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Home My WebLink About20041605.tiff v, 1P TRANSMITTAL MEMORANDUM 'CU Northwest Parkway Public j F' Highway Authority �Gt= 3701 Northwest Parkway, Broomfield, Colorado 80020 L nwp#@nwpky.org Phone: 303-533-1200 Fax: 303-404-3049 TO: NWP Investors FROM: Jill Lamoureux CC: DATE: Tuesday, June 3, 2003 SUBJECT: 2003 Annual Report & Financial Statements Enclosed are the 2003 Annual Report and Financial Statements. Please note that the Board of Directors implemented an Audit Committee for the 2003 Audit and will continue this practice for all future audits. 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' ,,, , ,f„ ,,., , „,„„ . i I1 I , f , r i The Northwest Parkwa y Public Highway Authority 2003 Annual Report Table of Contents Letter to the Readers Page 1 Overview Page 2 Grand Opening Summary Page 3-4 Balance Sheet Page 5 Bond Financing, Sources & Uses Page 6 Board of Directors Page 7 Northwest Parkway Staff Page 8 Contractors & Consultants Page 8 NW PARK WAY Dear Reader, 2003 was a year of accomplishment and a year to remember! In a little over 28 months from Notice to Proceed, the Northwest Parkway went from a line on a map, to an operating toll road. Through the cooperation of our Design/Build Contractor, Northwest Parkway Constructors, our many other consultants and contractors, and our staff, completion actually was achieved months ahead of schedule. Please enjoy the photographs of our Grand Opening found in these pages, as they express our excitement at the completion of our dream. 2003 also saw the Authority reach final agreement with our sister agency, the E-470 Public Highway Authority to ensure back room cooperation between us, so our customers can easi- ly drive both roads non-stop at highway speeds using the same electronic transponder. EXpressToll is now used successfully by over 131,000 account holders (with 233,000 transponders), with everyday ease. While our road is now open, we are still finishing the landscaping and making sure any rough spots are smoothed out. The first part of 2004 will see the finishing touches complete and we can look forward to reporting in our next edition on the thousands of customers taking advantage of our speed, safety and convenient travel, every day. Sincerely, Board of Directors Northwest Parkway Public Highway Authority f ; N O I 1 • - a Overview Moving from a line on a map to reality today" is a good way to summarize the year 2003 for the Northwest Parkway. During the past year, earthmovers and graders gave way to pavers and line-stripers along the alignment of the roadway, as the finishing touches were applied and the Northwest Parkway became a fully functioning toll highway before our very eyes. Producing a 70-mph asphalt jewel on time and on budget, the Northwest Parkway Public Highway Authority (PHA) now offers Metro Denver drivers a simple, affordable alternative to offset increasing congestion along the U.S. 36 corridor. It links the region's top technology and business corridor with Denver International Airport- in a 30 minute connection. Serving as the newest piece of the Metro Denver transportation puzzle, the Northwest Parkway serves as a model of design and operation for future toll road enterprises that seem likely to be a highly visible part of our future transportation landscape.A state of the art toll plaza on the mainline near Lowell Blvd. balances form and function, serving as the nerve center of Parkway operations. Trained personnel, operating collections and technical monitor- ing equipment share space with PHA staff and sales professionals in one finely designed facility. Creating a seamless transition with neighboring E-470, EXpressToll transponder technology allows Northwest Parkway users to travel the length of the 11-mile Parkway without ever stopping or fumbling for change.All tolls are electronically deducting from a pre-paid account, a technology that even allows for automatic account replenish- ment when stored funds become low. Drivers can travel the length of the parkway for$1.75, or between U.S. 36 and U.S. 287 for 75 cents. High design standards are clearly visible when driving the Northwest Parkway, as overpass structures, bridges and ramps are accentuated with top quality materials and decorative architecture. When combined with the surrounding open lands enhanced by stunning mountain views it is an experience that not only saves time but is enjoyable as well. This scenic landscape is being protected, as the Northwest Parkway was designed as a transportation corri- dor, not a development accelerator. As part of the Parkway financing, approximately $22 million has been allocat- ed by the PHA for permanent open space buffers and wetlands development along the Parkway. Turning a, $300 million toll funded transportation vision into reality in northwest Denver, took the hard work and dedication of many groups and individuals. This list includes the City and County of Broomfield, City of Lafayette, Weld County, City of Arvada, Regional Transportation District, Jefferson County, Interlocken Consolidated Metro District, the Colorado Department of Transportation and many others that have been part of the decade-plus plan- ning, design and build process. Now that the Northwest Parkway is up and running for business, the PHA looks to share the benefits and opportuni- ties the Parkway has to offer, and be at the top solution for those looking for a cost-effective, simple new option for Metro Denver travel. A new era has dawned with the Northwest Parkway. Jr i�y 't'. .a e-,7 Y# ₹q died. ✓i.f . { y f A ✓J -rat � R j S` } d \I � inimintHre- e t r iflv Oar ' �.�i "'!" , 2 t Grand Opening November 24, 2003 marked a special day for the Northwest Parkway Public Highway Authority (PHA) and for area drivers.A major milestone in ; rr: Metro Denver transportation history occurred on ..,,,,s.:/4::;;;77r.' a a cold, sunny Monday morning, as the gathered x - t .., 3-;y4,":1,,'''' crowd brushed chilly temperatures aside and celebrated the official opening of the Northwest f re',, Parkway for business. rn ill Ii.The grand opening of the Northwest Parkway it' iiir served as the culmination of more than a decade of planning, designing and construction Fr i efforts to create the 11-mile, 70 mph toll high- ' . way that provides a seamless connection between Interlocken Business Park and Denver International Airport. Commemorating the hard work of many individ- I uals and groups, words of praise were spoken during the Parkway's grand opening celebration. The dedication of the Northwest Parkway marked a validation of efforts by many individu- als including elected officials, PHA staff, consult- ants and contractors. Colorado Lt. Governor Jane E. Norton, stepping in for Gov. Bill Owens, provided an insightful speech in .11 support of the Northwest Parkway and explained how the Parkway rep- resents a successful implementation ;- of a private/public partnership and ,-- sets an example to follow for the - . ' transportation future of the state. Many others stepped up to the podi- , '•• OP L 4", urn on November 24 and expressed f "etheir admiration of the combined team effort and offered tales of r' "l' sometimes trying and humorous cir- - cumstances that eventually led to I IIthe successful opening of the Northwest Parkway. The gathering included print and ' electronic media outlets whose reporters attended to capture the re r := moment and deliver the news of the e- significant opening to the masses. '"� cis Invited guests took shelter from the elements and enjoyed refreshments and interaction in a large heated tent IN ",w erected for the opening. 