north texas municipal water district · estimates made by management; and evaluating the overall...

NORTH TEXAS MUNICIPAL WATER DISTRICT WYLIE, TEXAS

COMPREHENSIVE ANNUAL FINANCIAL REPORT

FISCAL YEAR ENDED SEPTEMBER 30, 2013

AS PREPARED BY THE

NTMWD ACCOUNTING DEPARTMENT

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North Texas Municipal Water DistrictCOMPREHENSIVE ANNUAL FINANCIAL REPORTFOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2013

TABLE OF CONTENTS

PageINTRODUCTORY SECTION

North Texas Municipal Water District Board of Directors iOrganizational Structure iiLetter of Transmittal iiiCertificate of Achievement for Excellence in Financial Reporting viThe North Texas Municipal Water District Operating System vii

FINANCIAL SECTION

Independent Auditor’s Report 1

Management's Discussion and Analysis 4

Basic Financial Statements:Statement of Net Position 10Statement of Revenues, Expenses and Changes in Net Position 14Statement of Cash Flows 16Notes to the Basic Financial Statements 18

Required Supplementary Information-Pension Trend Information (Unaudited) 45

SEWER SYSTEM SUPPLEMENTAL SCHEDULES

Schedule of Net Position 47Schedule of Revenues, Expenses and Changes in Net Position 71Schedule of Cash Flows 83

STATISTICAL SECTION (UNAUDITED)Schedule 1 – Net Position by Component 95Schedule 2 – Changes in Net Position 96Schedule 3 – Total Revenues by Source 97Schedule 4 – Total Expenses by Function 98Schedule 5 – Total Revenues by System 99Schedule 6 – Total Expenses by System 100Schedule 7 – Operating Revenues 101Schedule 8 – Operating Expenses 102Schedule 9 – Nonoperating Revenues and Expenses 103Schedule 10 – Net Additions to Capital Assets Excluding Construction in Progress 104Schedule 11 – Water Produced and Consumed, Wastewater Treated and

Solid Waste Disposed 105Schedule 12 – Historic Service Use 106Schedule 13 – Number of Water, Wastewater and Solid Waste Customers 108Schedule 14 – Water Rates 109Schedule 15 – Largest Customers 110Schedule 16 – Outstanding Debt by Type 111Schedule 17 – Revenue Coverage 112Schedule 18 – Demographic Statistics 113Schedule 19 – Principal Employers 114Schedule 20 – Number of Employees by Function 115Schedule 21 – Miscellaneous Statistical Data 116Schedule 22 – Operating and Capital Indicators 119Schedule 23 – Insurance in Force 120

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INTRODUCTORY SECTION

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NORTH TEXAS MUNICIPAL WATER DISTRICT

BOARD OF DIRECTORS

Bill Lofland President Rockwall

Darwin L. Whiteside Vice-President Royse City

Joe Joplin Secretary McKinney

Terry Sam Anderson Mesquite

Don Cates Forney

Gary Downey Frisco

Joe Farmer Allen

Marvin Fuller Wylie

Don Gordon Garland

Darrell Grooms Forney

Bill Harrison Farmersville

James Kerr Allen

Jack May Garland

Charles McKissick McKinney

Jim Mellody Royse City

John Murphy Richardson

Patrick Nicklen Princeton

Larry Parks Rockwall

Richard Sheehan Princeton

Lynn Shuyler Frisco

Shep Stahel Plano

John Sweeden Richardson

Bobby Robinson Mesquite

Robert Thurmond, Jr. Wylie

Jerry Yancey Plano

* * * * * * James M. Parks

Executive Director/General Manager

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NORTH TEXAS MUNICIPAL WATER DISTRICT ORGANIZATIONAL STRUCTURE Executive Director/General Manager James M. Parks

Deputy Director Joe Stankiewicz

Solid Waste System Officer Jeff Mayfield Engineering Manager Vacant Real Estate Manager Bently Powell Permit Manager Robert McCarthy

Wastewater System Manager Ken Wesson

Deputy Director Mike Rickman Information Technology Officer Jim Shirley Environmental Services Manager Elizabeth Turner

Maintenance Manager David Morgan Water System Manager Ted Kilpatrick

Director of Finance, Accounting and Personnel Judd Sanderson Accounting Manager Teresa Wigington

Budget Manager Erik Felthous

Human Resource Manager John Montgomery

Records Manager Kelly O’Brian

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January 27, 2014 TO THE BOARD OF DIRECTORS OF THE NORTH TEXAS MUNICIPAL WATER DISTRICT State law requires that the North Texas Municipal Water District (the “District”) publish within six months of the close of each fiscal year a complete set of financial statements presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants. Pursuant to that requirement, we hereby issue the comprehensive annual financial report of the North Texas Municipal Water District for the fiscal year ended September 30, 2013. This report consists of management’s representations concerning the finances of the District. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the District has established a comprehensive internal control framework that is designed both to protect the District’s assets from loss, theft or misuse and to compile sufficient reliable information for the preparation of the District’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the District’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatements. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The District’s financial statements have been audited by Weaver & Tidwell LLP, independent auditors. The goal of the independent audit was to provide reasonable assurance that the financial statements of the District as of and for the fiscal year ended September 30, 2013 are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditors concluded that the financial statements present fairly, in all material respects, the respective financial position of each major fund as of September 30, 2013, and the respective changes in financial position and respective cash flows, thereof for the year then ended in conformity with GAAP. The independent auditor’s report is presented as the first component of the financial section of this report. GAAP require that management provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (“MD&A”). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The District’s MD&A can be found immediately following the report of the independent auditors.

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Profile of the District The District, a conservation and reclamation district and political subdivision of the state of Texas created in 1951, provides treated water, wastewater, and solid waste service to over 1.6 million citizens living in north Texas. The District currently serves a 2,200 square-mile service area located in nine counties adjacent to the north and east boundaries of Dallas, Texas, and comprises all of the territory of its 13 member cities (Allen, Farmersville, Forney, Frisco, Garland, McKinney, Mesquite, Plano, Princeton, Richardson, Rockwall, Royse City and Wylie). The District is governed by a 25-member Board of Directors. Each member city having a population of 5,000 or more is represented by two Directors and each member city having a population of less than 5,000 (Farmersville) is represented by one Director. Directors are appointed by the governing bodies of the respective member cities for two-year terms. The annual budget serves as the basis for the District’s financial planning and control. Budgetary controls are maintained to ensure the proper management of resources and are required pursuant to contracts for service. Although there are no legal requirements to include comparative budget-to-actual expense statements in this report, such information is provided to the Board of Directors on a monthly basis throughout the year. Charges for services are based on budgeted operating expenses, including debt service requirements and capital expenditures but excluding depreciation and amortization. In the Wastewater, Sewer, Solid Waste and Interceptor Systems, charges for services are adjusted accordingly at the end of each year to a break-even basis. These year-end adjustments are recorded as amounts due to or due from the cities. Factors Affecting Financial Condition The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the District operates. Local Economy. The District’s cities continue to experience economic activity and residential growth. In the absence of outward migration of population and/or industry, the demands for basic services of water, wastewater and solid waste are not significantly affected by changes in the economy. The diversity and size of the District’s service area tends to moderate changes in any particular area and future growth is anticipated that will require the development of additional raw water supplies and capital expenditures for system improvements in all areas of service. Long-term financial planning. The District maintains 20-Year Water Rate Projections for the Water System and 10-Year Cost Projections for the Wastewater, Interceptor and Solid Waste Systems that are updated annually. The objective of these projections is to provide sufficient resources to fund needed capital projects, cover operations and maintenance expenses, and manage debt incurred from bond sales. The January 2013 Water System rate projection includes funding for $2.5 billion of capital projects to be developed over the next twenty year period. To fund these projects the projection assumes that the District will issue $1.4 billion of revenue bonds between 2014 and 2020 for several projects including the Lower Bois D’Arc Creek Reservoir Project. Also, between 2028 and 2032, it is assumed that the District will issue $750 million of bonds for additional system improvements including funds for the development of a Sulphur River Basin Water Supply Project. The January 2013 water rate projections indicate that at least a $1.30 per 1,000 gallons rate adjustment may be required to fund future expenditures over the next ten year period. Should projected expenditures increase or decrease significantly or should the development of expected projects be accelerated or rescheduled, the water rate will be adjusted accordingly.

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The November 2012 Wastewater System cost projection reflects several major improvement projects including the Rowlett Creek Wastewater Treatment Plant Advance Treatment and Peak Flow Management Project for 2015 and the expansion of the Wilson Creek Wastewater Treatment Plant from 56 mgd to 64 mgd by 2017. These projects will require the issuance of $175 million of revenue bonds over the next five years. Awards and Acknowledgements The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the North Texas Municipal Water District for its CAFR for the fiscal year ended September 30, 2012. This was the twenty third consecutive year that the District has received this prestigious award. In order to be awarded a Certificate of Achievement, the District published an easily readable and efficiently organized CAFR. This report satisfied both GAAP and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that the current CAFR continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the accounting and finance departments. We would like to express our appreciation to all members of the organization who assisted and contributed to the preparation of this report. In particular, our appreciation is extended to Teresa Wigington, Accounting Manager, and Tammy Turner, Financial Reporting Accountant, who worked many extra hours and exhibited extraordinary effort in ensuring the accuracy and timeliness of this report. Our appreciation is also extended to the President and members of the Board of Directors for providing their continued support to maintain the highest standards of professionalism in the management of the District’s finances. Respectfully Submitted,

James M. Parks, P.E Executive Director/General Manager

Judd R. Sanderson, CPA Director of Finance

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The North Texas Municipal Water District (NTMWD) The North Texas Municipal Water District (NTMWD) is a conservation and reclamation district and political subdivision of the State of Texas, created and functioning under Article XVI, Section 59, of the Texas Constitution, pursuant to Chapter 62, Acts of the 1951, 52nd Legislature of Texas, Regular Session, as amended. The NTMWD was created for the purpose of providing a source of water supply for municipal, domestic and industrial use, and for the treatment, processing and transportation of such water to its 13 Member Cities and other customers located in north central Texas. The essential services of regional water treatment and delivery, wastewater treatment, and solid waste disposal services enable residential and commercial growth within the communities served. The NTMWD currently serves a 2,200 square-mile area located in nine counties, including all the territory of its Member Cities, viz.: Allen, Farmersville, Forney, Frisco, Garland, McKinney, Mesquite, Plano, Princeton, Richardson, Rockwall, Royse City and Wylie. The NTMWD Administrative Office is located at 505 East Brown Street, Wylie, Texas. A 25-member Board of Directors governs the NTMWD. Each Member City with a population of 5,000 or more is represented by two Directors, while one Director represents each Member City with a population less than 5,000. Members of the Board of Directors are appointed by governing bodies of the respective Member City for two-year terms.

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North Texas Municipal Water District’s 2060 Additional Supply by Type (Acre-Feet per Year)

Water System

As a regional wholesale provider of potable water, North Texas Municipal Water District (NTMWD) is committed to meeting the current and future water supply needs of its Member Cities and Customers. Water rates are set at cost, no profits are included, and no taxes are collected.

NTMWD currently meets the water needs for over 1.6 million consumers within its service area. Through the state water planning process, it is estimated that the population is expected to more than double by the year 2060 to an estimated 3.5 million served. NTMWD has identified additional raw water supplies to meet the future water demands for the next 50 years. These identified water management strategies are included in the 2012 State Water Plan. NTMWD estimates that the equivalent of the Lavon Lake water supply will need to be developed every decade for the next 5 years to meet the future water demands. The water supply may be from a diversity of sources including conservation and reuse, connecting to existing supplies or new reservoirs. The least expensive water supply is the supply gained from conservation and efficient use of the current available water supply which comprises 22% of the future water supply planned for 2060.

NTMWD utilizes surface water supplies from Lavon Lake, Lake Texoma, Jim Chapman Lake, Lake Tawakoni, Bonham Lake and the East Fork Raw Water Supply Project, commonly known as the wetland project. In May 2013, NTMWD began purchasing raw water supplies, up to 60 million gallons per day, from Dallas Water Utilities. In response to the ongoing drought and the loss of 28% of NTMWD’s total water supplies from Lake Texoma due to the presence of an invasive species, zebra mussel, NTMWD continued to reinforce the water resources management strategies within its Drought Contingency and Water Emergency Response Plan to facilitate water use reductions. Increasing the awareness of conservation as a water supply is vital so that consumers become more knowledgeable regarding their water source and supplies.

Since 2006, NTMWD has committed in excess of $11 million to implement Water IQ, the statewide public awareness and water conservation program, to facilitate and increase water efficient behaviors. The 2013 Water IQ campaign elevated the water supply issues facing the north Texas region. Through the continued success of the Water IQ program combined with the Member City and Customer conservation strategies, water consumption continues to be reduced by an estimated 200 million gallons per day during peak summer months or an annualized 12-15%.

During the 2012-2013 Water Year (August 2012 – July 2013), NTMWD treated and delivered 93.3 billion gallons of water, a decrease in delivery of 4% as compared to 96.8 billion gallons delivered

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during the 2011-2012 Water Year, with Member Cities utilizing 84% of the total supply delivered and the remaining 16% being utilized by the NTMWD Customers.

During the 2012-2013 Operations Year (October 2012 - September 2013), Water System construction contracts totaled over $576 million. Major projects included the Lake Texoma Outfall to Wylie Water Treatment Plant (WTP) Raw Water Pipeline; Water Treatment Plants (WTPs) I, II, III, and IV Ozonation; Allen/Plano/Frisco/McKinney Pipeline Project B.

The construction of the Lake Texoma Outfall to Wylie WTP Raw Water Pipeline will allow NTMWD to transport water from Lake Texoma by way of pipeline directly to the Wylie WTP for treatment. This pipeline will restore the Texoma supply while minimizing the spread of zebra mussels. The enhancement to the water treatment process at the Wylie WTP includes ozonation. Once the ozonation project is completed in 2014, NTMWD will operate the largest ozone water treatment plant in the United States. The Lake Tawakoni WTP provides additional treatment capacity to the eastern service area of the NTMWD.

