Human services (199,269) Culture/recreation (7,464,637) Interest on long-term debt (1,900,311)

Total (58,510,322)$



C - 9

FUND-BY-FUND FINANCIAL ANALYSIS As noted earlier, the City of Lakeland uses fund accounting to segregate the transactions of the City into specific types of operations. The City maintains three major funds: The General Fund, the Department of Electric Utilities, and the Water & Wastewater Utilities Fund. The following discussion addresses significant activity within these three major fund types: General Fund The General Fund is used to account for the majority of the governmental activities of the City, including activities of the Police and Fire Departments; Public Works (road and drainage construction and maintenance); the Parks & Recreation Department; libraries; growth management; public utilities (such as street lighting); and administrative functions. These activities are financed from a combination of taxes, user fees, and the operating profits earned by the business-type activities operated by the City. A summary of the operations of this fund, including a comparison to the approved budget, is as follows:

GENERAL FUNDSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE

YEAR ENDED SEPTEMBER 30, 2003

Original FinalBudget Budget Actual Variance

REVENUESTaxes 22,026,370$ 22,026,370$ 23,268,025$ 1,241,655$ Licenses and permits 2,410,850 2,410,850 2,223,201 (187,649)Intergovernmental 8,079,285 8,409,875 8,246,861 (163,014)Charges for services 2,013,217 2,441,726 2,344,922 (96,804)Fines and forfeits 922,000 1,036,110 1,049,606 13,496Miscellaneous 982,606 1,151,415 841,572 (309,843)

Total revenues 36,434,328 37,476,346 37,974,187 497,841

EXPENDITURESCurrent:

General government: 8,224,730 8,666,889 8,074,358 592,531Public safety 33,680,241 34,902,150 33,665,124 1,237,026Physical environment 5,756,301 5,934,757 5,951,025 (16,268)Transportation 4,629,169 4,606,545 4,518,658 87,887Economic environment: 544,502 546,002 462,867 83,135Human services 35,650 138,550 110,570 27,980Culture/Recreation 10,298,027 10,384,389 10,111,855 272,534

Capital outlay 393,484 747,460 414,732 332,728Debt service 88,897 88,897 2,101 86,796

Total expenditures 63,651,001 66,015,639 63,311,290 2,704,349EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (27,216,673) (28,539,293) (25,337,103) 3,202,190NET TRANSFERS (TO) / FROM OTHER FUNDS 25,360,999 25,614,556 25,586,424 28,132

NET CHANGE IN FUND BALANCE (1,855,674)$ (2,924,737)$ 249,321$ 3,174,058$



C - 10

The budgeted revenues increased $1,042k between the original and final budget. $333k of this is due to the receipt of additional federal and state grant programs during the year, and the remainder is the result of the receipt of cash contributions and expense reimbursements which could not be anticipated at the time the original budget was prepared. The budgeted appropriations increased $2,364k between the original and final budget. $1,424k of this increase is the result of appropriations carried over from the preceding budget year. $493k represents the cost associated with additional federal and state grant programs during the year, $741k represents the appropriation of contributions and reimbursements, and $415k is the result of unanticipated expenses, the majority of which related to increases in employee health insurance costs. The budget does include $561k in mid-year budget reductions that were implemented by management in response to budget shortfalls experienced in fiscal 2002. Actual revenues fell short of the budgeted revenues by an amount of 1.3 percent. This is consistent with historical collection patterns, which tend to average excess revenues equal to 1.5 percent of budget. Actual expenses were less than the approved budget by 4.1 percent or $2.7 million. This represents a slightly larger percentage of actual versus budgeted expenditure than historical experience of 5.3 percent. This variance of 1.2 percent equates to approximately $800k. The result is that the unappropriated surplus, which represents the amount of unrestricted, undesignated net assets on hand in the General Fund as of September 30, 2003, was $1.5 million or 2.1 percent of the FY 2004 operating budget. This is up slightly from the surplus balance at the end of 2002 (1.3 percent), but represents less than half of the average amount of surplus on hand when compared to the preceding 10 year period (5.2 percent). As indicated above, management instructed department heads to review operating budgets for the FY 2003 fiscal year and made reductions in budgeted expenses in an effort to mitigate this decline in cash reserves. In addition, the approved budget for FY 2004 was curtailed in many areas, including the elimination of a cost of living increase for City employees, which was expected to save over $500k. Despite this, increases in insurance and pension costs suggest that the surplus balance will not rebound significantly over the next few years. The City collects $6 to $7 million annually from the lease of a city-owned medical center to a private, not-for-profit corporation. The majority of this revenue source has been dedicated to financing significant city-wide parks and recreation and public safety capital improvements for the past 15-20 years. A portion of this funding source has been allocated to financing operating costs associated with those improvements in recent years. Future growth in the dollar value of this funding source can be dedicated towards continuing funding of operating expenses and/or restoration of reserve levels in the General Fund. Lakeland Electric The Lakeland Electric Fund is used to account for the generation and delivery of electric power to residential and commercial customers in the greater Lakeland area. The service territory for Lakeland Electric is a predefined, 258 square mile area, encompassing all of the incorporated City limits and the surrounding area. The utility serves approximately 113,000 retail customers.



C - 11

A summation of the results of operations for Lakeland Electric is as follows:

DEPARTMENT OF ELECTRIC UTILITIESSCHEDULE OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS

FISCAL YEARS ENDED SEPTEMBER 30, 2003 AND 2002

2003 2002OPERATING REVENUES

Sales of energy - retail 229,975,771$ 218,788,921$ Sales of energy and capacity sales - wholesale 56,900,923 38,895,652 All other operating revenue 7,485,561 6,601,287

294,362,255 264,285,860 OPERATING EXPENSES

Generation 168,982,971 152,150,260 Transmission and distribution 17,533,197 16,814,861 Customer service and accounting 8,442,818 8,621,914 Administrative and general 21,060,790 14,959,480 Depreciation 31,185,680 29,493,305

247,205,456 222,039,820

OPERATING INCOME 47,156,799 42,246,040

NON-OPERATING ACTIVITY:Investment and other income 2,171,986 2,948,056 Interest on debt (26,062,408) (24,403,101)Transfers to other funds (20,940,707) (19,846,889)

(44,831,129) (41,301,934) CHANGE IN NET ASSETS 2,325,670$ 944,106$

The single largest operating aspect of the Electric Utility operations is energy generation. The average demand for energy placed on the system from retail customers is approximately 400 megawatts (MW), with peak demand during very warm or cold periods of between 625 and 735 MW. The generating capacity of the production units owned by the City is 1,028 MW. Almost 40 percent of this capacity was brought online within the last two years, in the form of a combined-cycle gas unit and a 50 MW peaking unit. When this combined cycle unit was conceived in the late 1990’s, there was a significant demand for wholesale energy in the Florida and national marketplace. At that point in time, the City anticipated selling a portion of the unit to another utility, and/or opportunities to enter into firm power contracts for generating capacity. Since completion of the construction of this unit, the opportunity for sales of ownership in the unit has not materialized. As a result, the capital and maintenance costs associated with this excess capacity are being fully offset by wholesale sales, which has reduced the profitability of the utility when compared to the late 1990’s. The City began selling power to the Florida Municipal Power Agency (FMPA) in December of 2000 in conjunction with a 10 year wholesale power sales agreement that provided FMPA with up to 100MW of power based on a fixed pricing schedule. Increases in natural gas prices have resulted in losses on this contract, given it’s fixed price nature. Net losses for fiscal 2003 were approximately $6.9 million. The City is in the process of renegotiating the terms of this contract in an effort to minimize future losses resulting from the energy pricing component of the contract, either through early termination of the contract, adjustment of the pricing schedule, or negotiation of firm commitments regarding the scheduling and quantity of power sales. The Electric Utility provides a dividend to the General Fund each year in the form of cash and utility services. The total amount of the dividend for fiscal year 2003 was $20.7 million or 13.7 percent of the non-fuel gross operating revenues of the utility. This dividend rate as a percentage of gross non-fuel revenues has remained steady over the last 15 years. As indicated on page C-7, coverage on bonded debt of Electric Utility remains very strong at 3.03 times the annual debt service requirement. The coverage ratio required by the enabling bond ordinance is 1.2 times.



C - 12

Water and Wastewater Utility A summation of the results of operations for the combined Water and Wastewater Utility is as follows:

WATER AND WASTEWATER UTILITIES FUNDSCHEDULE OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS

FISCAL YEARS ENDED SEPTEMBER 30, 2003 AND 2002

2003Water Wastewater Total 2002

OPERATING REVENUESCharges for services 16,220,042$ 13,141,807$ 29,361,849$ 29,374,618$

OPERATING EXPENSESPersonal services 3,322,177 4,181,660 7,503,837 6,552,875 Other operating expenses 4,380,072 4,805,235 9,185,307 8,829,958 Depreciation 2,054,384 3,534,691 5,589,075 5,421,652

9,756,633 12,521,586 22,278,219 20,804,485

OPERATING INCOME 6,463,409 620,221 7,083,630 8,570,133

NON-OPERATING ACTIVITY:Investment and other income 1,821,569 394,392 2,215,961 1,268,068 Interest expense (3,162,846) (942,023) (4,104,869) (4,063,411) Gain (loss) on disposal of fixed assets - (19,641) (19,641) 881,776 Capital grants and contributions 1,398,472 1,406,097 2,804,569 4,029,412 Loss on cash defeasance of long term debt - - - (2,210,211) Transfers to/from other funds (3,002,542) (1,741,380) (4,743,922) (4,838,316)

(2,945,347) (902,555) (3,847,902) (4,932,682)

CHANGE IN NET ASSETS 3,518,062$ (282,334)$ 3,235,728$ 3,637,451$

The Water/Wastewater Utility also provides a dividend to the General Fund each year in the form of cash and utility services. The total amount of the dividend for fiscal year 2003 was $4.6 million or 15.9 percent of the gross operating revenues of the utility. The utility is currently involved in a major capital expansion, including construction of a 9 MGD water treatment plant valued at $21 million, $13 million in water distribution system improvements, and $11 million in treatment improvements within the Wastewater system. As indicated on page C-7, coverage on bonded debt of Water/Wastewater Utility remains very strong at 2.42 times the annual debt service requirement. The coverage ratio required by the enabling bond ordinance is 1.0 times.

REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the City of Lakeland’s finances and was prepared by the Finance Department of the City. Requests for additional information should be addressed to the Finance Director at 228 South Massachusetts Ave, Lakeland, FL 33801.

BASIC FINANCIAL STATEMENTS


STATEMENT OF NET ASSETSSEPTEMBER 30, 2003

WITH COMPARATIVE DATA FOR THE YEAR ENDED SEPTEMBER 30, 2002Primary Government

Business-type Component ASSETS Governmental Activities 2003 2002 UnitsCurrent assets:

Cash and cash equivalents 14,723,154$ 28,767,043$ 43,490,197$ 53,538,819$ 6,690,330$ Receivables, net 7,086,867 43,755,636 50,842,503 54,161,048 57,087Internal balances 2,529,975 (2,529,975) - - - Due from other governments 2,062,175 710,919 2,773,094 2,402,097 2,119,717Inventory - 28,051,036 28,051,036 31,056,045 220,224Prepaid expenses 458,169 1,178,187 1,636,356 6,092,168 113,689Deferred regulatory charges - 12,651,731 12,651,731 - -

Total current assets 26,860,340 112,584,577 139,444,917 147,250,177 9,201,047Noncurrent assets:

Designated assets 7,466,783 121,785,288 129,252,071 131,078,561 2,657,412Restricted assets 20,149,979 97,356,004 117,505,983 119,973,049 99,658Capital assets:

Land 22,474,777 34,512,056 56,986,833 52,391,870 265,634Construction in process 6,317,512 35,703,448 42,020,960 41,462,481 - Facilities and equipment in service 174,778,806 1,309,038,544 1,483,817,350 1,432,088,068 14,933,949

Less accumulated depreciation (87,831,833) (495,487,899) (583,319,732) (553,334,419) (6,940,010)115,739,262 883,766,149 999,505,411 972,608,000 8,259,573

Other noncurrent assets:Deposits - 1,445 1,445 1,445 - Net pension obligation (asset) 2,885,873 3,533,540 6,419,413 9,951,439 - Unamortized debt issue costs - 8,730,825 8,730,825 7,413,679 -

2,885,873 12,265,810 15,151,683 17,366,563 - Total noncurrent assets 146,241,897 1,115,173,251 1,261,415,148 1,241,026,173 11,016,643

Total assets 173,102,237 1,227,757,828 1,400,860,065 1,388,276,350 20,217,690LIABILITIESCurrent liabilities:

Accounts payable 1,238,916 19,058,445 20,297,361 20,802,210 198,365Accrued liabilities 3,250,399 3,549,844 6,800,243 5,928,997 227,106Payable from designated assets - 1,291,641 1,291,641 2,583,972 - Accrued interest payable - 6,839 6,839 10,844 - Notes payable 227,152 361,501 588,653 1,272,283 - Deposits payable 10,613 835,962 846,575 684,600 - Deferred revenue 761,832 107,952 869,784 988,302 - Deferred regulatory revenue - - - 872,984 -

Total current liabilities 5,488,912 25,212,184 30,701,096 33,144,192 425,471Noncurrent liabilities:

Designated liabilities 251,673 34,979,884 35,231,557 44,587,212 - Restricted liabilities 3,270,490 26,857,304 30,127,794 28,022,501 - Accrued liabilities, less current portion 4,758,206 14,732,240 19,490,446 17,189,417 300,591Promissory notes and loans payable 10,276,348 8,044,302 18,320,650 18,369,729 - Revenue bonds payable, less current portion 24,824,797 629,860,610 654,685,407 651,065,409 -

Less unamortized bond discount - (23,995,032) (23,995,032) (20,913,579) - Total noncurrent liabilities 43,381,514 690,479,308 733,860,822 738,320,689 300,591

Total liabilities 48,870,426 715,691,492 764,561,918 771,464,881 726,062NET ASSETSInvested in capital assets, net of related debt 80,410,965 346,590,944 427,001,909 409,585,536 8,259,573Restricted for:

Debt service 458,837 2,725,412 3,184,249 1,481,174 - Capital improvements 12,598,245 7,957,690 20,555,935 18,376,939 99,658Law enforcement 378,460 - 378,460 251,678 - Community development 784,652 - 784,652 979,611 - Maintenance and repair 2,516,938 - 2,516,938 2,246,211 - Endowments

Nonexpendable 142,357 - 142,357 125,497 - 16,879,489 10,683,102 27,562,591 23,461,110 99,658

Unrestricted 26,941,357 154,792,290 181,733,647 183,764,823 11,132,397Total net assets 124,231,811$ 512,066,336$ 636,298,147$ 616,811,469$ 19,491,628$

The accompanying notes are an integral part of the financial statements.

D - 1


STATEMENT OF ACTIVITIESFOR THE YEAR ENDED SEPTEMBER 30, 2003

WITH COMPARATIVE DATA FOR THE YEAR ENDED SEPTEMBER 30, 2002

Program RevenuesOperating Capital

Charges Grants and Grants andFunctions/Programs Expenses for Services Contributions ContributionsPrimary government:Governmental activities

General government 12,308,562$ 1,284,336$ 107,875$ - $ Public safety 36,363,558 3,004,941 1,010,006 - Physical environment 6,644,822 1,941,437 396,447 16,272Transportation 8,876,156 811,445 5,082,474 3,497,684Economic environment 3,676,556 - 1,770,632 - Human services 199,269 - - - Culture/recreation 11,978,033 1,444,265 1,258,202 1,810,929Interest on long-term debt 1,900,311 - - -

Total governmental activities 81,947,267 8,486,424 9,625,636 5,324,885

Business-type activities:Electric 272,518,405 294,362,255 - - Water and Wastewater 26,280,687 29,361,849 - 2,804,569Parking 664,388 430,485 - - Lakeland Center 6,564,427 3,136,167 25,375 10,000Lakeland Linder Regional Airport 5,556,415 4,083,233 - 3,230,466Solid Waste 8,342,775 8,979,828 - 11,607Cleveland Heights Golf Course 2,641,941 2,304,978 - -

Total business-type activities 322,569,038 342,658,795 25,375 6,056,642Total primary government 404,516,305$ 351,145,219$ 9,651,011$ 11,381,527$

Component units:Mass Transit District 7,022,044$ 1,468,669$ 2,982,821$ 707,884$ Downtown Development Authority 349,041 - - -

Total component units 7,371,085$ 1,468,669$ 2,982,821$ 707,884$

General revenues:Property taxesFranchise feesUtility taxesTourism taxesState shared revenuesRents and royaltiesInvestment earningsMiscellaneousLoss on cash defeasance of long term debtNet transfers (to)/from other fundsNet contributions (to)/from component units

Total general revenues, special items, and transfersChange in net assets

Net assets, beginning of yearNet assets, end of year


D - 2

Net (Expense) Revenue and Changes in Net AssetsPrimary Government

Governmental Business-type Total ComponentActivities Activities 2003 2002 Units

(10,916,351)$ - $ (10,916,351)$ (7,755,884)$ - $ (32,348,611) - (32,348,611) (29,399,757) - (4,290,666) - (4,290,666) (4,596,989) -

515,447 - 515,447 92,851 - (1,905,924) - (1,905,924) (248,297) -

(199,269) - (199,269) (220,896) - (7,464,637) - (7,464,637) (7,769,780) - (1,900,311) - (1,900,311) (873,033) -

(58,510,322) - (58,510,322) (50,771,785) -

- 21,843,850 21,843,850 17,871,261 - - 5,885,731 5,885,731 8,375,785 - - (233,903) (233,903) (234,776) - - (3,392,885) (3,392,885) (3,252,944) - - 1,757,284 1,757,284 1,398,694 - - 648,660 648,660 660,044 - - (336,963) (336,963) (216,030) - - 26,171,774 26,171,774 24,602,034 -

(58,510,322) 26,171,774 (32,338,548) (26,169,751) -

- - - - (1,862,670)- - - - (349,041)- - - - (2,211,711)

11,344,358 - 11,344,358 10,213,198 2,659,284222,025 - 222,025 367,971 -

13,253,466 - 13,253,466 11,417,676 - - 440,004 440,004 440,004 -

6,409,955 - 6,409,955 6,130,364 - 6,571,722 - 6,571,722 6,423,137 - 1,239,626 3,702,256 4,941,882 6,617,932 151,6017,671,144 1,151,366 8,822,510 3,705,531 2,342

- - - (2,210,211) - 23,671,666 (23,671,666) - - -

(180,696) - (180,696) (177,153) 180,69670,203,266 (18,378,040) 51,825,226 42,928,449 2,993,92311,692,944 7,793,734 19,486,678 16,758,698 782,212

112,538,867 504,272,602 616,811,469 600,052,771 18,709,416124,231,811$ 512,066,336$ 636,298,147$ 616,811,469$ 19,491,628$

D - 3


BALANCE SHEETGOVERNMENTAL FUNDS

SEPTEMBER 30, 2003WITH COMPARATIVE DATA FOR THE YEAR ENDED SEPTEMBER 30, 2002

TotalOther Governmental

General Governmental FundsFund Funds 2003 2002

ASSETSCash and cash equivalents 9,972,285$ 28,601,160$ 38,573,445$ 36,311,999$ Cash with paying agents - 477,331 477,331 641,245Investments - 2,400,422 2,400,422 2,408,784Receivables, net 1,262,777 6,287,433 7,550,210 6,766,000Due from other funds - 408,833 408,833 309,821Due from other governments 1,103,648 1,383,902 2,487,550 1,975,020Prepaid expenditures 161,852 296,317 458,169 303,009Advances to other funds - 1,694,511 1,694,511 -

Total assets 12,500,562$ 41,549,909$ 54,050,471$ 48,715,878$

LIABILITIES AND FUND BALANCESLiabilities:

Accounts payable 541,241$ 2,701,168$ 3,242,409$ 2,830,677$ Accrued liabilities 3,226,720 540,965 3,767,685 3,204,161Notes payable - 15,000 15,000 22,500Deposits payable 10,613 - 10,613 13,690Due to other funds - 197,846 197,846 223,090Revenue bonds payable - 315,972 315,972 1,240,000Deferred revenue 1,524,615 9,284,402 10,809,017 7,699,708

Total liabilities 5,303,189 13,055,353 18,358,542 15,233,826

Fund Balances:Reserved for:

Encumbrances 552,694 5,552,254 6,104,948 12,749,480Prepaid expenditures 161,852 296,118 457,970 302,945Community development - 160,384 160,384 288,346Law enforcement 267,746 - 267,746 235,653Capital improvements - 10,654,209 10,654,209 4,793,009Maintenance and repair - 2,516,938 2,516,938 2,246,211Debt service - 458,837 458,837 23,528Endowments - 142,357 142,357 125,497

982,292 19,781,097 20,763,389 20,764,669Unreserved:

Designated:Cultural activities 1,139,787 - 1,139,787 1,082,101Recreation facilities 955,334 - 955,334 779,670Working capital 300,000 - 300,000 300,000Petty cash 29,621 - 29,621 23,554Subsequent years expenditures 2,313,804 - 2,313,804 3,190,265Special revenue funds:

Working capital - 300,000 300,000 300,000Capital improvements - (193,118) (193,118) 1,813,704Subsequent years expenditures - 6,175,704 6,175,704 765,754

Undesignated 1,476,535 - 1,476,535 1,133,513Special revenue funds - 2,430,873 2,430,873 3,328,822

6,215,081 8,713,459 14,928,540 12,717,383Total fund balances 7,197,373 28,494,556 35,691,929 33,482,052Total liabilities and fund balances 12,500,562$ 41,549,909$ 54,050,471$ 48,715,878$


D - 4


RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEETTO THE GOVERNMENT-WIDE STATEMENT OF NET ASSETS

SEPTEMBER 30, 2003

Total Fund Balances - Total Governmental Funds 35,691,929$

Amounts reported for governmental activities in the statement of net assets are different because:

Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. The cost of the assets is $203,571,095 and the accumulated depreciation is $87,831,833.

115,739,262

The value of certain assets are not recorded in the governmental fund financial statements, because such amounts normally are not convertible to cash on a timely enough basis to pay for the current period's expenditures. These assets consist of the following:

Revenues collected more than 60 days from year end. 9,376,773

Net Pension Obligation (an assets) attributable to employee salaries financed from governmental fund types. 2,885,873

Certain long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported as liabilities in the governmental funds. Long-term liabilities at year-end consist of:

Accrued liability for compensated absences. (4,758,206)

Bonds, loans and notes payable. (35,334,912)

Internal Service Funds are used to account for certain operating costs that are common to all City funds, such as the cost of vehicles, insurance, and centralized purchasing. These costs are allocated to the individual funds on a pro-rata basis, however the assets of these Internal Service Funds are recognized within the business-type activities component of the Government-wide Statement of Net Assets. The Internal Service Funds operated at a gain for the fiscal year. The cumulative pro-rata share of these gains attributable to governmental activities has been included in the allocation of costs to the governmental activities, resulting in an uncollected receivable from the business type activities.

631,092

Net Assets of Governmental Activities 124,231,811$


D - 5


STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCEGOVERNMENTAL FUNDS

FOR THE YEAR ENDED SEPTEMBER 30, 2003

TotalOther Governmental

General Governmental FundsFund Funds 2003 2002

REVENUESTaxes 23,268,025$ 6,634,298$ 29,902,323$ 26,848,644$ Licenses and permits 2,223,201 - 2,223,201 2,413,095Intergovernmental 8,246,861 7,297,659 15,544,520 15,053,538Charges for services 2,344,922 2,868,695 5,213,617 4,804,024Fines and forfeits 1,049,606 - 1,049,606 1,017,180Miscellaneous 841,572 10,994,537 11,836,109 10,341,281

Total revenues 37,974,187 27,795,189 65,769,376 60,477,762


General government 8,074,358 2,672,530 10,746,888 7,661,481Public safety 33,665,124 364,545 34,029,669 32,300,614Physical environment 5,951,025 352,640 6,303,665 6,300,969Transportation 4,518,658 3,643,741 8,162,399 7,997,819Economic environment 462,867 3,211,042 3,673,909 2,116,199Human services 110,570 88,699 199,269 217,964Culture/recreation 10,111,855 262,875 10,374,730 10,063,936

Capital outlay 414,732 24,104,365 24,519,097 21,397,473Debt service 2,101 4,238,056 4,240,157 3,519,056

Total expenditures 63,311,290 38,938,493 102,249,783 91,575,511

Excess (deficiency) of revenuesover expenditures (25,337,103) (11,143,304) (36,480,407) (31,097,749)

OTHER FINANCING SOURCES (USES)Proceeds from issuance of long-term debt - 15,219,585 15,219,585 12,510,000Transfers from other funds 27,434,853 9,933,031 37,367,884 34,306,986Transfers to other funds (1,848,429) (11,868,060) (13,716,489) (12,693,601)Contributions to component units - (180,696) (180,696) (177,153)

Total other financing sources and (uses) 25,586,424 13,103,860 38,690,284 33,946,232Net change in fund balances 249,321 1,960,556 2,209,877 2,848,483FUND BALANCE, beginning of year 6,948,052 26,534,000 33,482,052 30,633,569FUND BALANCE, end of year 7,197,373$ 28,494,556$ 35,691,929$ 33,482,052$


D - 6


RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,AND CHANGES IN FUND BALANCE OF THE GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES

SEPTEMBER 30, 2003

Net change in fund balances - total governmental funds 2,209,877$

Amounts reported for governmental activities in the statement of activities are different because:

Capital outlays are reported in governmental funds as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlays exceed depreciation expense in the current period. 19,982,188

The book value of assets disposed of during the year are not reported as an expenditure in the governmental funds, however it is recognized as a component of gain or loss on the disposition of capital assets in the statement of activities. (635,989)

Proceeds from issuance of long-term debt is recorded as a revenue in the governmental funds, but the proceeds result in an additional liability in the statement of net assets. (15,219,585)

Repayment of bond principal is recorded as an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. 2,339,846

Some of the assets capitalized this year were donated from private, third parties. The value of these donations are not recorded as revenues in the governmental funds because they do not represent available, spendable resources. However, these are recognized as Capital Grants and Contributions in the statement of activities. 919,131

Contributions to certain pension plans use current financial resources and are recorded in full as expenditures in the governmental funds, however a portion of these disbursements increase the net pension obligation (an asset) in the statement of activities. (1,635,125)

Certain deferred revenues that do not provide current financial resources are not reported as revenues inthe governmental funds, but are included in the statement of activities. 3,047,274

In the governmental funds, personnel costs are measured by the amount of financial resources used, which does not include the increase in accrued, compensated absences. These expenses are recorded in the statement of activities. (185,962)

The revenue and expenses of the Internal Service Funds are reported as a component of proprietary funds and accordingly are not recognized in the governmental funds. A portion of these net revenues and expenses are recorded as governmental activities in the statement of activities. 871,289

Change in net assets of governmental activities 11,692,944$


D - 7


STATEMENT OF NET ASSETSPROPRIETARY FUNDSSEPTEMBER 30, 2003

Business-type ActivitiesEnterprise Funds

Department Water and Otherof Electric Wastewater Enterprise Total Internal Service