3 Grand Opening - � ; �� rl � .44 ff Ante `47 rciftit w � ^:R A _i 1`.< ►. r s . ii dj „ • 'tea licral 1.4 V` 44.4.44141.44%. i. Safi ®' 4 The grand opening event held on the Parkway near the mainline toll plaza actually was a continuation of the opening celebration that began a few nights earlier at a black-tie gala dinner and reception held at the Omni Interlocken Resort in Broomfield. Guests enjoyed a reception and fine dinner while attending the Saturday night affair, and recognition awards and words of praise and admiration highlighted an enjoyable evening. Following the speeches, a ribbon-cutting ceremony officially dedicated the opening of the Northwest Parkway for traffic and at that moment, a cost-effective, easy-to-use transportation alternative for Metro Denver was bom. Following the opening, all drivers were given the opportunity to try the Northwest Parkway for free for two weeks while those who enrolled for an ExpressToll account continued to enjoy free passage through the end of the year. Now that the Northwest Parkway is officially open for business, many are finding that the Parkway provides the best solution to meet their trans- portation needs. 4 Balance Sheet The Northwest Parkway Public Highway Authority (A Development Stage Company) BALANCE SHEET December 31, 2003 2002 ASSETS Current assets Cash and cash equivalents $ 266,739 $ 485,635 Accounts receivable 194,483 718,952 Prepaid and other expenses 24.094 34.701 Total current assets 485,316 1,239,288 Restricted assets Investments 111,506,541 213,640,022 Accrued interest receivable 252.955 504.178 Total restricted assets 111,759,496 214,144,200 Property and equipment Property and equipment, net 332,574 82,674 Construction in progress 370.166.530 268.668.836 Total property and equipment 370,499,104 268,751,510 Bond issue costs (less accumulated amortization of$2,469,634 and $1,496,862 for 2003 and 2002, respectively) 33.061.119 34.033.891 Total assets $ 515.805.035 $ 518.168.889 LIABILITIES AND EQUITY(DEFICIT) Current liabilities Accounts payable and other liabilities $ 115,375 $ 48,426 Current liabilities payable from restricted assets Accounts payable and other liabilities 375,729 12,360,025 Accrued interest payable 2.362.212 1.930.109 Total current liabilities payable from restricted assets 2,737,941 14,290,134 Long-term liabilities Revenue bonds payable 442,300,870 429,784,123 Intergovernmental payable 20,000,000 20,000,000 Reimbursements payable 55.872.040 55.782.040 Total long-term liabilities 518.172,910 505.656.163 Total liabilities 521,026,226 519,994,723 Equity (deficit) Contributed capital 976,700 976,700 Deficit accumulated during development stage (6.197.891) (2.802.5341 Total equity (deficit) (5.221.191) (1.825.834) Total liabilities and equity (deficit) $515.805.035 $518.168.889 The accompanying notes are an integral part of these financial statements. For a copy please contact Jill Lamoureux at(303) 533-1200 5 Bond Financing, Sources & Uses The Northwest Parkway Public Highway Authority The Sources and Uses for the Northwest ("Authority") issued approximately $364 Million of Parkway Bond issue are estimated as insured Senior Bonds and approximately $52 follows: Million of subordinate bonds in June 2001 to fund SOURCES OF FUNDS: the construction of the Northwest Parkway toll road Series 2001A Bonds $175,720,000 project. The Underwriters were George K Baum & (Current Interest) Company and Bear, Stearns & Co. Inc. PBConsult was the financial consultant and provided the chief Series 2001B Bonds 79,865,792 (Current Appreciation) financial officer for the Authority. A.G. Edwards & Sons Inc. was the financial advisor. Vollmer Series 2001C Bonds 108,371,280 Associates conducted the traffic and revenue study (Convertible Capital Appreciation) with PB Consult Inc providing the economic land Series 2001D Bonds 52,465,000 use inputs for the study. (First Tier Subordinate) The 100% toll-revenue backed start-up toll road Colorado Department of Transportation 723,000 received bond insurance from both Ambac and FSA Net Original Issue Discount (4,025,562) resulting in a positive reception of the Northwest Parkway Authority bonds the market. The financing TOTAL SOURCES $413,119,510 plan received investment grade underlying ratings from all three rating agencies: Standard & Poor's USES OF FUNDS: Design-Build Fitch rated the senior bonds BBB-and Moody's (netgn-Bnt a interest ear a $179,819,232 earnings) Investors Service rating them a Baa3. The subordi- nate debt received Moody's Ba1 rating and a BB- Other Costs of the Project (1) 104,738,219 plus from Standard & Poor's. The Authority believes Capitalized Interest 2001A, 2001 D 43,047,440 that some of the factors supporting this project are that it is making an improved connection to already Debt Service Reserve Accounts 41,239,651 developed areas including Broomfield and Lafayette and one of the largest employment cen- ters in the Denver Metropolitan area: Interlocken Project Contingency 17,657,861 Business Park. (available for Project Costs) TOTAL USES $413,119,510 Because the project is backed solely by toll rev- enues the finance team devised a structure that (1) Includes right-of-way acquisition, project oversight engine costs, and amounts due included a combination of Current Interest Bonds, to reimbursementeringservices,agreements.administrative Capital Appreciation Bonds (CABs), Convertible Capital Appreciation Bonds, and First Tier Subordinate Bonds. Unlike current interest bonds that pay interest every six months, the CABs only pay interest at maturity, allowing the issuer to con- serve cash flow. The use of the convertible CABs allowed the Authority to minimize the amount of the interest payable while still allowing a period for the ramp-up of toll revenues. 6 4.10•7 2003 Board of Directors r w ; V[ r tt i-y` .." 7‘'-‘,,,t;-' :. b....44 d ili 4 ill i. __. V y Hank Stovall Sue Klempen Glenn Vaad City and County of Broomfield City of Lafayette Weld County EX-Officio Members tit IP 11/4 Mary Blue Joe Jehn Joel Rosenstein Lorraine Andersen Michelle Lawrence Regional Transportation Colorado Transportation Intedocken Consolidated City of Arvada Jefferson County District Commission Metropolitan District Alternatives/Representatives r trh* d § ar' �y�;� #. 'Y t F i ^gyp" ?a!r" r i • \ w Pir 4. iii 0. Don Allard Richard Sheehan Karen Stuart Wallace(Wally) Robert Masden Tom Norton City of Arvada Jefferson County City and County of Pulliam Weld County Colorado Department of Broomfield Regional Transportation Transportation District 7 L k Northwest Parkway Staff 0 b: ,a,,,0,., le, . . ti1/4 • 7,1 5` Steve Hogan Steve Bobrick Dick Bauman Jill Lamoureux Executive Director Director of Operations Chief Engineer Office Manager cit 4,,sti,„, , .. .,. c 1 NI „, , yy war d # n,*, i d a Lina Kheng Benton Tempas Jamie Dawson Kerni Weaver Contract Manager Director of IT Admin.Assistant Marketing Manager Contractors & Consultants Grant Thornton Icenogle, Norton, Smith, Blieszner & Miller Auditor General Counsel Clifton Gunderson George K. Baum & Co., Bear Sterns & Co. Accounting Investment Banking PB Consult, Inc. Vollmer Associates Administrative & Finance Support Traffic & Revenue Lovejoy & Associates Carter & Burgess, Inc. Consulting Engineer Project Oversight Engineer/Environmental Intermountain Corporate Affairs Northwest Parkway Constructors Public Relations (a Joint Venture by Peter Kiewit Sons', Inc. and Washington Group International) Design-Build Contractor 8 t. 