Construction projects at the Wylie WTP included: security enhancements; residuals removal; WTP I conversion to biologically active filtration (BAF) and improvements to existing drains; WTPs I and II sludge line improvements; supervisory control and data acquisition system upgrades and operations; electrical improvements to WTP II Chemical Building; WTP III filter and underdrain improvements and conversion to BAF; WTP IV conversion to BAF; electrical improvements at Raw Water Pump Station No. 2; High Service Pump Station 2-2 and 2-3 HVAC for ezService Pump Station 3-1 to 350 MGD.

Pump Station projects included: modifications to the Lake Texoma Pump Station; improvements for the Lake Tawakoni Intermediate Pump Station Treated Water Pump No. 6; expansion of the Frisco/McKinney Pump Station to 130 MGD; expansion of the Lake Jim Chapman Pump Station; installation of a second 50 MGD pump and improvements at the Apollo Pump Station; piping modifications to the Haley Pump Station; and improvements to the Diversion Pump Station.

Additional construction projects included: waterline relocations for both the 24-inch and 20-inch pipelines along SH 78 from Kreymer Lane in Wylie to FM 6 in Lavon; FM 1378 20-inch and 60-inch waterline relocations; U.S. Highway 380 14-inch waterline relocation; Wylie-McKinney 20-inch waterline relocation at Stinson Road; 12-inch replacement line for the Princeton No. 1 and McKinney-Princeton-Farmersville pipelines crossing U.S. Highway 380; Wylie-Rockwall-Farmersville 36-inch pipeline

The Lake Texoma Outfall to Wylie WTP Raw Water Pipeline

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The Wilson Creek Wastewater Treatment Plant

relocation along East Brown Street; 14-inch and 60-inch waterline relocation along Brown Street from Ballard to FM 1378; the Bonham WTP sludge lagoon improvements; the Lake Tawakoni WTP chlorine dioxide system; the Lake Tawakoni WTP CR 330 and off-site drainage improvements; and the South Delivery Point improvements.

Wastewater System

The NTMWD provides wastewater treatment services to protect the health of our communities and the environment. The water quality standards for wastewater discharges are established by the federal and state regulators to protect the environment and the receiving waterways. The treated wastewater, known as effluent, is released into local waterways where it is used again to supply drinking water, irrigate golf courses, and sustain aquatic life.

NTMWD owns and operates four regional treatment facilities that provide secondary and/or tertiary level wastewater treatment services. In addition to the regional facilities, NTMWD operates an additional thirteen smaller treatment plants that are included in NTMWD’s Sewer System.

NTMWD’s Regional Wastewater System and Sewer System treated over 32 billion gallons of wastewater during the 2012-2013 Operations Year (October 2012 - September 2013). Of the total wastewater treated, 81% received treatment at one of the four regional wastewater treatment plants, while the remaining 19% received treatment through NTMWD’s Sewer System.

Construction contracts within the Wastewater System totaled over $171 million. The largest expenditures were incurred for the Wilson Creek RWWTP expansion to 56 MGD and advanced treatment improvements.

Additional projects at wastewater plants included improvements to the Floyd Branch RWWTP ultraviolet disinfection and odor control facilities; the Wilson Creek gravity interceptor, the Wilson Creek RWWTP Phase I project; the South Mesquite Creek RWWTP road, electrical system and the Solids Building odor control system; and various Rowlett Creek RWWTP improvements.

Additional expansions, improvements, or rehabilitations to several force mains and lift stations included: the Indian Creek/Preston Road Subsystem force main, Phase III; Upper

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The 121 Regional Disposal Facility

White Rock Creek Lift Station and parallel force main; the Upper Cottonwood Creek emergency generator; Cottonwood Creek outfall sewer improvements; Forney Mustang Creek force main lines B and C; Forney Mustang Creek Interceptor System pressure main, Line D/parallel interceptor/and Lift Station; and the Forney force main parallel line, Line E.

Solid Waste System

NTMWD provides Solid Waste disposal services for five Solid Waste Member Cities and the residents of Collin County. The NTMWD Solid Waste Member Cities are the Cities of Allen, Frisco, McKinney, Plano, and Richardson.

NTMWD owns and operates the 121 Regional Disposal Facility (121 RDF). The 121 RDF is anticipated to meet the solid waste needs of the area served for at least 35 years. The life of the 121 RDF can be extended with increased recycling efforts and waste reduction practices. The 121 RDF is a component of the North Central Texas Council of Governments Solid Waste Master Plan. In addition to the 121 RDF, NTMWD operates three Transfer Stations (TS), including the Custer Road TS, Lookout Drive TS, and Parkway TS that all serve as collection sites for the commercial and household municipal waste collected within the Solid Waste Member Cities. At each of the transfer stations, the municipal waste is loaded into transfer trucks for transport by NTMWD vehicles to the 121 RDF for safe and proper disposal.

NTMWD provides Citizen Convenience Centers that are designed so residents residing in the Solid Waste Member Cities (Allen, Frisco, McKinney, Plano, and Richardson) can transport and dispose of undesirable household waste with passenger vehicles. No commercial waste is accepted at the Citizen Convenience Centers. The Citizen Convenience Centers are located at each of the three transfer stations and at the 121 RDF. To further protect the environment, NTMWD also provides a collection site for used motor oil and used oil filters at the Citizen Convenience Centers.

To promote waste minimization and to prevent illegal disposal of solid waste materials, Collin County has contracted with the NTMWD to conduct once-a-month clean-up days for Collin County residents. On designated clean-up days, Collin County residents can dispose of their municipal waste at the 121 RDF at no charge. In addition to offering the opportunity for disposal of eligible waste, the clean-up days offer recycling services for plastics, paper, aluminum, glass, and tires.

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During the 2012-2013 Operations Year (October 2012 - September 2013), NTMWD safely disposed of over 786,000 tons of commercial and municipal waste. The NTMWD Solid Waste Member Cities accounted for 72% of the tonnage disposed; outside customers, including private haulers, contributed the remaining 28%.

Construction contracts in the Solid Waste System totaled over $10 million. The Solid Waste construction projects included: the Custer Road Transfer Station Expansion; drainage structure closure activities at the McKinney Landfill; construction of Sectors 1 and 2 interim drainage improvements at the 121 RDF; and the construction of the Sector 3C liner at the 121 RDF.

FINANCIAL SECTION

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INDEPENDENT AUDITOR’S REPORT Members of the Board of Directors North Texas Municipal Water District District of Wylie, Texas Report on the Financial Statements We have audited the accompanying financial statements of each major fund of North Texas Municipal Water District (the District), as of and for the year ended September 30, 2013, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

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Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of each major fund of the North Texas Municipal Water District as of September 30, 2013, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As described in Note 14 to the financial statements, in 2013, the District adopted new accounting guidance, GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and the schedules of funding of progress for the District’s Retirement Plan and Other Postemployment Benefits plan on pages 4-9 and 45-46 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the North Texas Municipal Water District’s basic financial statements. The introductory section and statistical section, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The Sewer System Supplemental Schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including

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comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Sewer System Supplemental Schedules are fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 27, 2014, on our consideration of the North Texas Municipal Water District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering North Texas Municipal Water District’s internal control over financial reporting and compliance.

WEAVER AND TIDWELL, L.L.P. Dallas, Texas January 27, 2014

MANAGEMENT’S DISCUSSION AND ANALYSIS

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Management’s Discussion and Analysis (Unaudited)

As management of the North Texas Municipal Water District, we offer readers of the District’s financial statements this narrative overview and analysis of the financial activities of the District as of and for the fiscal year ended September 30, 2013. Financial Highlights • Total assets at the end of the year were approximately $2.8 billion and exceeded liabilities by

approximately $965.5 million. • The District’s total net position increased by approximately $46 million, or 5 percent. • During the year the District’s operating revenues increased by approximately $28 million, or 10

percent, and operating expenses increased by approximately $13 million, or 8 percent. • Construction of the Wylie Water Treatment Plant Ozonation Project, the Lake Texoma to Wylie Water

Treatment Plant Raw Water Pipeline Project, and the Mustang Creek Interceptor Improvements Project led the way in capital expenditures totaling $285 million.

• The District issued $34 million in revenue bonds for various projects and to refinance outstanding debt to take advantage of favorable interest rates.

Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the District’s basic financial statements which are comprised of fund financial statements and notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Financial Statements. The financial statements are designed to provide readers with an overview of the District’s finances, in a manner similar to private-sector business. The Statement of Net Position presents information on all of the District’s assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the District is improving or deteriorating. The Statement of Revenues, Expenses and Changes in Net Position presents information showing how the District’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., earned but unused vacation leave). The Statement of Cash Flows presents cash receipts, cash payments, and net changes in cash resulting from operating activities, capital and related financing activities, and investing activities for the year presented. Enterprise Funds. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the District are categorized as enterprise funds. The District reports five major enterprise funds: Water, Regional Wastewater, Sewer, Solid Waste and Interceptor.

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The basic enterprise fund financial statements can be found on pages 10 through 17 of this report. Notes to the Financial Statements. The notes provide additional information that is essential to a full understanding of the data provided in the fund financial statements. The notes to the financial statements can be found starting on page 18 of this report. Other Information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the District’s progress in funding its obligation to provide pension and other postemployment benefits to its employees. Required supplemental information can be found beginning on page 45 of this report. Financial Analysis As noted earlier, net position may serve over time as a useful indicator of the District’s financial position. In the case of the District, assets exceeded liabilities by $965,529,463 at the close of the most recent fiscal year.

North Texas Municipal Water District’s Net Position

Percent2013 2012 Increase Change

ASSETS: Current and other assets 599,935,531$ 848,035,657$ (248,100,126)$ (29.3)% Capital assets—net 2,156,727,306 1,890,251,199 266,476,107 14.1

Total assets 2,756,662,837 2,738,286,856 18,375,981 0.7

LIABILITIES: Current and other liabilities 155,550,339 128,977,033 26,573,306 20.6 Long-term liabilities outstanding 1,635,583,035 1,689,562,086 (53,979,051) (3.2)

Total liabilities 1,791,133,374 1,818,539,119 (27,405,745) (1.5)

NET POSITION: Net investment in capital assets 747,192,747 687,317,597 59,875,150 8.7 Restricted 134,554,194 129,622,913 4,931,281 3.8 Unrestricted 83,782,522 102,807,227 (19,024,705) (18.5)

Total net position 965,529,463$ 919,747,737$ 45,781,726$ 5.0 %

As of September 30

The largest portion of the District’s net position (77 percent) reflects its investment in capital assets (e.g., land, reservoir facilities, water treatment facilities and wastewater disposal facilities) less any related debt used to acquire those assets that is still outstanding. The District uses these capital assets to provide services to its member and customer cities; consequently, these assets are not available for future spending. Although the District’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other resources, since the capital assets themselves are not intended to be used to liquidate these liabilities. An additional portion of the District’s net position (14 percent) represents resources that are subject to external restrictions on how they may be used. The District’s restricted net position consist primarily of the reserve funds required by bond resolutions. The remaining balance of the District’s net position represents unrestricted net position (9 percent) and may be used to meet the District’s ongoing obligations. The increase in net position of $45,781,726 or 5.0% during the current fiscal year indicates an improved financial position.

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While the Statement of Net Position provides the components of the District’s assets, liabilities and net position at year-end, the Statement of Revenues, Expenses and Changes in Net Position provides information on the source of the change during the year. The primary source of the increase in net position of $45,781,726 were operating income of $108,774,279 offset by interest expense of $56,060,066.

North Texas Municipal Water District’s Changes in Net Position

Increase Percent2013 2012 (Decrease) Change

Operating Revenues: Water sales 184,641,152$ 161,588,387$ 23,052,765$ 14.3 % Wastewater service fees 83,357,407 78,762,862 4,594,545 5.8 Solid waste service fees 24,553,966 24,257,060 296,906 1.2 Other operating revenues 1,765,810 1,874,036 (108,226) (5.8)

Total Operating Revenues 294,318,335 266,482,345 27,835,990 10.4

Operating Expenses: Personnel 48,000,657 46,772,079 1,228,578 2.6 Operating Supplies: Chemicals 23,398,387 23,490,278 (91,891) (0.4) Other supplies 10,156,308 10,023,917 132,391 1.3 Operating Services: Electric power 28,667,812 24,705,243 3,962,569 16.0 Wholesale water purchases 6,180,945 2,519,799 3,661,146 145.3 Other services 23,747,509 22,285,358 1,462,151 6.6 Depreciation and amortization 45,392,438 42,808,209 2,584,229 6.0

Total Operating Expenses 185,544,056 172,604,883 12,939,173 7.5

Operating Income 108,774,279 93,877,462 14,896,817 15.9

Investment Income 1,261,442 1,864,517 (603,075) (32.3) Miscellaneous Revenue (Expense) 18,233 3,042,601 (3,024,368) (99.4) Federal Program Revenues 4,722,253 4,330,095 392,158 9.1 Gain on Sale of Capital Assets 180,440 164,661 15,779 100.0 Interest Expense (56,060,066) (49,572,489) (6,487,577) 13.1

Net Nonoperating Expense (49,877,698) (40,170,615) (9,707,083) 24.2

Change in Net Position 58,896,581 53,706,847 5,189,734 9.7

Net Position, Beginning of Year (As Previously Stated) 919,747,737 866,040,890 53,706,847 6.2

Change in Reporting (13,114,855) - (13,114,855)

Net Position, Beginning of Year (As Restated) 906,632,882 866,040,890 40,591,992 4.7

Net Position, End of Year 965,529,463$ 919,747,737$ 45,781,726$ 5.0%

Year Ended September 30

7

Total operating revenues for the District for the years ended September 30, 2013 and 2012 were $294,318,335 and $266,482,345, respectively. The $27,835,990 increase in total operating revenues was primarily due to a 14% increase in the water rate and a 6% increase in wastewater charges to fund capital projects and operating costs. Total operating expenses for the District for the years ended September 30, 2013 and 2012 were $185,544,056 and $172,604,883, respectively. The $12,939,173 increase in total operating expenses was primarily due to increased staffing levels in the Water System, additional raw water purchases and increased power costs. Net non-operating expense increased by $9,707,083 primarily due to additional interest expense and funding of postemployment benefits. The change in reporting in the amount of $13,114,855 reflects the expense of prior period bond issue costs that were previously amortized over the life of the related debt. Capital Asset and Debt Administration Capital Assets The District’s investment in capital assets as of September 30, 2013, amounted to $2,156,727,306 (net of accumulated depreciation). This investment in capital assets includes land and land improvements, reservoir facilities, water treatment and transmission facilities, wastewater treatment and disposal facilities, buildings and other equipment and water rights. The total increase in the District’s investment in capital assets for the current year was 14%. Major capital asset events during the current fiscal year included the following: • Acquisition of land for the development of the Lower Bois D’Arc Creek Reservoir Project continued;

construction in progress at the end of the fiscal year totaled $101,568,940. • The South Mesquite Wastewater Treatment Plant 8 MGD Expansion Project was placed in service;

construction costs totaled $47,293,672. • Construction of the Wylie Water Treatment Plant Ozonation Project continued; construction in

progress at the end of the fiscal year totaled $119,262,524. • The Wilson Creek Wastewater Treatment Plant 8 MGD Expansion Project was placed in service;

construction costs totaled $39,952,861. • Construction of the Lake Texoma to Wylie Water Treatment Plant Raw Water Pipeline Project

continued; construction in progress at the end of the fiscal year totaled $271,256,054.