ASSETS Utilities Utilities Funds 2003 2002 FundsCurrent assets:

Cash and cash equivalents 1,128,697$ 4,071,955$ 4,233,711$ 9,434,363$ 14,007,763$ 19,332,680$ Receivables 42,056,129 1,978,577 1,033,714 45,068,420 50,116,107 -

Less allowance for uncollectibles (913,655) (100,699) (298,430) (1,312,784) (1,818,086) - Due from other funds - - - - - 966,021Due from other governments - 105,865 568,549 674,414 645,235 36,505Inventory 26,546,702 540,938 62,136 27,149,776 30,250,606 901,260Prepaid expenses 1,058,626 2,809 54,498 1,115,933 5,788,815 62,254Deferred Regulatory Charges 12,651,731 - - 12,651,731 - -

Total current assets 82,528,230 6,599,445 5,654,178 94,781,853 98,990,440 21,298,720Noncurrent assets:

Designated assets 96,613,406 9,414,526 1,773,283 107,801,215 112,711,445 27,443,372Restricted assets 33,572,299 52,280,262 2,916,259 88,768,820 96,462,656 8,587,184Capital assets:

Land 9,454,342 10,621,670 14,426,072 34,502,084 32,262,460 9,972Construction in process 27,607,910 7,591,971 503,567 35,703,448 26,233,905 - Facilities and equipment in service 968,128,443 200,589,197 104,011,096 1,272,728,736 1,252,732,363 36,309,808

Less accumulated depreciation (372,530,922) (70,569,669) (32,163,883) (475,264,474) (450,056,563) (20,223,425)Total capital assets 632,659,773 148,233,169 86,776,852 867,669,794 861,172,165 16,096,355

Other noncurrent assets:Deposits - - 1,445 1,445 1,445 - Advances to other funds - - - - - 8,911,531Net pension obligation (asset) 2,706,403 315,623 329,661 3,351,687 5,164,661 181,853Unamortized debt issue costs 5,506,100 522,012 1,855,363 7,883,475 6,928,807 847,350

8,212,503 837,635 2,186,469 11,236,607 12,094,913 9,940,734Total noncurrent assets 771,057,981 210,765,592 93,652,863 1,075,476,436 1,082,441,179 62,067,645

Total assets 853,586,211 217,365,037 99,307,041 1,170,258,289 1,181,431,619 83,366,365 LIABILITIESCurrent liabilities:

Accounts payable 18,030,489 247,749 543,444 18,821,682 18,600,329 236,763Accrued liabilities 2,724,097 376,354 336,108 3,436,559 2,987,464 113,285Due to other funds 137,473 45,947 987,707 1,171,127 986,428 5,881Payable from designated assets - - - - - 1,291,641Accrued interest payable - - 3,313 3,313 7,318 3,526Current portion of loans payable - - 168,891 168,891 150,283 192,610Deferred revenue - - 107,952 107,952 84,440 - Deposits payable - - 788,869 788,869 670,910 47,093Deferred regulatory revenue - - - - 872,984 -

Total current liabilities 20,892,059 670,050 2,936,284 24,498,393 24,360,156 1,890,799Noncurrent liabilities:

Designated liabilities 24,073,665 4,553,824 800,000 29,427,489 39,556,177 5,552,395Restricted liabilities 6,793,408 11,311,134 2,275,579 20,380,121 19,331,876 6,477,183Accrued liabilities, less current portion 13,094,002 962,433 454,274 14,510,709 12,386,444 221,531Advances from other funds, less current portion 1,099,784 13,826,875 9,085,019 24,011,678 22,277,504 47,048Promissory notes and loans payable - 758,907 4,572,747 5,331,654 5,282,229 2,712,648Revenue bonds payable, less current portion 520,730,409 67,972,952 14,622,924 603,326,285 613,335,409 26,534,325

Less unamortized bond discount (25,333,862) 1,833,601 (58,367) (23,558,628) (20,451,504) (436,404)Total noncurrent liabilities 540,457,406 101,219,726 31,752,176 673,429,308 691,718,135 41,108,726

Total liabilities 561,349,465 101,889,776 34,688,460 697,927,701 716,078,291 42,999,525NET ASSETS

Invested in capital assets, net of related debt 173,181,567 97,575,860 59,790,091 330,547,518 320,605,406 16,043,426Restricted

Debt service - 511,528 103,883 615,411 1,045,870 2,110,001Capital improvement - 7,957,690 - 7,957,690 7,774,341 -

Unrestricted 119,055,179 9,430,183 4,724,607 133,209,969 135,927,711 22,213,413Total net assets 292,236,746$ 115,475,261$ 64,618,581$ 472,330,588$ 465,353,328$ 40,366,840$


D - 8


RECONCILIATION OF THE PROPRIETARY FUNDS STATEMENT OF NET ASSETSTO THE GOVERNMENT-WIDE STATEMENT OF NET ASSETS

SEPTEMBER 30, 2003

Net assets - business-type activities:

Enterprise Funds 472,330,588$ Internal Service Funds 40,366,840

512,697,428

Amounts reported for business-type activities in the statement of net assets are different because:

Internal Service Funds are recognized within the business-type activities component of the Government-Wide Statement of Net Assets, however the revenues and expenses of Internal Service Funds are allocated to the governmental and proprietary fund-types on a pro-rata basis. The Internal Service Funds operated at a gain for the fiscal year resulting in an unpaid liability to the governmental activities in the Government-Wide Statement of Net Assets. (631,092)

Net Assets of Business-type Activities 512,066,336$


D - 9


STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETSPROPRIETARY FUNDS

FOR THE YEAR ENDED SEPTEMBER 30, 2003WITH COMPARATIVE DATA FOR THE YEAR ENDED SEPTEMBER 30, 2002


Department Water and Otherof Electric Wastewater Enterprise Total Internal Service

Utilities Utilities Funds 2003 2002 FundsOPERATING REVENUES

Charges for services 294,362,255$ 29,361,849$ 18,934,691$ 342,658,795$ 291,982,644$ 24,414,355$

OPERATING EXPENSESPersonal services 34,925,500 7,503,837 7,257,368 49,686,705 44,482,643 2,707,682Other operating expenses 181,094,276 9,185,307 11,150,256 201,429,839 160,698,313 17,605,960Depreciation 31,185,680 5,589,075 3,402,021 40,176,776 38,260,513 3,408,890

Total operating expenses 247,205,456 22,278,219 21,809,645 291,293,320 243,441,469 23,722,532Operating income (loss) 47,156,799 7,083,630 (2,874,954) 51,365,475 48,541,175 691,823

NONOPERATING REVENUES (EXPENSES)Property and other taxes - - 440,004 440,004 440,004 - Federal, state and local grants - - 25,375 25,375 31,771 - Investment revenue 2,447,192 1,792,542 127,066 4,366,800 4,553,881 1,437,238Net increase (decrease) in the fair value of

investments and cash equivalents (880,762) 5,782 (79,934) (954,914) (342,974) (674,556)Interest income on internal loans - - - - - 1,316,721Miscellaneous revenue (expense) 605,556 417,637 145,590 1,168,783 185,005 729,573Contributions & donations - - - - 5,000 - Rebate on fuel taxes - - - - - 142,417Interest expense (23,925,296) (4,069,849) (1,305,310) (29,300,455) (28,282,495) (2,294,183)Amortization (2,137,112) (35,020) (86,639) (2,258,771) (1,861,838) (57,571)Gain (loss) on disposal of fixed assets - (19,641) 2,224 (17,417) 802,625 81,296

Total nonoperating revenue (expenses) (23,890,422) (1,908,549) (731,624) (26,530,595) (24,469,021) 680,935Income (loss) before contributions,transfers and other contributions 23,266,377 5,175,081 (3,606,578) 24,834,880 24,072,154 1,372,758

Capital grants and contributions - 2,804,569 3,252,073 6,056,642 7,298,313 - Loss on cash defeasance of long term debt - - - - (2,210,211) - Transfers from other funds - 2,663 3,047,043 3,049,706 3,483,395 322,303Transfers to other funds (20,940,707) (4,746,585) (1,276,676) (26,963,968) (26,088,192) (7,298)Change in net assets 2,325,670 3,235,728 1,415,862 6,977,260 6,555,459 1,687,763NET ASSETS, beginning of year 289,911,076 112,239,533 63,202,719 465,353,328 458,797,869 38,679,077NET ASSETS, end of year 292,236,746$ 115,475,261$ 64,618,581$ 472,330,588$ 465,353,328$ 40,366,840$


D - 10


RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENSES,AND CHANGES IN FUND NET ASSETS OF THE PROPRIETARY FUNDS TO THE STATEMENT OF ACTIVITIES

SEPTEMBER 30, 2003

Change in net assets - business-type activities:

Enterprise Funds 6,977,260$ Internal Service Funds 1,687,763

8,665,023

Amounts reported for business-type activities in the statement of activities are different because:

Internal Service Funds are recognized within the business-type activities component of the Government-Wide Statement of Activities, however the revenues and expenses of Internal Service Funds are allocated to the governmental and proprietary fund-types on a pro-rata basis. A portion of the net revenues and expenses of the Internal Service Funds for the year are recorded within the Governmental Activities on the Government-Wide Statement of Activities. (871,289)

Change in net assets of business-type activities 7,793,734$


D - 11


STATEMENT OF CASH FLOWSPROPRIETARY FUNDS



Department Water and Other Internalof Electric Wastewater Enterprise Total Service

Utilities Utilities Funds 2003 2002 FundsCash flows from operations:

Receipts from customers 298,504,204$ 29,342,830$ 18,783,757$ 346,630,791$ 293,005,810$ 7,066,663$ Receipts / payments for interfund services (2,621,610) (1,456,402) (2,047,837) (6,125,849) (6,040,625) 18,231,840Payments to suppliers (183,077,061) (7,603,732) (8,900,071) (199,580,864) (140,600,822) (17,898,544)Payments to employees (31,179,898) (7,159,236) (7,062,381) (45,401,515) (43,130,695) (2,612,728)

Net cash provided by operating activities 81,625,635 13,123,460 773,468 95,522,563 103,233,668 4,787,231

Cash flows from noncapital financing activities:Proceeds from local grants - - 25,375 25,375 31,771 - Increase in meter deposits payable, net 568,512 64,915 - 633,427 388,013 - Transfers from other funds - 2,663 3,047,043 3,049,706 2,783,270 322,303Transfers to other funds (20,940,707) (4,746,585) (1,276,676) (26,963,968) (25,482,101) (7,298)

Cash flows provided by (used in) noncapitalfinancing activities (20,372,195) (4,679,007) 1,795,742 (23,255,460) (22,279,047) 315,005

Cash flows from capital financing activities:Interest received on internal loans - - - - - 1,316,721Net issuance / repayment of interfund loans 1,165,303 83,575 (539,450) 709,428 (741,745) (167,345)Taxes received for payments on long-term debt - - 440,004 440,004 440,004 - Interest paid on long-term debt issued to

finance capital assets (29,634,241) (335,812) (1,525,205) (31,495,258) (35,132,372) (1,985,270)Proceeds from issuance of long-term debt 47,860,000 - - 47,860,000 44,431,390 - Proceeds from refunding of long-term debt - - 16,569,585 16,569,585 - - Debt issue costs - - (220,398) (220,398) - - Payments on and maturities of long-term debt (54,736,241) (1,803,360) (19,725,828) (76,265,429) (38,177,912) (364,122)Proceeds from capital grant programs - - 4,299,164 4,299,164 4,669,975 - Capital contributions to others - - - - (484,571) - Capital contributions from others - 2,757,977 706,500 3,464,477 5,011,417 - Proceeds from sale of capital assets - - 61,060 61,060 11,212 205,744Purchase of capital assets (42,867,603) (9,704,975) (5,491,368) (58,063,946) (72,359,212) (3,848,574)

Cash flows provided by (used in) capital financing activities (78,212,782) (9,002,595) (5,425,936) (92,641,313) (92,331,814) (4,842,846)

Cash flows from investing activities:Investment revenue 2,447,192 1,802,744 156,493 4,406,429 4,545,730 1,437,786Net increase (decrease) in the fair value of

cash equivalents (880,762) 23,270 (79,934) (937,426) 328,477 (580,873)Purchase of investment securities - - 1,886,219 1,886,219 (11,315,230) 3,481,160Proceeds from sale and maturity of

investment securities - 6,995,000 - 6,995,000 9,690,826 - Cash flows provided by (used in) investing activities 1,566,430 8,821,014 1,962,778 12,350,222 3,249,803 4,338,073Net increase (decrease) in cash and cash equivalents (15,392,912) 8,262,872 (893,948) (8,023,988) (8,127,390) 4,597,463

Cash and cash equivalents, beginning of year 132,229,243 55,082,785 9,349,474 196,661,502 204,788,892 50,497,731Cash and cash equivalents, end of year 116,836,331$ 63,345,657$ 8,455,526$ 188,637,514$ 196,661,502$ 55,095,194$

Reconciliation of operating income (loss)to net cash provided by operating activities

Operating income (loss) 47,156,799$ 7,083,630$ (2,874,954)$ 51,365,475$ 48,541,175$ 691,823$ Depreciation 31,185,680 5,589,075 3,402,021 40,176,776 38,260,513 3,408,890Rebate on fuel taxes - - - - - 142,417Miscellaneous revenue (expense) 605,556 417,637 157,197 1,180,390 185,005 729,573Contributions and donations - - - - 5,000 - (Increase) decrease in receivables, net 4,409,375 (436,656) 107,688 4,080,407 1,172,302 (1,303)(Increase) decrease in due from other governments - - (379,278) (379,278) (369,600) 13,461(Increase) decrease in inventory 3,048,342 31,191 21,298 3,100,831 (2,490,237) (95,821)(Increase) decrease in prepaid expenses 4,702,595 (1,934) (27,780) 4,672,881 3,719,877 (61,910)(Increase) in net pension obligation (asset) 1,349,347 268,640 194,987 1,812,974 (670,898) 83,927(Increase) decrease in deferred regulatory charges (12,651,731) - - (12,651,731) 11,111,206 - Increase (decrease) in accounts payable 296,399 24,305 1,286 321,990 657,287 (379,612)Increase (decrease) in accrued liabilities 2,396,255 147,572 29,532 2,573,359 2,160,416 (6,814)Increase (decrease) in deferred regulatory revenue (872,982) - - (872,982) 872,984 - Increase (decrease) in deposits payable - - 117,959 117,959 22,780 47,093Increase (decrease) in deferred revenue - - 23,512 23,512 55,858 - Increase (decrease) in estimated liability for -

unpaid claims - - - - - 215,507Net cash provided by operating activities 81,625,635$ 13,123,460$ 773,468$ 95,522,563$ 103,233,668$ 4,787,231$


D - 12


STATEMENT OF FIDUCIARY NET ASSETSFIDUCIARY FUNDS

SEPTEMBER 30, 2003

Pension andOther Employees

Benefit Trust AgencyFunds Fund

ASSETSCash and cash equivalents 10,460,208$ 2,402,129$ Investments 392,618,806 - Accrued interest receivable 37,292 - Receivables 871,936 - Loans receivable 25,842 - Due from other governments 96,857 -

Total assets 404,110,941 2,402,129

LIABILITIESAccounts payable 1,597,107 - Due to other governmental units - 2,402,129

Total liabilities 1,597,107 2,402,129

NET ASSETSHeld in trust for pension benefits and other purposes 402,513,834$ - $


D - 13


STATEMENT OF CHANGES IN FIDUCIARY NET ASSETSFIDUCIARY FUNDS

FOR THE YEAR ENDED SEPTEMBER 30, 2003

Pension andOther Employees

Benefit TrustFunds

ADDITIONSContributions:

State of Florida 1,142,961$ Employer 11,570,624Employee 6,597,585

Total contributions 19,311,170

Net investment income:Net (decrease) in the fair value of investments - Interest and dividends 3,356,234Investment advisor fee (912,544)

Net investment income (loss) 2,443,690

Miscellaneous income 4,680Total additions, net 21,759,540

DEDUCTIONSBenefits paid 17,849,025Refunds, former employees 1,274,742Actuarial fee 15,800Audit fee 6,000Other 295,695Transfers to other funds 52,138

Total deductions 19,493,400Change in net assets 2,266,140

NET ASSETS, beginning of year 348,076,460NET ASSETS, end of year 350,342,600$


D - 14


NOTES TO FINANCIAL STATEMENTS

E - 1

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Lakeland, Florida (City) is a political subdivision of the State of Florida incorporated under the authority of the Laws of Florida, Chapter 4096 adopted in 1891. The City operates under a Commission-Manager form of government and provides the following services: public safety, transportation, electric, water, storm water, solid waste, wastewater treatment, culture/recreation, public improvements, planning and zoning, and general administration. The City’s financial statements are prepared in accordance with generally accepted accounting principles (GAAP) as prescribed by the Governmental Accounting Standards Board (GASB). There are significant differences in the financing and operating environments between private and public sector entities, resulting in the unique application of accounting principals to government entities. The primary difference is the lack of a profit motive in many aspects of governmental operations, focusing instead on the best and most effective use of limited resources. Nevertheless, the GASB has endeavored to provide financial reporting standards that both satisfy the accounting needs that are unique to government entities, and disclose financial information that is prepared on a basis more comparable to the more widely understood accounting practices adopted by the private sector. In response to this objective, in June 1999 the GASB issued Statement 34 entitled Basic Financial Statements and Management’s Discussion and Analysis for State and Local Governments. The City implemented this new standard for the fiscal year ending September 30, 2002. Certain of the significant changes in the Statement include the following:

The financial statements include: • A Management’s Discussion and Analysis (MD&A) section providing analysis of the City’s overall financial position and

results of operations.

• Fund financial statements that focus on individual, “major” fund types of the City, with only non-major funds presented in aggregate totals. The traditional accounting policies and procedures that are unique to governmental operations are utilized within these financial statements.

• Government-wide financial statements prepared using full accrual accounting for all of the City’s activities, including

infrastructure (roads, bridges, etc). These statements are intended to provide accounting data that is prepared using uniform application of the same accounting policies adopted by entities in the private sector.

These and other changes are reflected in the accompanying financial statements, including notes to the financial statements. The City plans to retroactively report infrastructure in the fiscal year ending September 30, 2004. Governments are also required to follow the pronouncements of the Financial Accounting Standards Board (FASB) issued through November 30, 1989 that do not conflict with or contradict GASB pronouncements. The City has elected not to apply FASB pronouncements after that date. The more significant accounting policies used by the City are discussed below. The Department of Electric Utilities applies the accounting principles required by Statement of Financial Accounting Standards No. 71 - Accounting for the Effects of Certain Types of Regulation (SFAS 71). Lakeland Electric’s rates are designed to recover the cost of providing services, and the utility is able to collect those rates from its customers. SFAS 71 requires Lakeland Electric to defer certain expenses and revenues, and record various regulatory assets and liabilities in accordance with rate actions of the Lakeland City Commission. A. Reporting Entity These financial statements present the City (the primary government) and its component units, the Lakeland Area Mass Transit District and the Lakeland Downtown Development Authority. Component units are legally separate government entities that are included in the City’s report because of the significance of their operating or financial relationships with the City. Both component units are reported discretely in these financial statements. The Lakeland Area Mass Transit District was created under the authority of County Ordinance No. 80-13. The City of Lakeland's governing board appoints a voting majority of the organization's governing body and is able to impose its will on the organization. There are no significant financial transactions occurring between the City and the District. The Lakeland Downtown Development Authority was established in the City of Lakeland under the authority of the Laws of Florida, Chapter 77-588, to revitalize and preserve property values and prevent deterioration of the central business district. The Authority is fiscally dependent upon the City insofar as the City approves the Authority’s annual budget, provides an annual subsidy to the Authority to help finance operating costs, and is ultimately responsible for any deficits. Condensed financial information for the component units appear as a section within these notes to financial statements. Copies of separately issued financial statements for these individual component units may be obtained from the City's Finance Department.



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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The Lakeland Housing Authority is a non-profit corporation that was organized under the laws of the State of Florida to provide low rent housing for qualified individuals in accordance with the rules and regulations prescribed by the department of Housing and Urban Development and other Federal agencies. Although the City Commission appoints the members of the Lakeland Housing Authority’s governing board, the City does not impose its will on the Authority and is not responsible for the debts or deficits of the Authority. Therefore it has not been included as a component unit. B. Government-wide and Fund Financial Statements, and their underlying Basis of Accounting The City’s basic financial statements are presented in two separate and distinct formats. These consist of government-wide statements (reporting the City as a whole using full accrual accounting policies) and fund financial statements (focusing on individual major funds and utilizing the traditional basis of accounting used by local governments for different types of funds). Both the government-wide and fund financial statements categorize activities as either governmental or business-type based on their nature and funding practices. The City’s planning and zoning, police and fire protection, parks and recreation, public works, and general governmental functions are classified as governmental activities since they generally cannot pass the full cost of providing those services directly to the users of those services in the form of a user fee. The electric, water, wastewater, solid waste, parking, airport, civic center and golf course activities are classified as business type activities because they are able to assess user fees that are intended to satisfy at least the majority of their annual operating costs. Government-wide Statements In the government-wide Statement of Net Assets, both the government and business-type activities are presented on a consolidated basis in separate columns. This statement is prepared using the economic resources measurement focus, which means that all assets and liabilities (including capital assets and long-term debt) are included in the Statement of Net Assets. This accounting methodology is much more consistent with methodology used for business accounting in the private sector than “traditional” governmental accounting methodology. Within this statement, the net assets of the City (assets minus liabilities) are reported in three separate components – invested in capital assets, net of related debt; restricted net assets; and unrestricted net assets. The City utilizes restricted resources first to satisfy financial obligations whenever possible. The government-wide Statement of Activities reports the degree to which the gross expenses, including depreciation, of the significant governmental and business-type functions provided by the City are financed by the program revenues and the operating and capital grants that are directly related to the costs of providing each function. The statement then reports the extent to which the resulting net costs of these functions (gross expenses less directly-related program revenues and grants) are financed by general revenues of the City (i.e. taxes, interest income, etc.) This statement is prepared using the full accrual basis of accounting, which determines the timing of the recording of revenues and expenditures/expenses. Under this basis of accounting, revenues are recorded when earned, and expenses are recorded when an obligation is incurred. These accounting methods are also more consistent with the methodologies used for business accounting in the private sector than “traditional” governmental accounting methodology. Within the government-wide Statement of Activities, the City has elected not to include an allocation of indirect expenses to related functions. Administrative fees are charged by the General Fund to other funds, which are eliminated (reducing the revenue and expense of the General Fund) to recover the direct costs of providing services to those funds (i.e. finance, personnel, legal, technology management, etc). All other internal transactions related to services provided by internal service funds of the City to other functions within the City are also eliminated, insuring that the related expenses appear only once and are categorized within the appropriate functional activity. Fund Financial Statements These statements report information at a higher level of detail, focusing on separate reporting of individual major funds, rather than consolidating financial data into two very broad categories of governmental and business-type activities. Those funds that are considered non-major are consolidated into a single column. The financial transactions of the City are reported in individual funds within the City’s accounting system. Each fund is accounted for by providing a separate, self-balancing set of accounts comprising the assets, liabilities, reserves, fund equity, revenues and expenditures/expenses of each fund. GASB 34 sets forth the minimum criteria used to determine whether the individual funds are considered major versus non-major, based on the value of assets, liabilities, revenues and expenditures/expenses of each fund considered in relation to all funds taken as a whole. Those major funds for which detailed financial information is provided based on these criteria are the City’s General Fund, Electric Utility Fund, and Water/Wastewater Utility Fund. Within the fund financial statements, funds are also classified into fund types. Different basis of accounting are applied to the various fund types, based on the nature of the financial information needed to sustain the types of services provided. The various funds are classified based on fund types as follows:



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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Governmental Funds – Within the fund financial statements, the accounting policies applied to governmental funds is intended to capture only those transactions that will occur in the short-term, and the ability to finance those activities as needed. The financial focus applied to governmental funds is called the modified accrual basis of accounting. Revenues are susceptible to accrual in the accounting period in which they become available and measurable, which generally means those revenues that are collected within 60 days after year end. The City accrues an asset equal to the value of all material revenue to which it is entitled. Intergovernmental revenues included in this accrual are recognized as revenue while all other types are deferred. Major sources of revenue that meet the availability criterion include investment earnings, federal and state grants, state shared revenues, and the City’s share of State collected taxes. Expenditures are recognized in the accounting period in which the fund liability is incurred, if measurable, except for unmatured interest on general long-term debt which is recognized when due and the long-term portion of accumulated unpaid vacation and sick pay which is recognized when paid. Within governmental fund types, assets and liabilities are recorded using the flow of current financial resources measurement focus. This means that only current assets and current liabilities are generally included on their balance sheets. Their reported fund balance (net current assets) is considered a measure of "available spendable resources". The governmental fund types utilized by the City are broken down as follows:

General Fund – a “catch-all” fund used to account for all financial activities and resources not required to be accounted for in other funds. Special Revenue Funds – account for the proceeds of specific revenue sources that are legally restricted to expenditures for a specific purpose, such as gas taxes that are expended on transportation-related services. Debt Service Fund – accounts for the accumulation of resources needed to make that component of principal and interest payments on long term debt which will be payable in the current year.

Proprietary Funds – Within the fund financial statements, the financial focus for proprietary funds is identical to the full accrual, “private sector” focus applied within the government-wide statements. Revenues are recognized when they are earned and expenses are recognized when they are incurred, without application of the “measurable and available” criteria applied to governmental funds. Accordingly, full recognition is given to capital assets (and depreciation thereof) and all long-term liabilities. The emphasis is on recovering the costs of supplying needed services over the long-term from user fees charged directly to the persons using those services. The proprietary fund types utilized by the City are broken down as follows:

Enterprise Funds – account for operations for which a fee is charged to external users for goods or services, i.e. utility services provided to residents in the geographic areas served by the City’s electric, water and wastewater utilities.

Internal Service Funds – account for operations for which a fee is charged to internal users for goods or services. This includes the administrative cost of purchasing and acquisition; the purchase, maintenance and fueling of motorized equipment used by various City departments; the cost of self-insured risk programs administered by the City; and an internal loan program. To the extent possible, the ultimate costs of these services are reported in the appropriate functional activity.

Fiduciary Funds – Within the fund financial statements, fiduciary fund types are used to report assets that are held in trust or in an agency capacity by the City on behalf of designated beneficiaries. These consist of pension and other post-employment benefit funds maintained on behalf of retired City employees; and an agency fund use to accumulate impact fee revenues collected on behalf of Polk County, Florida. The same financial focus applied to proprietary funds types is applied to fiduciary fund types. Because the assets accounted for within fiduciary funds types cannot be used to address activities or obligations of the City, the activities of these funds are not incorporated into the government-wide financial statements. C. Budget Policy and Budgetary Data The City prepares an annual operating budget for the General Fund, all Special Revenue Funds, and the Debt Service Fund. These budgets are prepared on the modified accrual basis of accounting. As of September 30, 2003 there were no material violations of budgetary requirements. D. Cash and Cash Equivalents The City has defined cash and cash equivalents to include cash on hand, demand deposits, cash with paying agents, as well as each Fund’s equity in pooled cash.