'r 1. rrf Ilir Ors h. Iv .tim i I Po rr �..."1 i i Ia f, c 13 _-_;_;. _ a ',tr., -;.5'11., ?_ ,'tix. F.-.fi ,Y al l` r'M Ttc►Ne The NoRTHwcsr THE ',DLL is CHIRP, MKKWA'1 FROM BOULDER To IA . AND IT WILL KNOcI( TWEN1�1 MINUTES 111 0VF THE TRIP lyn.fll V''as z M1 a mg. INNIS I E4 -gy 3 � f WHOEVER SAID " IT'S Not THE ... AND THEN SURE AS He e: ►QEVE DESriNATIOu, IT'S THE JOUr&IVE`i " 601 STUCK Iv AIRPORT TRAFFIC ! NEta WEAJT ANY W NERE COOL• • v b4 . hfYt flirts €1 f :, y'g"YJVFfSY A A�` ₹t 1'm°�s1k A; .�� e ;�s'Ar€1L`.�TBF.[kry The Northwest Parkway Public Highway Authority 3701 Northwest Parkway Broomfield, CO. 80020 (303) 533-1200 www.nwpky.org info@nwpky.org NW (St PARKWAY NW ( 2003 Financial Statements & Audit (44 � I PARKWAY TM TRANSMITTAL MEMORANDUM florthweit Parkway . Public Highway Authority 3701 Northwest Parkway Broomfield,CO 80020 nwp @ northwestparkway.orq Phone: 303-533-1200 Fax: 303-404-3049 TO: NWP Board of Directors FROM: Audit Committee.— George DiCiero, Karen Stuart & Glenn Vaad CC: Pamela Bailey-Campbell, Calvin Logan &Wayne Ehlert DATE: Tuesday, April 27, 2004 SUBJECT: NWP Financial Statements The Northwest Parkway Audit Committee met on April 12, 2004 to review the audit and financial statements prepared by Grant Thornton. The Authority financials received a clean opinion from the auditors. Upon review of the financials with Pamela Bailey-Campbell and Jill Lamoureux from the Authority and Calvin Logan and Wayne Ehlert from Grant Thornton, we have found no areas of concern. We recommend to the Board that the audit and financial state nts be approved at the April 27, 200 board meeting. Karen Stua Glenn Vaad Communication with Audit Committee Northwest Parkway Public Highway Authority December 31 , 2003 G s t Thornton :I� Grant Thornton a Accountants and Business Advisors April 27, 2004 Audit Committee Members Northwest Parkway Public Highway Authority Ladies and Gentlemen: Professional standards require that we advise you of the following matters relating to our recently concluded audit. The matters discussed herein are those that we have noted as of March 11, 2004 and we have not updated our procedures regarding these matters since that date to the current date. Our Responsibility Under Auditing Standards Generally Accepted in the United States of America As stated in our engagement letter dated December 29, 2003, our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,whether caused by error or fraud. An audit in accordance with auditing standards generally accepted in the United States of America (US GAAS) does not provide absolute assurance or guarantee the accuracy of the financial statements and is subject to the inherent risk that errors or fraud, if they exist, have not been detected. Such standards also require that we obtain a sufficient understanding of the Authority's internal controls to plan the audit. However, such understanding is required for the purpose of determining our audit procedures and not to provide any assurance concerning such internal controls. Our responsibility under US GAAS includes reporting to you fraud involving senior management and fraud (whether caused by senior management or other employees) that causes a material misstatement of the financial statements. We have previously agreed that immaterial misappropriations identified during our audit that were perpetrated by lower-level employees need not be reported to you. Our Responsibility for Other Information in Documents Containing Audited Financial Statements Pursuant to professional standards, the auditors' responsibility for other information in documents containing the Authority's audited financial statements does not extend beyond the financial information identified in the auditors' report, and the auditors are not required to perform procedures to corroborate such other information. However,in accordance with such standards,we have read the information in the Authority's Annual Report and considered whether such information, or the manner of its presentation, was materially inconsistent with its presentation in the financial statements. Our responsibility also includes calling to management's attention any information that we believe is a material misstatement of fact. No such inconsistencies or misstatements came to our attention. 707 Seventeenth Street,Suite 3200 Denver,CO 80202 T 303.813.4000 F 303.839.5711 Audit F 303.839.5701 Tax W www.grantthornton.com Grant Thornton LLP US Member of Grant Thornton In[anwtlmal Significant Audit Adjustments For purposes of this letter, professional standards define a significant audit adjustment as a proposed correction of the financial statements that, in our judgment, may not have been detected except through our auditing procedures. The definition includes adjustments that were not recorded by the Authority because they are not material to the current financial statements but might be potentially material to future financial statements. No such adjustments were noted during the course of our audit. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter that could be significant to the Authority's financial statements or the auditors' report. We are pleased to report that no such disagreements arose during the course of our audit. Consultation with Other Accountants Management has informed us that there were no consultations with other accountants during the year relating to accounting and auditing matters. * * * * Should you desire further information concerning these matters, Wayne Ehlert, Partner, will be happy to meet with you at your convenience. This letter is intended solely for the information and use of the Audit Committee, Board of Directors, and management of the Authority and is not intended to be and should not be used by anyone other than these specified parties. Very truly yours, Financial Statements and Report of Independent Certified Public Accountants Northwest Parkway Public Highway Authority (A Development Stage Company) Broomfield, Colorado December 31 , 2003 and 2002 TABLE OF CONTENTS Payee REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 3 FINANCIAL STATEMENTS BALANCE SHEETS 5 STATEMENTS OF OPERATIONS AND CHANGES IN DEFICIT ACCUMULATED DURING DEVELOPMENT STAGE 6 STATEMENTS OF CASH FLOWS 7 NOTES TO FINANCIAL STATEMENTS 9 Grant Thornton T Accountants and Business Advisors REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Board of Directors Northwest Parkway Public Highway Authority We have audited the accompanying balance sheets of the Northwest Parkway Public Highway Authority (A Development Stage Company) as of December 31, 2003 and 2002, and the related statements of operations and changes in deficit accumulated during development stage and cash flows for the years then ended, and for the period from inception (June 2, 1999) to December 31, 2003. These financial statements are the responsibility of the Authority's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Northwest Parkway Public Highway Authority (A Development Stage Company) as of December 31, 2003 and 2002, and the results of its operations and its cash flows for the years then ended, and for the period from inception (June 2, 1999) to December 31, 2003, in conformity with accounting principles generally accepted in the United States of America. Denver, Colorado March 11, 2004 707 Seventeenth Street,Suite 3200 Denver,CO 80202 T 303.813.4000 F 303.839.5711 Audh F 303.839.5701 Tax W www.grantthornton.com Grant Thornton LLP US Member of Grant Thornton International Financial Statements Northwest Parkway Public Highway Authority (A Development Stage Company) BALANCE