North Texas Municipal Water District’s Capital Assets (net of accumulated depreciation)


Land 66,043,901$ 21,926,726$ 44,117,175$ 201.2 % Easements 45,804,109 40,699,536 5,104,573 12.5 % Land improvements 3,848,502 2,762,193 1,086,309 39.3 Water treatment, storage and transmission facilities 669,268,151 635,963,417 33,304,734 5.2 Wastewater treatment and disposal facilities 454,820,323 348,824,429 105,995,894 30.4 Solid waste transfer and disposal facilities 33,921,530 30,286,071 3,635,459 12.0 Reservoir facilities and water rights 300,101,491 307,430,438 (7,328,947) (2.4) Buildings 22,951,073 23,999,294 (1,048,221) (4.4) Automobiles and trucks 8,629,686 6,032,711 2,596,975 43.0 Office furniture and fixtures 261,450 306,082 (44,632) (14.6) Other equipment 7,847,478 8,516,952 (669,474) (7.9) Construction in progress 543,229,612 463,503,350 79,726,262 17.2

Total 2,156,727,306$ 1,890,251,199$ 266,476,107$ 14.1 %

As of September 30

Additional information on the District’s capital assets can be found in Note 4 of this report.

8

Debt Administration At the end of the current fiscal year, the District had total outstanding debt of $1,615,909,154. Of this amount 70% is reflected in the Water System and 10% is reflected in the Regional Wastewater System.

North Texas Municipal Water District’s Outstanding Debt


U.S. government contracts payable 35,139,154$ 36,417,993$ (1,278,839)$ (3.5)% Revenue bonds 1,580,770,000 1,617,810,000 (37,040,000) (2.3)

Total 1,615,909,154$ 1,654,227,993$ (38,318,839)$ (2.3)%

As of September 30

During the current fiscal year, the District refinanced a portion of the existing debt in order to take advantage of favorable interest rates. The result is expected to decrease future debt service payments by $1,147,278 in the Sewer System. The District’s revenue bonds have been rated as follows:

Moody’s S&P

Water System Aa2 AAAWastewater System Aa2 AAASolid Waste System Aa3 AAInterceptor System Aa1 AAA

Additional information on the District’s long-term debt can be found in Note 7 of this report. Economic Factors and Next Year’s Budgets and Rates The Annual Budget outlines the District’s plans to continue to provide high quality, cost-effective service to its member and customer cities. As a result of the continued growth in the District’s service area, the need for the development of raw water resources and capital expenditures to fund system expansions and improvements continues to increase. Such growth has been considered in developing the District’s budget for the 2014 fiscal year. The 2014 Water System budget provides funding for additional raw water purchases from the Dallas Water Utilities, start up costs for the Wylie Water Treatment Plant Ozonation Project, pumping costs for the transfer of the reconnected Texoma Water Supply and debt service for $76 million of bonds to be issued for system improvements. In order to fund these debt service requirements and the additional operations and maintenance costs, the budget requires a $.17 per 1,000 gallons rate adjustment. Additional rate adjustments can be expected in the future as the District continues to develop additional raw water supplies and construct treatment and transmission system improvements to meet system demands.

9

Requests for Information This financial report is designed to provide a general overview of the District’s finances and to demonstrate the District’s accountability for the funds it receives. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the office of the Director of Finance, P.O. Box 2408, Wylie, Texas 75098.

BASIC FINANCIAL STATEMENTS

NORTH TEXAS MUNICIPAL WATER DISTRICT STATEMENT OF NET POSITION SEPTEMBER 30, 2013

The notes to the basic financial statements are an integral part of this statement.

10

RegionalWater Wastewater

ASSETS System System

CURRENT ASSETS: Unrestricted Assets: Cash and cash equivalents 45,334,774$ 3,808,444$ Investments 45,374,680 - Accounts receivable 15,963,523 588,098 Due from other funds 142,076 176,315 Prepaid expenses 3,044,203 242,231

Total unrestricted assets 109,859,256 4,815,088

Restricted Assets: Cash and cash equivalents 90,771,526 27,903,647 Investments 191,364,232 28,412,021 Interest and accounts receivable 262,682 94,494 Due from other funds 3,536,603 -

Total restricted assets 285,935,043 56,410,162

TOTAL CURRENT ASSETS 395,794,299 61,225,250

DEFERRED OUTFLOWS OF RESOURCES: Deferred customer billings (unrestricted assets) - 202,593 Deferred customer billings (restricted assets) - -

Total deferred outflows of resources from current assets - 202,593

LONG-TERM ASSETS: Nondepreciable: Land 53,118,136 1,739,328 Easements 32,758,486 - Construction-in-progress 519,455,101 8,564,494

Total nondepreciable assets 605,331,723 10,303,822

Depreciable: Land improvements 3,712,838 1,321,303 Water treatment, storage, and transmission facilities 865,207,070 - Wastewater treatment and disposal facilities - 258,936,446 Solid waste transfer and disposal facilities - - Reservoir facilities and water rights 366,121,044 - Buildings 12,875,435 75,911 Automobiles and trucks 9,000,794 1,644,141 Office furniture and fixtures 407,014 61,847 Other equipment 4,407,255 6,656,827

Total depreciable assets 1,261,731,450 268,696,475

Less accumulated depreciation (300,171,884) (77,511,534) Net capital assets 1,566,891,289 201,488,763

DEFERRED OUTFLOWS OF RESOURCES: Long term deferred customer billings, less current portion - 544,139 Deferred loss on refunding 4,577,975 1,259,400

Total deferred outflows of resources from long-term assets 4,577,975 1,803,539

Net pension assets 689,095 200,573

TOTAL LONG-TERM ASSETS 1,572,158,359 203,492,875

TOTAL ASSETS 1,967,952,658$ 264,920,718$

11

Solid TotalSewer Waste Interceptor Enterprise

System System System Funds

1,526,418$ 2,939,655$ 909,736$ 54,519,027$ - - - 45,374,680

335,081 191,161 550,999 17,628,862 201,287 163,848 5,546 689,072 247,604 165,814 104,204 3,804,056

2,310,390 3,460,478 1,570,485 122,015,697

14,728,850 5,381,717 17,938,795 156,724,535 12,251,072 9,511,895 58,000,396 299,539,616

13,206 15,186 254,068 639,636 - - - 3,536,603

26,993,128 14,908,798 76,193,259 460,440,390

29,303,518 18,369,276 77,763,744 582,456,087

5,363 22,633 45,483 276,072 - 5,122,063 - 5,122,063

5,363 5,144,696 45,483 5,398,135

469,516 10,716,921 - 66,043,901 3,156,163 - 9,889,460 45,804,109 7,938,863 867,423 6,403,731 543,229,612

11,564,542 11,584,344 16,293,191 655,077,622

417,138 2,277,548 - 7,728,827 31,540,496 - - 896,747,566

151,627,942 - 185,905,399 596,469,787 - 64,837,622 - 64,837,622 - - - 366,121,044 - 18,596,362 - 31,547,708

191,772 5,686,990 180,397 16,704,094 - - - 468,861

1,683,671 14,563,153 2,666,438 29,977,344

185,461,019 105,961,675 188,752,234 2,010,602,853

(40,007,857) (52,027,877) (39,234,017) (508,953,169)

157,017,704 65,518,142 165,811,408 2,156,727,306

289,183 861,620 22,862 1,717,804 1,344,711 1,290,135 733,535 9,205,756

1,633,894 2,151,755 756,397 10,923,560

77,301 176,441 14,339 1,157,749

158,728,899 67,846,338 166,582,144 2,168,808,615

188,037,780$ 91,360,310$ 244,391,371$ 2,756,662,837$

(Continued)

NORTH TEXAS MUNICIPAL WATER DISTRICT STATEMENT OF NET POSITION SEPTEMBER 30, 2013


12


LIABILITIES System System

CURRENT LIABILITIES: Payable from unrestricted assets: Accounts payable and accrued liabilities 17,734,397$ 2,352,588$ Due to other funds 3,731,959 163,375 Customers’ advance payments 25,162 2,702,330 Accrued interest payable on U.S. government contracts 924,429 - Current portion of U.S. government contracts 1,320,151 -

Total payable from unrestricted assets 23,736,098 5,218,293

Payable from restricted assets: Accounts payable and accrued liabilities 30,747,903 1,309,175 Due to other funds 10,174 10,938 Accrued landfill closure and post-closure care cost - - Accrued interest payable on revenue bonds 4,420,501 2,114,914 Current portion of revenue bonds 34,185,000 9,045,000

Total payable from restricted assets 69,363,578 12,480,027

TOTAL CURRENT LIABILITIES 93,099,676 17,698,320

LONG-TERM LIABILITIES: Accrued landfill closure costs - - Accrued vacation—less current portion 777,914 186,071 Accrued sick—less current portion 1,238,540 233,416 Accrued OPEB liability 428,265 124,652 Long-term debt—less current portion 1,164,413,425 148,192,209

TOTAL LONG-TERM LIABILITIES 1,166,858,144 148,736,348

TOTAL LIABILITIES 1,259,957,820 166,434,668

NET POSITION: Net investment in capital assets 543,085,734 82,469,291 Restricted for debt service 81,413,161 16,104,777 Unrestricted 83,495,943 (88,018)

TOTAL NET POSITION 707,994,838$ 98,486,050$

13



947,202$ 1,820,715$ 676,492$ 23,531,394$ 268,508 4,936 20,295 4,189,073 853,019 1,835,909 633,319 6,049,739

- - - 924,429 - - - 1,320,151

2,068,729 3,661,560 1,330,106 36,014,786

4,860,110 2,119,345 3,211,865 42,248,398 5,034 - 10,456 36,602

- 4,331,130 - 4,331,130 1,938,830 140,724 2,054,454 10,669,423 8,830,000 2,680,000 7,510,000 62,250,000

15,633,974 9,271,199 12,786,775 119,535,553

17,702,703 12,932,759 14,116,881 155,550,339

- 790,933 - 790,933 91,331 178,947 13,875 1,248,138

149,808 573,018 76 2,194,858 48,043 109,655 8,911 719,526

132,214,255 38,668,192 147,141,499 1,630,629,580

132,503,437 40,320,745 147,164,361 1,635,583,035

150,206,140 53,253,504 161,281,242 1,791,133,374

19,448,973 33,690,115 68,498,634 747,192,747 18,058,340 4,423,268 14,554,648 134,554,194

324,327 (6,577) 56,847 83,782,522

37,831,640$ 38,106,806$ 83,110,129$ 965,529,463$

(Concluded)

NORTH TEXAS MUNICIPAL WATER DISTRICT STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION YEAR ENDED SEPTEMBER 30, 2013


14


System System

OPERATING REVENUES: Water sales 184,641,152$ -$ Wastewater service fees - 40,635,007 Solid waste service fees - - Other operating revenues 232,969 125,907

Total operating revenues 184,874,121 40,760,914

OPERATING EXPENSES: Personnel 26,125,386 8,846,037 Operating Supplies: Chemicals 16,396,401 4,143,535 Other supplies 3,295,466 1,960,891 Operating Services: Electric power 20,698,672 4,388,815 Wholesale water purchases 6,180,945 - Other services 5,231,011 7,394,108 Depreciation and amortization 28,446,785 5,032,114

Total operating expenses 106,374,666 31,765,500

OPERATING INCOME 78,499,455 8,995,414

NONOPERATING REVENUES (EXPENSES): Investment income 894,079 117,292 Miscellaneous revenue (expense) 18,233 - Federal program revenues 4,141,736 186,430 Gain on sale of capital assets 24,098 27,943 Interest expense (39,401,412) (4,321,604)

Total nonoperating revenues (expenses) (34,323,266) (3,989,939)

CHANGE IN NET POSITION 44,176,189 5,005,475

NET POSITION AT OCTOBER 1, 2012 (As Previously Stated) 670,997,970 94,778,265

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE (7,179,321) (1,297,690)