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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The various funds of the City have also combined their resources into a cash pool for the purpose of maximizing investment earnings on daily cash balances. The investment pool is comprised of money market funds, time deposits, notes, bonds, amounts invested with the Florida State Board of Administration (SBA), other securities, and accrued interest. Investments are recorded at fair value. Revenue from pooled cash and investments is allocated on the basis of the participation by each fund. Each fund’s pro-rata share of pooled cash and investments is included in the caption “cash and cash equivalents”. These amounts are also considered a cash equivalent because each fund can withdraw cash at any time without prior notice or penalty. E. Investments Owned by Individual Funds Investments owned by individual funds, comprised of time deposits, notes, bonds, and other securities, are reported at fair value. Amounts invested with the SBA and money market funds are reported at cost, which approximates fair value. Fixed income, equity and equity securities are reported at the last reported sales price. Revenue from investments owned by the individual funds is recorded in the respective fund as it is earned. F. Receivables Receivables are generally attributable to services provided by the City, amounts due to the City under expenditure-driven grant agreements with other governments, and accrued interest on investments. Receivables recorded in governmental fund types may be offset by deferred revenues or a reservation of fund balance depending on the revenue recognition criteria applied to those funds. The components of receivable balances include due from customers, due from commercial customers, due from vendors, due from other governments, interest receivable, and miscellaneous receivables, which include liquidated damages. Receivables are reported net of allowances for uncollectibles where applicable. G. Due To/From Other Funds Amounts receivable from, or payable to, other funds are reflected in the accounts of the fund until liquidated. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide statements as “internal balances”. H. Inventories and Prepaid Items Inventories are stated at the lower of cost or market using the weighted average method. Inventory and prepaid items are recorded as expenditures (expenses) when actually used in both governmental and proprietary funds. I. Designated and Restricted Assets The City has established long range plans concerning some of its proprietary funds, internal loan funds and component funds. As part of the plan to achieve its objectives, the City’s elected officials have designated certain assets that will be used to fund the cost of expansion of enterprise fund infrastructure, monies accumulated to finance replacement of capital assets at the end of their useful life, funds designated for payment of self-insured liability claims, and amounts set aside to pay currently maturing principal and interest on long-term debt. These assets and related liabilities are separated from other assets of the City and appear on the financial statements under the heading “designated assets” and “liabilities payable from designated assets”. Because these designations do not represent legal restrictions imposed by parties external from the local government, the net value of designated assets minus liabilities is included in the unrestricted section of net assets on the Statement of Net Assets. Revenue bond ordinances and certain other agreements with parties outside of the City require the restriction of certain fund assets for specific purposes such as sinking and reserve accounts required to secure bonded debt; renewal, repair, expansion, and construction funds (bond proceeds) set aside to finance recurring and future capital improvements; meter deposit funds held on behalf of utility customers; and proceeds from impact fees collected for the purpose of financing utility system capacity improvements. These assets and the related liabilities are classified separately from other assets and liabilities, appearing in the accompanying statement of net assets under the heading “restricted assets”, “liabilities payable from restricted assets”, and “restricted net assets”. In cases in which both unrestricted and restricted net assets are available to finance an expense or program, the City’s policy is to utilize restricted assets first whenever possible. J. Capital Assets Capital equipment purchased with an original value of $750 or more, and additions, improvements and other capital outlays having an original cost of $2,500 or more that significantly extend the useful life are capitalized. Capital assets used in governmental fund type operations are accounted for in the government–wide statements, rather than in the fund financial Statements. Routine maintenance, repairs, renewals and replacement costs are charged against operations.



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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Infrastructure consisting of certain improvements such as roads, sidewalks and drainage systems were not previously capitalized by the City. In accordance with the provisions of GASB 34, the City has elected to capitalize infrastructure assets having an original cost of $100,000 or more prospectively as of October 1, 2001. Retroactive reporting of infrastructure acquired prior to October 1, 2001 will be capitalized in the government-wide statements for fiscal year ending September 30, 2004. Capital assets are valued at historical cost or estimated historical cost if actual historical cost was not available. Donated capital assets are valued at their estimated fair value on the date donated. The depreciation on assets, where disclosed, is provided using the straight-line method over the following estimated useful lives:

Land improvements 10 - 30 yearsBuildings 15 - 50 yearsImprovements, other than buildings 10 - 45 yearsImprovements, sewer lines 50 yearsOffice machines 5 - 15 yearsCommunications equipment 5 - 10 yearsMotor vehicles 4 - 20 yearsFurnishings and fixtures 5 - 25 yearsMaintenance equipment, tools 5 - 15 yearsRoads and Alleys 20 yearsSidewalks 30 yearsStorm Drainage 30 years

Depreciation expense on assets used in governmental activities is included in the expenses of each governmental function on the government-wide Statement of Activities. Depreciation on general infrastructure assets is included within the expenses of the most relevant function. K. Revenues Substantially all governmental fund revenues are accrued. Property taxes, which are levied annually based on the value of real property and tangible personal property as assessed on January 1 and are payable from November thru the following March, are recognized in the same fiscal period in which payment is due. The property tax calendar for 2003 is as follows:

Lien date January 1, 2003Levy date January 1, 2003Due dates November 1, 2003 through March 31, 2004Delinquent date April 1, 2004Tax certificate sale On or before June 1, 2004

Revenues of proprietary funds types are categorized as either Operating or Non-operating. Operating revenues represent the user charges that are assessed directly to the persons benefiting from the service provided by that fund. All other revenues, including grant revenues and contributions in aid of construction, are classified as non-operating. In the government-wide Statement of Activities, revenue that is derived directly from the program itself or from outside sources, if restricted to a specific program, is called program revenue. Program revenue is classified as either charges for services, operating grants or capital grants. Charges for services is revenue received by a particular function for the services that it provides to both entities outside of the City and to other City functions. Operating grant revenues come from other government entities to support the operation costs of particular functions and also from the earnings of permanent funds that are legally restricted to a particular function. Capital grants come from other government entities for the purpose of constructing or purchasing capital assets. All revenues included in the classification of operating revenues in proprietary fund types are pledged as security for revenue bonds to the extent such indebtedness exists within each fund type, except for the indebtedness of the Lakeland Center Fund, which is secured by a pledge of the utility tax revenues accounted for within the General Fund. L. Indirect Expenses Within the government-wide Statement of Activities, indirect expenses are not allocated to the functions of governmental activities. All expenses represent only direct expenses of each function.



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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) M. Compensated Absences Within the government-wide Statement of Net Assets, the City accrues all accumulated unpaid vacation and sick leave when earned by the employee. Within the fund financial statements, the non-current portion of this liability payable from governmental funds is not recorded, since it would not be paid from expendable available financial resources. N. Inter-fund Activity Inter-fund activity is reported as loans, services provided, reimbursements, or transfers. Loans are reported as inter-fund receivables and payables as appropriate and are subject to elimination upon consolidation. Services provided, deemed to be at or near market rates, are treated as revenues and expenditures/expenses. Reimbursements occur when one fund incurs a cost, charges the appropriate benefiting fund, and reduces its related cost as a reimbursement. All other inter-fund transactions are treated as transfers. Transfers between governmental or proprietary funds are netted as part of the reconciliation to the government-wide financial statements. O. Expenses Expenses of proprietary funds types are categorized as either Operating or Non-operating. Operating expenses represent personal services, other expenses incurred in the normal operations of the proprietary fund, and depreciation expense. All other expenses are classified as non-operating. NOTE 2 – ACCOUNTING AND REPORTING CHANGES There were no significant accounting and reporting changes during the fiscal year ended September 30, 2003. NOTE 3 – CASH, CASH EQUIVALENTS AND INVESTMENTS A. Deposits The carrying amount of the amounts on deposit in banks, financial institutions, and cash on hand is as follows:

Primary ComponentGovernment Units

Demand Deposits (1) (909,108)$ 658,643$ Cash with Paying Agents 30,994,558 - Cash on Hand 25,488 - Total Deposits 30,110,938$ 658,643$

(1) The bank balance was $2,693,795.

All balances are collateralized with securities held by the pledging financial institutions but not in the name of the City of Lakeland. This collateral consists of insurance provided by the FDIC and securities held by the State of Florida Public Deposit Security Trust Fund. B. Cash Equivalents and Investments: Several forms of legal and contractual provisions govern the types of investments in which the City may directly invest. Allowable investments consist of direct obligations of the Federal Government, interest bearing time deposits, obligations of the Federal Farm Credit Banks, Federal Home Loan Mortgage Corporation, Federal Home Loan Bank or obligations guaranteed by the Government National Mortgage Association or the Federal National Mortgage Association, repurchase agreements and the Florida State Board of Administration. The pension trust funds are also authorized for investment in corporate stocks and bonds, money market funds and other qualified securities.



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NOTE 3 – CASH, CASH EQUIVALENTS AND INVESTMENTS (continued) The following investments held by the various funds of the City as of September 30, 2003 are collateralized by registered securities held by the City or its agents in the City’s name:

Reported Amount - Fair ValueMaturing Primary Component

Interest Rate % Through Government UnitsUS Treasury Notes 2.000 to 7.250 05/16 1,204,766$ - $ US Treasury Bonds 4.380 to 12.000 08/29 2,162,294 - US Treasury Strips (1) — 08/07 3,015,126 - US Treasury Bills (1) — — 374,726 - Federal Home Loan Bank (2) 2.620 to 3.140 07/09 149,945,037 - Federal Home Loan Mortgage Association 3.250 to 5.500 08/12 379,329 - Federal National Mortgage Association 3.000 to 7.000 11/14 516,454 - Government National Mortgage Association 7.000 02/28 60,760 - Corporate Notes and Bonds 2.880 to 8.000 05/29 1,424,364 - Corporate Stocks (2) — — 210,571,351 - Repurchase Agreements (3) 5.540 10/16 2,985,274 -

Sub-total 372,639,481$ - $

Other investments are collateralized by securities that exist in physical or book entry form, and thus cannot be held in the City’s name. The breakdown of investments held as of September 30, 2003 by type and category of credit risk are as follows:

Reported Amount - Fair ValueMaturing Primary Component

Interest Rate % Through Government UnitsSmall Business Administration 10.00 10/07 50,667$ - $ State Board of Administration (4) — — 107,425,292 8,788,757Money Market Funds (5) — — 13,625,124 - Mutual Funds (5) — — 166,372,188 - Commingled Trust Funds (5) — — 14,055,291 - Accrued Interest Receivable (6) — — 1,010,090 -

Sub-total 302,538,652$ 8,788,757$ Total Investments 675,178,133$ 8,788,757$

(1) These securities were purchased at a discount and there is no stated interest rate. (2) Federal Home Loan Bank balance includes $11.945 million in investment purchase transactions that had been executed but not

settled (in cash) as of September 30, 2003. The dollar value of these securities is owned by an internal investment pool. Because the pool did not own equity in these instruments, the related value of the investments is not included in the allocation of investments to participant funds as of September 30, 2003. Corporate Stocks balance includes $938,468 in net transactions in the Pension Funds that had been executed but not settled as of September 30, 2003.

(3) The repurchase agreement was collateralized by government-backed securities having a fair value of $2,985,274 as of September 30, 2003.

(4) Funds are invested in the Florida State Board of Administration's (SBA) local governments pooled investment account. The rate

of interest fluctuates daily. The interest rate on September 30, 2003 was 1.32 percent. The fair value of the position in the external investment pool is the same as the value of the pool shares. The SBA duties related to the Local Government Surplus Funds Trust Fund is defined in Sections 218.40-218.41, Florida Statutes. The executive director is authorized to use all investment authority spelled out in Section 215.47, Florida Statutes and is responsible for all internal measurement, regulatory and rules defined in these sections of the Florida Statutes.

(5) The rate of return on the money market funds, commingled trust funds, and mutual funds fluctuates during the year based on

market conditions. Also, there is no stated maturity date for this type of investment. These funds may be invested, withdrawn, or reinvested at the discretion of the City.



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NOTE 3 – CASH, CASH EQUIVALENTS AND INVESTMENTS (continued) (6) Represents accrued interest accounted for within the internally managed investment pool. This asset is allocated to participating

funds on a pro-rata basis and is included within the investment caption. Investments and deposits are classified in the Statement of Net Assets as follows:

Pension andGovernmental Business-type Employee Agency Component

Activities Activities Benefit Funds Funds Total UnitsUnrestrictedCash and cash equivalents 14,723,154$ 28,767,043$ - $ - $ 43,920,197$ 6,690,330$

Designated AssetsCash and cash equivalents 7,175,694 94,934,087 - - 102,109,781 2,657,412Cash with paying agents - 25,830,594 - - 25,830,594 -

Restricted AssetsCash and cash equivalents 16,674,597 89,514,364 10,460,208 2,402,129 118,621,298 99,658Cash with paying agents 477,331 4,686,633 - - 5,163,964 - Investments 2,400,422 2,679,009 392,618,806 - 397,698,237 -

41,451,198$ 246,411,730$ 403,079,014$ 2,402,129$ 693,344,071$ 9,447,400$

Totals - all classificationsCash and cash equivalents 38,573,445$ 213,215,494$ 10,460,208$ 2,402,129$ 264,651,276$ 9,447,400$ Cash with paying agents 477,331 30,517,227 - - 30,994,558 - Investments 2,400,422 2,679,009 392,618,806 - 397,698,237 -

41,451,198$ 246,411,730$ 403,079,014$ 2,402,129$ 693,344,071$ 9,447,400$ Totals - note disclosuresTotal investments 675,178,133$ 8,788,757$ Total deposits 30,110,938 658,643 Less: investments in transit (11,945,000) -

693,344,071$ 9,447,400$



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NOTE 4 –CAPITAL ASSETS A. Capital Activity

Capital Assets of the City as of September 30, 2003, consisted of the following:

Balance BalanceOctober 1, September 30,

Governmental Activities 2002 Additions Deletions 2003 Non-depreciable Assets: Land 20,119,438$ 2,927,339$ 572,000$ 22,474,777$ Construction in process 15,211,885 5,432,448 14,326,821 6,317,512 Depreciable assets: Buildings 84,141,885 13,299,140 - 97,441,025 Improvements, other than buildings 26,568,918 3,400,806 - 29,969,724 Infrastructure 1,346,634 12,012,315 - 13,358,949 Equipment 32,665,704 2,690,929 1,347,525 34,009,108

180,054,464 39,762,977 16,246,346 203,571,095 Less accumulated depreciation: Buildings 50,141,736 1,417,866 - 51,559,602 Improvements, other than buildings 7,521,298 961,545 - 8,482,843 Infrastructure 23,055 336,012 - 359,067 Equipment 26,894,443 1,821,486 1,285,608 27,430,321

84,580,532 4,536,909 1,285,608 87,831,833Net capital assets 95,473,932$ 35,226,068$ 14,960,738$ 115,739,262$

Business-type activities Non-depreciable assets: Land 32,272,432$ 2,239,624$ - $ 34,512,056$ Construction in process 26,250,596 167,938,566 158,485,714 35,703,448 Depreciable assets: Buildings 94,160,586 4,547,600 350,386 98,357,800 Improvements 38,965,327 3,698,952 44,563 42,619,716 Machinery and equipment 73,698,994 9,102,814 8,115,960 74,685,848 Electric transmission and distribution 257,788,130 51,590,101 1,946,825 307,431,406 Water transmission and distribution 58,533,498 685,058 - 59,218,556 Pumping stations 9,702,507 409,071 - 10,111,578 Sewer lines 39,176,986 1,120,361 - 40,297,347 Sewer plants 47,501,458 194,513 - 47,695,971 Electric and water plants in service 667,837,441 135,851,103 175,068,222 628,620,322

1,345,887,955 377,377,763 344,011,670 1,379,254,048 Less accumulated depreciation: Buildings 25,640,637 2,591,895 289,472 27,943,060 Improvements 13,381,122 1,663,674 32,938 15,011,858 Machinery and equipment 36,468,066 8,307,804 7,888,762 36,887,108 Electric transmission and distribution 100,241,249 9,567,101 1,952,470 107,855,880 Water transmission and distribution 16,097,583 1,271,975 - 17,369,558 Pumping stations 2,255,033 268,124 - 2,523,157 Sewer lines 10,882,721 914,784 - 11,797,505 Sewer plants 24,267,166 1,921,352 - 26,188,518 Electric and water plants in service 239,520,310 17,078,957 6,688,012 249,911,255

468,753,887 43,585,666 16,851,654 495,487,899Net capital assets 877,134,068$ 333,792,097$ 327,160,016$ 883,766,149$



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NOTE 4 –CAPITAL ASSETS (continued) B. Depreciation Expense Included in the government-wide Statement of Activities is depreciation expense for the year ended September 30, 2003, distributed to governmental and business-type functions as follows:

Governmental activities: General government 800,580$ Public safety 1,457,215 Physical environment 582,000 Transportation, including depreciation of general infrastructure assets 317,140 Economic environment - Human services 2,647 Culture/recreation 1,377,327Total depreciation expense - governmental activities 4,536,909$

Business-type activities:Electric 31,185,680$ Water and Wastewater 5,589,075 Parking 143,180 Lakeland Center 995,924 Lakeland Linder Regional Airport 1,898,738 Solid Waste 98,142 Cleveland Heights Golf Course 266,037 Internal Service Funds 3,408,890

Total depreciation expense - business-type activities 43,585,666$

NOTE 5 –INTERFUND BALANCES AND TRANSFERS A. Interfund Receivables and Payables Individual fund interfund receivables and payables at September 30, 2003 are presented in the following table.

Advances To and Due From Other FundsNonmajor Electric Internal

Advances From and Governmental Utility ServiceDue To Other Funds Funds Fund Funds Totals

Major Funds: Electric Utility Fund 1,237,257$ - $ - $ 1,237,257$ Water and Wastewater Utilities 413,523 13,459,299 - 13,872,822Internal Service Funds 52,929 - - 52,929Nonmajor Enterprise Funds 195,174 - 9,877,552 10,072,726Nonmajor Governmental Funds 204,461 - - 204,461

TOTALS 2,103,344$ 13,459,299$ 9,877,552$ 25,440,195$

The majority of interfund balances represent the unpaid component of internal loans issued from an internal service fund to finance various capital and operating projects. Of this amount, $8,911,530 is to be repaid over a period exceeding one year. In addition, there is a long-term receivable/payable from the Water and Wastewater Utility to the Electric Utility Fund representing the allocation of debt previously issued to finance capital projects of the Water Utility which is fully secured by Electric operating revenues. The long-term component of this interfund balance is $13,459,299, which is being amortized in annual installments thru October 1, 2033.



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NOTE 5 –INTERFUND BALANCES AND TRANSFERS (Continued) B. Interfund Transfers Interfund transfers for the year ending September 30, 2003 are presented in the following table:

Interfund Transfers To:Water &

Nonmajor WasteWater Nonmajor InternalGeneral Governmental Utilities Enterprise Service

Interfund Transfers From: Fund Funds Fund Funds Funds TotalGeneral Fund - $ 343,722$ - $ 1,425,000$ 79,707$ 1,848,429$ Nonmajor Governmental Funds 1,970,409 9,150,595 - 747,056 - 11,868,060Electric Utility Fund 19,657,035 343,726 2,663 728,382 208,901 20,940,707Water & Wastewater Utilities Fund 4,657,027 - - 55,863 33,695 4,746,585Nonmajor Enterprise Funds 1,098,244 87,690 - 90,742 - 1,276,676Internal Service Funds - 7,298 - - - 7,298Fiduciary Funds 52,138 - - - - 52,138

Total 27,434,853$ 9,933,031$ 2,663$ 3,047,043$ 322,303$ 40,739,893$

The majority of transfers are made for the purpose of subsidizing recurring operating losses incurred within funds whose programs and activities do not generate sufficient dedicated revenues to finance those costs in their entirety. Transfers to the Internal Service Funds are intended to finance capital acquisitions accounted for in internal service funds. There are no significant transfers that do not occur on a routine basis. NOTE 6 – LONG-TERM LIABILITIES A. Totals by Activity The following is a summary of long-term obligation transactions of the City for the year ended September 30, 2003. Additional details are provided on following pages.

Balance Balance Amount October 1, September 30, Due within

2002 Incurred Satisfied 2003 One YearGovernmental Activities:Loans Payable 11,128,000$ 455,000$ 1,064,500$ 10,518,500$ 227,152$ Revenue Bonds Payable 12,584,673 20,430,784 7,466,805 25,548,652 723,855Compensated Absences 5,252,244 233,224 7,262 5,478,206 720,000

28,964,917 21,119,008 8,538,567 41,545,358 1,671,007

Business-type Activities:Loans Payable 18,986,719 - 2,841,645 16,145,074 361,501Revenue Bonds Payable 659,605,736 66,223,344 72,447,323 653,381,757 17,300,000Compensated Absences 7,477,687 219,641 58,365 7,638,963 842,434Accreted Interest Payable 5,979,464 1,956,246 - 7,935,710 -

692,049,606 68,399,231 75,347,333 685,101,504 18,503,935

721,014,523$ 89,518,239$ 83,885,900$ 726,646,862$ 20,174,942$

Revenue bond obligations issued for the benefit of governmental activities are paid from amounts accumulated in legally required sinking funds maintained in the debt service fund. Loans issued for the benefit of governmental activities are not secured by one specific revenue pledge. These obligations are repaid directly from various revenue sources accounted for within special revenue funds. Long-term obligations payable from the resources of business-type activities are paid from the net revenues generated by those activities. Other long term liabilities of governmental activities consisting of compensated absences are repaid as employees separate from service, using current revenues of the general fund as the funding source.



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NOTE 6 – LONG-TERM LIABILITIES (continued) B. Revenue Bonds Revenue bonds issued and outstanding as of September 30, 2003 are as follows:

Issue Maturity Interest Year-endPurpose Series Amount Date Rates Balances

Uitlities Tax Revenue Refunding Bonds 2002A 15,020,000$ 10/01/17 3.50 to 4.20 15,020,000$ Utilities Tax Revenue Bonds 2002B 15,355,000 10/01/22 3.90 to 4.50 15,355,000Tourist Development Tax and Utilities Tax Revenue Bon 2002C 5,660,000 10/01/17 3.50 to 4.20 5,660,000Capital Improvement Revenue Bonds 1997 45,700,000 10/01/17 3.85 to 5.00 37,665,000Electric and Water Refunding Revenue Bonds 1999A 195,635,409 10/01/36 3.05 to 5.00 194,565,409Energy System Refunding Revenue Bonds 1999B 144,305,000 10/01/14 5.30 to 6.05 105,525,000Energy System Refunding Revenue Bonds 1999C 64,525,000 10/01/12 5.30 to 6.05 64,525,000Energy System Refunding Revenue Bonds 2003 47,860,000 10/01/37 Variable rate 47,860,000Energy System Revenue Bonds 2001A 90,000,000 10/01/35 Variable rate 90,000,000Energy System Revenue Bonds 2001B 30,000,000 10/01/18 5.00 to 5.50 30,000,000Water and Wastewater Revenue Refunding and

Improvement Bonds 2002 72,755,000 10/01/33 3.50 to 5.00 72,755,000

678,930,409$

Interest requirements for Energy System Variable Rate Revenue Bonds are calculated using 110 percent of the average actual interest rate for the twelve months period ending September 30, 2003. These bonds, issued in the aggregate dollar amount of $90,000,000, are remarketed on a weekly basis, with the interest rate changing based on the market rate of interest for 7 day tax-free debt on each remarketing date. The City has entered into a Standby Bond Purchase Agreement with Toronto Dominion Bank to purchase any tendered bonds which cannot be remarketed. In the event the bonds cannot be remarketed the bonds become Bank Bonds and bear an interest rate for the first 31 days equivalent to the Federal Funds Rate plus 0.50 percent. The maximum interest rate under the agreement for Bank Bonds is the greater of the Bank’s prime rate plus 1 percent, or the Federal Funds Rate plus 1.50 percent. This agreement expires in April 2004. The Capital Improvement Revenue Bonds are secured by a covenant to budget and appropriate non-ad valorem revenues of the City in sufficient annual amounts to satisfy the debt service requirements on those bonds. The Utility Tax Revenue bonds are secured by Utility taxes levied on the sale of Electricity, Water, Propane, Fuel Oil and Telecommunications Services within the city limits. The Tourist Development bonds are secured by a pledge of the same aforementioned Utility taxes and the proceeds of a tax on hotel rooms rented within the city limits. The Electric and Energy bonds series are secured by a pledge of operating revenues of the Electric Utility. The Water and Wastewater bonds are secured by the operating revenues of those utility services. The Capital Improvement, Utility Tax and Tourist tax bonds require the establishment of debt service reserve accounts and sinking funds to accumulate the funds needed to make annual debt service payments. As of September 30, 2003, the city is in compliance with all required covenants of the bond ordinances, including compliance with federal arbitrage regulations.



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NOTE 6 – LONG-TERM LIABILITIES (continued) C. Promissory Notes Outstanding loans as of September 30, 2003 are as follows:

Issue Maturity Interest Year-endLender Series Amount Date Rates Balances

Sun Trust Bank 620,000$ 01/10/07 7.050 199,423$ Wastewater Revolving Loan Program 13,655,627 03/31/15 2.450 7,726,842Sunshine State Governmental Financing Commission 1995 6,955,000 07/15/15 Variable rate 2,555,000Sunshine State Governmental Financing Commission 1999 2,266,000 09/01/14 Variable rate 2,686,000Sunshine State Governmental Financing Commission 1999 1,854,000 09/01/09 Variable rate 969,000Sunshine State Governmental Financing Commission 2000 4,750,000 10/31/20 Variable rate 2,692,000Sunshine State Governmental Financing Commission 2001 9,760,000 10/31/16 Variable rate 8,813,000Florida First Mortgage 391,500 02/01/04 6.000 291,500Sun Trust Bank 75,000 01/01/05 Prime plus 1% 15,000Textron Financial 433,880 09/15/06 5.850 285,809Nally Property 455,000 01/01/18 N/A 430,000

26,663,574$

The debt service requirements of these promissory notes are not secured by pledges of any specific revenue sources of the City. Annual debt service payments are made from a variety of non-ad valorem revenues. The interest rate on the variable rate loans issued by the Sunshine State Governmental Financing Commission are established by that entity on a monthly basis, based on the rate of interest paid on the underlying debt issued to support the loans issued to local governments by that entity. As of September 30, 2003, the city is in compliance with all covenants of these loan agreements. D. Conduit Debt The City has issued industrial revenue bonds to provide financial assistance to private business for economic development purposes. This includes bonds issued to provide financial assistance for the acquisition and construction of retirement and nursing home facilities having an unmatured principal balance of $15,765,000 as of September 30, 2003; bonds issued to finance capital improvements at the Lakeland Regional Medical Center having an unmatured principal balance of $219,365,000 as of September 30, 2003; and bonds issued to finance and refinance the acquisition, construction, and equipping of educational facilities located in the City of Lakeland having an unmatured principal balance of $30,000,000 as of September 30, 2003. Neither the City nor any political subdivision thereof is obligated in any manner for repayment of these bonds. E. Debt Service Requirement to Maturity The requirements to repay all long-term debt outstanding as of September 30, 2003 are summarized in the following table.