SHEETS December 31, 2003 2002 ASSETS Current assets Cash and cash equivalents $ 266,739 $ 485,635 Accounts receivable 194,483 718,952 Prepaid and other expenses 24,094 34,701 Total current assets 485,316 1,239,288 Restricted assets Investments 111,506,541 213,640,022 Accrued interest receivable 252,955 504,178 Total restricted assets 111,759,496 214,144,200 Property and equipment Property and equipment,net 332,574 82,674 Construction in progress 370,166,530 268,668,836 Total property and equipment 370,499,104 268,751,510 Bond issue costs (less accumulated amortization of$2,469,634 and $1,496,862 for 2003 and 2002,respectively) 33,061,119 34,033,891 Total assets $ 515,805,035 $ 518,168,889 LIABILITIES AND EQUITY (DEFICIT) Current liabilities Accounts payable and other liabilities $ 115,375 $ 48,426 Current liabilities payable from restricted assets Accounts payable and other liabilities 375,729 12,360,025 Accrued interest payable 2,362,212 1,930,109 Total current liabilities payable from restricted assets 2,737,941 14,290,134 Long-term liabilities Revenue bonds payable 442,300,870 429,784,123 Intergovernmental payable 20,000,000 20,000,000 Reimbursements payable 55,872,040 55,872,040 Total long-term liabilities 518,172,910 505,656,163 Total liabilities 521,026,226 519,994,723 Equity (deficit) Contributed capital 976,700 976,700 Deficit accumulated during development stage (6,197,891) (2,802,534) Total equity (deficit) (5,221,191) (1,825,834) Total liabilities and equity (deficit) $ 515,805,035 $ 518,168,889 The accompanying notes are an integral part of these financial statements. 5 Northwest Parkway Public Highway Authority (A Development Stage Company) STATEMENTS OF OPERATIONS AND CHANGES IN DEFICIT ACCUMULATED DURING DEVRT OPMENT STAGE June 2, 1999 (inception) to Years Ended December 31, December 31, 2003 2002 2003 Operating revenue Program assistance contract $ - $ 809,485 $ 1,344,485 Membership dues - 100,000 125,000 Toll revenue 108,418 - 108,418 Total operating revenue 108,418 909,485 1,577,903 Operating expenses Salaries and benefits 862,291 588,091 2,437,813 Professional fees 213,987 290,092 959,580 Public information - - 109,748 Toll road operations 106,207 - 106,207 General and administrative expenses 992,091 450,835 1,912,029 Depreciation 30,655 3,441 80,410 Total operating expenses 2,205,231 1,332,459 5,605,787 Operating (loss) (2,096,813) (422,974) (4,027,884) Non-operating revenues (expenses) Interest income 8,013,373 13,260,988 29,675,214 Interest expense (8,013,373) (13,260,988) (29,624,519) Financing costs (1,314,191) (1,126,828) (3,046,157) Other income 15,647 804,438 1,325,455 Other expense - - (925,000) Total non-operating revenues (expenses) (1,298,544) (322,390) (2,595,007) Net loss (3,395,357) (745,364) (6,622,891) Less payments (received) made in non exchange transactions that (increased) decreased contributed capital - - 425,000 Deficit accumulated during development stage,beginning of period (2,802,534) (2,057,170) - Deficit accumulated during development stage, end of period $ (6,197,891) $ (2,802,534) $ (6,197,891) The accompanying notes are an integral part of these financial statements. 6 Northwest Parkway Public Highway Authority (A Development Stage Company) STATEMENTS OF CASH FLOWS June 2, 1999 (inception) to Years Ended December 31, December 31, 2003 2002 2003 Cash flows from operating activities Operating loss $ (2,096,813) $ (422,974) $ (4,027,884) Adjustments to reconcile operating loss to net cash used in operating activities Depreciation 30,655 3,441 80,410 Loss on disposal of property and equipment 1,358 - 2,731 Changes in assets and liabilities: Increase in reimbursable expenditures under program assistance contract - - (182,960) (Increase) decrease in accounts receivable 540,116 (522,985) 17,131 (Increase) decrease in prepaid expenses 10,607 (16,355) (24,094) Increase in accounts payable and other liabilities 66,949 14,305 284,106 Net cash used in operating activities (1,447,128) (944,568) (3,850,560) Cash flows from capital and related financing activities Purchase of investments (8,261,038) (13,375,791) (397,283,833) Proceeds from sale/maturity of investments 110,394,519 128,953,205 285,777,292 Interest paid (12,897,311) (12,897,310) (31,777,725) Purchases of property and equipment (281,912) (43,855) (670,280) Payments related to construction in progress (95,855,740) (115,732,072) (259,531,296) Proceeds from issues of bonds payable - - 412,396,510 Payments related to bond issue costs - - (35,530,753) Interest received 8,264,596 13,385,923 29,423,210 Financing costs paid - - (32,520) Capital contributions received - - 920,311 Net cash provided by capital and related financing activities 1,363,114 290,100 3,690,916 — Cash flows from noncapital financing activities 'ether income - 608,471 608,471 ther expense (134,882) (47,206) (182,088) Net cash provided by (used in) noncapital financing activites (134,882) 561,265 426,383 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (218,896) (93,203) 266,739 d cash equivalents,beginning of period 485,635 578,838 - ,d cash equivalents,end of period $ 266,739 $ 485,635 $ 266,739 The accompanying notes are an integral part of these financial statements. 7 Northwest Parkway Public Highway Authority (A Development Stage Company) STATEMENTS OF CASH FLOWS (CONTINUED) June 2, 1999 (inception) to Years Ended December 31, December 31, 2003 2002 2003 Non cash investing and financing activities: The Authority incurred the following liabilities in conjunction with the purchase of property and equipment: Accrued purchases $ 375,729 $ 12,360,025 $ 20,469,968 Reimbursement agreements - - 55,872,040 Intergovernmental agreements - - 32,000,000 The Authority capirali7ed reimbursable expenditures in which they were not reimbursed - - 182,960 The Authority incurred the following related to non-operating expense: Amortization of bond issue costs 972,772 1,029,302 2,469,634 Amortization of bond discount 206,536 50,320 357,495 Accretion of capital appreciation bonds 12,310,211 11,627,936 29,546,865 The Authority accepted the assignment of all the Northwest Parkway Project Nonprofit Corporation assets on July 6, 1999. Assignment included the following: Property and equipment - - 40,629 Contracts in progress - - 15,760 The accompanying notes are an integral part of these financial statements. 8 Northwest Parkway Public Highway Authority (A Development State Company) NOTES TO FINANCIAL STATEMENTS December 31, 2003 and 2002 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Northwest Parkway Public Highway Authority (A Development Stage Company) (the Authority) was formed by an intergovernmental agreement on June 2, 1999, among the City of Broomfield, the County of Weld, and the City of Lafayette (the Governmental Unit(s)). The purpose of the agreement was to finance, construct, operate and/or maintain the Northwest Parkway. In December 2003, the toll road was opened for use, but the Authority will not take title to the toll road until 2004. It is the Authority's intent to serve as an enterprise, as such term is defined in the Colorado Constitution, Article X, Section 20(2)(d), and in furtherance thereof, to serve as a government-owned business, engaged in the business venture of providing roadway transportation in exchange for the payment of toll fees. Reporting Entity The Authority is a separate governmental entity. Each member appoints a representative to the Authority Board of Directors. The State of Colorado may join in the Authority, pursuant to the Colorado Constitution. In the event the State of Colorado joins