NET POSITION AT OCTOBER 1, 2012 (As Restated) 663,818,649 93,480,575

NET POSITION AT SEPTEMBER 30, 2013 707,994,838$ 98,486,050$

15

Solid Total

Sewer Waste Interceptor EnterpriseSystem System System Funds

-$ -$ -$ 184,641,152$ 24,567,547 - 18,154,853 83,357,407

- 24,553,966 - 24,553,966 599,329 791,883 15,722 1,765,810

25,166,876 25,345,849 18,170,575 294,318,335

3,290,247 9,037,093 701,894 48,000,657

1,393,784 38,593 1,426,074 23,398,387 570,958 4,047,346 281,647 10,156,308

1,781,858 165,070 1,633,397 28,667,812 - - - 6,180,945

3,978,984 5,548,556 1,594,850 23,747,509 5,233,950 2,723,994 3,955,595 45,392,438

16,249,781 21,560,652 9,593,457 185,544,056

8,917,095 3,785,197 8,577,118 108,774,279

69,533 27,857 152,681 1,261,442 - - - 18,233 - 394,087 - 4,722,253

2,412 125,987 - 180,440 (5,677,110) (1,701,228) (4,958,712) (56,060,066)

(5,605,165) (1,153,297) (4,806,031) (49,877,698)

3,311,930 2,631,900 3,771,087 58,896,581

36,804,443 36,087,171 81,079,888 919,747,737

(2,284,733) (612,265) (1,740,846) (13,114,855)

34,519,710 35,474,906 79,339,042 906,632,882

37,831,640$ 38,106,806$ 83,110,129$ 965,529,463$

NORTH TEXAS MUNICIPAL WATER DISTRICT STATEMENT OF CASH FLOWS YEAR ENDED SEPTEMBER 30, 2013


16


System SystemCASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers 188,374,577$ 40,404,730$ Cash received from other funds 6,509,782 343,388 Cash received from (paid to) others 1,460,006 24,382 Cash paid to suppliers for goods and services (69,349,093) (16,425,739) Cash paid for employee services (19,654,301) (5,448,298) Cash paid to other funds - (4,658,958)

Net cash provided by operating activities 107,340,971 14,239,505

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from the issuance of bonds - 24,655,267 Cash paid for capital assets (261,229,847) (11,184,404) Interest paid on long-term debt (57,874,923) (6,112,890) Interest paid on U.S. government contracts (1,179,762) - Principal payments on long-term debt (34,965,000) (7,895,000) Payments on U.S. government contracts (1,278,838) - Payments for bond issue costs (3,500) (217,894) Federal Program Revenues 4,141,736 186,430

Net cash used for capital and related financing activities (352,390,134) (568,491)

CASH FLOWS FROM INVESTING ACTIVITIES: Sale and maturity of investments 295,684,030 15,538,098 Purchases of investments (217,902,330) (28,385,424) Interest received 1,129,523 81,049

Net cash provided by (used for) investing activities 78,911,223 (12,766,277) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (166,137,940) 904,737

CASH AND CASH EQUIVALENTS—Beginning of year 302,244,240 30,807,354

CASH AND CASH EQUIVALENTS—End of year 136,106,300$ 31,712,091$

RECONCILIATION OF TOTAL CASH TO THE STATEMENT OF NET POSITIONUnrestricted cash and cash equivalents 45,334,774$ 3,808,444$ Restricted cash and cash equivalents 90,771,526 27,903,647

136,106,300$ 31,712,091$

RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating income 78,499,455$ 8,995,414$

Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 28,446,785 5,032,114 Change in current assets and liabilities: Accounts receivable and deferred billings (2,207,974) 53,647 Prepaid expenses 591,117 75,088 Net pension assets (282,886) (82,228) Due to/from other funds 123,600 (105,774) Accounts payable, accrued liabilities, and developers’ deposits 5,040,893 616,858 Accrued vacation and Accrued sick (292,000) (57,843) Accrued OPEB (2,507,763) 131,570 Landfill liability - - Customers’ advance payments (70,256) (419,341)

Total adjustments 28,841,516 5,244,091 NET CASH PROVIDED BY OPERATING ACTIVITIES 107,340,971$ 14,239,505$

NONCASH TRANSACTION DISCLOSURESChange in landfill liability -$ -$ Gain on sale of capital assets 24,098 27,943 Interest capitalized on construction 10,987,899 1,612,002 Amortization of bond-related items (6,108,076) (220,746) Change in fair value of investments (67,640) (28,930) Change in actuarial value of net pension assets 282,886 82,228 Refunding bonds issued - - Refunding proceeds deposited in escrow - -

17



24,513,240$ 24,226,496$ 17,870,084$ 295,389,127$ 168,232 1,665,396 - 8,686,798 20,243 129,033 226 1,633,890

(5,677,163) (11,416,471) (4,498,534) (107,367,000) (2,137,793) (5,780,729) (420,486) (33,441,607) (2,455,239) (1,069,828) (502,768) (8,686,793)

14,431,520 7,753,897 12,448,522 156,214,415

(62,000) - - 24,593,267 (2,474,046) (3,389,560) (6,470,840) (284,748,697) (6,151,603) (1,786,694) (5,949,860) (77,875,970)

- - - (1,179,762) (8,590,000) (2,580,000) (7,610,000) (61,640,000)

- - - (1,278,838) (129,811) - (284,066) (635,271)

- 394,087 - 4,722,253

(17,407,460) (7,362,167) (20,314,766) (398,043,018)

4,887,982 - 27,966,686 344,076,796 (8,689,142) (6,008,663) (47,557,408) (308,542,967)

105,229 68,568 424,761 1,809,130

(3,695,931) (5,940,095) (19,165,961) 37,342,959 (6,671,871) (5,548,365) (27,032,205) (204,485,644)

22,927,139 13,869,737 45,880,736 415,729,206

16,255,268$ 8,321,372$ 18,848,531$ 211,243,562$

1,526,418$ 2,939,655$ 909,736$ 54,519,027$ 14,728,850 5,381,717 17,938,795 156,724,535 16,255,268$ 8,321,372$ 18,848,531$ 211,243,562$

8,917,095$ 3,785,197$ 8,577,118$ 108,774,279$

5,233,950 2,723,994 3,955,595 45,392,438

(248,753) 131,373 (437,289) (2,708,996) 22,949 59,506 (2,913) 745,747

(30,155) (65,452) (6,089) (466,810) 10,174 (70,000) 42,000 -

297,799 116,796 407,583 6,479,929 8,507 (70,224) (8,742) (420,302)

51,973 116,149 9,640 (2,198,431) - 136,203 - 136,203

167,981 890,355 (88,381) 480,358

5,514,425 3,968,700 3,871,404 47,440,136

14,431,520$ 7,753,897$ 12,448,522$ 156,214,415$

-$ 136,203$ -$ 136,203$ 2,412 125,987 - 180,440

102,427 83,273 780,534 13,566,135 (291,501) 5,973 (605,581) (7,219,931) (11,084) 4,541 595 (102,518) 30,155 65,452 6,089 466,810

9,340,000 - - 9,340,000 9,279,086 - - 9,279,086

NORTH TEXAS MUNICIPAL WATER DISTRICT NOTES TO THE FINANCIAL STATEMENTS

18

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reporting Entity

The North Texas Municipal Water District (the District) is a conservation and reclamation district and political subdivision of the State of Texas, created and functioning under Article XVI, Section 59, of the Texas Constitution, pursuant to Chapter 62, Acts of 1951, 52nd Legislature of Texas, Regular Session, as amended (the Act). The District was created for the purpose of providing a source of water supply for municipal, domestic and industrial use and for the treatment, processing and transportation of such water to its 13 member cities (as defined below) and other customers located in North Central Texas. Under the State of Texas Constitution and the Statutes, the District has broad powers to effect flood control and the conservation and use, for all beneficial purposes, of storm and floodwaters and unappropriated flow waters and, as a necessary aid to these purposes, the specific authority to construct, own and operate water supply, treatment, and distribution facilities and sewage gathering, transmission and disposal facilities and to collect, transport, treat, dispose of and control all municipal, domestic, industrial, or communal waste, whether in fluid, solid, or composite state.

The District comprises all of the territory of its member cities: Allen, Farmersville, Forney, Frisco, Garland, McKinney, Mesquite, Plano, Princeton, Richardson, Rockwall, Royse City, and Wylie (the member cities). The District’s Administrative Office is located at 505 Brown Street, Wylie, Texas. The District is governed by a 25-member Board of Directors. Each member city having a population of 5,000 or more is represented by two members on the Board of Directors. A member city with a population of less than 5,000 (Farmersville) is represented by one member on the Board of Directors. Members of the Board of Directors are appointed by the governing bodies of the respective member cities for two-year terms.

Measurement Focus, Basis of Accounting and Financial Presentation

Measurement Focus

The accompanying basic financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash flows. The District’s operating revenues are derived from charges to users, primarily for the sale and treatment of water and wastewater. The District constructs facilities to provide services to others, which are financed in part by the issuance of its revenue bonds. Users, primarily member cities, generally contract to pay amounts equal to the District’s operating and maintenance expenses, debt service requirements and any other obligations payable from the revenues of the District. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

Basis of Presentation

The District presents its financial statements in accordance with GASB Statement 34 guidance for governments engaged in business type activities. Accordingly, the basic financial statements and Required Supplementary Information (RSI) of the District consist of MD&A, Statement of Net Position, Statement of Revenues, Expenses and Changes in Net Position, Statement of Cash Flows, Notes to the Financial Statements, and Trend Information for the Retirement and Other Post-Employment Benefits Plans.


19

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

Basis of Presentation – Continued

The District presents its activities in five major funds: Water System, Regional Wastewater System, Sewer System, Solid Waste System and Interceptor System.

Funds

The Water Fund owns and operates a wholesale water treatment and transmission system consisting of raw water facilities, water treatment works and water transmission facilities and provides treated water to municipalities, water supply corporations, and individual customers. The Regional Wastewater, Sewer, and Interceptor Funds own and operate wastewater treatment and disposal systems consisting of facilities to receive, treat and dispose of wastewater. The Solid Waste Fund owns and operates landfill sites and solid waste transfer stations.

Revenues

Charges for treated water are based upon the current budgeted expenditure requirements (including debt service payments and excluding charges for depreciation and amortization) and amounts designated by the Board of Directors for capital improvements. Charges for wastewater and solid waste disposal are based upon the current budgeted expenditure requirements (including debt service payments and excluding charges for depreciation and amortization) and are adjusted for the difference between budgeted and actual expenditures for the same period. The District derives approximately 71% of its revenues from the Cities of Frisco, Garland, McKinney, Mesquite, Plano, and Richardson. Such revenues derived directly from the respective systems are defined by the District as operating revenues. All other revenues not directly related to the operations of the systems are reported as non-operating revenues. Revenues are shown net of rebates and/or excess billings.

Expenses

Direct charges attributable to the operations of the District’s systems, including depreciation and amortization, are reported as operating expenses. Interest expense and other similar charges not directly related to the systems’ operations are reported as non-operating expenses.

Cash and Cash Equivalents

All highly liquid investments (including restricted assets) with original maturities of three months or less when purchased are considered to be cash equivalents.

Deposits

The District’s collateral agreement requires that all deposits be fully collateralized by government securities or Texas municipal bonds rated A or better that have a market value exceeding the total amount of cash and investments held at all times.

Investments

All of the District’s investments are carried at fair value. Fair values are determined based on quoted market prices. Investments in U.S. government securities are guaranteed or insured by the U.S. government.


20

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Accounts Receivable

Management considers accounts receivable to be fully collectible as of September 30, 2013; accordingly, no allowance for doubtful accounts is deemed necessary. As of September 30, 2013, member cities Allen, Frisco, Garland, McKinney, Mesquite, Plano, and Richardson accounted for approximately 76% of total accounts receivable.

Material and Supplies Inventory

Inventory of supplies and parts is maintained at different warehouses for use in the operation and is recorded as an expense when consumed or placed in service. Inventory is valued based on first-in-first-out methodology.

Capital Assets

All purchased capital assets are stated at historical cost unless they are determined to be impaired based on GASB Statement No. 42, Accounting and Financial Reporting for Impairment of Capital Assets and for Insurance Recoveries. Donated assets are stated at their estimated fair values on the date donated. Repairs and maintenance are recorded as expenses; renewals and betterments are capitalized. According to the District’s capitalization policy, assets capitalized have an original cost of $5,000 or more and two or more years of estimated useful life. Depreciation is calculated on each class of depreciable property using the straight-line method. Estimated useful lives are as follows:

Water treatment, storage and transmission facilities 40 to 75 years Wastewater treatment and disposal facilities 30 to 50 years Solid waste transfer and disposal facilities 40 years Land improvements 20 years Water rights 50 years Reservoir facilities 50 years Buildings 10 to 40 years Automobiles and trucks 5 years Office furniture and fixtures 7 to 10 years Other equipment 5 to 20 years

Capitalized Interest

Interest related to the construction of major projects is capitalized. During fiscal year September 30, 2013, $13,566,135 of interest expense was capitalized.

Compensated Absences

Employees are allowed to accumulate vacation within certain limitations. Payment for accrued vacation (within limits) upon termination is subject to the employee leaving in good standing. Payment for accrued sick leave (within limits) is paid upon retirement. At September 30, 2013, a liability of $2,620,315 for unused vacation and $3,718,572 for unused sick leave has been accrued. The short-term portion is included in “accounts payable and accrued liabilities” in the accompanying statement of net assets.


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NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

Compensated Absences – Continued

A summary of changes in accrued vacation and sick leave for the year ended September 30, 2013 is as follows:

Beginning Ending Amount due

Liability Additions Reductions Liability within one year

Vacation 2,376,982$ 1,965,454$ 1,722,121$ 2,620,315$ 1,372,177$ Sick 3,541,603 569,009 392,040 3,718,572 1,523,714

Net Position

Net position is reported as (1) net investment in capital assets; (2) restricted for debt service and; (3) unrestricted. When both restricted and unrestricted net assets are available for use, it is the District's policy to use restricted net assets first, then unrestricted net assets.