Year Principal Interest

2004 18,660,832$ 29,627,111$ 2005 20,647,425 28,879,504 2006 23,195,674 27,742,129 2007 23,699,232 26,506,777 2008 24,574,810 25,228,665

2009-2013 154,628,964 126,179,496 2014-2018 128,628,046 81,647,951 2019-2023 69,239,000 50,605,273 2024-2028 61,880,000 38,717,765 2029-2033 79,655,000 25,951,876 2034-2038 100,785,000 9,674,510

705,593,983$ 470,761,057$



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NOTE 6 – LONG-TERM LIABILITIES (continued) F. Current Refunding of Debt A portion of the proceeds from the issuance of the Utilities Tax Revenue Refunding Bonds, Series 2002A were used to refund all of the City’s outstanding Utilities Tax Revenue Refunding and Improvement Bonds, Series 1994A that had an outstanding balance of $15,530,000. A portion of the proceeds from the issuance of the Tourist Development Tax and Utilities Tax Revenue Refunding Bonds, Series 2002C were used to refund all of the City’s outstanding Tourist Development Tax and Utilities Tax Revenue Bonds, Series 1994B that had an outstanding balance of $5,520,000. These transactions resulted in a loss on disposal of $1,958,385 which is being amortized over the remaining life of the refunding bond issue. The transaction resulted in a present value savings of $1,192,275. A portion of the proceeds from the issuance of the Energy System Variable Rate Refunding Revenue Bonds, Series 2003 were used to refund all of the City’s outstanding Energy System Revenue Bonds, Series 2000B that had an outstanding balance of $41,825,000. The transaction resulted in a loss on disposal of $6,095,020 which is amortized over the remaining life of the refunding bond issue. The transaction resulted in a present value savings of $6,664,579.

NOTE 7 – INTEREST EXPENSE All interest expense of governmental activities is disclosed separately from related functional expenses on the government-wide Statement of Activities. Interest expense of business-type activities is consolidated into the functional expense categories on the government-wide Statement of Activities. The total amount of interest charged to expenses and the total amount capitalized for the year ended September 30, 2003 is as follows:

Governmental Business-typeActivities Activities

Amount charged to expense 923,819$ 31,594,638$ Add: interest expense capitalized - 973,274 Total 923,819$ 32,567,912$

NOTE 8 – LEASES The Lakeland Linder Regional Airport leases land and commercial and industrial space to a variety of tenants. These leases contain terms ranging from 1 to 60 years. Total revenue earned under these leases for the year ended September 30, 2003 was $3,446,169. The City has leased the operations of the Lakeland Regional Medical Center to a private not-for-profit corporation. Under the terms of this agreement, the lessee is to pay the city an amount equal to 2.25 percent of certain net revenues. This lease expires in October 2033, and may be extended by mutual agreement. The amount recorded as lease revenues in the current year is $6,483,302. The projected lease revenue on leases having initial or remaining terms of more than one year is as follows:

Fiscal Year Airport LRMC

2004 2,613,886$ 6,633,000$ 2005 2,290,670 6,783,0002006 1,476,811 6,933,0002007 1,262,564 7,083,0002008 1,178,979 7,233,000

Thereafter 3,842,447 229,575,000Total future minimum lease revenue 12,665,357$ 264,240,000$



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NOTE 8 – LEASES (continued) Included in the description of long-term liabilities in Note 6 is the carrying value of capital leases that the City has entered into for the acquisition of golf carts and mowing equipment for the benefit of the city-owned golf course. Information about these leases is as follows:

Assets acquired under capital lease program:

Original cost 547,852$ Carrying Value 419,225 Current depreciation expense 118,710

Lease obligations remaining to be paid:Current 106,582$ Long-Term 179,227

285,809$

Future minimum lease payments:2004 120,711$ 2005 119,710 2006 69,912

310,333$

NOTE 9 – DONOR RESTRICTED ENDOWMENTS The City is the recipient of donor-restricted endowments used to finance maintenance of a mausoleum located at a city-owned cemetery, and to purchase reading materials for the city-owned library system. Total assets held by the city for these endowments equaled $142,357 as of September 30, 2003. The dollar value of these assets experienced a net appreciation of $16,860 for the year ended September 30, 2003. Funds are expended in accordance with the terms of the original endowments, which were established by City Ordinance. Expenditure of investment income and other appreciation is controlled by the City’s Parks and Recreation Department, subject to the scrutiny of the City’s Finance Department. These assets are reported as Governmental Activities in the Government-wide Financial Statements, and as a component of “Other Funds” within the Governmental Funds in the Fund Financial Statements.



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NOTE 10 – RISK FINANCING ACTIVITIES The City has established a self-insurance fund for worker's compensation, general liability, automobile liability, prescriptions, and health insurance. Significant losses from other forms of risk, including property damage, are covered by commercial insurance. Settlements have not exceeded the cost of insurance coverage in any of the past three years. At year-end, claim expense accounts and liabilities are adjusted in the health insurance and self-insurance reserves to accrue any changes in unpaid claims outstanding at year-end and the estimated liability for incurred but not reported claims (IBNR). The IBNR includes known and unknown loss events and expected future development on claims already reported. The IBNR reserve for the self-insurance reserve portion of the fund is the actuarially determined funding requirement minus any unpaid claims outstanding at year-end (current liability). The IBNR reserve for the health insurance reserve portion of the fund was determined by the greater of 17 percent of the total claims paid during the fiscal year or unpaid claims outstanding, minus any unpaid claims outstanding at year-end (current liability). City policy requires that all claims be submitted to the administrator within 90 days of the date of service. Claims received after that period will not be paid. However, any possible liability related to any such claims must be recognized as expenses resulting from these claims could be incurred over subsequent periods. The City has also purchased a stop-loss policy to reduce the City’s exposure to large losses on health insurance claims. This policy reimburses the City for expenses related to claims exceeding $200,000. As of September 30, 2003, the City paid $309,661 in premiums for its stop-loss insurance policy and no amounts were deducted from claims liability. All claims pending and a provision for incurred but not reported claims have been accrued in the financial statements of the self-insurance fund. A reconciliation of the change in the aggregate liabilities of the self-insurance fund as of September 30, 2003 is as follows:

Claims liability at beginning of year 6,946,917$ Current year claims and changes in estimates 10,660,218Claims payments (10,814,319)

Claims liability at end of year 6,792,816$

NOTE 11 – UTILITY PLANT PARTICIPATION AGREEMENT In 1978, the City entered into a fifty-year participation agreement with the Orlando Utility Commission in which the cost of construction, operation and maintenance of a 364 megawatt coal fired electrical generating unit is shared between the two entities. The City of Lakeland operates this unit, but the energy generated by the unit and all ongoing expenses are allocated between the City and the Orlando Utility Commission based on a 60 percent interest and a 40 percent interest respectively.



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NOTE 12 – ENTERPRISE FUND SEGMENT INFORMATION The City maintains eight enterprise funds that provide electric and water service, wastewater service, parking facilities, a civic center, an airport, solid waste collection, and a municipal golf course. Selected financial data for these funds is presented below:

Parking System

Condensed Statement of Net Assets FundAssets

Current assets 300,439$ Capital assets 4,967,260Other assets 988,312

Total assets 6,256,011

LiabilitiesCurrent liabilities 69,125Long-term liabilities 42,830Due to/advances from other funds 675,938

Total liabilities 787,893

Net assetsInvested In capital assets, net of related debt 4,291,322Restricted - Unrestricted 1,176,796

Total net assets 5,468,118$

Condensed Statement of Revenues, Expenses, and Changes in Net AssetsOperating revenues

Charges for services 430,485$ Operating expenses

Expenses 503,919Depreciation 143,180

Total operating expenses 647,099Operating income (loss) (216,614)Non-operating revenues (expenses)

Investment revenue 4,647Interest expense and fiscal charges (17,289)All other 1,569

Total nonoperating revenue (expenses) (11,073)Income (loss) before transfers (227,687)Capital contributions - Total transfers in 308,167Total transfers out - Change in net assets 80,480Net assets-beginning of year 5,387,638Net assets-end of year 5,468,118$

Condensed Statement of Cash FlowsNet cash provided (used) by operating activities (45,264)$ Net cash provided (used) by noncapital financing activities 77,000Net cash provided (used) by capital and related

financing activities 746,604Net cash providing (used) by investing activities 4,647Beginning cash and cash equivalents 482,278Ending cash and cash equivalents 1,265,265$



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NOTE 12 – ENTERPRISE FUND SEGMENT INFORMATION (continued from previous page)

Lakeland Lakeland Linder Solid Waste ClevelandCenter Regional Management Heights Golf

Condensed Statement of Net Assets Fund Airport Fund Fund Course FundAssets

Current assets 1,375,536$ 2,703,207$ 900,415$ 374,581$ Capital assets 26,277,993 50,187,628 1,075,958 4,268,013Other assets 4,156,511 1,544,664 156,107 30,417

Total assets 31,810,040 54,435,499 2,132,480 4,673,011

LiabilitiesCurrent liabilities 792,330 385,504 380,809 320,809Long-term liabilities 16,956,282 2,941,395 152,223 2,574,427Due to/advances from other funds - 8,800,851 595,937 -

Total liabilities 17,748,612 12,127,750 1,128,969 2,895,236

Net assetsInvested In capital assets, net of related debt 13,536,273 39,853,640 480,021 1,628,835Restricted 1 103,882 - - Unrestricted 525,154 2,350,227 523,490 148,940

Total net assets 14,061,428$ 42,307,749$ 1,003,511$ 1,777,775$

Condensed Statement of Revenues, Expenses, and Changes in Net AssetsOperating revenues

Charges for services 3,136,167$ 4,083,233$ 8,979,828$ 2,304,978$ Operating expenses

Expenses 4,856,501 2,546,231 8,168,766 2,332,207Depreciation 995,924 1,898,738 98,142 266,037

Total operating expenses 5,852,425 4,444,969 8,266,908 2,598,244Operating income (loss) (2,716,258) (361,736) 712,920 (293,266)Non-operating revenues (expenses)

Investment revenue 1,139 19,493 16,115 5,738Interest expense and fiscal charges (633,244) (579,116) (35,382) (40,279)All other 426,499 (19,209) 11,607 117,695

Total nonoperating revenue (expenses) (205,606) (578,832) (7,660) 83,154Income (loss) before transfers (2,921,864) (940,568) 705,260 (210,112)Capital contributions 10,000 3,230,466 - - Total transfers in 2,609,202 129,674 - - Total transfers out - (87,690) (1,188,986) - Change in net assets (302,662) 2,331,882 (483,726) (210,112)Net assets-beginning of year 14,364,090 39,975,867 1,487,237 1,987,887Net assets-end of year 14,061,428$ 42,307,749$ 1,003,511$ 1,777,775$

Condensed Statement of Cash FlowsNet cash provided (used) by operating activities (1,549,334)$ 1,222,795$ 960,260$ 185,011$ Net cash provided (used) by noncapital financing activities 2,634,577 129,674 (1,188,986) - Net cash provided (used) by capital and related

financing activities (2,065,036) (3,514,454) (247,188) (202,385)Net cash providing (used) by investing activities 1,916,785 19,493 16,115 5,738Beginning cash and cash equivalents 2,577,500 5,006,163 978,708 304,825Ending cash and cash equivalents 3,514,492$ 2,863,671$ 518,909$ 293,189$



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NOTE 13 – RESERVED AND DESIGNATED FUND BALANCES In the Fund Financial Statements, reserves and designations segregate portions of fund balance that are either not available or have been earmarked for specific purposes. Reserves represent legal restrictions placed on assets which are not subject to modification by the City. Designations are by actions of the City Commission and can be increased, reduced or eliminated by similar actions. A. Reserved Fund Balance

Reserved fund balance as of September 30, 2003 is described below:

Reserved for Community Development – this represents unexpended net assets derived from grant programs awarded to the City by state and federal agencies, which are restricted to expenditure on projects that improve housing conditions in specific target areas within the City limits. Reserved for Law Enforcement – this represents the value of contraband seized by the Lakeland Police Department. The use of these assets is limited by state law. Reserved for Encumbrances – these reserves represent the portion of purchase orders and contracts awarded for which the goods or services have not yet been received. Reserved for Prepaid Expenditures – this represents the value of non-current resources that cannot be considered as unrestricted, available funds. Reserved for Capital Improvements – this represents assets set aside in renewal and replacement funds created by revenue bond indentures and the unexpended proceeds from impact fee assessments that are restricted for payment of capital expansion costs associated with the City’s transportation, parks and recreation, police, fire, water and wastewater systems. Reserved for Maintenance and Repair – this represents assets held in perpetual care funds for the continued maintenance of cemetery plots sold in city owned cemetery facilities Reserved for Debt Service – this represents cash and investments established in accordance with the requirements in revenue bond indentures, which are set aside to pay unmatured principal and interest requirements on outstanding bonded debt. Reserved for Endowments – this represents unexpended net assets derived from donations or bequests given to the City, which the earnings are restricted to expenditures relating to the purchase of certain books and periodicals and maintenance of the Scott Morris Mausoleum.

B. Designated Fund Balances.

Unreserved fund balances in the Fund Financial Statements are designated as follows:

Cultural Activities – represents cash and investments set aside to generate investment income earmarked towards funding social service programs by parties external to the City of Lakeland Recreation Facilities – represents amounts set aside to finance new recreational facilities and maintenance for Hollis Gardens. Capital Improvements – represents amounts set aside to finance capital improvements to recreational facilities, and to electric, water and wastewater utility facilities. Working Capital – represents certain minimum cash balances required by the various funds of the city to ensure that short-term cash flow is sufficient to finance all currently maturing obligations owed to vendors and employees Subsequent Years Expenditures – represents amount needed to finance budget appropriations approved by the City Commission to finance the following year’s budgeted expenditures to the extent those expenditures exceed estimated revenues. Petty Cash – this represents cash balances used by various city departments to provide change to customers, purchase small dollar items, and contained in imprest cash accounts and are therefore unavailable for appropriation.

C. Deficit Fund Balances There are no deficit fund balances at September 30, 2003. The September 30, 2002 deficit fund balance in the Self-Insurance Fund was eliminating during fiscal year 2003 by increased funding.



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NOTE 14 – DEFINED BENEFIT PENSION PLANS The City maintains three separate single employer defined benefit pension plans for its employees. These plans were established by, and are subject to modifications in funding levels and benefits, by ordinance approved by the City Commission. All three plans are subject to periodic review by an independent actuary to determine the required funding level upon which the City bases the annual contributions. A. Statistical Data and Plan Assumptions

The following information is applied to each pension plan:

Employees' Police Officers' Firefighters'Pension and Supplemental SupplementalRetirement Pension and Pension

System Retirement System PlanACCOUNTING POLICIES AND PLAN ASSETS:

Basis of accounting Accrual Accrual AccrualAssets valuation:

Reporting Fair Value Fair Value Fair ValueActuarial valuation (1) (1) (1)

Legal reserves None None NoneLong-term receivable None None NoneInternal/participant loans None None NoneNon-governmental investment in excess of 5% (2) (2) (2)

MEMBERSHIP AND PLAN PROVISIONS:MEMBERS:

Active participants 1,972 229 123Retirees & beneficiaries 726 93 68Terminated vested 57 18 1

NORMAL RETIREMENT BENEFITS:Age 50 50 50Years of service (minimum) 10 10 10Monthly benefit (3) (4) (5)Monthly maximum N/A $1,350 N/AMonthly minimum N/A N/A $670

DISABILITY BENEFITS:Line of duty None 100% (6) 95%Non-line of duty (maximum) None None 48% (6)

CONTRIBUTIONS: (7)Rate:

City 12.87% - -State - 4.97% 7.20%Participants 7% 1% 3%

ACTUARIAL VALUATION:Frequency Annual Annual AnnualLatest date 10/1/2003 10/1/2003 10/1/2003Basis for contribution 10/1/2002 10/1/2002 10/1/2002Cost method cost cost cost



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NOTE 14 – DEFINED BENEFIT PENSION PLANS (continued)

Employees' Police Officers' Firefighters'Pension and Supplemental SupplementalRetirement Pension and Pension

System Retirement System PlanAMORTIZATION: N/A N/A N/A

ASSUMPTIONS:Investment earnings 7.5% 8.0% 7.5%Salary increases 5.0% 6.5% 6.0%Mortality table (8) (8) (8)Post-retirement benefit increases 1% N/A N/ARetirement rate (9) (9) (9)

(1) The actuarial adjustment factor applied to the fair value of assets is the amount by which current market prices were inflated in

relation to a longer-range trend. The aggregate actuarial cost method does not identify or separately amortize unfunded actuarial liabilities.

(2) The Employees’ Pension and Retirement System held the following plan assets: 42.4 percent in mutual funds, 55.1 percent in

corporate stocks. The Police Officers’ Supplemental Pension and Retirement System held the following plan assets: 87.6 percent of its investments in five commingled trust funds with SunTrust Bank, Central Florida, and 8.0 percent in one trust fund with Merrill Lynch. The Firefighters’ Supplemental Pension Plan held the following plan assets: 33.7 percent in bonds and notes, 42.3 percent in corporate stocks, and 20.8 percent in mutual funds.

(3) The monthly benefit is determined by multiplying the average monthly salary by a service factor and a benefit factor. For

participants as of September 30, 2003, the average monthly salary is computed using the average of the highest total earnings over a consecutive period of 36 months. The service factor is based on the length of continuous service and is calculated by accumulating 3 percent per year for the first 25 years of service plus 1 percent per year for all service exceeding 25 years. The benefit factor is based on the age of the employee on the day retirement benefits commence. Plan participants who enter the plan on or after October 1, 2003 and are vested will receive their benefits at the normal retirement age of 62. The amount of monthly retirement income payable to an employee who retires on his normal retirement date will equal 2 percent of the highest total earnings over a consecutive period of 60 months multiplied times the number of years of credited service up to 10 years, and 3 percent of the same average earnings for the next 20 years of credited service then 1 percent per year of the same average earnings for each year of service in excess of 30 years.

(4) The monthly benefit is determined by multiplying the credited service by 2 percent of the average salary multiplied by a benefit

factor. The benefit factor is based on the age of the employee on the day retirement benefits commence. (5) The monthly benefit for 15 or more years of credited service is determined by multiplying 1/12 of $565 by the credited service

multiplied by a benefit factor. The monthly benefit for 10 years but less than 15 years of credited service is determined by multiplying 1/12 of $535 by credited service multiplied by a benefit factor. The benefit factor is based on the age of the employee and the years of credited service at the time of retirement.

(6) Only available after 10 years of credited service. (7) Effective October 1, 2003 the employee contribution will increase to 8 percent, and employer contribution will increase to 14.4

percent. (8) 1983 Group Annuity Table (Male) (Setback 0 for males, 5 for females). (9) Probabilities of retirement by eligible members are assigned for each attained age.



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NOTE 14 – DEFINED BENEFIT PENSION PLANS (continued) B. Funding Levels The funding activity of the Employees Pension and Retirement System for the current and preceding two years is as follows:

September 30, September 30, September 30,2003 2002 2001

Annual required contribution 22,025,642$ 16,415,394$ 14,512,008$ Interest on net pension obligation (asset) (746,356) (649,566) (518,739)Annual pension cost 21,279,286 15,765,828 13,993,269Contributions made (17,747,260) (17,056,409) (15,737,611)Change in net pension obligation (asset) 3,532,026 (1,290,581) (1,744,342)Net pension obligation (asset) beginning of year (9,951,439) (8,660,858) (6,916,516)Net pension obligation (asset) end of year (6,419,413)$ (9,951,439)$ (8,660,858)$

The funding activity of the Police Officers’ Supplemental Pension and Retirement System for the current and preceding two years is as follows:


Annual required contribution 800,469$ 601,749$ 551,112$ Interest on net pension obligation (asset) (71,615) (55,377) (44,392)Annual pension cost 728,854 546,372 506,720Contributions made (825,254) (749,347) (644,037)Change in net pension obligation (asset) (96,400) (202,975) (137,317)Net pension obligation (asset) beginning of year (895,188) (692,213) (554,896)Net pension obligation (asset) end of year (991,588)$ (895,188)$ (692,213)$

The funding activity of the Firefighters’ Supplemental Pension and Retirement System for the current and preceding two years is as follows:


Annual required contribution 540,413$ 413,918$ 374,076$ Interest on net pension obligation (asset) (152,581) (129,531) (110,074)Annual pension cost 387,832 284,387 264,002Contributions made (618,710) (591,718) (523,429)Change in net pension obligation (asset) (230,878) (307,331) (259,427)Net pension obligation (asset) beginning of year (2,034,414) (1,727,083) (1,467,656)Net pension obligation (asset) end of year (2,265,292)$ (2,034,414)$ (1,727,083)$

For more information pertaining to the aforementioned plans refer to the City of Lakeland, Florida stand-alone plan financial statements for each plan, which can be obtained by contacting the City of Lakeland, Finance Department, City Hall, 228 S. Massachusetts Ave., Lakeland, FL 33801-5086. NOTE 15 – DEFINED CONTRIBUTION PENSION PLAN The City administers a defined contribution pension plan that is made available to the following senior management employees: City Manager, City Attorney, Chief Assistant Attorney, Chief of Police and Manager of Lakeland Electric Utilities in lieu of their participation in the Employees Pension and Retirement System defined benefit plan. This plan was established by the City Commission, who retains authority for establishing contribution levels. Participating employees contribute 7 percent of their salary to the plan and the City contributes 12.87 percent. Investment accounts consisting of mutual funds have been established with a third party in the name of the City for the benefit of the participants. Upon separation from service, each participant is entitled to benefits equal to no more than the accumulated balance in the investment accounts, subject to certain restrictions. For the fiscal year ended September 30, 2003, the employer contribution was $78,121 and the employee contribution was $41,800. Effective October 1, 2003 the employee’s contribution will increase to 8 percent and the city’s contribution to the plan will increase to 14.4 percent.



E - 23

NOTE 16 – OTHER POST EMPLOYMENT BENEFITS The City Commission has agreed to offer subsidized post employment health care benefits to former employees who are receiving retirement benefits from the City in conjunction with the Employees Pension and Retirement System Plan. One form of subsidy consists of a payment of up to 50 percent of the cost of Part A Medicare insurance coverage purchased by a former employee who is not otherwise eligible for Medicare coverage. The City can rescind this agreement at any time. To date, there have been no participants in this program. A second form of subsidy consists of a payment equal to 50 percent of the normal monthly insurance premium levied by the City's self-insured health insurance program. In fiscal year 2003, the retiree’s health insurance premium subsidy was reduced to 45 percent; in fiscal year 2004, the subsidy will be reduced to 40 percent; and in fiscal year 2005, the subsidy will reduce to 35 percent. Effective October 1, 2002, all current employees, who retiree on or after October 1, 2002 will be offered a health premium subsidy based on years of services as follows: 10-14 years of service 15 percent, 15-19 years of service 25 percent, and 20 years or more 35 percent. Retirees are required to make an election as to participation in the City-sponsored health insurance plan upon retirement. Effective January 1, 2003 any employee, who wishes to have his/her spouse and dependents insured on the City of Lakeland’s Health Insurance Plan prior to retirement, will be required to have them on the plan one year prior to retirement. Should a participant at any time elect not to purchase coverage from the City-sponsored plan, all eligibility for future participation in that plan, including rights to the subsidy, is terminated. Effective January 1, 2003, all new hires will not be eligible for a retiree subsidy plan which has been formally adopted by City ordinance 4379. The City can terminate the subsidy program at any time. A total of 546 retirees participated in the plan during the fiscal year ended September 30, 2003 incurring total costs of $1,116,643 paid by the City. The subsidy is funded on a pay-as-you-go basis, with the cost being charged to the Retiree Health Insurance Fund. NOTE 17 – COMMITMENTS AND CONTINGENCIES A. Litigation A lawsuit from Horizon Construction has been decided with a judgment in the amount of $20,000 in damages, which is less than three percent of the original claim. Each party is to pay it’s own legal fees. The bonding company, which the jury found breached its agreement with the City, has appealed, which has been stayed pending outcome of the attorney fee issue. The court has required the parties to arbitrate the taxable costs that were awarded to Horizon, which arbitration is presently pending a decision. Any award would be less than $100,000 which would not materially affect the financial position of the City. Various suits and claims arising in the ordinary course of operations are pending against the City. While the ultimate effect of such litigation cannot be ascertained at this time, in the opinion of counsel for the City, the liabilities which may arise from such actions would not result in losses which would materially affect the financial position of the City or the results of its operations. B. Contractual Commitments The City has contracts for the purchase and delivery of coal requiring the purchase of a minimum number of tons per year. The City also has contracts for the supply and transportation of natural gas requiring the purchase and transportation of a minimum and a maximum number of cubic feet of natural gas per year. The City has contracts for the purchase/sale and delivery of electric energy setting a maximum number of megawatts available for purchase. Since 1996, the Department of Electric Utilities and the Department of Water Utilities entered into contracts with eighteen major customers to provide their electric energy requirements for a period of ten years. Other major contracts issued by the City which have not been completed as of September 30, 2003 are as follows:

Widen Edgewood Drive - $1,563,046 Radio System Expansion - $1,385,044 Lake Mirror Park - $651,406 Northeast Water Plant Engineering - $1,118,000 Northeast Water Plant Construction - $14,317,000 Northeast Water Plant By-pass Line - $709,356 Northeast Wellfield - $3,550,000



E - 24

NOTE 18 – COMPONENT UNITS The condensed Statement of Net Assets and Statement of Activities for the component units of the City for the year ended September 30, 2003 (LAMTD is unaudited) are presented in the following tables:

Governmental Business-type(Lakeland ActivitiesDowntown (Lakeland Area

Development Mass TransitASSETS: Authority) District) Total

Current assets 257,436$ 8,943,611$ 9,201,047$

Noncurrent assets:Designated assets - 2,657,412 2,657,412Restricted assets 99,658 - 99,658Capital assets 2,747 8,256,826 8,259,573

Total noncurrent assets 102,405 10,914,238 11,016,643Total assets 359,841 19,857,849 20,217,690

LIABILITIES:Current liabilities - 425,471 425,471Noncurrent liabilities - 300,591 300,591

Total liabilities - 726,062 726,062

NET ASSETS:Invested in capital assets, net of related debt 2,747 8,256,826 8,259,573Restricted:

Capital improvements 99,658 - 99,658Unrestricted 257,436 10,874,961 11,132,397

Total net assets 359,841$ 19,131,787$ 19,491,628$

Net (Expense) Revenue andProgram Revenues and Changes in Net Assets

Charges Operating Capital Businessfor Grants and Grants and Governmental Type

Functions/Programs: Expenses Services Contributions Contributions Activities Activities TotalGovernmental activities

Economic environment 349,041$ - $ - $ - $ (349,041)$ - $ (349,041)$

Business-type activitiesLakeland Area Mass Transit District 7,022,044 1,468,669 2,982,821 707,884 - (1,862,670) (1,862,670)

Total 7,371,085$ 1,468,669$ 2,982,821$ 707,884$ (349,041) (1,862,670) (2,211,711)

General revenues:Property taxes 209,573 2,449,711 2,659,284Investment earnings 7,650 143,951 151,601Miscellaneous - 2,342 2,342Net transfers (to) / from component units (30,856) 30,856 - Net contributions from primary government 180,696 - 180,696

Total general revenues and transfers 367,063 2,626,860 2,993,923Change in net assets 18,022 764,190 782,212

Net assets, beginning of year 341,819 18,367,597 18,709,416Net assets, end of year 359,841$ 19,131,787$ 19,491,628$



E - 25

NOTE 19 – SUBSEQUENT EVENTS There were no significant subsequent events that occurred after the fiscal year end requiring disclosure.