in the Authority, the State shall have one Director on the Board. The Authority follows the Governmental Accounting Standards Board (GASB) accounting pronouncements, which provide guidance for determining which governmental activities, organizations and functions should be included within the financial reporting entity. GASB pronouncements set forth the financial accountability of a governmental organization's elected governing body as the basic criterion for including a possible component governmental organization in a primary government's legal entity. Financial accountability includes, but is not limited to, appointment of a voting majority of the organization's governing body, ability to impose its will on the organization, a potential for the organization to provide specific financial benefits or burdens and fiscal dependency. The Authority is not financially accountable for any other organization, nor is the Authority a component unit of any other primary governmental entity. Basis of Accounting The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. Enterprise funds are accounted for on the flow of economic resources measurement focus and use the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. In addition, enterprise funds are used to account for those operations that are financed and operated in a manner similar to private business or where the Board has decided that the determination of revenues earned, costs incurred and/or net income is necessary for management accountability. The Authority applies all applicable GASB pronouncements, as well as Financial Accounting Standards Board (FASB) pronouncements, issued on or before November 30, 1989 unless those pronouncements conflict with or contradict GASB pronouncements. The Authority has elected not to apply FASB pronouncements issued after November 30, 1989. 9 Northwest Parkway Public Highway Authority (A Development State Company) NOTES TO FINANCIAL STATEMENTS (CONTINUED) December 31, 2003 and 2002 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Investments Investments in securities are carried at fair value. Unrealized gains resulting from increases in fair value between January 1 and December 31 are recognized as interest income and unrealized losses resulting from decreases in fair value are recognized as decreases in interest income. Realized gains or losses on securities included in the investment portfolio are recognized only when the related security is sold. Investments in guaranteed investment contracts are reported using a cost-based measurement. Fixed Assets Purchased property and equipment are recorded at historical cost. Donated property is recorded at estimated market value at the date of transfer. Furniture and fixtures, computers and automobiles are depreciated using the straight-line method over the estimated useful life of five to seven years. Capitalized Interest During the construction phase of fixed assets, the interest incurred net of interest earned on the invested proceeds over the same period, is reflected in the capitalized value of the asset constructed. As of December 31, 2003 and 2002, $17,626,252 and $11,649,393, respectively of interest was capitalized. Bond Discounts/Issuance Costs Premiums and discounts related to the issuance of bonds are amortized over the remaining term of the bonds by a method that approximates the interest method. Equity The contributed capital represents assigned assets in the form of cash and equipment received from the Northwest Parkway Project Nonprofit Corporation. Statement of Cash Flows The financial statements include a statement of cash flows showing cash and cash equivalents provided and used by operating, investing, and financing activities. The Authority considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. 10 Northwest Parkway Public Highway Authority (A Development State Company) NOTES TO FINANCIAL STATEMENTS (CONTINUED) December 31, 2003 and 2002 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Use of Estimates In preparing financial statements in conformity with accounting principles generally accepted in the United States of America,management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 2—DEPOSITS AND INVESTMENTS Deposits The Colorado Public Deposit Protection Act (PDPA) requires that all units of local government deposit cash in eligible public depositories,with eligibility determined by State regulators. Amounts on deposit in excess of federal insurance levels must be collateralized by eligible collateral as determined by the PDPA. PDPA allows the financial institution to create a single collateral pool for all public funds held. The pool is to be maintained by another institution or held in trust for all the uninsured public deposits as a group. The market value of the collateral must be at least equal to 102% of the uninsured deposits. Deposits are categorized as follows. Category 1 — insured or collateralized with securities held by the Authority or by its agent in the Authority's name, Category 2— collateralized with securities held by the pledging financial institution's trust department or agent in the Authority's name, and Category 3—uncollateralized,including any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent but not in the Authority's name. At December 31, 2003 and 2002, the Authority's deposits had a carrying value of $118,696 and $11,380,respectively. At December 31,the Authority's cash deposits are categorized as follows: Bank Balance 2003 2002 Categorized deposits Insured deposits —Category 1 $ 113,735 $ 100,000 Deposits collateralized through PDPA —Category 2 217249 180.628 Total $ 31018A $2$0.628 11 Northwest Parkway Public Highway Authority (A Development State Company) NOTES TO FINANCIAL STATEMENTS (CONTINUED) December 31,2003 and 2002 NOTE 2-CASH DEPOSITS AND INVESTMENTS (CONTINUED) Investments Colorado statutes specify investment instruments meeting defined rating and risk criteria in which local government entities may invest: • Obligations of the United States and certain U.S. government agency securities • Certain international agency securities • Bonds of certain Colorado government entities • Banker's acceptances of certain banks • Commercial paper with a certain rating • Written repurchase agreements collateralized by certain authorized securities • Certain money market mutual funds • Guaranteed investment contracts • Local government investment pools The Authority may invest or deposit any funds in the manner provided by law for political subdivisions of the State. In addition, the Authority may direct a corporate trustee which hold funds of the Authority to invest or deposit such funds in investments or deposits other than those specified by law for political subdivisions of the state if the board determines, by resolution, that such investment or deposit meets the standard established in the Colorado Revised Statutes, the income is at least comparable to income available on investments or deposits specified by law for political subdivisions of the state, and such investments will assist the Authority in the financing, construction, maintenance, or operation of public highways. The bond documents impose additional restrictions on investments. Investments made by the Authority are summarized below. The investments that are represented by specific identifiable investment securities are classified by the three categories described below: Category 1 — Insured or registered, or securities held by the Authority or its agent in the Authority's name. Category 2— Uninsured and unregistered, with securities held by the counterparty's trust department or agent in the Authority's name. Category 3— Uninsured and unregistered with securities held by the counterparty or by it trust department or agent but not in the Authority's name. Investments included in cash and cash equivalents The Authority participates in the Colorado Government Liquid Assets Trust (COLOTRUST), which is a local government investment pool. This investment operates similarly to a money market fund and each share is equal to $1 since investments are not evidenced by a physical or book entry security; therefore, this investment is not categorized. At December 31, 2003 and 2002, the Authority's investment was $148,043 and $474,255,respectively. This investment is included in cash and cash equivalents. 