Budgets and Budgetary Accounting

The District is not required under its enabling act to adopt a budget; therefore, comparative statements of actual expenses compared to budget expenses are not included.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the basic financial statements and accompanying notes. Actual results could differ from those estimates.

Subsequent Events

The District has evaluated all events or transaction that occurred after September 30, 2013 up through January 27, 2014, the date the financial statements were available to be issued. During this period there were no subsequent events requiring disclosure.

NOTE 2. RESTRICTED ASSETS

Restricted assets represent amounts reserved for:

- Construction Funds—Construction of facilities, restricted by purpose of the debt issuance.

- Interest and Redemption (Sinking) Funds—Current interest and principal of bonded indebtedness.

- Reserve Funds—Payment of final serial maturity on bonded indebtedness or payment of interest and principal of bonded indebtedness when and to the extent the amount in the interest and redemption (sinking) fund is insufficient.

- Contingency Funds – unexpected or extraordinary expenses for which funds are not otherwise available or for debt service to the extent of interest and redemption (sinking) fund deficiencies as required by bond covenants.

- Reserve for Maintenance – Escrow for future maintenance expenses.


22

NOTE 2. RESTRICTED ASSETS – CONTINUED The cash and cash equivalents, investments, interest and accounts receivable components of each fund represented by restricted assets are as follows:

Cash and Interest andCash Accounts

Fund Equivalents Investments ReceivableWater: Construction Fund 52,772,635$ 123,297,240$ 212,115$ Interest and Redemption Fund 15,911,843 - - Reserve Fund 1,592,145 68,066,992 50,567 Contingency Fund 19,674,492 - - Reserve for Maintenance Fund 820,411 - -

90,771,526 191,364,232 262,682 Regional Wastewater: Construction Fund 19,294,643 18,183,410 87,979 Interest and Redemption Fund 6,957,387 - - Reserve Fund 939,199 10,228,611 6,515 Reserve for Maintenance Fund 712,418 - -

27,903,647 28,412,021 94,494 Sewer: Construction Fund 6,238,998 - - Interest and Redemption Fund 6,037,894 - - Reserve Fund 1,694,998 12,251,072 13,206 Reserve for Maintenance Fund 709,492 - - Reserve for Equipment Replacement 47,468 - -

14,728,850 12,251,072 13,206 Solid Waste: Construction Fund 2,248,955 6,002,200 4,569 Interest and Redemption Fund 795,947 - - Reserve Fund 243,164 3,509,695 10,617 Reserve for Maintenance Fund 887,529 - - Reserve for Equipment Replacement 1,206,122 - -

5,381,717 9,511,895 15,186 Interceptor: Construction Fund 10,807,874 47,474,730 243,354 Interest and Redemption Fund 5,250,648 - - Reserve Fund 578,720 10,525,666 10,714 Reserve for Maintenance Fund 1,301,553 - -

17,938,795 58,000,396 254,068 Total 156,724,535$ 299,539,616$ 639,636$

Deferred customer billings of $5,122,063 that are reflected as deferred outflows in the Solid Waste System represent member cities’ obligations for closure and postclosure costs related to solid waste landfills. Based on the contracts for services, member cities will be billed for the actual costs incurred to close the landfills.

NOTE 3. CASH AND INVESTMENTS The District maintains a cash and investment pool, which includes cash balances and authorized investments of all funds. This pooled cash is invested by the Investment Officer to enhance diversification and interest earnings. The pooled interest earned is allocated to the funds based on cash and investment balances in these funds at the end of each accounting period.


23

NOTE 3. CASH AND INVESTMENTS – CONTINUED A. Deposits

At September 30, 2013, the carrying amount of cash deposits was $7,286,356 and total bank balance was $8,902,355. During 2012-2013, the District’s combined deposits were fully insured by federal depository insurance or collateralized with securities pledged to the District and held by the entity or its agent in the entity’s name. At September 30, 2013, the District also holds petty cash of $1,500.

B. Investments

Legal provisions generally permit the District to invest in direct and indirect obligations of the United States of America or its agencies, certain certificates of deposit, repurchase agreements, public funds investment pools and mutual funds. During the year ended September 30, 2013, the District did not own any types of securities other than those permitted by statute. The District invests in the Texas Local Government Investment Pool (TexPool) and the Local Government Investment Cooperative (LOGIC). TexPool, a public funds investment pool created by the Treasurer of the State of Texas acting by and through the Texas Treasury Safekeeping Trust Company, is empowered to invest funds and act as a custodian of investments purchased with local investment funds. LOGIC is also a public funds investment pool with the same authority as TexPool. It has been organized and established pursuant to an Interlocal Agreement between participating government entities. The District has an undivided beneficial interest in the pool of assets held by these agencies. For both LOGIC and TexPool investments, the fair value of the District’s position in the pool is the same as the value of the pool shares. These investments and deposits are fully insured by Federal depository insurance or collateralized by securities held in the name of Texas Treasury Safekeeping Trust Company, the entity that created TexPool and in the name of LOGIC. Authorized investments include obligations of the United States of America or its agencies, direct obligations of the State of Texas or its agencies, certificates of deposit and repurchase agreements.

In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, investments were stated at fair value using the aggregate method in all funds, resulting in the following investment income:

Regional SolidWater Wastewater Sewer Waste Interceptor

System System System System System Total

Investment income: Interest 826,439$ 88,362$ 58,449$ 32,398$ 153,276$ 1,158,924$ Net changes in the fair value of investments 67,640 28,930 11,084 (4,541) (595) 102,518

Investment income 894,079$ 117,292$ 69,533$ 27,857$ 152,681$ 1,261,442$


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NOTE 3. CASH AND INVESTMENTS – CONTINUED In accordance with GASB Statement No. 31, the net changes in the fair value of investments take into account all changes in fair value (including purchases and sales) that occurred during the year. These portfolio value changes are unrealized unless sold. C. Summary of Cash and Investments

The following is a summary of cash and investments at September 30, 2013:


System System System System System Total

Unrestricted Cash and cash equivalents 45,334,774$ 3,808,444$ 1,526,418$ 2,939,655$ 909,736$ 54,519,027$ Investments 45,374,680 - - - - 45,374,680

Total unrestricted 90,709,454 3,808,444 1,526,418 2,939,655 909,736 99,893,707

Restricted Cash and cash equivalents 90,771,526 27,903,647 14,728,850 5,381,717 17,938,795 156,724,535 Investments 191,364,232 28,412,021 12,251,072 9,511,895 58,000,396 299,539,616

Total restricted 282,135,758 56,315,668 26,979,922 14,893,612 75,939,191 456,264,151

Total 372,845,212$ 60,124,112$ 28,506,340$ 17,833,267$ 76,848,927$ 556,157,858$


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NOTE 3. CASH AND INVESTMENTS – CONTINUED

At September 30, 2013, the District had the following deposits and investments:

WeightedCredit Quality Fair Average

Ratings Value Maturity

Unrestricted Cash and Investments Cash and cash equivalents: Deposits with a financial institution Not Rated 7,286,356$ n/a Cash on hand Not Rated 1,500 n/a TexPool AAAm 37,631,088 60 Days LOGIC AAAm 9,600,083 55 Days

Total Cash Equivalents 54,519,027

Investments—Securities of U.S. Government Agencies: FNMA - Fannie Mae Agency Note Aaa 8,369,760 380 Days FRE - Freddie Mac Discount Note P-1 14,991,540 269 Days FHLB - Federal Home Loan Bank Agency Note Aaa 22,013,380 134 Days

Total Securities of U.S. Government Agencies 45,374,680

Total Unrestricted Investments and Cash Equivalents 99,893,707

Restricted Cash and InvestmentsCash and Cash Equivalents Deposits with a financial institution Not Rated 19 n/a TexPool AAAm 65,361,429 60 Days LOGIC AAAm 91,363,087 55 Days

Total Cash Equivalents 156,724,535

Investments—Securities of U.S. Government Agencies: FRE - Freddie Mac Discount Note P-1 55,974,670 244 Days FHLB - Federal Home Loan Bank Agency Note Aaa 104,502,012 184 Days FNMA - Fannie Mae Discount Note P-1 25,000,000 1 Day FNMA - Fannie Mae Agency Note Aaa 20,924,400 380 Days FHLMC - Federal Home Loan Mortgage Corp Agency Note Aaa 63,120,540 770 Days FFCB - Federal Farm Credit Bank Agency Note Aaa 30,017,994 437 Days

Total Securities of U.S. Government Agencies 299,539,616

Total Restricted Investments and Cash Equivalents 456,264,151

Total Cash and Investments 556,157,858$


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NOTE 3. CASH AND INVESTMENTS – CONTINUED

GASB Statement No. 40, Deposit and Investment Risk Disclosures, addresses common deposit and investment risks related to credit risk, custodial credit risk, concentration of credit risk, interest rate risk, and foreign currency risk. Credit risk is the risk that a security issuer may default on an interest or principal payment. State law and the District’s investment policy limits the District to investments in high quality rated instruments that have been evaluated by agencies such as Standard and Poor's or Moody's Investor Service. Custodial credit risk is the risk that a depository financial institution will not be able to recover collateral securities that are in the possession of an outside party. The District monitors collateral balances at the bank to ensure they are backed by quality rated instruments. Concentration of credit risk is the risk associated with holding investments that are not pools and full faith credit securities in excess of 5% of the total portfolio. The investment policy of the District contains no limitations on the amount that can be invested in any one issuer. At September 30, 2013, investments other than external investment pools that represent 5% or more of the District’s investments are as follows:

Issue Investment Type Reported Amount

FHLB Federal agency notes 126,515,392$ FNMA Federal agency discount notes 25,000,000$ FRE Federal agency discount notes 70,966,210$ FNMA Federal agency notes 29,294,160$ FHLMC Federal agency notes 63,120,540$ FFCB Federal agency notes 30,017,994$

The District held a total of $344,914,296 in securities that equated to 62.0% of the total investment portfolio. Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. There is no formal policy relating to interest rate risk. However, the District manages its exposure to interest rate risk by investing in investment pools which purchase a combination of short term investments with an average maturity of less than 60 days, thus reducing the interest rate risk. The District monitors the interest rate risk inherent in its portfolio by measuring the weighted average maturity of its portfolio. At September 30, 2013, of the District’s portfolio had a weighted average maturity of greater than one year. Foreign currency risk is the potential for loss due to fluctuations in exchange rates. The District is not exposed to foreign currency risk.


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NOTE 4. CAPITAL ASSETS A summary of changes in capital assets follows:

Balance at Balance at October 1, Additions and Disposals and September 30,

2012 Transfers Transfers Adjustments 2013

Nondepreciable:Land 21,926,726$ 44,152,956$ 35,781$ 66,043,901$ Easements 40,699,536 5,104,573 45,804,109 Construction in progress 463,503,350 310,207,020 230,480,758 543,229,612

Total nondepreciable assets 526,129,612 359,464,549 230,516,539 - 655,077,622 Depreciable:Land improvements 6,431,152 1,297,675 7,728,827 Water treatment, storage and transmission facilities 843,197,117 53,550,449 896,747,566 Wastewater treatment and disposal facilities 477,961,965 118,507,822 596,469,787 Solid waste transfer and disposal facilities 60,319,744 4,517,878 64,837,622 Reservoir facilities and water rights 366,121,044 - 366,121,044 Buildings 31,801,146 76,530 (329,968) 31,547,708 Automobiles and trucks 13,828,393 4,239,352 1,363,651 16,704,094 Office furniture and fixtures 468,861 - 468,861 Other equipment 28,926,371 1,117,581 66,608 29,977,344

Total depreciable assets 1,829,055,793 183,307,287 1,430,259 (329,968) 2,010,602,853 Less accumulated depreciation on: Land improvements (3,668,959) (211,366) (3,880,325) Water treatment, storage and transmission facilities (207,233,700) (20,245,715) (227,479,415) Wastewater treatment and disposal facilities (129,137,536) (12,511,928) (141,649,464) Solid waste transfer and disposal facilities (30,033,673) (882,419) (30,916,092) Reservoir facilities and water rights (58,690,606) (7,328,947) (66,019,553) Buildings (7,801,852) (794,783) (8,596,635) Automobiles and trucks (7,795,682) (936,508) (657,782) (8,074,408) Office furniture and fixtures (162,779) (44,632) (207,411) Other equipment (20,409,419) (2,784,687) (1,064,240) (22,129,866)

Total accumulated depreciation (464,934,206) (45,740,985) (1,722,022) - (508,953,169)

Total depreciable assets—net 1,364,121,587 137,566,302 (291,763) (329,968) 1,501,649,684

TOTAL CAPITAL ASSETS—Net 1,890,251,199$ 497,030,851$ 230,224,776$ (329,968)$ 2,156,727,306$

NOTE 5. INTERFUND BALANCES

At September 30, 2013, interfund balances consisted of the following:

Due From Due toOther Funds Other Funds

Water System 3,678,679$ 3,742,133$ Regional Wastewater System 176,315 174,313 Sewer System 201,287 273,542 Solid Waste System 163,848 4,936 Interceptor System 5,546 30,751

Total 4,225,675$ 4,225,675$

The above interfund balances are a result of routine administrative type transactions in the normal course of business and are expected to be repaid in less than one year.