E - 26

OTHER REQUIRED SUPPLEMENTAL INFORMATION


REQUIRED SUPPLEMENTARY INFORMATIONGENERAL FUND

BUDGETARY COMPARISON SCHEDULEBUDGET (GAAP BASIS) AND ACTUALYEAR ENDED SEPTEMBER 30, 2003

2003 2002Original Final Actual Variance Actual

REVENUESTaxes 22,026,370$ 22,026,370$ 23,268,025$ 1,241,655$ 20,802,918$Licenses and permits 2,410,850 2,410,850 2,223,201 (187,649) 2,413,095Intergovernmental 8,079,285 8,409,875 8,246,861 (163,014) 8,410,050Charges for services 2,013,217 2,441,726 2,344,922 (96,804) 2,405,521Fines and forfeits 922,000 1,036,110 1,049,606 13,496 1,017,180Miscellaneous 982,606 1,151,415 841,572 (309,843) 1,024,558

Total revenues 36,434,328 37,476,346 37,974,187 497,841 36,073,322


General government:Legislative 56,770 74,586 61,283 13,303 77,144Executive 261,160 332,580 318,360 14,220 270,218Financial and administrative 3,530,015 3,494,775 3,190,177 304,598 2,873,679Legal counsel 146,158 154,808 154,811 (3) 144,120Comprehensive planning 1,251,666 1,692,739 1,378,590 314,149 1,370,299Other general government 2,978,961 2,917,401 2,971,137 (53,736) 2,517,595

8,224,730 8,666,889 8,074,358 592,531 7,253,055Public safety:

Law enforcement 23,768,631 24,796,496 24,084,780 711,716 23,031,768Fire control 8,127,734 8,155,796 7,887,600 268,196 7,376,264Protective inspections 1,783,876 1,949,858 1,692,744 257,114 1,639,946

33,680,241 34,902,150 33,665,124 1,237,026 32,047,978Physical environment:

Utility services 5,008,971 5,169,328 5,187,582 (18,254) 5,068,309Conservation and resource management 13,157 13,157 13,157 - 11,695Lakes and environmental 195,408 207,248 207,247 1 195,096Other physical environment 538,765 545,024 543,039 1,985 523,813

5,756,301 5,934,757 5,951,025 (16,268) 5,798,913Transportation:

Road and street facilities 4,629,169 4,606,545 4,518,658 87,887 4,357,461

Economic environment:Other economic environment 544,502 546,002 462,867 83,135 364,283

Human services:Other human services 35,650 138,550 110,570 27,980 99,378

Culture/Recreation:Libraries 2,227,740 2,295,725 2,194,040 101,685 2,205,159Parks and recreation 7,847,585 7,863,587 7,696,088 167,499 7,542,049Cultural services 159,882 159,882 159,882 - 153,922Special events 62,820 65,195 61,845 3,350 39,700

10,298,027 10,384,389 10,111,855 272,534 9,940,830

Capital outlay 393,484 747,460 414,732 332,728 626,660

Debt service:Principal retirement 88,897 88,897 - 88,897 - Interest - - 2,101 (2,101) 6,576

88,897 88,897 2,101 86,796 6,576

Total expenditures 63,651,001 66,015,639 63,311,290 2,704,349 60,495,134EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (27,216,673) (28,539,293) (25,337,103) 3,202,190 (24,421,812)

OTHER FINANCING SOURCES AND USESTransfers from other Funds 26,899,821 27,460,178 27,434,853 (25,325) 25,179,660Transfers from Component Units - - - - - Transfers to other Funds: (1,538,822) (1,845,622) (1,848,429) (2,807) (1,618,981)

Total other financing sources (uses) 25,360,999 25,614,556 25,586,424 (28,132) 23,560,679

NET CHANGE IN FUND BALANCE (1,855,674) (2,924,737) 249,321 3,174,058 (861,133)

FUND BALANCE, beginning of year 6,948,052 6,948,052 6,948,052 - 7,809,185FUND BALANCE, end of year 5,092,378$ 4,023,315$ 7,197,373$ 3,174,058$ 6,948,052$

F - 1


REQUIRED SUPPLEMENTAL INFORMATIONEMPLOYEE PENSION FUNDS

SEPTEMBER 30, 2003

I . SCHEDULE OF EMPLOYER CONTRIBUTIONS

Employees' Pension & Police Officers' Supplemental Firefighters' SupplementalRetirement System Pension & Retirement System Pension Plan

Annual Annual Annual Annual Annual AnnualYear Ended Required Actual Percentage Required Actual Percentage Required Actual Percentage

September 30 Contribution Contribution Contributed Contribution Contribution Contributed Contribution Contribution Contributed

2003 15,845,033$ 11,492,503$ 73 % - $ - $ - % - $ - $ - %

2002 10,732,707 11,047,917 103

2001 9,049,219 10,193,063 113 - - - - - -

2000 8,839,827 9,801,217 111 - - - - - -

1999 8,428,791 9,435,140 112 - - - - - -

1998 8,298,247 9,109,768 110 - - - - - -

II. NOTES TO REQUIRED SUPPLEMENTARY INFORMATION

The Police Officers' Supplemental Pension and Retirement System and the Firefighters' Supplemental Pension Plan schedules showa zero annual required contribution by the City because the City does not contribute to these plans. The Police Officers' SupplementalPension and Retirement System plan receives contributions from a one percent excise tax imposed by the City on casualty insurancecompanies, which is collected by the State of Florida and remitted to this plan. The Firefighters' Supplemental Pension Plan receivesproceeds from an excise tax on fire insurance, which is collected by the State of Florida and remitted to this plan.

For additional information regarding the pensions please refer to page E-20 in the notes to the basic financial statements.

The pension uses the aggregate actuarial cost method- A method under which the excess of the Actuarial Present Value of ProjectedBenefits of the group included in an Actuarial Valuation over the Actuarial Value of Assets is allocated on a level basis over theprojected salaries of the group between the valuation date and assumed exit. This allocation is performed for the group as a whole,not as a sum of individual allocations. That portion of the Actuarial Present Value allocated to a valuation year is called the Normal cost.The Actuarial Accrued Liability is equal to the Actuarial Value of Assets. Under this method, the Actuarial gains (losses), as they occur,reduce (increase) future Normal Costs.

For more information pertaining to the aforementioned plans refer to the City of Lakeland, Florida stand-alone plan financialstatements for each plan, which can be obtained by contacting the City of Lakeland, Finance Department, City Hall 228 S.Massachusetts Ave., Lakeland, FL 33801- 5086.

F - 2

COMBINING STATEMENTS

NON-MAJOR FUNDS

OTHER GOVERNMENTAL FUNDS

G - 1

SPECIAL REVENUE FUNDS Special revenue funds are used to account for proceeds from certain specific revenue sources. These funds are recorded separately as directed by legal requirements, regulatory provisions, or administrative action. As with the General Fund, the primary accounting focus is on the sources and uses of available funds and the financial activity is reported using the modified accrual basis accounting. TRANSPORTATION FUND – Major sources of revenues for the Transportation Fund include taxes levied on motor fuels and impact fees. These revenues are used for projects approved by the City Commission, such as street improvements. PUBLIC IMPROVEMENT FUND – Consists of revenues primarily received from an agreement to lease a City-owned hospital facility to a not-for-profit corporation. The revenues are used to finance a variety of capital improvement projects not assignable to an enterprise operation and to pay debt service on long-term debt issued for the same purpose. COMMUNITY DEVELOPMENT FUND – The Federal Department of Housing and Urban Development provides funds for improvement projects and economic development assistance in low to moderate-income areas. STORMWATER FUND – Revenues, received primarily through the collection of residential and commercial fees as well as transfers from the Transportation Fund for drainage and lake projects, are used for projects approved by the City Commission for storm water capital activities. LAKELAND COMMUNITY REDEVELOPMENT AGENCY – Revenues that are received primarily from the tax increment of the special taxing district established for the purpose of revitalizing the downtown Lakeland area. IMPACT FEE FUND – The Impact Fee Fund is used to account for impact fees collected for transportation, law enforcement, fire protection, and parks and recreation. DEBT SERVICE FUND The Debt Service Fund is used to account for the accumulation of resources for, and the payment of, general long-term debt principal and interest. PERMANENT FUNDS Permanent funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support the reporting government’s programs. OAK HILL BURIAL PARK FUND – This fund is used to account for the accumulation of resources used to finance improvements to the Oak Hill Burial Park. CEMETERY PERPETUAL CARE FUND – When the corpus of this fund is sufficient, it will be used to account for the accumulation of resources used to maintain all City owned cemeteries. SCOTT MORRIS MAUSOLEUM FUND – This fund accounts for a contribution to provide maintenance of the Scott Morris Mausoleum. WEBSTER BOOK FUND – This fund accounts for a bequest received by the City to purchase nonfiction books and periodicals for the City of Lakeland Public Library. BALDWIN BOOK FUND – This fund accounts for a bequest received by the City to purchase general science and wholesome fiction books for the City of Lakeland Public Library.

NON-MAJOR FUNDS

PROPRIETARY FUNDS

G - 2

PROPRIETARY FUNDS Proprietary funds are used to account for business-type activities and includes both enterprise funds and internal service funds. ENTERPRISE FUNDS Enterprise funds are used to account for operations that are financed and operated in a manner similar to private business enterprises. The primary customer of enterprise funds is the general public and the intent is that the costs relating to providing certain goods or services are primarily recovered through user fees and charges. PARKING SYSTEM FUND – This fund accounts for operating and maintaining parking facilities throughout the City, including two municipal parking garages. LAKELAND CENTER FUND – This fund accounts for operating and maintaining the Lakeland Center for public shows, civic and cultural events, entertainment and other activities. LAKELAND LINDER REGIONAL AIRPORT FUND – This fund accounts for revenues from leases of buildings and land, commissions on the sale of gasoline, related operating expenses, and capital outlays necessary for maintaining the airport facilities and an industrial park. SOLID WASTE MANAGEMENT FUND – This fund accounts for all activities necessary to provide refuse collection, disposal services and recycling to residents of the City. CLEVELAND HEIGHTS GOLF COURSE FUND – This fund accounts for operating and maintaining the City-owned golf course. INTERNAL SERVICE FUNDS Internal service funds account for the financing of goods or services provided by one department to other departments of the City on a cost reimbursement basis. PURCHASING AND STORES FUND – This fund accounts for the costs of purchasing and maintaining custody of supplies and materials. Services provided are billed based on an estimate of actual cost, including operating expenses, and overhead. FLEET MANAGEMENT FUND – This fund accounts for renting and maintaining automotive equipment used by other City departments. User charges are assessed to cover actual costs, including operating expenses, overhead, and depreciation. SELF-INSURANCE FUND – This fund accounts for the cost of claims and management fees incurred in providing employee health insurance, workers' compensation, general liability, public officials’ liability, airport general liability, automobile liability and trustee and fiduciary liability for the City of Lakeland. INTERNAL LOAN FUND – This fund accounts for internal loans that are made to other funds of the City of Lakeland for the purpose of financing operating deficits and capital acquisition costs that the City has determined should not be financed through the traditional tax-free debt market. All loans are interest bearing with defined repayment terms.

NON-MAJOR FUNDS

FIDUCIARY FUNDS AND COMPONENT UNITS

G - 3

FIDUCIARY FUNDS Fiduciary funds are used to report assets held in a trustee or agency capacity for others and therefore cannot be used to support the government’s own programs. Fiduciary funds include both trust funds and agency funds. EMPLOYEES’ PENSION AND RETIREMENT SYSTEM – This fund accounts for the accumulation of resources used for retirement payments for City employees. Resources for retirement benefits are contributed by employees at a rate of 7% of their salary and by the City at a rate of 12.87% of the covered employee's salary. POLICE OFFICERS' SUPPLEMENTAL PENSION AND RETIREMENT SYSTEM – This fund accounts for the accumulation of resources used for retirement annuity payments to police officers. Resources are contributed by police officers at a rate of 1% of their salary and by the State of Florida from the proceeds of an excise tax imposed by the City on casualty insurance companies. FIREFIGHTERS' SUPPLEMENTAL PENSION PLAN – This fund accounts for the accumulation of resources used for retirement annuity and death benefit payments for firefighters. Resources are contributed by firefighters at a rate of 3% of their salary and by the State of Florida from the proceeds of an excise tax imposed by the City on fire insurance companies. The tax is collected by the State of Florida and remitted to the fund. ALTERNATE EMPLOYEE PENSION PLAN – This fund is used to account for the accumulation of assets designated for providing post-employment benefits for certain eligible employees enrolled in the plan. Resources for retirement benefits are contributed by employees at the rate of 7% of their salary and by the City at the rate of 12.87%. DEATH BENEFIT FUND – This fund accounts for the accumulation of resources used to provide continued life insurance to certain City employees after retirement. The maximum liability at year-end is completely funded. SURVIVOR'S BENEFIT TRUST FUND – This fund accounts for the accumulation of resources used for payment of a death benefit to surviving spouses of certain retired employees. COMPONENT UNITS A component unit is a separate organization that must be included in the financial reporting of the primary government. Such reporting assures that the financial statements of the primary government are fairly presented. LAKELAND AREA MASS TRANSIT DISTRICT – This fund accounts for all activities necessary to provide modern bus transportation in the Lakeland area. The City does not have any ownership claim against the assets of this entity; however, the City does maintain some control over operations in that the majority of its governing board is composed of members of the City Commission. LAKELAND DOWNTOWN DEVELOPMENT AUTHORITY – This fund accounts for the special taxing district established for the purpose of revitalizing the downtown Lakeland area.


COMBINING STATEMENT OF NET ASSETSNONMAJOR GOVERNMENTAL FUNDS


Special Revenue FundsLakeland

Public Community Community Impact Debt Service Transportation Improvement Development Stormwater Redevelopment Fee

Fund Fund Fund Fund Fund Agency FundASSETS

Cash and cash equivalents 344,809$ 4,891,020$ 12,746,744$ 990,014$ 3,552,300$ 1,520,734$ 4,137,128$ Cash with paying agents 477,331 - - - - - - Investments - - - - - - - Receivables, net - 316,382 5,507,907 384,202 57,675 15,000 - Due from other funds - - 408,833 - - - - Due from other governments - 55,692 902,835 137,245 218,414 - 69,716Prepaid expenditures - - 296,118 199 - - - Advances to other funds - - 1,694,511 - - - -

Total assets 822,140$ 5,263,094$ 21,556,948$ 1,511,660$ 3,828,389$ 1,535,734$ 4,206,844$

LIABILITIESAccounts payable - $ 477,881$ 1,968,675$ 34,611$ 160,694$ 58,255$ - $ Accrued liabilities 477,331 5,857 25,606 21,985 7,318 2,868 - Notes payable - - - - - 15,000 - Due to other funds - - - - - 197,846 - Revenue bonds payable 315,972 - - - - - - Deferred revenue - 316,383 7,913,405 1,054,614 - - -

Total liabilities 793,303 800,121 9,907,686 1,111,210 168,012 273,969 -

FUND BALANCESReserved:

Community development - - - 160,384 - - - Prepaid expenditures - - 296,118 - - - - Encumbrances - 2,135,047 2,465,170 240,066 544,994 166,977 - Capital improvements - - 6,282,612 - - - 4,206,844Maintenance and repair - - - - - - - Debt service 28,837 - 430,000 - - - - Endowments - - - - - - -

28,837 2,135,047 9,473,900 400,450 544,994 166,977 4,206,844Unreserved:

Designated:Working capital - 300,000 - - - - - Capital improvements - - - - (193,118) - - Subsequent years expenditures - 808,524 1,212,584 - 3,308,501 846,095 - Total designated - 1,108,524 1,212,584 - 3,115,383 846,095 -

Undesignated - 1,219,402 962,778 - - 248,693 - Total fund balance 28,837 4,462,973 11,649,262 400,450 3,660,377 1,261,765 4,206,844Total liabilities and fund balances 822,140$ 5,263,094$ 21,556,948$ 1,511,660$ 3,828,389$ 1,535,734$ 4,206,844$

G - 4

Permanent FundsOak Hill Cemetery Scott Total NonmajorBurial Perpetual Morris Webster Baldwin GovernmentalPark Care Mausoleum Book Book FundsFund Fund Fund Fund Fund 2003 2002

164,753$ 185,923$ 50,790$ 15,052$ 1,893$ 28,601,160$ 26,639,124$ - - - - - 477,331 641,245- 2,325,800 - - 74,622 2,400,422 2,408,784- 6,267 - - - 6,287,433 5,761,671- - - - - 408,833 309,821- - - - - 1,383,902 909,403- - - - - 296,317 296,347- - - - - 1,694,511 -

164,753$ 2,517,990$ 50,790$ 15,052$ 76,515$ 41,549,909$ 36,966,395$

- $ 1,052$ - $ - $ - $ 2,701,168$ 2,368,373$ - - - - - 540,965 190,724- - - - - 15,000 22,500- - - - - 197,846 197,846- - - - - 315,972 1,240,000- - - - - 9,284,402 6,412,952- 1,052 - - - 13,055,353 10,432,395

- - - - - 160,384 288,346- - - - - 296,118 296,283- - - - - 5,552,254 12,552,846

164,753 - - - - 10,654,209 4,793,009- 2,516,938 - - - 2,516,938 2,246,211- - - - - 458,837 23,528- - 50,790 15,052 76,515 142,357 125,497

164,753 2,516,938 50,790 15,052 76,515 19,781,097 20,325,720

- - - - - 300,000 300,000- - - - - (193,118) 1,813,704- - - - - 6,175,704 765,754- - - - - 6,282,586 2,879,458

- - - - - 2,430,873 3,328,822164,753 2,516,938 50,790 15,052 76,515 28,494,556 26,534,000164,753$ 2,517,990$ 50,790$ 15,052$ 76,515$ 41,549,909$ 36,966,395$

G - 5


COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCENONMAJOR GOVERNMENTAL FUNDS


Special Revenue FundsLakeland

Debt Public Community CommunityService Transportation Improvement Development Stormwater Redevelopment Impact FeeFund Fund Fund Fund Fund Agency Fund

REVENUESTaxes - $ 5,082,474$ - $ - $ - $ 1,551,824$ - $ Intergovernmental - 87,041 1,810,929 1,770,632 218,414 - 3,410,643Charges for services - - 293,776 - 1,339,253 - 1,235,666Miscellaneous 7,205 2,270,654 8,056,939 205,188 56,062 38,828 75,575

Total revenues 7,205 7,440,169 10,161,644 1,975,820 1,613,729 1,590,652 4,721,884


General government - - 2,377,007 99,684 61,815 104,730 - Public safety - - 180,558 183,987 - - - Physical environment - - 65,534 - 287,106 - - Transportation - 2,882,255 50,986 - 597,455 113,045 - Economic environment - - - 1,592,740 - 1,618,302 - Human services - - - 88,699 - - - Culture/recreation - 1,462 238,793 22,390 - - -

Capital outlay - 7,325,672 15,139,690 - 1,175,822 433,601 - Debt service 693,149 152,561 3,202,103 - - 190,243 -

Total expenditures 693,149 10,361,950 21,254,671 1,987,500 2,122,198 2,459,921 -

EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES (685,944) (2,921,781) (11,093,027) (11,680) (508,469) (869,269) 4,721,884

OTHER FINANCING SOURCES (USES)Proceeds from issuance of long-term debt - - 14,219,585 - - 1,000,000 -

Transfers from other funds:General Fund - - 4,300 - - 300,000 - Transportation Fund - - 52,000 - 1,200,000 70,000 - Public Improvement Fund 603,563 2,433,000 - - - - - Community Development Fund - - 735 - - 100,000 - Self-Insurance Fund - - 7,298 - - - - Lakeland Community Redevelopment Agency - - 175,000 - - - - Impact Fee Fund - 3,646,234 870,063 - - - - Lakeland Linder Regional Airport Fund 87,690 - - - - - - Department of Electric Utilities - - 343,726 - - - -

Total transfers from other funds 691,253 6,079,234 1,453,122 - 1,200,000 470,000 -

Transfers to other funds:General Fund - (100,000) (1,800,000) - (277) (30,000) (39,632)Debt Service Fund - - (603,563) - - - - Transportation Fund - - (2,433,000) - - - (3,646,234)Public Improvement Fund - (52,000) - (735) - (175,000) (870,063)Lakeland Community Redevelopment Agency - (70,000) - (100,000) - - - Stormwater Utility Fund - (1,200,000) - - - - - Fleet Management Fund - - - - - - - Parking System Fund - (231,167) - - (1,280) - - Lakeland Center Fund - - (499,404) - (5,054) - - Cleveland Heights Golf Course Fund - - - - - - - Lakeland Linder Regional Airport Fund - - - - (10,151) - -

Total transfers to other funds - (1,653,167) (5,335,967) (100,735) (16,762) (205,000) (4,555,929)

Transfers to component units - - - - - (180,696) - Total other financing sources (uses) 691,253 4,426,067 10,336,740 (100,735) 1,183,238 1,084,304 (4,555,929)Net change in fund balances 5,309 1,504,286 (756,287) (112,415) 674,769 215,035 165,955

FUND BALANCE, beginning of year 23,528 2,958,687 12,405,549 512,865 2,985,608 1,046,730 4,040,889FUND BALANCE, end of year 28,837$ 4,462,973$ 11,649,262$ 400,450$ 3,660,377$ 1,261,765$ 4,206,844$

G - 6

Permanent FundsOak Hill Cemetery Scott Total NonMajorBurial Perpetual Morris Webster Baldwin GovernmentalPark Care Mausoleum Book Book FundsFund Fund Fund Fund Fund 2003 2002

- $ - $ - $ - $ - $ 6,634,298$ 6,045,726$ - - - - - 7,297,659 6,643,488- - - - - 2,868,695 2,398,503

5,897 260,599 1,379 282 15,929 10,994,537 9,316,7235,897 260,599 1,379 282 15,929 27,795,189 24,404,440

- 29,294 - - - 2,672,530 408,426- - - - - 364,545 252,636- - - - - 352,640 502,056- - - - - 3,643,741 3,640,358- - - - - 3,211,042 1,751,916- - - - - 88,699 118,586- - - 230 - 262,875 123,106

29,580 - - - - 24,104,365 20,770,813- - - - - 4,238,056 3,512,480

29,580 29,294 - 230 - 38,938,493 31,080,377

(23,683) 231,305 1,379 52 15,929 (11,143,304) (6,675,937)

- - - - - 15,219,585 12,510,000

- 39,422 - - - 343,722 64,422- - - - - 1,322,000 1,258,600- - - - - 3,036,563 1,270,056- - - - - 100,735 - - - - - - 7,298 - - - - - - 175,000 175,000- - - - - 4,516,297 5,994,914- - - - - 87,690 89,708- - - - - 343,726 274,626- 39,422 - - - 9,933,031 9,127,326

- - (500) - - (1,970,409) (1,136,788)- - - - - (603,563) (673,577)- - - - - (6,079,234) (6,330,549)- - - - - (1,097,798) (435,844)- - - - - (170,000) (58,600)- - - - - (1,200,000) (1,200,000)- - - - - - (88,174)- - - - - (232,447) (701,397)- - - - - (504,458) (389,023)- - - - - - (50,000)- - - - - (10,151) (10,668)- - (500) - - (11,868,060) (11,074,620)

- - - - - (180,696) (177,153)- 39,422 (500) - - 13,103,860 10,385,553

(23,683) 270,727 879 52 15,929 1,960,556 3,709,616

188,436 2,246,211 49,911 15,000 60,586 26,534,000 22,824,384164,753$ 2,516,938$ 50,790$ 15,052$ 76,515$ 28,494,556$ 26,534,000$

G - 7


COMBINING STATEMENT OF NET ASSETSNONMAJOR PROPRIETARY FUNDS



LakelandLinder Solid Cleveland Total Other

Parking Lakeland Regional Waste Heights ProprietarySystem Center Airport Management Golf Course Funds

ASSETS Fund Fund Fund Fund Fund 2003 2002Current assets:

Cash and cash equivalents 291,982$ 1,247,965$ 1,881,666$ 518,909$ 293,189$ 4,233,711$ 5,311,958$ Receivables 10,126 98,824 531,554 380,243 12,967 1,033,714 1,062,366

Less allowance for uncollectibles (1,752) (14,382) (278,878) - (3,418) (298,430) (219,393)Due from other governments - - 568,549 - - 568,549 645,235Inventory - - - - 62,136 62,136 83,434Prepaid expenses 83 43,129 316 1,263 9,707 54,498 26,718

Total current assets 300,439 1,375,536 2,703,207 900,415 374,581 5,654,178 6,910,318

Non-current assets:Designated assets 973,283 - 800,000 - - 1,773,283 2,303,535

Restricted assets - 2,266,527 649,732 - - 2,916,259 4,730,087

Capital assets:Land 851,973 2,611,443 9,840,426 290,977 831,253 14,426,072 13,514,208Construction in process 144,550 - 247,593 - 111,424 503,567 1,435,945Facilities and equipment in service 6,462,365 37,247,016 54,989,289 1,269,650 4,042,776 104,011,096 98,993,774

Less accumulated depreciation (2,491,628) (13,580,466) (14,889,680) (484,669) (717,440) (32,163,883) (29,134,529)Total capital assets 4,967,260 26,277,993 50,187,628 1,075,958 4,268,013 86,776,852 84,809,398

Other noncurrent assets:Deposits 1,445 - - - - 1,445 1,445Net pension obligation (asset) 13,584 67,147 73,443 156,107 19,380 329,661 524,648Unamortized debt issue costs - 1,822,837 21,489 - 11,037 1,855,363 289,044

Total other noncurrent assets 15,029 1,889,984 94,932 156,107 30,417 2,186,469 815,137Total assets 6,256,011 31,810,040 54,435,499 2,132,480 4,673,011 99,307,041 99,568,475

LIABILITIES Current liabilities:

Accounts payable 54,722 40,722 70,928 275,419 101,653 543,444 642,794Accrued liabilities 14,403 70,655 65,227 105,390 80,433 336,108 301,233Accrued interest payable - - 3,313 - - 3,313 7,318Due to other funds 57,160 - 769,111 161,436 - 987,707 890,506Current portion of loans payable - - 54,973 - 113,918 168,891 150,283Deposits payable - 651,015 137,854 - - 788,869 670,910Deferred revenue - 29,938 53,209 - 24,805 107,952 84,440