12 Northwest Parkway Public Highway Authority (A Development State Company) NOTES TO FINANCIAL STATEMENTS (CONTINUED) December 31,2003 and 2002 NOTE 2- CASH DEPOSITS AND INVESTMENTS (CONTINUED) Investments (Continued) Restricted investments The investments the Authority acquired from the bond offering were required to be deposited into reserve accounts for capitalized interest, debt service reserve, and construction funds. These investments are held in six different guaranteed investment contracts, which are not subject to categorization as mentioned above. Interest is paid semiannually on June 15 and December 15 for each contract. Three of these contracts have maturity dates greater than five years. Two of the guaranteed investment contracts are structured so the original investment plus interest earnings are sufficient to make the required semiannual interest payments on the Series A &D bonds through the capitalized interest period (lune 15, 2006). A total of$43,513,177 was deposited into these two contracts. One of the contracts contains an interest rate of 5.101% and the other contract has an interest rate of 5.041%, both contracts mature on June 15, 2006. A third party guarantees the funds in both contracts. In addition, both contracts call for the company to maintain certain credit ratings with S&P and Moody's. The investment balance in these two guaranteed investment contracts and the debt service accounts at December 31, 2003 and 2002 is $22,084,324 and$30,907,995, respectively. Two other guaranteed investment contracts, which are to be used for construction costs, contain an interest rate of 4.51%. A total of $245,114,354 was deposited into these two contracts. This amount is to be used to pay all cost associated with the construction of the toll road, which includes the design build contract, right-of-way acquisitions, project oversight engineering services, administrative costs and reimbursement agreements. One of the contracts terminates on September 1, 2004 and the other contract terminates on June 1, 2007. These contracts maintain certain credit ratings with S&P and Moody's for the company. The investment balance at December 31, 2003 and 2002 is $48,182,566 and $141,492,376, respectively. The final two guaranteed investment contracts are investments of the debt reserve funds, which are to be used to pay debt service and redemption price of the bonds. The original investments in both of these contracts are to remain, unless liquidation is required as noted in the contracts. A total of $41,239,651 was deposited into these two contracts. Both contracts terminate on June 15, 2021,but have an optional termination date of June 15, 2011. In addition, both contracts call for the companies to maintain certain credit ratings with S&P and Moody's. One of the contracts contains an interest rate of 6.42% and the other contract contains an interest rate of 5.86% along with a third party guarantee of the funds. The investment balance at December 31, 2003 and 2002 is $41,239,651 in each year. 13 Northwest Parkway Public Highway Authority (A Development State Company) NOTES TO FINANCIAL STATEMENTS (CONTINUED) December 31, 2003 and 2002 NOTE 3-PROPERTY AND EQUIPMENT A summary of changes in property and equipment at December 31,2003 is as follows: Balance at Balance at January 1, December 31, 2003 Additions Deletions Transfers 2003 Property and equipment Furniture and fixtures $ 31,237 $ 97,565 $ - $ - $ 128,802 Accumulated depreciation (6,849) (6,867) - - (13,716) Computers 68,025 134,347 (2,628) - 199,744 Accumulated depreciation (20,503) (15,809) 1,270 - (35,042) Automobiles 30,064 50,000 - - 80,064 Accumulated depredation (21,045) (7,202) - - (28,247) Leasehold improvements 3,103 - - - 3,103 Accumulated depreciation (1.358) (776) - - (2.134) Total property& equipment,net 82,674 251,258 (1,358) - 332,574 Construction in progress 268.668 836 101.497.694 - 370.166,530 Total $268.751.510 $ 10j74&952 $ (L358) $ - $ 370.499.104 A summary of changes in property and equipment at December 31,2002 is as follows: Balance at Balance at January 1, December 31, 2002 Additions Deletions Transfers 2002 Property and equipment Furniture and fixtures $ 19,220 $ 13,466 $ - $ (1,449) $ 31,237 Accumulated depredation (5,858) (991) - - (6,849) Computers 36,187 30,389 - 1,449 68,025 Accumulated depredation (18,053) (2,450) - - (20,503) Automobiles 30,064 - - - 30,064 Accumulated depredation (21,045) - - - (21,045) Leasehold improvements 3,103 - - - 3,103 Accumulated depredation (1.358) - - (1.358) Total property& equipment,net 42,260 40,414 - - 82,674 Construction in progress 148.757.920 119.910.916 - - 268.668.836 Total $ 148.800.180 $ 119951330 $ - $- $268.751.510 14 Northwest Parkway Public Highway Authority (A Development State Company) NOTES TO FINANCIAL STATEMENTS (CONTINUED) December 31, 2003 and 2002 NOTE 3-PROPERTY AND EQUIPMENT Construction Contractor On June 22, 2001 the Authority entered into a Design/Build Contract with Northwest Parkway Constructors (the Contractor) to construct the Authority's toll road. The original contract price to be paid to Northwest Parkway Constructors is $187,637,528. The contract has provisions for change orders, guarantees, liquidated damages for delay and early completion bonuses. As of December 31, 2003 and 2002 there have been seventy-three and forty-four authorized contract changes,which have increased the contract price to$191,578,605 and $190,214,965,respectively. As allowed under Colorado Revised Statues,Article 91 of Tide 24, the Authority and the Contractor have entered into an escrow agreement whereby the Contractor has deposited acceptable securities into an escrow account in lieu of retainage under the contract. As of December 31, 2003 and 2002 securities have been deposited in escrow with a verified market value equal to or greater than the retainage release to date of$9,578,930 and$9,510,748,respectively. Project Oversight The Authority has a contract for$5,300,000 with Carter&Burgess, Inc. to serve as project oversight engineer. This contract expires in July 2004. Intergovernmental Agreements On February 18, 1999 an intergovernmental agreement was entered into between the City of Broomfield, City of Lafayette, City of Louisville, and the County of Boulder for the purpose of regulating land uses regarding the construction of the Parkway. Certain sections of this agreement were amended on January 16, 2001, and the Authority was added as a signatory. Per the agreement, the Authority will pay the following: a total of$12,000,000 for Dillon Road improvements, of which $1,000,000 was paid to the City of Lafayette during 2001 and the other $11,000,000 was included in the design/build contract; $12,000,000 for South 96th Street improvement to the City of Louisville, which was