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NOTE 6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES At September 30, 2013, accounts payable and accrued liabilities consisted of the following:

Regional SolidWater Wastewater Sewer Waste InterceptorSystem System System System System Total

Payable to vendors/contractors 44,648,011$ 1,990,876$ 4,797,502$ 974,334$ 2,503,582$ 54,914,305$ Insurance claims liability 1,031,090 - - - - 1,031,090 Payable to cities - 712,418 756,959 2,093,651 1,301,553 4,864,581 Compensated absences 1,769,966 617,632 126,166 322,305 59,822 2,895,891 Accrued payroll and related benefits 1,033,233 340,837 126,685 549,770 23,400 2,073,925

Total 48,482,300$ 3,661,763$ 5,807,312$ 3,940,060$ 3,888,357$ 65,779,792$

Payable from unrestricted assets 17,734,397$ 2,352,588$ 947,202$ 1,820,715$ 676,492$ 23,531,394$ Payable from restricted assets 30,747,903 1,309,175 4,860,110 2,119,345 3,211,865 42,248,398

Total 48,482,300$ 3,661,763$ 5,807,312$ 3,940,060$ 3,888,357$ 65,779,792$


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NOTE 7. LONG-TERM DEBT Long-term debt consists of the following at September 30, 2013:

Balance at Balance at Amounts dueOctober 1, Retired or September 30, Within

2012 Issued Refunded 2013 One YearWater System:Water revenue bonds03/14-09/40, .174-6.123% 1,134,125,000$ 34,965,000$ 1,099,160,000$ 34,185,000$ U.S. govt contracts payable,12/13-10/51, 3.225-3.253% 36,417,993 1,278,839 35,139,154 1,320,151

1,170,542,993 - 36,243,839 1,134,299,154 35,505,151 Regional Wastewater: Wastewater revenue bonds,12/13-06/33, 2.0-5.0% 137,765,000 24,330,000 7,895,000 154,200,000 9,045,000 Sewer System: Murphy contract revenue bonds, 01/14-07/14, 6.25% 120,000 60,000 60,000 60,000 Rockwall contract revenue bonds, 12/13-06/28, 4.50-5.75% 3,110,000 235,000 2,875,000 240,000 Mustang Creek Interceptor System revenue bonds, 12/13-06/42, 3.00-6.00% 10,620,000 260,000 10,360,000 165,000 Rockwall-Heath contract revenue bonds 12/13-06/25, 3.75-4.625% 2,245,000 130,000 2,115,000 135,000 Terrell contract revenue bonds 12/13-06/35, 4.5-5.0% 11,290,000 270,000 11,020,000 285,000 McKinney contract revenue bonds, 12/13-06/15, 5.0% 400,000 125,000 275,000 135,000 Plano contract revenue bonds, 12/13-06/18, 2.5-3.641% 3,945,000 700,000 3,245,000 725,000 Stewart Creek contract revenue bonds, 12/13-06/19, 1.580% 3,445,000 465,000 2,980,000 475,000 Royse City contract revenue bonds, 12/13-06/22, 4.75-5.25% 1,085,000 85,000 1,000,000 90,000 Little Elm contract revenue bonds, 12/13-06/23, .5-2.00% 3,705,000 3,555,000 3,725,000 3,535,000 310,000 Parker Creek Interceptor System, revenue bonds, 12/13-06/23, 4.50-5.125% 1,830,000 130,000 1,700,000 135,000 Sabine Creek Interceptor System revenue bonds, 12/13-6/23, 4.50-5.125% 1,475,000 105,000 1,370,000 110,000 Sabine Creek Wastewater System revenue bonds, 12/13-6/23, 2.00-3.00% 6,060,000 5,785,000 6,060,000 5,785,000 430,000 Muddy Creek Wastewater System revenue bonds 12/13-06/26, 2.0-5.0% 17,845,000 1,185,000 16,660,000 1,225,000 Muddy Creek Interceptor revenue bonds 12/13-06/24, 4.0-4.875% 2,495,000 155,000 2,340,000 165,000 Buffalo Creek Interceptor revenue bonds 12/13-06/27, 3.0-5.0% 14,075,000 885,000 13,190,000 925,000 Rockwall Water Pumping Facilities bonds 12/13-06/26, 4.5-4.75% 1,715,000 90,000 1,625,000 95,000 Panther Creek Wastewater System bonds 12/13-06/29, 3.25-5.0% 46,050,000 2,220,000 43,830,000 2,310,000 Lower East Fork Interceptor bonds 12/13-06/26, 4.0-4.75% 15,055,000 775,000 14,280,000 815,000 146,565,000 9,340,000 17,660,000 138,245,000 8,830,000 Solid Waste System--revenue bonds, 03/14-09/28, 2.0-5.375% 43,300,000 2,580,000 40,720,000 2,680,000 Interceptor System-revenue bonds, 12/13-06/32, 2.5-5.0% 156,055,000 7,610,000 148,445,000 7,510,000

Total 1,654,227,993$ 33,670,000$ 71,988,839$ 1,615,909,154$ 63,570,151$


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NOTE 7. LONG-TERM DEBT – CONTINUED In the Statement of Net Position, the long-term liabilities include premiums net of discounts of $65,619,422 in the Water System, $3,037,209 in the Regional Wastewater System, $2,799,255 in the Sewer System, $628,192 in the Solid Waste System and $6,206,499 in the Interceptor System. Other long term debt activity for the year ended September 30, 2013, was as follows:

Balance at Balance atOctober 1, September 30,

2012 Additions Deletions 2013

Water System:Premiums $72,070,064 -$ (6,450,642)$ $65,619,422Deferred Loss (4,920,541) - 342,566 (4,577,975)

67,149,523 - (6,108,076) 61,041,447

Regional WastewaterPremiums 3,070,464 445,742 (478,997) 3,037,209 Deferred Loss (1,517,651) - 258,251 (1,259,400)

1,552,813 445,742 (220,746) 1,777,809

Sewer SystemPremiums 3,238,707 161,530 (430,655) 2,969,582 Discounts (189,402) - 19,075 (170,327) Deferred Loss (1,081,300) (383,490) 120,079 (1,344,711)

1,968,005 (221,960) (291,501) 1,454,544

Solid Waste SystemPremiums 887,286 - (137,470) 749,816 Discounts (136,054) - 14,430 (121,624) Deferred Loss (1,419,149) - 129,014 (1,290,135)

(667,917) - 5,974 (661,943)

Interceptor SystemPremiums 6,860,074 - (653,575) 6,206,499 Deferred Loss (781,529) - 47,994 (733,535)

6,078,545 - (605,581) 5,472,964

Total 76,080,969$ 223,782$ (7,219,930)$ 69,084,821$

Revenue bonds outstanding at September 30, 2013, are secured as follows: - Water Revenue Bonds—Assignment of the gross revenues to be derived from the

operation of the District’s Water System.


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NOTE 7. LONG-TERM DEBT – CONTINUED - Regional Wastewater Revenue Bonds—Assignment of gross revenues or gross

revenues to be derived from the operation of the District’s Regional Wastewater System and payments made to the District from the Cities of Plano, Mesquite, McKinney, Forney, Allen, Frisco, Princeton, Prosper, Rockwall, Seagoville and Heath, Texas.

- Murphy Contract Revenue Bonds—Assignment of the gross revenues to be derived

from the operation of the District’s sewage disposal system serving the City of Murphy, Texas and payments made to the District by the City of Murphy, Texas.

- Rockwall Contract Revenue Bonds—Assignment of the gross revenues to be derived

from the operation of the District’s sewage disposal system serving the City of Rockwall, Texas.

- McKinney Contract Revenue Bonds—Payments made to the District by the City of

McKinney, Texas. - Plano Contract Revenue Bonds— Payments made to the District by the City of Plano,

Texas. - Stewart Creek Contract Revenue Bonds—Assignment of gross revenues to be

derived from the operation of the Stewart Creek Wastewater System and payments made to the District by the Cities of Frisco and The Colony, Texas.

- Royse City Contract Revenue Bonds—Payments made to the District by the City of

Royse City, Texas. - Little Elm Contract Revenue Bonds—Payments made to the District by the Town of

Little Elm, Texas.

- Parker Creek Interceptor System—Assignment of gross revenues to be derived from the operation of the Parker Creek Interceptor System and payments made to the District by the Cities of Fate and Royse City, Texas.

- Sabine Creek Interceptor System—Assignment of gross revenues to be derived from

the operation of the Sabine Creek Interceptor System and payments made to the District by the City of Royse City, Texas.

- Sabine Creek Wastewater System—Assignment of gross revenues to be derived from

the operation of the Sabine Creek Wastewater System and payments made to the District by the City of Fate and the City of Royse City, Texas.


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NOTE 7. LONG-TERM DEBT – CONTINUED - Muddy Creek Wastewater System—Assignment of gross revenues to be derived from

the operation of the Muddy Creek Wastewater System and payments made to the District by the Cities of Murphy and Wylie, Texas.

- Muddy Creek Interceptor System—Assignment of gross revenues to be derived from

the operation of the Muddy Creek Interceptor System and payments made to the District by the Cities of Murphy and Wylie, Texas.

- Buffalo Creek Interceptor System—Assignment of gross revenues to be derived from

the operation of the Buffalo Creek Interceptor System and payments made to the District by the Cities of Forney, Heath and Rockwall, Texas.

- Rockwall/Heath Water Storage Facilities—Payments to be made to the District by the

Cities of Rockwall and Heath, Texas. - Terrell Water Transmission Facilities—Payments to be made to the District by the City

of Terrell, Texas. - Rockwall Water Pumping Facilities—Payments to be made to the District by the City

of Rockwall, Texas. - Panther Creek Wastewater System—Assignment of gross revenues to be derived

from the operation of the Panther Creek Wastewater System and payments made to the District by the City of Frisco, Texas.

- Lower East Fork Interceptor System—Assignment of gross revenues to be derived

from the operation of the District’s Lower East Fork Interceptor System and payments made to the District by the Cities of Mesquite and Seagoville, Texas.

- Mustang Creek Interceptor—Payments to be made to the District by the City of

Forney, Texas. - Solid Waste Revenue Bonds—Assignment of the gross revenues to be derived from

the operation of the District’s Solid Waste System. - Interceptor Revenue Bonds—Assignment of the gross revenues to be derived from

the operation of the District’s Upper East Fork Interceptor System.

Interest and redemption (sinking) funds, reserve funds and contingency funds have been established, as required, in accordance with bond resolutions. Funds may be placed in secured time deposits or invested in direct obligations of, or obligations guaranteed by, the U.S. government. Interest earned is retained in the applicable funds or transferred to meet debt service requirements in accordance with bond resolutions. The Water Fund’s long-term debt payable to the U.S. government is pursuant to contracts covering the Chapman and Lavon Reservoirs.


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NOTE 7. LONG-TERM DEBT – CONTINUED Premiums and discounts on bonds are amortized over the life of the debt using the effective interest method. During the year, the District issued $24,330,000 of revenue bonds in the Wastewater System primarily for system improvements. The District also issued revenue refunding bonds in the amounts of $9,340,000 in the Sewer System to refund a portion of the District’s outstanding debt. The net proceeds of the refunding of $9,279,086 were deposited with an escrow agent to purchase direct obligations of the United States. As a result of the current refunding, the District decreased its aggregate debt service payment to maturity by $1,147,278 and realized an economic gain (difference between present value of debt service payment of the old debt and the new debt) of $1,042,477. At September 30, 2013 defeased bonds outstanding totaled $63,010,000. For current and advance refunding resulting in defeasance of debt, the difference between the reacquisition price and the net carrying amount of the old debt is deferred and amortized as interest expense over the remaining life of the old debt or the life of the new debt, whichever is shorter. At September 30, 2013, the amount of the unamortized deferred amount on refundings is $9,205,756.


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NOTE 7. LONG-TERM DEBT – CONTINUED Annual requirements to retire revenue bonds outstanding, including interest, are:

Principal Interest Total Principal Interest Total

2014 34,185,000$ 53,046,009$ 87,231,009$ 9,045,000$ 6,344,744$ 15,389,744$ 2015 35,595,000 51,575,244 87,170,244 9,420,000 6,030,444 15,450,444 2016 37,145,000 50,131,467 87,276,467 9,820,000 5,672,494 15,492,494 2017 38,755,000 48,472,711 87,227,711 10,080,000 5,313,244 15,393,244 2018 40,450,000 46,718,911 87,168,911 10,580,000 4,868,644 15,448,644 2019-2023 227,925,000 204,042,333 431,967,333 49,340,000 17,891,931 67,231,931 2024-2028 250,510,000 146,560,315 397,070,315 42,505,000 7,989,439 50,494,439 2029-2033 265,675,000 83,173,409 348,848,409 13,410,000 1,109,780 14,519,780 2034-2038 147,470,000 27,390,916 174,860,916 - - - 2039-2043 21,450,000 1,749,819 23,199,819 - - -

1,099,160,000$ 712,861,134$ 1,812,021,134$ 154,200,000$ 55,220,720$ 209,420,720$

Water Fund Regional Wastewater Fund


2014 8,830,000$ 5,817,739$ 14,647,739$ 2,680,000$ 1,688,694$ 4,368,694$ 2015 9,080,000 5,488,167 14,568,167 2,775,000 1,582,250 4,357,250 2016 9,365,000 5,165,443 14,530,443 2,880,000 1,471,988 4,351,988 2017 9,630,000 4,834,028 14,464,028 2,960,000 1,383,581 4,343,581 2018 9,435,000 4,457,191 13,892,191 3,065,000 1,272,069 4,337,069 2019-2023 50,195,000 16,288,239 66,483,239 17,125,000 4,400,319 21,525,319 2024-2028 28,590,000 5,970,035 34,560,035 9,235,000 1,385,287 10,620,287 2029-2033 6,705,000 1,993,075 8,698,075 - - - 2034-2038 3,990,000 819,219 4,809,219 - - - 2039-2043 2,425,000 224,931 2,649,931