Total current liabilities 126,285 792,330 1,154,615 542,245 320,809 2,936,284 2,747,484

Noncurrent liabilities:Designated liabilities - - 800,000 - - 800,000 2,058,000Restricted liabilities - 2,266,526 9,053 - - 2,275,579 3,658,211Accrued liabilities, less current portion 42,830 125,199 95,892 152,223 38,130 454,274 459,617Advances from other funds, less current portion 618,778 - 8,031,740 434,501 - 9,085,019 8,813,088Promissory notes and loans payable - - 2,036,450 - 2,536,297 4,572,747 4,579,916Revenue bonds payable, less current portion - 14,622,924 - - - 14,622,924 14,140,000

Less unamortized bond discount - (58,367) - - - (58,367) (90,560)Total other liabilities 661,608 16,956,282 10,973,135 586,724 2,574,427 31,752,176 33,618,272

Total liabilities 787,893 17,748,612 12,127,750 1,128,969 2,895,236 34,688,460 36,365,756

NET ASSETSInvested in capital assets, net of related debt 4,291,322 13,536,273 39,853,640 480,021 1,628,835 59,790,091 57,177,558Restricted:

Debt service - 1 103,882 - - 103,883 509,528Unrestricted 1,176,796 525,154 2,350,227 523,490 148,940 4,724,607 5,515,633

Total net assets 5,468,118$ 14,061,428$ 42,307,749$ 1,003,511$ 1,777,775$ 64,618,581$ 63,202,719$

G - 8


COMBINING SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETSNONMAJOR PROPRIETARY FUNDS



Lakeland ClevelandLinder Solid Heights Total Other

Parking Lakeland Regional Waste Golf ProprietarySystem Center Airport Management Course FundsFund Fund Fund Fund Fund 2003 2002

OPERATING REVENUESCharges for services 430,485$ 3,136,167$ 4,083,233$ 8,979,828$ 2,304,978$ 18,934,691$ 17,657,080$

OPERATING EXPENSESPersonal services 204,230 2,020,753 1,088,657 2,855,923 1,087,805 7,257,368 6,674,277Other operating expenses 299,689 2,835,748 1,457,574 5,312,843 1,244,402 11,150,256 10,304,030Depreciation 143,180 995,924 1,898,738 98,142 266,037 3,402,021 3,345,555

Total operating expenses 647,099 5,852,425 4,444,969 8,266,908 2,598,244 21,809,645 20,323,862Operating income (loss) (216,614) (2,716,258) (361,736) 712,920 (293,266) (2,874,954) (2,666,782)

NONOPERATING REVENUES (EXPENSES)Property and other taxes - 440,004 - - - 440,004 440,004Federal, state and local grants - 25,375 - - - 25,375 31,771Investment revenue 17,722 19,190 57,197 26,303 6,654 127,066 254,731Net increase (decrease) in the fair value of

investments and cash equivalents (13,075) (18,051) (37,704) (10,188) (916) (79,934) 205,397Miscellaneous revenue 1,569 40,744 43,224 - 60,053 145,590 111,442Contributions & donations - - - - - - 5,000Interest expense (17,289) (633,244) (579,116) (35,382) (40,279) (1,305,310) (1,647,278)Amortization - (78,758) (4,463) - (3,418) (86,639) (30,542)Gain (loss) on disposal of fixed assets - (866) (57,970) - 61,060 2,224 (79,151)

Total nonoperating revenue (expenses) (11,073) (205,606) (578,832) (19,267) 83,154 (731,624) (708,626)Income (loss) before contributions, transfers (227,687) (2,921,864) (940,568) 693,653 (210,112) (3,606,578) (3,375,408)

Capital grants and contributions - 10,000 3,230,466 11,607 - 3,252,073 3,268,901Transfers from other funds 308,167 2,609,202 129,674 - - 3,047,043 3,483,395Transfers to other funds - - (87,690) (1,188,986) - (1,276,676) (1,402,986)

308,167 2,619,202 3,272,450 (1,177,379) - 5,022,440 5,349,310Change in net assets 80,480 (302,662) 2,331,882 (483,726) (210,112) 1,415,862 1,973,902NET ASSETS, beginning of year 5,387,638 14,364,090 39,975,867 1,487,237 1,987,887 63,202,719 61,228,817NET ASSETS, end of year 5,468,118$ 14,061,428$ 42,307,749$ 1,003,511$ 1,777,775$ 64,618,581$ 63,202,719$

G - 9


COMBINING STATEMENT OF CASH FLOWSNONMAJOR PROPRIETARY FUNDS



Lakeland ClevelandLinder Solid Heights Total Other

Parking Lakeland Regional Waste Golf ProprietarySystem Center Airport Management Course FundsFund Fund Fund Fund Fund 2003 2002

Cash flows from operating activities:Receipts from customers 437,970$ 3,202,541$ 3,777,583$ 8,940,671$ 2,424,992$ 18,783,757$ 17,224,897$ Receipts / payments for interfund services (15,396) (45,525) (113,583) (1,805,725) (67,608) (2,047,837) (1,818,979)Payments to suppliers (270,109) (2,730,070) (1,387,186) (3,404,079) (1,108,627) (8,900,071) (8,341,114)Payments to employees (197,729) (1,976,280) (1,054,019) (2,770,607) (1,063,746) (7,062,381) (6,744,540)

Net cash provided by (used in) operating activities (45,264) (1,549,334) 1,222,795 960,260 185,011 773,468 320,264

Cash flows from noncapital financing activities:Proceeds from local grants - 25,375 - - - 25,375 31,771Transfers from other funds 308,167 2,609,202 129,674 - - 3,047,043 2,783,270Transfers to other funds - - (87,690) (1,188,986) - (1,276,676) (796,895)

Cash flows provided by (used in) noncapital financing activities 308,167 2,634,577 41,984 (1,188,986) - 1,795,742 2,018,146

Cash flows from capital financing activities:Taxes received for payments on long-term debt - 440,004 - - - 440,004 440,004Interest paid on long-term debt issued to finance capital assets (17,289) (849,134) (583,121) (35,382) (40,279) (1,525,205) (1,756,944)Proceeds from issuance of long-term debt - - - - - - 565,850Net issuance / repayment of interfund loans (27,912) - (271,359) (164,699) (75,480) (539,450) 47,785Payments on and maturities of long-term debt - (17,654,952) (2,109,241) - 38,365 (19,725,828) (700,004)Proceeds from refunding of long-term debt - 16,569,585 - - - 16,569,585 - Debt issue costs - (220,398) - - - (220,398) - Proceeds from capital grant programs - - 4,299,164 - - 4,299,164 4,669,975Capital contributions to others - - - - - - (484,571)Capital contributions from others 696,500 10,000 - - - 706,500 713,787Proceeds from sale of capital assets - - - - 61,060 61,060 11,212Purchase of capital assets (135,862) (360,141) (4,762,207) (47,107) (186,051) (5,491,368) (6,427,975)

Cash flows provided by (used in) capital financing activities 515,437 (2,065,036) (3,426,764) (247,188) (202,385) (5,425,936) (2,920,881)

Cash flows from investing activities:Investment revenue 17,722 48,617 57,197 26,303 6,654 156,493 255,077Net increase (decrease) in the fair value of cash equivalents (13,075) (18,051) (37,704) (10,188) (916) (79,934) 205,804Purchase / Sale of investment securities - 1,886,219 - - - 1,886,219 (1,907,604)

Cash flows provided by investing activities 4,647 1,916,785 19,493 16,115 5,738 1,962,778 (1,446,723)Net increase (decrease) in cash and cash equivalents 782,987 936,992 (2,142,492) (459,799) (11,636) (893,948) (2,029,194)

Cash and cash equivalents, beginning of year 482,278 2,577,500 5,006,163 978,708 304,825 9,349,474 11,378,668Cash and cash equivalents, end of year 1,265,265$ 3,514,492$ 2,863,671$ 518,909$ 293,189$ 8,455,526$ 9,349,474$

Reconciliation of operating income (loss) to net cash provided by (used in) operating activities:

Operating income (loss) (216,614)$ (2,716,258)$ (361,736)$ 712,920$ (293,266)$ (2,874,954)$ (2,666,782)$ Depreciation 143,180 995,924 1,898,738 98,142 266,037 3,402,021 3,345,555Miscellaneous revenue 1,569 40,744 43,224 11,607 60,053 157,197 111,442Contributions and donations - - - - - - 5,000(Increase) decrease in receivables, net 5,916 17,985 16,610 (50,764) 117,941 107,688 (209,484)(Increase) decrease in inventory - - - - 21,298 21,298 (36,735)(Increase) decrease in prepaid expenses (54) (18,313) (200) (843) (8,370) (27,780) 7,915Increase (decrease) in accounts payable 10,826 (53,073) (42,763) 84,444 1,852 1,286 19,805(Increase) in net pension obligation (asset) 6,501 44,473 34,638 85,316 24,059 194,987 (70,263)Increase (decrease) in accrued liabilities 3,412 20,710 (7,362) 19,438 (6,666) 29,532 104,773Increase (decrease) in deferred revenue - 7,645 13,794 - 2,073 23,512 55,858(Increase) decrease in due from other governments - - (379,278) - - (379,278) (369,600)Increase (decrease) in deposits payable - 110,829 7,130 - - 117,959 22,780

Net cash provided by (used in) operating activities (45,264)$ (1,549,334)$ 1,222,795$ 960,260$ 185,011$ 773,468$ 320,264$

G - 10


COMBINING STATEMENT OF NET ASSETSINTERNAL SERVICE FUNDS


Total InternalPurchasing Fleet Self- Internal Service And Stores Management Insurance Loan Funds

ASSETS Fund Fund Fund Fund 2003 2002Current assets:

Cash and cash equivalents 347,956$ 803,983$ - $ 18,180,741$ 19,332,680$ 22,302,862$Receivables - - - - - 353 Due from other funds - - - 966,021 966,021 874,986 Due from other governments - 36,505 - - 36,505 49,966 Inventory 672,623 228,637 - - 901,260 805,439 Prepaid expenses 316 61,938 - - 62,254 344

Total current assets 1,020,895 1,131,063 - 19,146,762 21,298,720 24,033,950Noncurrent assets:

Designated assets - 19,569,310 7,874,062 - 27,443,372 25,556,838Restricted assets - - - 8,587,184 8,587,184 6,505,046 Capital assets:

Land - 9,972 - - 9,972 9,972 Construction in process - - - - - 16,691 Facilities and equipment in service 3,495,753 32,814,055 - - 36,309,808 34,632,564

Less accumulated depreciation (1,078,871) (19,144,554) - - (20,223,425) (18,697,324)Total capital assets 2,416,882 13,679,473 - - 16,096,355 15,961,903

Other noncurrent assets:Advances to other funds - - - 8,911,531 8,911,531 8,813,088 Net pension obligation (asset) 66,806 115,047 - - 181,853 265,780 Unamortized debt issue costs - - - 847,350 847,350 484,872

66,806 115,047 - 9,758,881 9,940,734 9,563,740 Total noncurrent assets 2,483,688 33,363,830 7,874,062 18,346,065 62,067,645 57,587,527

Totals assets 3,504,583 34,494,893 7,874,062 37,492,827 83,366,365 81,621,477LIABILITIES Current liabilities:

Accounts payable 43,760 193,003 - - 236,763 246,767 Accrued liabilities 37,586 75,699 - - 113,285 110,901 Accrued interest payable - - - 3,526 3,526 3,526 Current portion of loans payable - - - 192,610 192,610 85,000 Deposits payable 47,093 - - - 47,093 - Due to other funds 3,308 2,573 - - 5,881 532 Payable from designated assets - - 1,291,641 - 1,291,641 2,583,972

Total current liabilities 131,747 271,275 1,291,641 196,136 1,890,799 3,030,698 Noncurrent liabilities:

Designated liabilities - 51,220 5,501,175 - 5,552,395 4,650,451 Restricted liabilities - - - 6,477,183 6,477,183 6,093,270 Accrued liabilities, less current portion 65,464 156,067 - - 221,531 230,729 Advances from other funds, less current portion 26,464 20,584 - - 47,048 - Promissory notes and loans payable - - - 2,712,648 2,712,648 3,014,000 Revenue bonds payable, less current portion - - - 26,534,325 26,534,325 26,385,327

Less unamortized bond discount - - - (436,404) (436,404) (462,075) Total noncurrent liabilities 91,928 227,871 5,501,175 35,287,752 41,108,726 39,911,702

Total liabilities 223,675 499,146 6,792,816 35,483,888 42,999,525 42,942,400NET ASSETS

Invested in capital assets, net of related debt 2,387,110 13,656,316 - - 16,043,426 15,961,371Restricted

Debt service - - - 2,110,001 2,110,001 411,776 Unrestricted 893,798 20,339,431 1,081,246 (101,062) 22,213,413 22,305,930

Total net assets 3,280,908$ 33,995,747$ 1,081,246$ 2,008,939$ 40,366,840$ 38,679,077$

G - 11


COMBINING SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET ASSETSINTERNAL SERVICE FUNDS


Total InternalPurchasing Fleet Self- Internal ServiceAnd Stores Management Insurance Loan Funds

Fund Fund Fund Fund 2003 2002OPERATING REVENUES

Charges for services 2,423,803$ 7,954,013$ 14,036,539$ - $ 24,414,355$ 22,210,480$

OPERATING EXPENSESPersonal services 918,671 1,789,011 - - 2,707,682 2,666,333Other operating expenses 1,528,107 3,254,614 12,823,239 - 17,605,960 18,516,416Depreciation 78,696 3,330,194 - - 3,408,890 3,139,069

Total operating expenses 2,525,474 8,373,819 12,823,239 - 23,722,532 24,321,818Operating (loss) (101,671) (419,806) 1,213,300 - 691,823 (2,111,338)

NONOPERATING REVENUES (EXPENSES)Investment revenue 12,111 536,855 180,218 708,054 1,437,238 1,927,162Net (decrease) in the fair value of

investments and cash equivalents (4,285) (235,758) (77,054) (357,459) (674,556) (149,289)Interest income on internal loans - - - 1,316,721 1,316,721 860,424Miscellaneous revenue (expense) 9,191 30,834 689,548 - 729,573 326,813Rebate on fuel taxes - 142,417 - - 142,417 195,569Interest expense - - - (2,294,183) (2,294,183) (1,910,474)Amortization - - - (57,571) (57,571) (52,608)Gain (loss) on disposal of fixed assets - 81,296 - - 81,296 305,462

Total nonoperating revenues 17,017 555,644 792,712 (684,438) 680,935 1,503,059Income (loss) before transfers (84,654) 135,838 2,006,012 (684,438) 1,372,758 (608,279)

Transfers from other funds - 322,303 - - 322,303 1,191,466Transfers to other funds - - (7,298) - (7,298) (153,031)

- 322,303 (7,298) - 315,005 1,038,435Change in net assets (84,654) 458,141 1,998,714 (684,438) 1,687,763 430,156NET ASSETS, beginning of year 3,365,562 33,537,606 (917,468) 2,693,377 38,679,077 38,248,921NET ASSETS, end of year 3,280,908$ 33,995,747$ 1,081,246$ 2,008,939$ 40,366,840$ 38,679,077$

G - 12


COMBINING STATEMENT OF CASH FLOWSINTERNAL SERVICE FUNDS


Total InternalPurchasing Fleet Self- Internal Serviceand Stores Management Insurance Loan Funds

Fund Fund Fund Fund 2003 2002Cash flows from operating activities

Receipts from customers 1,381,390$ 186,712$ 5,498,561$ - $ 7,066,663$ 5,362,906$ Receipts / payments for interfund services 1,051,957 7,954,013 9,225,870 - 18,231,840 17,409,790Payments to suppliers (1,566,031) (3,355,173) (12,977,340) - (17,898,544) (17,971,963)Payments to employees (889,531) (1,723,197) - - (2,612,728) (2,663,982)

Net cash provided by (used in) operating activities (22,215) 3,062,355 1,747,091 - 4,787,231 2,136,751

Cash flows from noncapital financing activitiesTransfers from other funds - 322,303 - - 322,303 1,191,466Transfers to other funds - - (7,298) - (7,298) (122,393)

Cash flows (used in) noncapital financing activities - 322,303 (7,298) - 315,005 1,069,073

Cash flows from capital financing activities:Interest received on internal loans - - - 1,316,721 1,316,721 860,424Payments on and maturities of long-term debt -

governmental funds - - - 1,365,878 1,365,878 (964,977)Net issuance / repayment of interfund loans - 22,139 - (189,484) (167,345) (99,271)Interest paid on long-term debt issued to

finance capital assets - - - (1,985,270) (1,985,270) (1,944,795)Payments on and maturities of long-term debt - - - (1,730,000) (1,730,000) (1,665,000)Proceeds from sale of capital assets - 205,744 - - 205,744 332,018Purchase of capital assets (3,307) (3,845,267) - - (3,848,574) (4,868,785)

Cash flows used in capital financing activities (3,307) (3,617,384) - (1,222,155) (4,842,846) (8,350,386)

Cash flows from investing activities:Investment revenue 12,111 536,855 180,218 708,602 1,437,786 2,026,390Net increase (decrease) in the fair value of

cash equivalents (4,285) (235,758) (77,054) (263,776) (580,873) (96,396)Purchase of investment securities - - - 3,481,160 3,481,160 (131,132)

Cash flows provided by investing activities 7,826 301,097 103,164 3,925,986 4,338,073 1,798,862Net increase (decrease) in cash and cash equivalents (17,696) 68,371 1,842,957 2,703,831 4,597,463 (3,345,700)Cash and cash equivalents, beginning of year 365,652 20,304,922 6,029,449 23,797,708 50,497,731 53,843,431Cash and cash equivalents, end of year 347,956$ 20,373,293$ 7,872,406$ 26,501,539$ 55,095,194$ 50,497,731$

Reconciliation of operating loss to net cash provided (used) by operating activities

Operating income (loss) (101,671)$ (419,806)$ 1,213,300$ - $ 691,823$ (2,111,338)$ Depreciation 78,696 3,330,194 - - 3,408,890 3,139,069Rebate on fuel taxes - 142,417 - - 142,417 195,569Miscellaneous revenue (expense) 9,191 30,834 689,548 - 729,573 326,813(Increase) decrease in receivables, net 353 - (1,656) - (1,303) 100(Increase) decrease in due from other

governments - 13,461 - - 13,461 39,734(Increase) decrease in inventory (78,569) (17,252) - - (95,821) 56,058(Increase) decrease in prepaid expenses (188) (61,722) - - (61,910) 30,931(Increase) in net pension obligation (asset) 29,140 54,787 - - 83,927 (31,921)Increase (decrease) in accounts payable 11,581 (21,585) (369,608) - (379,612) 336,723Increase (decrease) in accrued liabilities (17,841) 11,027 - - (6,814) 41,294Increase (decrease) in deposits payable 47,093 - - - 47,093 (8,837)Increase (decrease) in estimated liability for

unpaid claims - - 215,507 - 215,507 122,556Net cash provided by (used in) operating activities (22,215)$ 3,062,355$ 1,747,091$ - $ 4,787,231$ 2,136,751$

G - 13

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G - 15


COMBINING STATEMENT OF NET ASSETSCOMPONENT UNITSSEPTEMBER 30, 2003

WITH COMPARATIVE DATA FOR THE YEAR ENDED SEPTEMBER 30, 2002

Lakeland TotalLakeland Area Downtown ComponentMass Transit Development Units

District* Authority 2003 2002ASSETSCurrent assets:

Cash and cash equivalents 6,432,894$ 257,436$ 6,690,330$ 6,649,499$ Receivables, net 57,087 - 57,087 21,950Due from other governments 2,119,717 - 2,119,717 949,536Prepaid expenses 113,689 - 113,689 1,200Inventory 220,224 - 220,224 199,078

Total current assets 8,943,611 257,436 9,201,047 7,821,263

Noncurrent assets:Designated assets 2,657,412 - 2,657,412 2,617,702

Restricted assets - 99,658 99,658 98,373

Capital assets:Land 265,634 - 265,634 265,634Facilities and equipment in service 14,899,887 34,062 14,933,949 15,108,444

Less accumulated depreciation (6,908,695) (31,315) (6,940,010) (6,672,232)Total capital assets 8,256,826 2,747 8,259,573 8,701,846

Total noncurrent assets 10,914,238 102,405 11,016,643 11,417,921Total assets 19,857,849 359,841 20,217,690 19,239,184

LIABILITIESCurrent liabilities:

Accounts payable 198,365 - 198,365 64,825Accrued liabilities 227,106 - 227,106 227,649

Total current liabilities 425,471 - 425,471 292,474

Noncurrent liabilities:Accrued liabilities, less current portion 300,591 - 300,591 237,294

Total liabilities 726,062 - 726,062 529,768

NET ASSETSInvested in capital assets, net of related debt 8,256,826 2,747 8,259,573 8,701,846Restricted

Capital improvements - 99,658 99,658 98,373Unrestricted 10,874,961 257,436 11,132,397 9,909,197

Total net assets 19,131,787$ 359,841$ 19,491,628$ 18,709,416$

* Unaudited

G - 16


COMBINING SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET ASSETSCOMPONENT UNITS


Lakeland TotalLakeland Area Downtown ComponentMass Transit Development Units

District* Authority 2003 2002Operating revenues:

Charges for services 1,468,669$ - $ 1,468,669$ 1,110,203$

Operating expenses:Personal services 4,189,957 88,017 4,277,974 3,725,671Other operating expenses 1,729,749 259,068 1,988,817 1,822,004Depreciation 1,102,338 1,956 1,104,294 1,098,333

Total operating expenses 7,022,044 349,041 7,371,085 6,646,008Operating income (loss) (5,553,375) (349,041) (5,902,416) (5,535,805)

Nonoperating revenues (expenses):Investment revenue 143,951 7,650 151,601 180,092Property taxes 2,449,711 209,573 2,659,284 2,540,207Federal, state, and local grants 2,800,176 - 2,800,176 2,308,893Miscellaneous revenue 2,342 - 2,342 2,156Local assistance 182,645 - 182,645 145,275Gain on disposal of fixed assets - - - 3,195

Total nonoperating revenue 5,578,825 217,223 5,796,048 5,179,818Income (loss) before operating transfers 25,450 (131,818) (106,368) (355,987)

Capital contributions 707,884 - 707,884 2,226,714

Contributions/transfers from others Lakeland Community Redevelopment Agency - 180,696 180,696 177,153Lakeland Downtown Development Authority 30,856 - 30,856 22,082

Transfers to other component unitsLakeland Area Mass Transit District - (30,856) (30,856) (22,082)

Net Operating transfers 30,856 149,840 180,696 177,153Change in net assets 764,190 18,022 782,212 2,047,880NET ASSETS, beginning of year 18,367,597 341,819 18,709,416 16,661,536NET ASSETS, end of year 19,131,787$ 359,841$ 19,491,628$ 18,709,416$

* Not audited.

G - 17


G - 18

SUPPLEMENTAL INFORMATION


H - 1


SCHEDULE OF LONG-TERM DEBT - ALL FUNDSSEPTEMBER 30, 2003

DateFinal

Interest Rate Issue MaturityGENERAL LONG-TERM DEBT ACCOUNT GROUP

Utilities Tax Revenue Refunding and Improvement Bonds, Series 1994A 3.610 to 6.000 09-08-94 10-01-14Utilities Tax Revenue Refunding and Improvement Bonds, Series 2002A 3.500 to 4.200 01-31-03 10-01-22Loan payable - Sunshine State Governmental Financing Commission (1) 09-21-99 09-01-14Loan payable - Sunshine State Governmental Financing Commission (1) 10-16-01 10-31-16Mortgage Payable 6.000 09-03-99 12-01-04Note Payable Prime plus 1% 01-05-96 01-05-05Lease Payable N/A 12-01-02 01-01-18Internal Loans 4.000 to 6.250 08-31-96 03-31-18

DEPARTMENT OF ELECTRIC UTILITIES Energy System Variable Rate Refunding Revenue Bonds,

Series 2003 Variable 01-21-03 10-01-37Energy System Revenue Bonds,

Series 2000B 5.500 to 5.670 11-15-00 10-01-40Energy System Variable Rate Revenue Bonds,

Series 2001A Variable 05-01-01 10-01-35Energy System Revenue Bonds,

Series 2001B 5.000 to 5.500 05-01-01 10-01-18Electric Refunding Revenue Bonds,

Series 1999A 3.050 to 5.000 05-01-99 10-01-36Energy System Refunding Revenue Bonds,

Series 1999B 5.300 to 6.050 05-01-99 10-01-14Energy System Refunding Revenue Bonds,

Series 1999C 5.300 to 6.050 05-01-99 10-01-12

LAKELAND LINDER REGIONAL AIRPORT FUNDPromissory Note - Sun Trust, Series A and B 7.050 02-10-92 01-10-07Internal Loan 4.000 to 7.000 08-31-96 06-30-17Loan payable - Sunshine State Governmental Financing Commission (1) 11-01-00 10-31-20

LAKELAND CENTER FUNDUtility Tax Revenue Refunding and Improvement Bonds,

Series 1994 A 3.610 to 6.000 09-08-94 10-01-17Tourist Development Tax Revenue Bond, Series 1994 B 3.610 to 6.000 09-08-94 10-01-17Utility Tax Revenue Bonds, Series 2002A 3.500 to 4.200 01-31-03 10-01-17Tourist Development Tax Revenue Bonds, Series 2002C 3.500 to 4.200 01-31-03 10-01-17

WATER AND WASTEWATER UTILITIESLoan Payable - Wastewater Revolving Loan Program 2.450 03-31-94 03-31-15Water and Wastewater Revenue Refunding and Improvement

Bonds, Series 2002 3.500 to 5.000 08-29-02 10-01-33

PARKING FUNDInternal Loan 5.000 03-31-03 03-31-13

SOLID WASTE MANAGEMENT FUNDInternal Loan 6.600 03-31-99 03-31-09

CLEVELAND HEIGHTS GOLF COURSE FUNDLoan payable - Sunshine State Governmental Financing Commission (1) 09-21-99 09-01-14Internal Loan 5.500 to 5.600 06-30-99 06-30-04Lease Payable -Textron Financial Corp. 5.850 10-29-01 09-15-06

INTERNAL LOAN FUNDLoan payable - Sunshine State Governmental Financing Commission (1) 06-26-95 07-15-15Loan payable - Sunshine State Governmental Financing Commission (1) 09-21-99 09-01-14Capital Improvement Revenue Bonds, Series 1997 3.850 to 5.000 07-15-97 10-01-17Utility Tax Revenue Bonds, Series 2002B 3.900 to 4.500 01-31-03 10-01-22

TOTAL ALL FUNDS

(1) The interest rate is variable, based on the debt issued by the Sunshine State Governmental Financing Commission.