paid during 2002; $12,000,000 for West Midway Boulevard improvements to the City of Broomfield, of which $2,000,000 was paid during 2001 and $10,000,000 is recorded as a liability; $5,000,000 each to the Cities of Louisville and Broomfield for open space and conservation easement allocation,which was paid during 2001; $3,000,000 each to the City of Broomfield, City of Louisville, and Boulder County and $1,000,000 to the City of Lafayette for acquisition of permanent open space located within the Plan area, of which the total$10,000,000 is recorded as a liability. The permanent open space payments are to be paid by December 31, 2008. In 2001 an intergovernmental agreement was entered into between the Authority, the Cities of Broomfield and Thornton, and E-470 Public Highway Authority (E-470). E-470 is to provide the final design for the Interstate-25 interchange at an approximate cost of$3,000,000. The Authority is to reimburse E-470 for this cost with interest at a rate of 6.945%. The Authority and E-470 shall share equally in the cost of acquiring the 64.9 acres of right-of-way for the interchange. As of December 31, 2003 and 2002 the total cumulative cost reimbursed to E-470 for the final design was $2,747,852. 15 Northwest Parkway Public Highway Authority (A Development State Company) NOTES TO FINANCIAL STATEMENTS (CONTINUED) December 31,2003 and 2002 NOTE 4-BUDGET The Authority's Board of Directors held a public hearing in December 2002 to approve the budget and appropriate the funds for the period January 1, 2003 to December 31, 2003. The Authority's Board of Directors can modify the budget and appropriations resolutions upon completion of notification and publication requirements. The appropriation is at the total fund expenditures level and lapses at the year-end. The budget adopted for the Authority is not consistent with accounting principles generally accepted in the United States of America (GAAP), as capital outlay is budgeted as an expenditure and contributions from members and bond proceeds are budgeted as revenue. These departures are necessary due to State budget requirements. Encumbrance accounting (open purchase order, contracts in process and other commitments for the expenditures of fund in future periods) is currently not used by the Authority for contracts. The Authority is shown as an enterprise fund. This essentially requires the accounting treatment to be the same as a business whereby revenue is recognized as income when a sale occurs and is earned. Expenses are recognized when incurred. Depreciation is recorded on capitalized equipment. The following summarizes net loss on budgetary basis to net loss on GAAP basis for the year ended December 31, 2003: Variance Amended favorable budget Actual (unfavorable) Revenues $ 7,468,659 $ 8,137,438 $ 668,779 Expenditures (203,222,672) (112,101,079) 91,121,593 Reconciliation to net loss (GAAP Basis) for the year ended December 31,2003 Amortization of bond discount (206,537) Amortization of bond issuance costs (972,772) Capital improvements 101,497,694 Depreciation of property and equipment (30,655) Furniture and fixtures 281,912 Loss on disposal of fixed asset (1,358) Net loss (GAAP basis) $ (3.3,9.5 3521 16 Northwest Parkway Public Highway Authority (A Development State Company) NOTES TO FINANCIAL STATEMENTS (CONTINUED) December 31, 2003 and 2002 NOTE 4-BUDGET (CONTINUED) The following summarizes net loss on budgetary basis to net loss on GAAP basis for the year ended December 31, 2002: Variance Amended favorable budget Actual (unfavorable) Revenues $ 9,982,500 $ 13,260,988 $ 3,278,488 Expenditures (326,360,358) (134,591,983) 191,768,375 Reconciliation to net loss (GAAP Basis) for the year ended December 31,2002 Amortization of bond discount (50,320) Amortization of bond issuance costs (1,029,302) Capital improvements 119,910,916 Depreciation of property and equipment (3,441) Furniture& fixtures 43,855 Member dues 100,000 Proceeds for construction costs 1,613.923 Net loss (GAAP basis) $ _ (745.364) NOTE 5 —REVENUE BONDS PAYABLE The detail of the Authority's long-term obligations is as follows: $175,720,000 Series 2001A Senior Current Interest Bonds, $175,720,000 Revenue Bonds mature June 15, 2041. Annual principal payments ranging from $1,175,000 to $10,025,000 commence on June 15, 2008 and continue through June 15, 2041. Interest is due semiannually on June 15 and December 15 at rates ranging from 4.0% to 5.5%. $79,865,792 Series 2001B Senior Capital Appreciation Bonds, $413,045,000 Revenue Bonds with maturity values ranging from $6,725,000 to $38,750,000 are payable on respective maturity dates commencing June 15, 2018 and continuing through June 15, 2034. The Series 2001B Bonds accrete in value from date issued through maturity or any earlier redemption date, compounded on June 15 and December 15 of each year at yields to maturity ranging from 5.90%to 6.31%. $108,371,280 Series 2001C Senior Convertible Capital Appreciation Bonds, $189,175,000 Revenue Bonds with maturity values ranging from $995,000 to $92,245,000, are payable on respective maturity dates commencing on June 15,2012 and continuing through June 15,2025. The Series 2001C Bonds accrete in value from date issued through conversion date, December 15, 2011, compounded on June 15 and December 15 of each year at yields to conversion date ranging from 5.00% to 5.80%. Commencing on December 15, 2011, interest is due semiannually on June 15, and December 15 at rates ranging from 5.00% to 5.80%. 17 Northwest Parkway Public Highway Authority (A Development State Company) NOTES TO FINANCIAL STATEMENTS (CONTINUED) December 31,2003 and 2002 NOTE 5—REVENUE BONDS PAYABLE (CONTINUED) $52,465,000 Series 2001D First Tier Subordinate Current Interest Bonds, $52,465,000 Revenue Bonds mature June 15, 2041. Annual mandatory sinking fund requirements commence on June 15, 2008 and continue through June 15, 2041 in increasing amounts from $400,000 to $3,860,000. Interest is due semiannually on June 15 and December 15 at a rate of 7.125%. A Summary of changes in long-term revenue bonds payable at December 31,2003 is as follows: Balance Accretion Balance January 1, of December 31, Description 2003 Additions discounts 2003 Senior Current Interest Bonds-A(CIB)-A $ 175,720,000 $ - $ - $ 175,720,000 Discount on Senior CIB-A (2,255,146) - 127,474 (2,127,672) Senior Capital Appreciation Bonds-B (CAB)-B 413,045,000 - - 413,045,000 Discount on Senior CAB-B (325,461,266) - 5,532,117 (319,929,149) Senior Convertible Capital Appreciation Bonds-C(CCAB)-C 189,175,000 - - 189,175,000 Discount Senior CCAB-C (71,285,008) - 6,778,094 (64,506,914) Subordinate Current Interest Bonds-D (CIB)-D 52,465,000 - - 52,465,000 Discount Subordinated CIB-D (1 619 457) - 79.062 (1 540.395) Total $429.784.123 $ - $ 12516 747 $442.300.870 A summary of changes in long-term revenue bonds payable at December 31,2002 is as follows: Balance Accretion Balance January 1, of December 31, Description 2002 Additions discounts 2002 Senior Current Interest Bonds-A (CIB)-A $ 175,720,000 $ - $ - $ 175,720,000 Discount on Senior CIB-A (2,284,434) - 29,288 (2,255,146) Senior Capital Appreciation Bonds-B (CAB)-B 413,045,000 - - 413,045,000 Discount on Senior CAB-B (330,664,607) - 5,203,341 (325,461,266) Senior Convertible Capital Appreciation Bonds-C(CCAB)-C 189,175,000 - - 189,175,000 Discount Senior CCAB-C (77,709,603) - 6,424,595 (71,285,008) Subordinate Current Interest Bonds-D(CIB)-D 52,465,000 - - 52,465,000 Discount Subordinated CIB-D (1 640.489) - 21 032 (1 619 457) Total $418 10586 $ .,. - $ 11 678 256 $429 784.123 