138,245,000$ 51,058,067$ 189,303,067$ 40,720,000$ 13,184,188$ 53,904,188$

Solid Waste FundSewer Fund


2014 7,510,000$ 6,163,363$ 13,673,363$ 62,250,000 73,060,549$ 135,310,549$ 2015 7,815,000 5,920,075 13,735,075 64,685,000 70,596,180 135,281,180 2016 8,165,000 5,656,700 13,821,700 67,375,000 68,098,092 135,473,092 2017 8,495,000 5,346,100 13,841,100 69,920,000 65,349,664 135,269,664 2018 8,875,000 4,976,025 13,851,025 72,405,000 62,292,840 134,697,840 2019-2023 44,675,000 18,845,888 63,520,888 389,260,000 261,468,710 650,728,710 2024-2028 46,390,000 8,571,705 54,961,705 377,230,000 170,476,781 547,706,781 2029-2033 16,520,000 1,166,013 17,686,013 302,310,000 87,442,277 389,752,277 2034-2038 - - - 151,460,000 28,210,135 179,670,135 2039-2043 - - - 23,875,000 1,974,750 25,849,750

148,445,000$ 56,645,869$ 205,090,869$ 1,580,770,000$ 888,969,978$ 2,469,739,978$

Interceptor Fund Total All Funds


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NOTE 7. LONG-TERM DEBT – CONTINUED Annual requirements to amortize contracts payable, including interest, are:

Principal Interest Total2014 1,320,151$ 1,138,449$ 2,458,600$ 2015 1,362,798 1,095,802 2,458,600 2016 1,406,824 1,051,777 2,458,601 2017 1,452,271 1,006,330 2,458,601 2018 1,499,186 959,414 2,458,600 2019-2023 8,254,458 4,038,545 12,293,003 2024-2028 6,133,590 2,707,117 8,840,707 2029-2033 2,232,061 2,089,340 4,321,401 2034-2038 2,619,506 1,701,895 4,321,401 2039-2043 3,074,205 1,247,196 4,321,401 2044-2048 3,607,831 713,570 4,321,401 2049-2051 2,176,273 138,628 2,314,901

35,139,154$ 17,888,063$ 53,027,217$

Water Fund

NOTE 8. RETIREMENT PLAN

Plan Description

The District provides a Retirement Plan for Employees of North Texas Municipal Water District (the Plan), a single employer defined benefit pension plan, for all of its eligible full-time employees through an AETNA Life Insurance Company group pension defined benefit fund contract. The Plan is administered by the District’s Executive Director/General Manager. The Plan does not issue separate financial statements. All employees who have two years of continuous service and have reached 21 years of age are eligible to participate in the Plan.

Benefits are established and may be amended by the District’s Board of Directors. Benefits provided by the Plan include retirement, disability and preretirement death benefits. The benefit formula provides for a 10-year certain and continuous annuity. Preretirement death benefits are provided as a lump sum equal to the greater of the present value of the accrued benefit or current vested wages. The benefit at retirement is calculated as follows:

- Normal Retirement (age 65)—3% of earnings plus 1% of earnings in excess of covered compensation while an active member.

- Early Retirement (over age 55 with at least 20 years of service)—The annual accrued benefit equals the accrued benefit based on service to the early retirement date, reduced by 5% for each year a member retires before the normal retirement date. There is no reduction in benefits for a member who retires whose age plus years of service total at least 85.

- Late Retirement (after normal retirement date)—The benefit accrued to the late retirement date.


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NOTE 8. RETIREMENT PLAN - CONTINUED - Disability (certified to be permanently and totally disabled on or after May 1,

1990)—60% of final average monthly compensation reduced by 64% of Social Security disability.

As of January 1, 2013, the participants comprised the following:

Active participants 455Terminated vested participants 41Disabled Participants 2Retired participants 67Beneficiaries 8

Total number of participants 573

The Plan’s assets are invested in pooled mutual and commingled funds and are stated at fair value as determined by the Plan’s custodian. Funding Status

The actuarial assumptions used in the valuation as of January 1, 2013, are as follows: (a) rate of return on investment of present and future assets of 8% per annum compounded annually, (b) projected inflation rate increases of 3% per year compounded annually, (c) projected earnings progression increases of 4% per year, compounded annually, and (d) mortality for males and females from the RP – 2000 Mortality Table. The actuarial cost method used is the projected unit credit cost method. For purposes of applying the actuarial cost method, plan assets are valued at market value. The unfunded actuarial accrued liability is being amortized as a level dollar amount on an open basis over a 30-year amortization period.

Contributions

The District’s annual minimum contribution is actuarially calculated based on the amount required to prevent the unfunded liability from increasing. The significant actuarial assumptions used to compute the actuarially determined contribution requirement are the same as those used to compute the actuarial accrued liability as set forth above. The unfunded actuarial accrued liability is amortized over an open period of 30 years. Employees make no contributions to the Plan. For the plan years ended December 31, 2012, 2011, and 2010, the District made contributions of $5,022,000, $3,925,000, and $3,345,000, respectively which represent 20.4%, 16.2% and 14.2%, respectively of annual covered payroll. These contributions were based on actuarially determined contribution requirements through an actuarial valuation performed at January 1, 2013, 2012, and 2011.


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NOTE 8. RETIREMENT PLAN – CONTINUED The net pension obligation (asset) at September 30, 2013 is as follows:

Annual Required Contribution (ARC) 4,494,071$ Interest on Prior Year's Net Pension Asset (92,620) Adjustment to the ARC 102,840

Annual Pension Cost 4,504,291

Contributions made (4,971,101)

Increase in Net Pension Asset 466,810 Net Pension Asset, Beginning of Year 690,939

Net Pension Asset, End of Year 1,157,749$

The actuarial value of assets was determined using market values. The actuarial value of the plan’s assets was $44,256,958 at January 1, 2013. The funded status of the Plan for the current year and each of the two preceding years is as follows:

Contributions- Trend information is presented below for the three most recent years.

Annual Percentage PensionFiscal Annual Pension of APC ObligationYear Contributions Cost (APC) Contributed (Asset)

2011 3,895,681$ 3,841,410$ 101.4 (607,349)$ 2012 4,638,780 4,555,190 101.8 (690,939) 2013 4,971,101 4,504,291 110.4 (1,157,749)

As of the most recent actuarial valuation date, funding progress on the plan is as follows:

Actuarial valuation date January 1, 2013Actuarial value of plan assets 44,256,958$ Actuarial accrued liability (AAL) 61,907,170 Unfunded AAL 17,650,212 Covered payroll 24,589,093 Unfunded AAL as a % of covered payroll 71.78%Funded ratio 71.49%

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment and mortality trends. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.


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NOTE 8. RETIREMENT PLAN – CONTINUED In addition to this retirement plan, the District provides health and dental care benefits for certain retirees and their spouses up to age 65. The District pays 100 percent of the health and dental care premiums for participants currently eligible for benefits. For the year ended September 30, 2013, the District recorded OPEB expense of $1,185,000, related to these benefits, of which $694,655 was allocated to the Water System, $205,870 was allocated to the Wastewater System, $75,695 was allocated to the Sewer System, $194,715 was allocated to the Solid Waste System, $14,065 was allocated to the Interceptor System. See Note 12 for additional disclosure information related to the District’s post employment benefits.

NOTE 9. COMMITMENTS AND CONTINGENCIES

Commitments

Remaining commitments under water, wastewater, sewer, and interceptor construction contracts as of September 30, 2013 were, $79,679,266, $6,598,010, $1,261,924, and $7,722,840 respectively.

Contingencies The District is party to an arrangement with the City of Irving involving the construction of various infrastructure projects including a pump station, pipeline, a building and other facilities, a portion of which benefit the District. A substantial amount of work on the construction of these projects, estimated to be approximately $5,000,000, took place as of September 30, 2013. As of the date of these financial statements, there is no contractual arrangement outlining the District’s share of these costs, and the parties have not come to agreement on the amount of costs which will ultimately be the District’s responsibility. As the amount of final settlement cannot be reasonably estimated, these costs have not been accrued in the financial statements. In November, 2013, the District received a subpoena from the United States Attorney for the Eastern District of Texas (USA-ED) for records related to a sanitary sewer overflow (SSO) event, and for prior SSO reporting within the District’s wastewater collection system. The subpoena is related to allegations by staff of the United States Environmental Protection Agency (EPA) that the District has not properly reported, or has under reported SSO’s. Members of the USA-ED and EPA have conducted interviews of District staff and have collected documents relating to these allegations and the EPA has conducted an audit which concluded on January 23, 2014. The District has timely produced documents as required under the subpoena. There has been no further activity or communication from either the USA-ED or EPA as of the date of this report related to this matter and as such, the District has not recorded any potential liabilities in connection with it. The District intends to aggressively defend any allegations that it has violated the Clean Water Act. The District is involved in lawsuits arising in the ordinary course of business, including claims involving contract disputes. In the opinion of the District’s management, potential liability in these matters will not have a material impact on the financial statements as of September 30, 2013.


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NOTE 10. CLOSURE AND POSTCLOSURE CARE COSTS State and federal laws and regulations require the District to place a final cover on its landfill sites when it stops accepting waste and to perform certain maintenance and monitoring functions at the sites for 30 years after closure. Although closure and postclosure care costs will be paid only near or after the date that the landfill stops accepting waste, the District accrues a portion of these estimated closure and postclosure care costs in each period based on landfill capacity used as of each balance sheet date. At September 30, 2013, a liability of $5,122,063 for landfill closure and postclosure care costs has been accrued in the Solid Waste System Fund in the accompanying statement of net assets.

Beginning EndingLiability Additions Reductions Liability

4,985,860$ 136,203$ -$ 5,122,063$

The $5,122,063 reported as landfill closure and postclosure care liability at September 30, 2013, includes $93,209 for Transfer Stations, $1,404,256 for the Maxwell Creek Landfill, $3,069,705 for the McKinney Landfill and $554,893 for the 121 Regional Disposal Facility, which represents the cumulative amount reported to date based on the use of 8.4% of the estimated capacity of the 121 Regional Disposal Facility. The Maxwell Creek Landfill was closed during 2006 and the McKinney Landfill was closed during 2009. The District will recognize the remaining cost of closure and postclosure care of $6,066,736 for the 121 Regional Disposal Facility as the remaining estimated capacity is filled. These amounts are based on what it would cost to perform all closure and postclosure care at September 30, 2013. Based upon the current utilization of capacity, the remaining expected life of the 121 Regional Disposal Facility is estimated to be 35 years. Actual costs may be higher due to inflation, changes in technology, or changes in laws or regulations. The District is required to provide financial assurance for closure and postclosure care to the State of Texas. In accordance with current regulations, a local government may demonstrate financial assurance for closure and postclosure care, or corrective action by satisfying certain requirements. Management of the District believes they have satisfied such requirements.

NOTE 11. RISK MANAGEMENT The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. Commercial insurance is purchased for fire and extended coverage for the buildings, plants, structures and contents with a $25,000 deductible per occurrence. Commercial insurance is also provided under a commercial floater policy, which covers the heavy off-road equipment with a $5,000 deductible per occurrence. The District is a member of a public entity risk pool operating as a common risk management and insurance program for a number of water districts and river authorities within the State of Texas. Coverage provided by the pool consists of workers’ compensation, general liability, automobile liability, directors’ and officers’ liability, and automobile physical damage. Annual premiums are paid to the pool. The pool is self-sustaining through member premiums and the purchase of reinsurance through commercial companies. The amount of settlements did not exceed insurance coverage for the last three fiscal years.


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NOTE 11. RISK MANAGEMENT – CONTINUED The District maintains a self-insurance program for the employee group medical program. A third-party administrator is utilized to provide claims administration and payment of claims. Insurance is purchased to provide specific stop loss and aggregate stop loss protection. The liability for insurance claims is based on GASB Statement No. 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. These liabilities are based upon the insurance company’s figures for the District’s liability for termination claims upon the termination of the policy year and the stop loss premium for any claims above the District’s liability. Additionally, the liability for unpaid claims includes the effects of specific incremental claims, adjustment expenses, and if probable and material, salvage, and subrogation. The liability is reported with accounts payable and accrued liabilities in the statement of net position. Changes in the employees’ health claims liability amount in fiscal September 30, 2013 and 2012 were:

ClaimsLiability Incurred and Current Year Liability

Fiscal Beginning Change in Claim End ofYear of Year Estimates Payments Year

2012 922,864$ 6,475,805 6,440,571$ 958,098$ 2013 958,098 6,635,102 6,562,110 1,031,090

NOTE 12. OTHER POSTEMPLOYMENT BENEFITS Plan Description

The District provides other postemployment benefits (OPEB) in the form of health and dental insurance benefits for certain retirees and their spouses up to age 65 through a single-employer defined medical plan. These benefits are funded 100 percent by the District for the currently eligible retirees and their spouses. A third-party administrator is utilized to provide claims administration and payment of claims. Insurance is purchased to provide specific stop loss and aggregate stop loss protection. The District does not issue separate audited financial statements for its plan.

Funding Policy

The District’s funding policy is established and may be amended by the District’s Board of Directors. The District has established an irrevocable trust fund to accumulate assets for payment of future OPEB benefits for fiscal year 2013.


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NOTE 12. OTHER POSTEMPLOYMENT BENEFITS – CONTINUED The District’s annual OPEB cost, percentage of annual OPEB costs contributed to its plan and net OPEB obligation for fiscal year 2013 and the two preceding years were as follows:

2013 2012 2011

Annual required contribution 1,209,730$ 1,150,873$ 919,840$ Interest on prior year Net OPEB obligation 116,718 82,335 52,690 Adjustment to annual required contribution (168,746) (119,036) (76,177) Annual OPEB cost 1,157,702 1,114,172 896,353 Contributions made 3,356,135 254,586 155,238 Increase in net OPEB obligation (2,198,433) 859,586 741,115 Net OPEB obligation - beginning of year 2,917,959 2,058,373 1,317,258 Net OPEB obligation - end of year 719,526$ 2,917,959$ 2,058,373$

Percentage of annual OPEB costs contributed 290% 23% 17%

Funded Status and Funding Progress

The funded status of other postemployment benefits as of October 1, 2012, the date of the latest actuarial valuation, was as follows:

Actuarial accrued liability (AAL) 10,670,501$ Actuarial value of plan assets - Unfunded actuarial accrued liability 10,670,501$

Funded ratio (actuarial value of plan asset/AAL) 0.0%Covered Payroll 24,589,093 Unfunded actuarial accrued liability as a percentage of covered payroll 43.40%

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. The unfunded actuarial accrued liability is being amortized assuming 30 level annual payments on an open basis. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revisions as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.