H - 2

PrincipalOutstanding Outstanding Interest and Interest

Original October 1, Issued Retired September 30 Payable in Payable inIssue Amount 2002 During Year During Year 2003 Future Years Future Years

7,720,000$ 4,735,000$ - $ 4,735,000$ - $ - $ - $ 4,050,000 - 4,050,000 - 4,050,000 793,354 4,843,3541,854,000 1,009,000 - 40,000 969,000 7,873 976,8739,760,000 9,760,000 - 947,000 8,813,000 1,730,698 10,543,698

391,500 341,500 - 50,000 291,500 59,318 350,81875,000 22,500 - 7,500 15,000 1,337 16,337

455,000 - 455,000 25,000 430,000 - 430,00013,759,986 7,849,673 16,380,784 2,731,805 21,498,652 7,724,243 29,222,89538,065,486 23,717,673 20,885,784 8,536,305 36,067,152 10,316,823 46,383,975

47,860,000 - 47,860,000 - 47,860,000 59,703,083 107,563,083

41,825,000 41,825,000 - 41,825,000 - - -

90,000,000 90,000,000 - - 90,000,000 37,476,833 127,476,833

30,000,000 30,000,000 - - 30,000,000 19,868,075 49,868,075

195,635,409 194,935,409 - 370,000 194,565,409 201,465,809 396,031,218

144,305,000 117,705,000 - 12,180,000 105,525,000 30,414,502 135,939,502

64,525,000 64,525,000 - - 64,525,000 30,419,251 94,944,251614,150,409 538,990,409 47,860,000 54,375,000 532,475,409 379,347,553 911,822,962

620,000 250,664 - 51,241 199,423 24,945 224,36814,827,956 9,026,084 700,000 968,235 8,757,849 3,859,524 12,617,3734,750,000 4,750,000 - 2,058,000 2,692,000 373,238 3,065,238

20,197,956 14,026,748 700,000 3,077,476 11,649,272 4,257,707 15,906,979

13,370,000 10,795,000 - 10,795,000 - - - 6,835,000 5,520,000 - 5,520,000 - - -

10,970,000 - 10,970,000 - 10,970,000 2,995,874 13,965,8745,660,000 - 5,660,000 - 5,660,000 1,653,271 7,313,271

36,835,000 16,315,000 16,630,000 16,315,000 16,630,000 4,649,145 21,279,145

13,655,627 8,275,204 - 548,362 7,726,842 1,229,152 8,955,994

72,755,000 72,755,000 - - 72,755,000 54,817,019 127,572,01986,410,627 81,030,204 - 548,362 80,481,842 56,046,171 136,528,013

696,500 - 696,500 27,177 669,323 175,826 845,149

998,300 586,509 - 136,131 450,378 54,420 504,798

2,266,000 2,227,000 108,742 - 2,335,742 291,177 2,626,919540,600 75,479 - 75,479 - - - 433,880 384,851 - 99,042 285,809 24,524 310,333

3,240,480 2,687,330 108,742 174,521 2,621,551 315,701 2,937,252

6,955,000 2,555,000 - - 2,555,000 523,507 3,078,507- 544,000 - 193,742 350,258 154,763 505,021

45,700,000 39,395,000 - 1,730,000 37,665,000 15,433,354 53,098,35415,355,000 - 15,355,000 - 15,355,000 11,310,479 26,665,47968,010,000 42,494,000 15,355,000 1,923,742 55,925,258 27,422,103 83,347,361

868,604,758$ 719,847,873$ 102,236,026$ 85,113,714$ 736,970,185$ 482,585,449$ 1,219,555,634$

H - 3


SCHEDULE OF REQUIRED DEBT PAYMENTS TO MATURITYSEPTEMBER 30, 2003

UTILITIES TAX REVENUE REFUNDING BONDS

GENERAL LONG TERM DEBT PORTION LAKELAND CENTER FUND PORTION

SERIES 2002A SERIES 2002A

Fiscal Year Principal Interest Total Principal Interest Total

2003-04 420,000$ 110,463$ 530,463$ 990,000$ 330,143$ 1,320,143$ 2004-05 555,000 100,712 655,712 660,000 313,642 973,6422005-06 235,000 92,813 327,813 655,000 300,493 955,4932006-07 250,000 87,962 337,962 655,000 287,392 942,3922007-08 265,000 82,680 347,680 665,000 273,860 938,8602008-09 280,000 76,398 356,398 665,000 258,565 923,5652009-10 295,000 68,472 363,472 670,000 240,203 910,2032010-11 310,000 59,010 369,010 685,000 219,021 904,0212011-12 325,000 48,285 373,285 710,000 195,465 905,4652012-13 345,000 36,129 381,129 720,000 169,540 889,5402013-14 370,000 22,630 392,630 740,000 141,980 881,9802014-15 400,000 7,800 407,800 750,000 113,295 863,2952015-16 - - - 770,000 83,270 853,2702016-17 - - - 800,000 51,470 851,4702017-18 - - - 835,000 17,535 852,535

TOTALS 4,050,000$ 793,354$ 4,843,354$ 10,970,000$ 2,995,874$ 13,965,874$

UTILITIES TAX REVENUE BONDS

SERIES 2002B

Fiscal Year Principal Interest Total

2003-04 - $ 449,604$ 449,604$ 2004-05 - 688,755 688,7552005-06 165,000 688,755 853,7552006-07 170,000 685,455 855,4552007-08 165,000 682,055 847,0552008-09 175,000 678,590 853,5902009-10 185,000 674,215 859,2152010-11 190,000 668,665 858,6652011-12 185,000 662,490 847,4902012-13 200,000 656,015 856,0152013-14 200,000 648,515 848,5152014-15 210,000 640,915 850,9152015-16 645,000 632,725 1,277,7252016-17 675,000 606,925 1,281,9252017-18 700,000 579,250 1,279,2502018-19 2,080,000 549,850 2,629,8502019-20 2,185,000 445,850 2,630,8502020-21 2,295,000 336,600 2,631,6002021-22 2,410,000 221,850 2,631,8502022-23 2,520,000 113,400 2,633,400

TOTALS 15,355,000$ 11,310,479$ 26,665,479$

H - 4


SCHEDULE OF REQUIRED DEBT PAYMENTS TO MATURITY (CONTINUED)SEPTEMBER 30, 2003

TOURIST DEVELOPMENT TAX AND UTILITIES TAX REVENUE REFUNDING BONDS

SERIES 2002C


2003-04 390,000$ 116,754$ 506,754$ 2004-05 320,000 171,058 491,0582005-06 320,000 164,657 484,6572006-07 330,000 158,258 488,2582007-08 335,000 151,657 486,6572008-09 340,000 144,623 484,6232009-10 350,000 136,122 486,1222010-11 360,000 125,623 485,6232011-12 375,000 113,922 488,9222012-13 385,000 100,797 485,7972013-14 400,000 86,360 486,3602014-15 415,000 71,160 486,1602015-16 430,000 54,975 484,9752016-17 445,000 37,775 482,7752017-18 465,000 19,530 484,530

TOTALS 5,660,000$ 1,653,271$ 7,313,271$

CAPITAL IMPROVEMENT REVENUE BONDS

SERIES 1997


2003-04 1,805,000$ 1,757,705$ 3,562,705$ 2004-05 1,880,000 1,679,380 3,559,3802005-06 1,960,000 1,596,820 3,556,8202006-07 2,045,000 1,509,690 3,554,6902007-08 2,135,000 1,416,662 3,551,6622008-09 2,230,000 1,317,335 3,547,3352009-10 2,335,000 1,211,172 3,546,1722010-11 2,445,000 1,097,620 3,542,6202011-12 2,560,000 976,220 3,536,2202012-13 2,685,000 846,375 3,531,3752013-14 2,820,000 708,750 3,528,7502014-15 2,960,000 564,250 3,524,2502015-16 3,110,000 412,500 3,522,5002016-17 3,265,000 253,125 3,518,1252017-18 3,430,000 85,750 3,515,750

TOTALS 37,665,000$ 15,433,354$ 53,098,354$

H - 5



WATER AND WASTEWATER REVENUE REFUNDING AND IMPROVEMENT BONDS

WATER UTILITIES PORTION WASTEWATER UTILITIES PORTION

SERIES 2002 SERIES 2002

Fiscal Year Principal Interest Total Principal Interest Total

2003-04 1,115,000$ 2,464,175$ 3,579,175$ 1,255,000$ 836,425$ 2,091,425$ 2004-05 1,145,000 2,424,625 3,569,625 1,300,000 791,712 2,091,7122005-06 1,175,000 2,392,103 3,567,103 1,345,000 754,672 2,099,6722006-07 1,205,000 2,364,556 3,569,556 1,370,000 723,256 2,093,2562007-08 1,240,000 2,332,444 3,572,444 1,405,000 686,813 2,091,8132008-09 1,260,000 2,295,706 3,555,706 1,445,000 644,916 2,089,9162009-10 1,385,000 2,241,394 3,626,394 1,490,000 585,087 2,075,0872010-11 1,445,000 2,170,644 3,615,644 1,565,000 508,712 2,073,7122011-12 1,520,000 2,096,519 3,616,519 1,645,000 428,462 2,073,4622012-13 1,600,000 2,018,519 3,618,519 1,725,000 344,212 2,069,2122013-14 1,670,000 1,934,681 3,604,681 1,815,000 253,444 2,068,4442014-15 1,770,000 1,844,381 3,614,381 1,910,000 155,663 2,065,6632015-16 655,000 1,780,725 2,435,725 2,010,000 52,763 2,062,7632016-17 465,000 1,753,650 2,218,650 - - - 2017-18 480,000 1,733,269 2,213,269 - - - 2018-19 500,000 1,711,519 2,211,519 - - - 2019-20 525,000 1,688,128 2,213,128 - - - 2020-21 1,650,000 1,637,831 3,287,831 - - - 2021-22 1,725,000 1,558,706 3,283,706 - - - 2022-23 1,805,000 1,474,869 3,279,869 - - - 2023-24 1,890,000 1,384,750 3,274,750 - - - 2024-25 1,990,000 1,287,750 3,277,750 - - - 2025-26 2,090,000 1,185,750 3,275,750 - - - 2026-27 2,390,000 1,073,750 3,463,750 - - - 2027-28 2,890,000 941,750 3,831,750 - - - 2028-29 3,055,000 790,862 3,845,862 - - - 2029-30 3,210,000 629,600 3,839,600 - - - 2030-31 3,370,000 460,231 3,830,231 - - - 2031-32 3,540,000 282,369 3,822,369 - - - 2032-33 3,715,000 95,626 3,810,626 - - -

TOTALS 52,475,000$ 48,050,882$ 100,525,882$ 20,280,000$ 6,766,137$ 27,046,137$

H - 6



ENERGY SYSTEM REFUNDING REVENUE BONDS

SERIES 1999A


2003-04 385,000$ 7,887,031$ 8,272,031$ 2004-05 395,000 7,872,394 8,267,3942005-06 555,000 7,853,394 8,408,3942006-07 575,000 7,830,794 8,405,7942007-08 600,000 7,807,294 8,407,2942008-09 625,000 9,739,544 10,364,5442009-10 6,700,719 11,883,044 18,583,7632010-11 6,307,218 12,259,649 18,566,8672011-12 5,952,510 12,597,623 18,550,1332012-13 5,626,268 12,919,781 18,546,0492013-14 5,308,195 13,225,166 18,533,3612014-15 5,020,499 10,569,263 15,589,7622015-16 10,710,000 7,515,150 18,225,1502016-17 11,225,000 6,980,163 18,205,1632017-18 11,785,000 6,419,644 18,204,6442018-19 12,340,000 5,831,250 18,171,2502019-20 12,960,000 5,198,750 18,158,7502020-21 3,775,000 4,780,375 8,555,3752021-22 3,960,000 4,587,000 8,547,0002022-23 4,160,000 4,384,000 8,544,0002023-24 4,370,000 4,170,750 8,540,7502024-25 4,585,000 3,946,875 8,531,8752025-26 4,820,000 3,711,750 8,531,7502026-27 5,060,000 3,464,750 8,524,7502027-28 5,305,000 3,205,625 8,510,6252028-29 5,570,000 2,933,750 8,503,7502029-30 5,855,000 2,648,125 8,503,1252030-31 6,145,000 2,348,125 8,493,1252031-32 6,455,000 2,033,125 8,488,1252032-33 6,775,000 1,702,375 8,477,3752033-34 7,115,000 1,355,125 8,470,1252034-35 7,470,000 990,500 8,460,5002035-36 7,840,000 607,750 8,447,7502036-37 8,235,000 205,875 8,440,875

TOTALS 194,565,409$ 201,465,809$ 396,031,218$

H - 7




SERIES 1999B


2003-04 11,360,000$ 6,371,065$ 17,731,065$ 2004-05 12,855,000 5,592,224 18,447,2242005-06 14,540,000 4,695,038 19,235,0382006-07 15,585,000 3,708,444 19,293,4442007-08 11,130,000 2,833,528 13,963,5282008-09 12,005,000 2,114,873 14,119,8732009-10 12,740,000 1,343,490 14,083,4902010-11 - 926,255 926,2552011-12 - 926,255 926,2552012-13 - 926,255 926,2552013-14 6,815,000 720,101 7,535,1012014-15 8,495,000 256,974 8,751,974

TOTALS 105,525,000$ 30,414,502$ 135,939,502$


SERIES 1999C


2003-04 - $ 3,903,763$ 3,903,763$ 2004-05 - 3,903,763 3,903,7632005-06 - 3,903,763 3,903,7632006-07 - 3,903,763 3,903,7632007-08 5,095,000 3,749,639 8,844,6392008-09 5,370,000 3,433,073 8,803,0732009-10 5,775,000 3,095,936 8,870,9362010-11 14,865,000 2,471,576 17,336,5762011-12 16,180,000 1,532,465 17,712,4652012-13 17,240,000 521,510 17,761,510

TOTALS 64,525,000$ 30,419,251$ 94,944,251$

H - 8



ENERGY SYSTEM VARIABLE RATE REFUNDING REVENUE BONDS

SERIES 2003


2003-04 - $ 1,818,542$ 1,818,542$ 2004-05 - 1,789,964 1,789,9642005-06 - 1,789,964 1,789,9642006-07 - 1,789,964 1,789,9642007-08 - 1,789,964 1,789,9642008-09 - 1,789,964 1,789,9642009-10 - 1,789,964 1,789,9642010-11 - 1,789,964 1,789,9642011-12 - 1,789,964 1,789,9642012-13 - 1,789,964 1,789,9642013-14 - 1,789,964 1,789,9642014-15 - 1,789,964 1,789,9642015-16 - 1,789,964 1,789,9642016-17 - 1,789,964 1,789,9642017-18 - 1,789,964 1,789,9642018-19 - 1,789,964 1,789,9642019-20 - 1,789,964 1,789,9642020-21 - 1,789,964 1,789,9642021-22 - 1,789,964 1,789,9642022-23 - 1,789,964 1,789,9642023-24 - 1,789,964 1,789,9642024-25 - 1,789,964 1,789,9642025-26 - 1,789,964 1,789,9642026-27 - 1,789,964 1,789,9642027-28 - 1,789,964 1,789,9642028-29 - 1,789,964 1,789,9642029-30 - 1,789,964 1,789,9642030-31 - 1,789,964 1,789,9642031-32 - 1,789,964 1,789,9642032-33 - 1,789,964 1,789,9642033-34 - 1,789,964 1,789,9642034-35 9,040,000 1,620,916 10,660,9162035-36 9,375,000 1,276,556 10,651,5562036-37 9,725,000 919,386 10,644,3862037-38 19,720,000 368,764 20,088,764

TOTALS 47,860,000$ 59,703,083$ 107,563,083$

H - 9



ENERGY SYSTEM VARIABLE RATE REVENUE BONDS

SERIES 2001AFiscal Year Principal Interest Total

2003-04 - $ 1,430,550$ 1,430,550$ 2004-05 - 1,430,550 1,430,5502005-06 - 1,430,550 1,430,5502006-07 - 1,430,550 1,430,5502007-08 - 1,430,550 1,430,5502008-09 - 1,430,550 1,430,5502009-10 - 1,430,550 1,430,5502010-11 - 1,430,550 1,430,5502011-12 - 1,430,550 1,430,5502012-13 - 1,430,550 1,430,5502013-14 - 1,430,550 1,430,5502014-15 - 1,430,550 1,430,5502015-16 - 1,430,550 1,430,5502016-17 - 1,430,550 1,430,5502017-18 - 1,430,550 1,430,5502018-19 - 1,430,550 1,430,5502019-20 - 1,430,550 1,430,5502020-21 - 1,430,550 1,430,5502021-22 4,555,000 1,394,349 5,949,3492022-23 4,725,000 1,320,596 6,045,5962023-24 4,905,000 1,244,062 6,149,0622024-25 5,090,000 1,164,627 6,254,6272025-26 5,295,000 1,082,092 6,377,0922026-27 5,495,000 996,338 6,491,3382027-28 5,705,000 907,326 6,612,3262028-29 5,920,000 814,937 6,734,9372029-30 6,150,000 719,010 6,869,0102030-31 6,385,000 619,388 7,004,3882031-32 6,630,000 515,952 7,145,9522032-33 6,880,000 408,581 7,288,5812033-34 7,145,000 297,117 7,442,1172034-35 7,420,000 181,362 7,601,3622035-36 7,700,000 61,196 7,761,196

TOTALS 90,000,000$ 37,476,833$ 127,476,833$


SERIES 2001BFiscal Year Principal Interest Total

2003-04 - $ 1,561,100$ 1,561,100$ 2004-05 - 1,561,100 1,561,1002005-06 - 1,561,100 1,561,1002006-07 - 1,561,100 1,561,1002007-08 - 1,561,100 1,561,1002008-09 - 1,561,100 1,561,1002009-10 - 1,561,100 1,561,1002010-11 - 1,561,100 1,561,1002011-12 - 1,561,100 1,561,1002012-13 - 1,561,100 1,561,1002013-14 6,565,000 1,380,562 7,945,5622014-15 5,655,000 1,044,513 6,699,5132015-16 4,130,000 785,750 4,915,7502016-17 4,325,000 574,375 4,899,3752017-18 4,550,000 352,500 4,902,5002018-19 4,775,000 119,375 4,894,375

TOTALS 30,000,000$ 19,868,075$ 49,868,075$

H - 10



1992 PROMISSORY NOTE - AIRPORT IMPROVEMENTS

SERIES A and B


2003-04 54,973$ 12,305$ 67,278$ 2004-05 58,976 8,302 67,2782005-06 63,271 4,007 67,2782006-07 22,203 331 22,534

TOTALS 199,423$ 24,945$ 224,368$

1993 PROMISSORY NOTE - LAKELAND COMMUNITY REDEVELOPMENT AGENCY


2003-04 7,500$ 1,188$ 8,688$ 2004-05 7,500 149 7,649

TOTALS 15,000$ 1,337$ 16,337$

1999 PROMISSORY NOTE - LAKELAND COMMUNITY REDEVELOPMENT AGENCY


2003-04 50,000$ 17,490$ 67,490$ 2004-05 50,000 14,490 64,4902005-06 50,000 11,490 61,4902006-07 50,000 8,490 58,4902007-08 50,000 5,490 55,4902008-09 41,500 1,868 43,368

TOTALS 291,500$ 59,318$ 350,818$

H - 11


ANALYSIS OF SINKING FUND AND RESERVE ACCOUNT REQUIREMENTSSEPTEMBER 30, 2003

Sinking ReserveFund Account Total

UTILITIES TAX REVENUE REFUNDING BONDS

FUNDS REQUIRED, all series 1,981,730$ 2,380,426$ 4,362,156$

FUNDS AVAILABLECash (1,193,680) (146,449) (1,340,129)Cash with paying agent 1,981,730 - 1,981,730Investments 1,222,032 1,214,374 2,436,406SBA - 1,321,508 1,321,508Market Value (2,630) (2,614) (5,244)

Total funds available 2,007,452 2,386,819 4,394,271

FUNDING OVER REQUIREMENTS 25,722$ 6,393$ 32,115$

TOURIST DEVELOPMENT TAX AND UTILITIES TAX REVENUE BONDS

FUNDS REQUIRED, all series 479,429$ 440,892$ 920,321$

FUNDS AVAILABLECash (485,060) (61,669) (546,729)Cash with paying agent 479,429 - 479,429Investments 486,106 - 486,106SBA - 502,561 502,561Market Value (1,046) - (1,046)

Total funds available 479,429 440,892 920,321

FUNDING OVER REQUIREMENTS - $ - $ - $

CAPITAL IMPROVEMENT REVENUE BONDS

FUNDS REQUIRED, all series 2,702,805$ 3,601,500$ 6,304,305$

FUNDS AVAILABLECash (2,550,230) (297,021) (2,847,251)Cash with paying agent 2,702,805 - 2,702,805Investments 2,612,806 231,549 2,844,355SBA - 3,632,136 3,632,136Market Value (5,624) 34,837 29,213

Total funds available 2,759,757 3,601,501 6,361,258

FUNDING OVER REQUIREMENTS 56,952$ 1$ 56,953$

H - 12

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- -

8,48

8,12

5-

- 7,

145,

952

- 1,

789,

964

3,82

2,36

921

,246

,410

2033

- -

- -

- 8,

477,

375

- -

7,28

8,58

1-

1,78

9,96

43,

810,

626

21,3

66,5

4620

34-

- -

- -

8,47

0,12

5-

- 7,

442,

117

- 1,

789,

964

- 17

,702

,206

2035

- -

- -

- 8,

460,

500

- -

7,60

1,36

2-

10,6

60,9

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26,7

22,7

7820

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- -

- -

8,44

7,75

0-

- 7,

761,

196

- 10

,651

,556

- 26

,860

,502

2037

- -

- -

- 8,

440,

875

- -

- -

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44,3

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- -

- -

- -

- -

- 20

,088

,764

- 20

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- -

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- -

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218

$ 13

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127,

476,

833

$ 49

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127,

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$ 1,

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281,

313

$

H - 13


H - 14


SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSAND STATE FINANCIAL ASSISTANCEYEAR ENDED SEPTEMBER 30, 2003

CFDA/ TransfersCSFA To

Contract/Grant Number Number Expenditures SubrecipientsDEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Direct Programs:Community Development Block Grant B-01-MC-12-0011 14.218 - $ - $ Community Development Block Grant B-02-MC-12-0011 14.218 522,582 88,574Community Development Block Grant B-03-MC-12-0011 14.218 375,388 52,339Home Investment Partnership Program M-00-MC-12-0228 14.239 - - Home Investment Partnership Program M-01-MC-12-0228 14.239 44,707 13,667Home Investment Partnership Program M-02-MC-12-0228 14.239 361,940 70,500Home Investment Partnership Program M-03-MC-12-0228 14.239 -

Indirect Programs:Passed through the Lakeland Housing Authority

LHA #10 FL14DEP0110100 14.854 - - LHA #11 FL14DEP0110101 14.854 75,363 -

TOTAL DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 1,379,980$ 225,080$

DEPARTMENT OF JUSTICE

Direct Programs:COPS Universal V 95-CC-WX-0051 16.710 62,352$ - $ School Based Partnership (ICOP II) 99-SB-WX-0107 16.710 - - COPS More 00 00-CM-WX-0327 16.710 - - Universal Hiring Program V - COPS In Schools Grant I 1999-SH-WX-0365 16.710 - - COPS In Schools Grant II 2001-SH-WX-0112 16.710 132,771 - DOJ-Bullet Proof Vest Partnership Program 00/01 01006213 16.607 10,320 - DOJ-Bullet Proof Vest Partnership Program 02/03 3014720 16.607 - - Law Enforcement Block Grant 99-00 2000-LB-BX-0325 16.592 - - Law Enforcement Block Grant 01-02 2001-LB-BX-1771 16.592 22,784 - Law Enforcement Block Grant 02-03 2002-LB-BX-0886 16.592 181,326 - Law Enforcement Block Grant 03-04 2003-LB-BX-0792 16.592 - - Weed & Seed 00/02 00A-161931-T-31800-00 16.595 - - Automated Fingerprint ID 2003LPCXK002 16.607 - -

Indirect Programs:Passed through the Florida Office of the Attorney General

Victim Assistance Grant VI (01/02) V1019 16.575 - - Victim Assistance Grant VI (02/03) V2006 16.575 69,209 -

Passed through the Florida Department of Law EnforcementByrne Formula Grant Program 01-CJ-J1-07-63-02-206 16.579 - - Byrne Formula Grant Program 02-CJ-2H-07-63-02-039 16.579 - - Byrne Formula Grant Program 03-CJ-5A-07-63-02-068 16.579 31,488 - Byrne Formula Grant Program 02-CJ-2H-07-63-02-038 16.579 - - Byrne Formula Grant Program 02-CJ-2H-07-63-02-040 16.579 - - Byrne Formula Grant Program 03-CJ-5A-07-63-02-069 16.579 7,688 - Byrne Formula Grant Program 03-CJ-5A-07-63-02-067 16.579 33,754 - Byrne Formula Grant Program 03-CJ-5A-07-63-02-070 16.579 25,196 -

Passed through the Florida Department of Children & FamiliesStop Violence Against Women 01/02 LJ174 16.588 - - Stop Violence Against Women 02/03 LJ174 16.588 68,340 - Stop Violence Against Women 03/04 LJ174 16.588 13,539 -

Passed through Polk County Weed and Seed Year 5 - Planning C010029-00 16.595 - - Weed and Seed 99/00 99A-161931-T-31800-0027-SE000-2599 16.595 - -

Passed through the Polk County Sheriff's DepartmentFlorida Vehicle Theft 01-016-01 41.004 - - High Intensity Drug Trafficking Area (HIDTA) 11PCFP505 16.595 - - High Intensity Drug Trafficking Area (HIDTA) 2002 12PCFP505 16.595 7,086 - High Intensity Drug Trafficking Area (HIDTA) 2003 13PCFP505 16.595 33,222 -

TOTAL DEPARTMENT OF JUSTICE 699,075$ - $

H - 15


SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSAND STATE FINANCIAL ASSISTANCE (CONTINUED)



Contract/Grant Number Number Expenditures SubrecipientsUS OFFICE OF THE ATTORNEY GENERAL

Direct Programs:Drug Education for Youth (DEFY) Polk County 98A-161931-T-31800-0027-SE000-2599 16.595 - $ - $ Drug Education for Youth (DEFY) Polk County 2001-W002-FL-WS 16.595 - -

TOTAL US OFFICE OF THE ATTORNEY GENERAL - $ - $

FEDERAL AVIATION ADMINISTRATION

Direct Programs:Improve Runway 27 Safety Area 3-12-0041-024-2002 20.106 62,227$ - $ FAA-Airport Master Plan Update FM 404467 1 94 01 20.106 32,625 - Rehabilitate Taxiway "A" - Eastern End FM 404469 1 84 01 20.106 - - Rehabilitate Taxiways B, B-1 FM 404466 1 94 01 20.106 1,532,189 - FAA-Design/Rehab Taxiway "C" 3-12-0041-025-2003 20.106 450 -