18 Northwest Parkway Public Highway Authority (A Development State Company) NOTES TO FINANCIAL STATEMENTS (CONTINUED) December 31, 2003 and 2002 NOTE 5—REVENUE BONDS PAYABLE (CONTINUED) The aggregate future principal maturities and interest payments for the Bonds at December 31,2003 are: Principal Interest Total Year ending December 31, 2004 $ - $ 12,897,310 $ 12,897,310 2005 - 12,897,310 12,897,310 2006 - 12,897,310 12,897,310 2007 - 12,897,310 12,897,310 2008 1,575,000 12,859,560 14,434,560 Thereafter 828,830.000 370,615.414 1,199.445,414 $ 830 405 00 0 $11,5„O42,15 $12.65.4.6.2a4 NOTE 6—REIMBURSEMENT AGREEMENTS The Authority entered into reimbursement agreements with the following entities, Interlocken Ltd., Interlocken Consolidated Metropolitan District (ICMD), and the City of Broomfield. The Authority agreed to reimburse the following costs at such time as the Authority has funds available. Interlocken Ltd. incurred costs with respect to the planning, financing design and/or construction of Interlocken Loop in the amount of$1,995,904. ICMD incurred costs with respect to planning, financing, design and construction of Interlocken Loop in the amount of $5,205,813. Both of these commitments bear interest at the rate of 6% per annum from the date of the agreements until they are paid in full. These entities will be reimbursed at such time as the Authority has funds available. At December 31, 2003 and 2002, the Authority has recorded accrued interest of $1,824,824 and $1,392,719,respectively, for these commitments. The Authority agreed to reimburse the City of Broomfield for the portion of the City expenditures, which benefit or are incorporated into the Parkway. The City of Broomfield incurred initial expenditures and secondary expenditures, which were recorded as a capital asset and liability by the Authority. The determination of whether any of these amounts can be reimbursed from the initial funding shall be solely the determination of the Authority. If reimbursement of the unpaid expenditures is not made from the initial funding, the amounts shall be reimbursed at such time the Authority has funds available from financings or revenues,if any. The unpaid expenditures bear no interest The Authority reimbursed the City of Broomfield for their initial expenditures during 2001 and the secondary expenditures of $48,670,323 are recorded as a liability at December 31,2003 and 2002. NOTE 7 —CONTRIBUTED CAPITAL The Authority accepted as of June 2, 1999, the assignment of all of the Northwest Parkway Project Nonprofit Corporation's assets and rights and delegation of all the Corporation's duties and obligations in the amount of $976,700. These assets were valued at the estimated market value at the date of transfer and have been recorded on the Authority's books as cash, furniture and fixtures, computers, and automobiles. 19 Northwest Parkway Public Highway Authority (A Development State Company) NOTES TO FINANCIAL STATEMENTS (CONTINUED) December 31, 2003 and 2002 NOTE 8-RETIREMENT PLANS The Authority has a single employer defined contribution plan in which all employees are eligible to participate upon their first day of employment. This plan is administered by an outside trustee. The plan is in lieu of Social Security and the Authority contributes 16.5% of each participant's compensation to the plan. Participants are required to contribute 6.5% of their compensation. Participants vest immediately 100% in all contributions. The Authority contributed $105,687 and $82,729 to this plan for the year ended December 31, 2003 and 2002, respectively. The Authority's total payroll for the year ended December 31, 2003 and 2002 was $651,937 and $499,663, respectively. Compensation of employees covered by this plan for the year ended December 31, 2003 and 2002 was $573,181 and$448,250, respectively. NOTE 9—DEFERRED COMPENSATION As of September 2001, the Authority offered all regular employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan permits participants to defer a portion of their salary until future years. This plan is administered by an outside trustee. The employees' voluntary contributions are made to the 457 plan. Employees can contribute a maximum of$8,500 per year. Deferred compensation is available for withdrawal any time after the participant reaches age 59-1/2, and must begin at age 70. Withdrawals can also be made upon termination of employment, death, or unforeseeable emergency. Such withdrawals may be subject to the IRS penalties for early withdrawal. Withdrawals can also be made upon termination of the plan. An independent trustee administers funds in the plan. The trustee provides participants with quarterly statements of contributions, withdrawals and earnings. Contributions made for the years ended December 31,2003 and 2002,were $30,300 and$15,550,respectively. • NOTE 10-TABOR In November 1992, the voters of Colorado approved Amendment 1, commonly known as the Taxpayer's Bill of Rights (TABOR), which adds a new Section 20 to Article X of the Colorado Constitution. TABOR contains tax, spending, revenue and debt limitations,which apply to the State of Colorado and all local governments. Enterprises, defined as government-owned businesses authorized to issue revenue bonds and receiving less than 10% of annual revenue in grants from all state and local governments combined, are excluded from the provisions of TABOR. During the January to May 1996 session, the Colorado General Assembly enacted S.B. 96-173, which was signed into law by the Governor on March 18, 1996. The General Assembly declared its intention that public highway authorities be permitted to qualify as enterprises under Section 20 of Article X of the Colorado Constitution; therefore,TABOR is not applicable to the Authority. 20 Northwest Parkway Public Highway Authority (A Development State Company) NOTES TO FINANCIAL STATEMENTS (CONTINUED) December 31, 2003 and 2002 NOTE 11—RISK MANAGEMENT The Authority is exposed to various risks of losses, including general liability, property damage, and employee life, medical, dental, and accidental benefits. The Authority has a risk management program, which includes commercial property insurance for catastrophic losses, including floods and earthquakes, for the entity. The Authority also carries commercial insurance for employee life, health, accident, and Workers' Compensation. The Authority has various set limits on their commercial insurance coverage and has not exceeded the coverage since inception. The Authority is not a part of a public entity risk pool. NOTE 12—COMMITMENTS Contingency The Authority is a Petitioner in various right-of-way valuation lawsuits. Although the outcome of these lawsuits is not presently determinable, it is the opinion of the Authority's counsel that resolution of these matters should not have a material adverse effect on the financial condition of the Authority. Leases The Authority is currently obligated under a lease agreement for its former office facilities. The lease requires monthly payments of $11,069 increasing 5% per year through August 31, 2005. In addition to this amount, the Authority is required to pay a portion of the lessor's operating costs, which approximates $2,415 per month. In addition to this lease the Authority has two open-ended leases for a copier and a vehicle, which total monthly payment approximate $2,383. Following is a schedule of minimum lease payments on these leases as of December 31,2003. Year Ending December 31, 2004 $ 211,340 2005 155,544 2006 28,596 2007 28,596 2008 28.596 Total $ 4521567 21 Hello