TOTAL FEDERAL AVIATION ADMINISTRATION 1,627,491$ - $

FEDERAL DEPARTMENT OF TRANSPORTATION

Indirect Programs:Passed through the Florida Department of Transportation

Lakeland DUI Traffic Enforcement Project 00/01 J8-02-06-18 20.601 - $ - $ Lakeland DUI Traffic Enforcement Project 01/02 J8-03-06-18 20.601 26,861 - FDOT - Combee Road Lighting Enhancement FM 411873 1 58 01 20.205 - - LAP - Rolling Woods Lane Sidewalk 411775-1-58-01 20.205 55,692 - Bike Path - Peterson Park to New Jersey Rd 200487-1-58-01 20.205 - - Intermodal Connector I 200496-1-38-01 20.205 127,042 - Intermodal Connector II 200466-1-38-01 20.205 356,312I4 & US 98 Interchange Landscaping 201213-1-58-01 20.205 7,365

TOTAL FEDERAL DEPARTMENT OF TRANSPORTATION 573,272$ - $

DEPARTMENT OF ENERGY

Direct Programs:Innovative Clean Coal Technology Program DE-FC-91MC27364 81.096 - $ - $ Innovative Clean Coal Technology Program DE-FC-94MC31261 81.096 - -

TOTAL DEPARTMENT OF ENERGY - $ - $

URBAN FAMILY INSTITUTE

Direct Programs:Kids House Safe Haven 2001 2001WSQX0024 16.595 - $ - $

TOTAL URBAN FAMILY INSTITUTE - $ - $

NATIONAL ENDOWMENT FOR THE HUMANITIES

Direct Programs:Library Endowment HA-20140-01 45.166 - $ - $

TOTAL NATIONAL ENDOWMENT FOR THE HUMANITIES - $ - $

DEPARTMENT OF ENVIRONMENTAL PROTECTION

Direct Programs:Drinking Water Plant Vulnerability Assessment 83076201 66.476 105,865$ - $

TOTAL DEPARTMENT OF ENVIRONMENTAL PROTECTION 105,865$ - $

TOTAL EXPENDITURES OF FEDERAL AWARDS 4,385,683$ 225,080$

H - 16





Contract/Grant Number Number Expenditures SubrecipientsFLORIDA DEPARTMENT OF AGRICULTURE

Direct Programs:Lake Wire Palm Garden 007988 42.012 6,100$ - $ Lk Hunter Terrace - Tree Plant Demo 007987 42.012 - - Urban and Community Forestry Grant UCFG 00-45 42.012 - -

TOTAL FLORIDA DEPARTMENT OF AGRICULTURE 6,100$ - $

FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION

Direct Programs:Veterans Park Playground Equip F1028 37.017 - $ - $ FRDAP - Peterson Park F02125 37.017 174,148 - FRDAP - Washington Park F3570 37.017 73,806 -

TOTAL DEPARTMENT OF ENVIRONMENTAL PROTECTION 247,954$ - $

FLORIDA DEPARTMENT OF HEALTH - BUREAU OF EMERGENCY MEDICAL SERVICES

Direct Programs:Polk County EMS Grant 2001 N/A 52.008 - $ - $

TOTAL FLORIDA DEPARTMENT OF HEALTH - BUREAU OF EMERGENCY MEDICAL SERVICES - $ - $

FLORIDA DEPARTMENT OF LEGAL AFFAIRS AND ATTORNEY GENERAL

Direct Programs:Florida Vehicle Theft Prevention 01-016-01 41.004 - $ - $

TOTAL FLORIDA DEPARTMENT OF LEGAL AFFAIRS AND ATTORNEY GENERAL - $ - $

FLORIDA DEPARTMENT OF TRANSPORTATION

Direct Programs:Beautification of Memorial Blvd 411628-1-74-01 55.003 - $ - $ FDOT-LAC Land Acquisition-WPI 1827970 WPI 1827970 55.004 - - Land Acquisition & Environmental Study WPI 1827868/7924 55.004 - - FDOT-Install Gates & Fences WPI 1827077 WPI 1827077 55.004 - - FDOT-Mstr. Drainage Plan 1- WIP1828099 WPI 1828099 55.004 - - Improve Runway 27 Safety Area 3-12-0041-024-2002 55.004 3,457 - FAA/FDOT - Environmental Assessment 20701818401 55.004 - - FDOT - Airport Terminal Construction WPI 1828114 55.004 154,465 - FDOT - Runway 5 Approach Land Acquisition WPI 1828112 55.004 - - FDOT - Land Acquisition West of Airport WPI 1828086 55.004 683,898 - FDOT - Air Traffic Control Tower Construction WPI 1828081 55.004 90,020 - FAA - Runway 9-27 Rehabilitation WPI 1828078 55.004 - - FDOT-Mstr. Drainage Plan 2 WIP1828100 WPI 1828100 55.004 - - FAA-Airport Master Plan Update FM 404467 1 94 01 55.004 1,813 - Rehabilitate Taxiway "A" - Eastern End FM 404469 1 84 01 55.004 - - Rehabilitate Taxiways B, B-1 FM 404466 1 94 01 55.004 85,122 - Construct T-Hangers FM 410818 1 94 01 55.004 492,430 - Fuel Farm FM 412223 1 94 01 55.004 793 - Medulla / Waring Road ( Intermodal) 20050815401 55.014 611,276 - Medulla / Waring Road ( Fast Track) 40840615401 55.014 1,080,253 -

TOTAL FLORIDA DEPARTMENT OF TRANSPORTATION 3,203,527$ - $

H - 17





Contract/Grant Number Number Expenditures SubrecipientsFLORIDA OFFICE OF TOURISM, TRADE, AND ECONOMIC DEVELOPMENT

Direct Programs:Marchant Stadium N/A 73.016 933,360$ - $ Medulla / Waring Road ( GEICO) EDTF 98/9953D 31.002 - -

TOTAL FLORIDA OFFICE OF TOURISM, TRADE, AND ECONOMIC DEVELOPMENT 933,360$ - $

FLORIDA HOUSING AND FINANCE CORPORATION

Direct Programs:State Housing Initiatives Partnership Program 00 146 52.901 - $ - $ State Housing Initiatives Partnership Program 01 146 52.901 183,162 - State Housing Initiatives Partnership Program 02 146 52.901 282,852 - State Housing Initiatives Partnership Program 03 146 52.901 - -

TOTAL FLORIDA HOUSING AND FINANCE CORPORATION 466,014$ - $

TOTAL EXPENDITURES OF STATE FINANCIAL ASSISTANCE 4,856,955$ - $

H - 18


NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE

H - 19

NOTE A - BASIS OF PRESENTATION The accompanying Schedule of Expenditures of Federal Awards and State Financial Assistance include the federal and state activities of the City of Lakeland, Florida. Grant-related expenditures for the governmental fund types are presented using the modified accrual basis of accounting. Grant-related expenditures for the proprietary fund types are presented using the accrual basis of accounting. The City maintains separate grant-related accounts in the general ledger system. Individual grant revenue and expense accounts are assigned at the time the City is awarded a grant and it is approved by the City Commission. All grant revenues and eligible expenses are recorded in the individual accounts. The City’s accounting policies relating to encumbrances, receivables, and designations of fund balance, and other financial matters are applied to the grant accounts. There were no non-cash awards in the current year. NOTE B - LOAN PAYABLE In March 1994, the City entered into an agreement with the State of Florida Department of Environmental Protection (FDEP) under a Federal program whereby the State would provide a low interest loan to the City to finance the cost of specified capital improvements to the wastewater system. The loan was executed in two installments carrying separate rates of interest, but with identical repayment terms. The loans will carry a fixed interest rate of 2.36% and 2.59% and are to be repaid over a period of 20 years. The loan is secured by a pledge of excess revenues of the wastewater system, and by a pledge of certain amounts, deposited into a loan amortization account and loan amortization reserve established by the City for the purpose of funding future debt service on the loan. Amounts required for deposit are classified as a restricted asset. The proceeds from the loan were disbursed to the City on a reimbursement basis as eligible construction expenditures were incurred. The amount disbursed to the City was $12,049,667 and the final disbursement was made in fiscal year 1996. The amount of the loan outstanding at September 30, 2003 was $7,726,842.


H - 20

STATISTICAL SECTION

CITY OF LAKELAND

MISCELLANEOUS STATISTICAL DATASEPTEMBER 30, 2003

FORM OF GOVERNMENT

COMMISSION - MANAGER

DATE OF INCORPORATION PRESENT CHARTER ADOPTED

1885 1976

TERMS OF OFFICE

Mayor/Commissioner and Six Commissioners - Four YearsCity Manager-Appointed

DEPARTMENTS

General Government, including Finance DepartmentPublic Safety, Fire Department

Public Safety, Police DepartmentPublic Works Department

Parks and Recreation DepartmentDepartment of Electric Utilities

Water UtilitiesWastewater Utilities

Lakeland CenterLakeland Regional Airport

AREA OF CITY

67.5 square miles

POPULATION GROWTH

Number ofYear People

2003 estimated 88,7412000 (1) 78,4521990 (1) 70,5761980 (1) 47,4061970 (1) 42,8031960 (1) 41,3501950 (1) 30,8511940 (1) 22,0681930 (1) 18,554

(1) U. S. Census final adjusted count.

I - 1


GENERAL FUND - REVENUES AND OTHER FINANCING SOURCESLAST TEN FISCAL YEARS

SOURCES

OtherFiscal Licenses Inter- Charges for Fines and FinancingYear Taxes and Permits governmental Services Forfeits Miscellaneous Sources Total

2003 23,268,025$ 2,223,201$ 8,246,861$ 2,344,922$ 1,049,606$ 841,572$ 27,434,853$ 65,409,040$

2002 20,802,918 2,413,095 8,410,050 2,405,521 1,017,180 1,024,558 25,179,660 61,252,982

2001 18,526,620 2,143,017 8,490,131 2,543,268 1,174,308 1,546,006 22,617,771 57,041,121

2000 17,076,077 2,301,496 9,154,308 2,518,253 1,078,073 1,293,007 21,452,470 54,873,684

1999 16,366,275 2,190,881 8,609,734 2,060,561 1,045,254 1,487,268 20,408,900 52,168,873

1998 15,303,436 1,876,562 7,823,299 2,136,239 923,004 1,881,713 19,480,294 49,424,547

1997 14,531,688 1,708,479 6,685,592 1,706,371 906,245 1,655,493 19,310,950 46,504,818

1996 14,293,025 1,499,610 6,658,741 1,724,480 939,542 1,719,250 18,345,828 45,180,476

1995 13,933,722 1,449,308 6,284,818 1,463,044 1,143,049 1,497,497 18,278,809 44,050,247

1994 6,161,171 1,520,701 3,662,636 1,623,921 818,565 1,293,979 24,597,067 39,678,040

I - 2

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7,25

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364,

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2000

6,26

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258,

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610,

453

704,

380

279,

238

905,

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1999

6,01

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426

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2,36

8,04

95,

537,

363

95,3

2515

,625

7,91

3,17

067

3,14

924

8,90

61,

338,

805

50,9

92,3

76

1998

5,82

7,28

325

,856

,455

2,07

6,35

35,

372,

207

79,8

4636

,298

7,77

5,66

470

7,73

723

8,01

893

9,62

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,909

,481

1997

5,74

6,60

924

,911

,675

1,90

0,64

35,

096,

192

75,5

3023

,500

7,34

9,53

281

,121

144,

055

1,03

1,63

246

,360

,489

1996

5,21

6,65

322

,872

,824

1,76

5,90

54,

968,

193

75,4

6946

,332

6,95

4,82

612

2,66

612

3,00

51,

612,

880

43,7

58,7

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1995

4,76

6,60

221

,504

,569

1,83

4,61

14,

979,

650

75,7

5047

,570

6,51

1,69

794

,276

71,5

952,

062,

545

41,9

48,8

65

1994

4,82

0,10

320

,490

,538

1,83

2,66

14,

774,

357

80,5

7345

,010

6,13

5,67

776

,256

208,

694

714,

092

39,1

77,9

61

I - 3


GENERAL FUND PROPERTY TAX LEVIES, TAX COLLECTIONS, ASSESSED VALUATIONS AND PROPERTY TAX RATES

SINCE 1961

Special Purpose Ordinary PurposeFiscal Year Total Percent Delinquent Total Ratio of Total

Ending Assessed Tax Rate Assessed Tax Rate Tax Current Tax of Levy Tax Tax CollectionSeptember 30 Valuation(1) In Mills Valuation (1) In Mills Levy (2) Collections Collected Collections Collections to Tax Levy

2003 - - 3,414,051,118$ 2.995 9,884,548$ 9,777,693$ 98.92 5,538$ 9,783,231$ 98.972002 - - 3,130,240,450 2.995 9,068,362 8,985,692 99.09 10,446 8,996,138 99.202001 - - 2,739,885,355 2.995 7,936,350 7,849,760 98.91 117,963 7,967,723 100.402000 - - 2,484,224,679 2.995 7,196,005 6,997,185 97.24 20,061 7,017,246 97.521999 - - 2,359,359,376 2.995 6,828,739 6,799,492 99.57 19,100 6,818,592 99.851998 - - 2,276,431,377 2.995 6,601,635 6,374,042 96.55 17,767 6,391,809 96.821997 - - 2,104,694,297 2.995 6,096,308 6,070,206 99.57 22,240 6,092,446 99.941996 - - 2,055,471,107 2.995 5,953,389 5,924,884 99.52 13,933 5,938,817 99.761995 - - 1,978,709,773 2.995 5,735,770 5,717,122 99.67 25,563 5,742,685 100.121994 - - 1,902,162,193 2.995 5,515,577 5,484,073 99.43 11,141 5,495,214 99.631993 - - 1,890,759,988 3.000 5,493,330 5,474,987 99.67 33,328 5,508,315 100.271992 - - 1,885,510,731 3.000 5,488,202 5,418,833 98.74 80,704 5,499,537 100.211991 - - 1,793,158,569 3.000 5,226,337 5,148,800 98.52 37,999 5,186,799 99.241990 - - 1,694,099,319 2.700 4,407,363 4,405,174 99.95 49,001 4,454,175 101.061989 - - 1,444,147,442 2.700 3,753,710 3,732,655 99.44 11,527 3,744,182 99.751988 - - 1,320,723,949 2.700 3,460,872 3,426,801 99.02 25,007 3,451,808 99.741987 - - 1,162,196,271 2.700 3,044,539 3,018,551 99.15 4,068 3,022,619 99.281986 - - 1,058,105,828 2.700 2,771,992 2,762,116 99.64 2,607 2,764,723 99.741985 - - 874,538,492 2.700 2,295,381 2,291,241 99.82 3,897 2,295,138 99.991984 - - 765,457,259 2.781 2,064,808 2,062,585 99.89 2,111 2,064,696 99.991983 - - 649,190,366 3.000 1,888,984 1,884,200 99.75 1,860 1,886,060 99.851982 - - 646,863,711 3.512 2,208,625 2,200,269 99.62 - 2,200,269 99.621981 - - 578,673,832 3.760 2,114,320 2,096,952 99.18 39 2,096,991 99.181980 - - 546,494,224 3.899 2,070,860 2,062,372 99.59 3,578 2,065,950 99.761979 - - 525,696,460 3.884 1,978,331 1,964,496 99.30 8,755 1,973,251 99.741978 - - 385,199,746 5.062 1,949,830 1,946,788 99.84 937 1,947,725 99.891977 - - 373,200,064 4.896 1,826,919 1,804,925 98.80 5,098 1,810,023 99.081976 - - 343,114,554 4.896 1,676,299 1,674,908 99.92 879 1,675,787 99.971975 - - 321,962,705 4.896 1,575,982 1,571,951 99.74 625 1,572,576 99.781974 - - 246,878,215 6.000 1,471,691 1,470,433 99.91 1,093 1,471,526 99.991973 - - 218,101,892 6.000 1,308,302 1,303,261 99.61 63 1,303,324 99.621972 - - 192,541,551 6.000 1,156,397 1,152,450 99.66 453 1,152,903 99.701971 214,877,705 0.3 180,944,545 5.700 1,095,865 1,090,833 99.54 725 1,091,558 99.611970 203,848,510 1.8 162,624,060 4.200 1,049,948 1,047,531 99.77 9 1,047,540 99.771969 200,115,119 1.8 159,174,553 4.200 1,028,739 1,026,781 99.81 1,453 1,028,234 99.951968 199,667,252 1.8 158,413,726 4.200 1,024,737 1,023,935 99.92 129 1,024,064 99.931967 207,559,121 1.8 166,264,891 5.200 1,238,181 1,237,234 99.92 553 1,237,787 99.971966 157,281,929 3.0 117,476,391 6.000 1,176,703 1,175,317 99.88 789 1,176,106 99.951965 138,856,286 3.0 99,065,701 6.000 1,010,962 1,010,589 99.96 169 1,010,758 99.981964 103,056,020 5.0 64,786,700 7.500 1,001,180 1,000,407 99.92 9 1,000,416 99.921963 98,891,000 5.0 60,807,600 9.500 1,072,127 1,071,160 99.91 128 1,071,288 99.921962 92,899,690 5.0 55,608,320 11.000 1,076,189 1,075,677 99.95 512 1,076,189 100.001961 88,419,800 5.0 52,208,830 11.000 1,016,393 1,015,867 99.95 526 1,016,393 100.00

(1) The State of Florida, by statute, requires property appraisers to assess all property within the Stateat 100% of market value. Therefore, the assessed valuation and estimated actual value is the same.

(2) Total property tax levy minus any discounts given to taxpayers . Therefore, the realized tax rate may be less than the tax rate used to assess property taxes.

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SCHEDULE OF PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTSLAST TEN FISCAL YEARS

MILLS ($1 PER $1,000 VALUATION)City of Lakeland Southwest

Lakeland Lakeland Florida Polk Peace LakeFiscal Year Area Mass Downtown Water County River Deeson

Ending Transit Development Management School Water WaterSeptember 30 Municipal District District Total County District Board Basin Basin

2003 2.995 0.488 1.956 5.439 7.727 0.284 8.317 0.195 0.420

2002 2.995 0.488 1.956 5.439 7.727 0.422 8.578 0.195 0.420

2001 2.995 0.488 1.956 5.439 7.727 0.422 8.722 0.195 0.420

2000 2.995 0.488 1.956 5.439 7.727 0.422 8.846 0.195 0.420

1999 2.995 0.488 1.956 5.439 7.977 0.422 9.072 0.195 0.430

1998 2.995 0.488 1.956 5.439 7.977 0.422 9.431 0.195 0.450

1997 2.995 0.488 2.000 5.483 7.977 0.422 9.336 0.195 -

1996 2.995 0.475 2.000 5.470 7.977 0.422 9.329 0.195 -

1995 2.995 0.471 1.963 5.429 7.777 0.422 9.066 0.195 -

1994 2.995 0.480 1.974 5.449 7.777 0.422 8.602 0.096 -

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COMPUTATION OF DIRECT AND OVERLAPPING BONDED DEBTSEPTEMBER 30, 2003

DIRECT DEBTTax Supported Ad Valorem Debt: - $

Non Self-Supported Bonded Revenue Debt:Utilities Tax Revenue Refunding Bonds,

Series 2002A 15,020,000$ Utilities Tax Revenue Bonds,

Series 2002B 15,355,000Tourist Development Tax and Utilities

Tax Revenue Refunding Bonds, Series 2002C 5,660,000Capital Improvement Revenue Bonds, Series 1997 37,665,000

Total non self-supported bonded revenue debt 73,700,000$

Self-Supported Bonded Revenue Debt:Electric Utility Revenue Bonds:

Series 1999A 194,565,409$ Series 1999B 105,525,000Series 1999C 64,525,000Series 2001A 90,000,000Series 2001B 30,000,000Series 2003 47,860,000

Water and Wastewater RevenueRefunding Bonds, Series 2002 72,755,000

Total self-supported bonded revenue debt 605,230,409$

TOTAL DIRECT BONDED DEBT 678,930,409$

OVERLAPPING DEBT District School Board of Polk County (applicable percentage 15% ) 3,719,250$

TOTAL DIRECT AND OVERLAPPING BONDED DEBT 682,649,659$

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SCHEDULE OF REVENUE BONDS COVERAGELAST TEN FISCAL YEARS

ENERGY SYSTEM REVENUE BONDS

Net RevenuesAvailable for

Fiscal Year Debt Service Principal Interest Total Coverage

2003 107,862,213$ 11,745,000$ 23,940,419$ 35,685,419$ 3.022002 104,761,901 12,550,000 24,740,702 37,290,702 2.812001 85,911,139 10,085,000 25,381,228 35,466,228 2.422000 91,543,250 9,520,000 22,392,786 31,912,786 2.871999 94,495,229 8,335,000 23,700,878 32,035,878 2.951998 89,134,341 10,815,000 23,200,761 34,015,761 2.621997 74,773,381 10,225,000 24,049,996 34,274,996 2.181996 76,700,730 9,660,000 21,866,065 31,526,065 2.431995 84,505,144 7,795,000 21,619,997 29,414,997 2.871994 77,165,570 7,335,000 22,116,037 29,451,037 2.62

UTILITY TAX AND TOURIST DEVELOPMENT TAX REVENUE BONDS



2003 13,693,470$ 1,800,000$ 610,920$ 2,410,920$ 5.682002 11,857,680 1,200,000 1,069,196 2,269,196 5.232001 10,047,912 1,155,000 1,069,605 2,224,605 4.522000 9,649,522 1,070,000 1,111,158 2,181,158 4.421999 9,157,829 1,020,000 1,184,347 2,204,347 4.151998 8,561,301 970,000 1,208,485 2,178,485 3.931997 8,111,298 895,000 1,242,335 2,137,335 3.801996 8,055,244 895,000 1,274,642 2,169,642 3.711995 7,958,386 865,000 1,171,944 2,036,944 3.91

WATER AND WASTEWATER SYSTEM REVENUE BONDS



2003 13,837,375$ 2,370,000$ 3,342,075$ 5,712,075$ 2.422002 14,100,780 980,833 1,493,804 2,474,637 5.702001 5,509,566 1,020,000 1,166,728 2,186,728 2.522000 5,909,955 970,000 1,223,474 2,193,474 2.691999 5,186,776 935,000 1,227,833 2,162,833 2.401998 4,754,373 715,000 1,243,303 1,958,303 2.431997 5,292,280 570,000 1,272,975 1,842,975 2.871996 5,115,051 605,000 1,314,061 1,919,061 2.671995 4,996,133 570,000 1,338,807 1,908,807 2.621994 4,103,568 545,000 1,505,729 2,050,729 2.00

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SOCIO-ECONOMIC DATALAST TEN CALENDAR YEARS

Net Effective TotalDwelling Building Municipal School Church Retail Buying Telephone

Year Units Permits Value Construction Construction Construction Sales (1) Income (1) Lines

2003 40,920 3,275 124,198,214$ 990,000$ 9,486,162$ 5,561,200$ (2) (2) 124,892 (7)

2002 40,583 3,363 172,847,383 - 6,497,500 5,203,466 1,589,420,000$ 1,283,726,000$ 131,722 (7)

2001 40,781 3,191 182,702,142 35,000 1,756,000 152,600 1,512,530,000 1,228,031,000 139,454 (7)

2000 40,167 3,354 161,907,692 75,000 6,161,879 3,485,500 1,476,685,000 1,209,571,000 141,119 (6)

1999 39,211 4,036 164,459,613 - 225,000 1,268,000 1,932,012,000 1,176,833,000 137,870 (5)

1998 38,200 4,360 145,544,785 - 2,000,000 510,000 1,820,705,000 1,125,004,000 286,581 (4)

1997 37,672 3,940 87,925,079 - 2,000,000 800,000 (2) (2) 266,000 (3)

1996 37,102 4,207 83,555,438 3,820,115 2,200,000 250,000 1,712,401,000 1,046,880,000 123,310

1995 36,895 3,675 104,674,151 3,330,000 400,000 3,568,000 1,587,191,000 987,795,000 117,661

1994 36,753 3,412 73,180,056 9,434,000 2,340,000 534,000 1,477,362,000 1,147,180,000 (2)

1993 36,481 3,568 80,000,954 2,095,000 - 295,000 1,379,337,000 1,090,496,000 102,230

SOURCE(1) LEDC Survey of Buying Power, Sales and Marketing Management. (Reported figures are from prior year's data).(2) Information not available.(3) Data available for Lakeland urban area only prior to 1997. Data available for Polk County only.(4) Polk Progress Report (Dr. C. Brown, FSC). General Telephone will not release this proprietary information as of 1998. (5) Total Lakeland area phone lines reported by GTE as of December 31.(6) Total Lakeland area phone lines reported by Verizon as of December 31.(7) Total Lakeland area phone lines reported by Verizon as of September 30.

NOTE: See page D-5 for the property values for the last ten years.

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TEN LARGEST TAXPAYERSSEPTEMBER 30, 2003

Percentage ofAssessed Total Assessed

Value of Real Value of RealAnd Personal And Personal

Taxpayer Name Type of Business Property Property

Publix Supermarkets, Inc. Retail/Distribution-Grocery 224,626,788$ 6.58

Verizon Telecommunications 53,640,350 1.57

Rooms To Go Furniture Corp. Retail/Distribution-Furniture 44,192,580 1.29

H-D Lakeland Mall Joint Venture General Partnership Retail/General Merchandise 41,460,800 1.21

Wal Mart Retail/General Merchandise 33,273,025 0.97

Lakeland Ledger Publishing Corp. Print Media 31,998,897 0.94

Carlton Arms of North Lakeland Real Estate-Apartment Complex 25,415,795 0.74

Government Employees Insurance Company Insurance 19,319,330 0.57

Watson Clinic Medical Facility 18,357,380 0.54

Pepperidge Farm Inc Distribution-Grocery 17,789,760 0.52

510,074,705$ 14.93

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Included on pages J-7 thru J-9 of the Comprehensive Annual Financial Report are the auditor’s findings with respect to the Independent Auditors’ Management Letter. The following are management’s responses:

Comments on Prior Year Recommendations

INVESTMENTS Police Officers’ Supplemental Pension and Retirement System We concur with the auditor’s findings. The investment manager purchased a position in the American EuroPacific Growth Fund in the fourth quarter of calendar 2000. As of the end of the preceding fiscal year, the original cost of this investment exceeded the 10 percent limit for foreign investments. At that time, the market value of this investment was down sharply compared to its original cost. Since that time, the performance of this fund has improved dramatically, with the fund presently valued at almost 85 percent of its original cost. The managers have elected to retain the excess position in this fund until such time as the original value is recovered, in order to prevent a realized loss on what is assumed to be a temporary decline in market value. The investment policy for the Police Officers’ Supplemental Pension and Retirement System will be modified to include language appearing in the investment policies governing all other investment portfolios of the City, which allows the City to exceed investment limits when the sale of investments would result in a realized loss to the fund. Other No comment required RECEIVABLES No comment required UTILITY BILLINGS No comment required

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COMMENTS ON CURRENT YEAR ENHANCEMENT OF INTERNAL CONTROLS The City has implemented additional procedures which will act as a further deterrent against similar cases of collusion. These additional procedures include a document management system which is programmed to notify related parties in three (3) separate departments whenever a change order is requested. Additionally, emergency change orders require subject matter experts within the City’s Purchasing Department to scrutinize requests during the resolution phase of the emergency. Sincerely, Gregory M. Finch Finance Director


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