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NOTE 12. OTHER POSTEMPLOYMENT BENEFITS – CONTINUED Actuarial Methods and Assumptions

Projections of benefits for financial reporting purposes are based on the substantive plan and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the October 1, 2012, actuarial valuation, the entry age actuarial cost method was used. The key actuarial assumptions include: (a) Benefit liabilities as of October 1, 2012, (b) Discount rate of valuing liabilities, without prefunding, of 4% per annum, compounded annually, (c) 60% of active members are assumed to elect coverage for a spouse upon retirement, (d) Participants are assumed to retire at the earlier of their Normal Retirement Age or the eligibility for unreduced early retirement benefit under the Retirement Plan, and (e) Inflation rate set at a sliding scale of medical inflation from a 5.8% rate in 2014 to 6.7% by 2026.

NOTE 13. RECENTLY ISSUED GASB STATEMENTS

GASB Statement No. 60, "Accounting and Financial Reporting for Service Concession Arrangements", which is effective for the District beginning in fiscal year 2013. This statement is to improve financial reporting by addressing issues related to service concession arrangements (SCAs), which are a type of public-private or public-public partnership. The District had no activity of this type during 2013. In the future if there is activity that applies to this statement the District will account for it appropriately. GASB Statement No. 61, ''The Financial Reporting Entity: Omnibus-an amendment of GASB Statements No. 14 and No. 34" which is effective for the District beginning in fiscal year 2013. This statement is to improve financial reporting for a governmental financial reporting entity. The District had no activity of this type during 2013. In the future if there is activity that applies to this statement the District will account for it appropriately. GASB Statement No. 62, "Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements", is effective for the District beginning in fiscal year 2013. This statement is to incorporate into the GASB's authoritative literature certain accounting and financial reporting guidance that is included in the following pronouncements issued on or before November 30, 1989, which does not conflict with or contradict GASB pronouncements: Financial Accounting Standards Board (FASB) Statements and Interpretations; Accounting Principles Board Opinions; Accounting Research Bulletins of the American Institute of Certified Public Accountants (AICPA) Committee on Accounting Procedure. This standard was implemented by the District in its fiscal year 2013 financial statements. GASB Statement No. 63, “Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position”, was issued in July 2012 to establish guidance for reporting deferred outflows of resources, deferred inflows of resources, and net position in a statement of financial position. This standard was implemental in fiscal year 2013.


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NOTE 13. RECENTLY ISSUED GASB STATEMENTS– CONTINUED GASB Statement No. 65, “Items Previously Reported as Assets and Liabilities" which the District elected to implement in fiscal year 2013. This statement reclassifies certain items that were previously reported as assets and liabilities as deferred outflows or inflows of resources and recognizes these items as outflows or inflows of resources. This statement applies to all state and local governmental entities. This standard was implemented by the District in its fiscal year 2013 financial statements, which required an adjustment to beginning net position of $13,114,885. The GASB issued Statement No. 67, Financial Reporting for Pension Plans, which will be effective for periods beginning after June 15, 2013. The objective of this Statement is to improve financial reporting of state and local governmental pension plans with regard to providing decision-useful information, supporting assessments of accountability and interperiod equity, and creating additional transparency. This Statement applies to all state and governmental entities and amends Statements 25 and 50. The District will evaluate the impact of the standard on its Financial Statements and will take the necessary steps to implement it. The GASB issued Statement No. 68, Accounting and Financial Reporting for Pensions, which will be effective for periods beginning after June 15, 2014. The objective of this Statement is to improve accounting and financial reporting of state and local governmental pension plans. This Statement applies to all state and governmental entities and replaces Statements 27 and 50. The District will evaluate the impact of the standard on its Financial Statements and will take the necessary steps to implement it. The GASB issued Statement No. 69, Governmental Combinations and Disposals of Government Operations, which will be effective for periods beginning after December 15, 2013. The objective of this Statement is to establish accounting and financial reporting standards related to government combinations and disposals of government operations. The District will evaluate the impact of the standard on its Financial Statements and will take the necessary steps to implement it. The GASB issued Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees, which will be effective for periods beginning after June 15, 2013. The objective of this Statement is to require a state or local government guarantor that offers a nonexchange financial guarantee to another organization or government to recognize a liability on its financial statements when it is more likely than not that the guarantor will be required to make a payment to the obligation holders under the agreement. The District will evaluate the impact of the standard on its Financial Statements and will take the necessary steps to implement it.


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NOTE 14 CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE During 2013, the District adopted new accounting guidance, GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. The implementation of this guidance eliminated the presentation of bond issuance costs from the Statement of Net Position. As such, a restatement adjustment was necessary to adjust beginning net position to reflect the elimination of bond issuances costs, by fund, as of the beginning of the fiscal year. The effects are listed below.

Regional Solid TotalWater Wastewater Sewer Waste Interceptor Enterprise

System System System System System FundsNet Position at October 1, 2012

(As Previously Stated) 670,997,970$ 94,778,265$ 36,804,443$ 36,087,171$ 81,079,888$ 919,747,737$ Cumulative Effect of Change in

Accounting Principle (7,179,321) (1,297,690) (2,284,733) (612,265) (1,740,846) (13,114,855)

Net Position at October 1, 2012 (As Restated) 663,818,649$ 93,480,575$ 34,519,710$ 35,474,906$ 79,339,042$ 906,632,882$

REQUIRED SUPPLEMENTAL INFORMATION

NORTH TEXAS MUNICIPAL WATER DISTRICT REQUIRED SUPPLEMENTARY INFORMATION

45

(1) (2) (3) (4) (5) (6)FundingExcess

Actuarial Actuarial (Deficiency) asValuation Actuarial Accrued Funded Funding Annual a Percentage

Date, Value of Liability Ratio Excess Covered of CoveredJanuary 1, Plan Assets (AAL) (1)/(2) (Deficiency) Payroll Payroll

2005 15,224,777$ 19,480,431$ 78.2 (4,255,654)$ 12,678,403$ (33.6) 2006 17,350,503 22,808,930 76.1 (5,458,427) 13,954,127 (39.1) 2007 21,994,911 26,040,669 84.5 (4,045,758) 15,283,344 (26.5) 2008 25,178,639 30,059,464 83.8 (4,880,825) 18,035,938 (27.1) 2009 19,819,453 34,595,678 57.3 (14,776,225) 20,009,776 (73.8) 2010 27,268,702 39,330,742 69.3 (12,062,040) 22,514,217 (53.6) 2011 32,566,292 47,047,848 69.2 (14,481,556) 23,571,504 (61.4) 2012 36,145,178 55,435,846 65.2 (19,290,668) 24,256,075 (79.5) 2013 44,256,958 61,907,170 71.5 (17,650,212) 24,589,093 (71.8)

North Texas Municipal Employee Retirement SystemSchedule of Funding Progress

Schedule of Employer Contributions

Annual Percentage

Plan Year Annual Required of ARC December 31 Contributions Contribution (ARC) Contributed

2005 1,505,902$ 1,505,730$ 100.0 2006 1,982,950 1,808,035 109.7 2007 1,981,000 1,846,575 107.3 2008 2,206,525 2,156,712 102.3 2009 3,351,291 3,332,543 100.6 2010 3,345,000 3,290,731 101.6 2011 3,925,000 3,841,410 102.2 2012 5,022,000 4,555,190 110.2

North Texas Municipal Employee Retirement System

NORTH TEXAS MUNICIPAL WATER DISTRICT REQUIRED SUPPLEMENTARY INFORMATION

46

(1) (2) (3) (4) (5) (6)FundingExcess

Actuarial Actuarial (Deficiency) asValuation Actuarial Accrued Funded Funding Annual a Percentage

Date, Value of Liability Ratio Excess Covered of CoveredOctober 1, Plan Assets (AAL) (1)/(2) (Deficiency) Payroll Payroll

2007 -$ 4,050,859$ -$ (4,050,859)$ 15,283,344$ (26.5) 2008 - 5,277,469 - (5,277,469) 18,035,938 (29.3) 2009 - 6,722,277 - (6,722,277) 20,009,776 (33.6) 2010 - 7,324,430 - (7,324,430) 22,514,217 (32.5) 2011 - 9,801,016 - (9,801,016) 24,256,075 (40.4) 2012 - 10,670,501 - (10,670,501) 24,589,093 (43.4)

North Texas Municipal Employee Other Postemployment Benefits PlanSchedule of Funding Progress

Schedule of Employer Contributions

Annual Percentage

Plan Year Annual Required of ARC October 1 Contributions Contribution (ARC) Contributed

2008 635,591$ 635,591$ 100.0 2009 102,014 678,085 15.0 2010 126,245 865,930 14.6 2011 155,238 919,840 16.9 2012 254,586 1,150,873 22.1

North Texas Municipal Employee Other Postemployment Benefits Plan

SEWER SYSTEM SUPPLEMENTAL STATEMENTS

NORTH TEXAS MUNICIPAL WATER DISTRICT SEWER SYSTEM SCHEDULE OF NET POSITION SEPTEMBER 30, 2013

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Little Elm Plano Water Transmission Water Transmission

ASSETS Facilities Facilities

CURRENT ASSETS: Unrestricted Assets: Cash and cash equivalents 3,314$ 4,009$ Accounts receivable - - Due from other funds - - Prepaid expenses - - Total unrestricted assets 3,314 4,009 Restricted Assets: Cash and cash equivalents 405,015 434,206 Investments 239,191 629,503 Interest and accounts receivable 204 538

Total restricted assets 644,410 1,064,247

TOTAL CURRENT ASSETS 647,724 1,068,256

DEFERRED OUTFLOWS OF RESOURCES: Deferred customer billings (unrestricted assets) - - Deferred customer billings (restricted assets) - - Total deferred outflows of resources from current assets - -

LONG-TERM ASSETS: Nondepreciable: Land - - Easements 1,148,574 - Construction-in-progress - -

Total nondepreciable assets 1,148,574 - Depreciable: Land improvements - - Water treatment, storage, and transmission facilities 4,140,774 9,233,771 Wastewater treatment and disposal facilities - - Automobiles and trucks - - Other equipment - - Total depreciable assets 4,140,774 9,233,771

Less accumulated depreciation (612,489) (3,003,462) Net capital assets 4,676,859 6,230,309

DEFERRED OUTFLOWS OF RESOURCES: Long term deferred billings, less current portion - - Deferred loss on refunding 136,490 -

Total deferred outflows of resources from long-term assets 136,490 -

Net Pension Assets - -

TOTAL LONG-TERM ASSETS 4,813,349 6,230,309

TOTAL ASSETS 5,461,073$ 7,298,565$

48

Royse City Kaufman 4-1 McKinney-Frisco Rockwall-HeathWater Transmission Water Distribution Water Transmission Water Storage

Facilities Facilities Facilities Facilities

219$ 13,189$ -$ 4$ - 5,583 - - - - - - - 53 - - 219 18,825 - 4

82,175 74,089 - 76,756 139,111 - - 229,183

119 - - 196 221,405 74,089 - 306,135

221,624 92,914 - 306,139

- - - - - - - - - - - -

- - - - - - - - - - - -

- - - -

- - - - 1,594,322 - - 2,600,259

- - - - - - - - - - - -

1,594,322 - - 2,600,259

(368,272) - - (325,032)

1,226,050 - - 2,275,227

- - - - - - - -

- - - -

- - - -

1,226,050 - - 2,275,227

1,447,674$ 92,914$ -$ 2,581,366$


49

Terrell RockwallWater Transmission Water Pump Station

ASSETS Facilities Facilities

CURRENT ASSETS: Unrestricted Assets: Cash and cash equivalents (65,910)$ 6$ Accounts receivable 65,921 - Due from other funds - - Prepaid expenses - - Total unrestricted assets 11 6 Restricted Assets: Cash and cash equivalents 277,426 67,506 Investments 819,655 159,127 Interest and accounts receivable 701 136

Total restricted assets 1,097,782 226,769

TOTAL CURRENT ASSETS 1,097,793 226,775


LONG-TERM ASSETS: Nondepreciable: Land - - Easements - - Construction-in-progress - -

Total nondepreciable assets - - Depreciable: Land improvements - - Water treatment, storage, and transmission facilities 12,039,133 1,932,237 Wastewater treatment and disposal facilities - - Automobiles and trucks - - Other equipment - - Total depreciable assets 12,039,133 1,932,237

Less accumulated depreciation (1,705,544) (289,841) Net capital assets 10,333,589 1,642,396

DEFERRED OUTFLOWS OF RESOURCES: Long term deferred billings, less current portion - - Deferred loss on refunding - -

Total deferred outflows of resources from long-term assets - -



TOTAL ASSETS 11,431,382$ 1,869,171$

50

Murphy South Rockwall North RockwallWWTP/ Wylie (Buffalo Creek) (Squabble Creek)

Interceptor WWTP WWTP WWTP

3,301$ 6,035$ 137,161$ 120,107$ - - - 1,941 - 12 - 51 - 100 5,213 4,555

3,301 6,147 142,374 126,654

19,968 23,505 151,150 46,463 - - 388,310 - - - 332 -

19,968 23,505 539,792 46,463

23,269 29,652 682,166 173,117

- 40 1,506 816 - - - - - 40 1,506 816

33,018 - 60,724 - - - 243,045 - - - - -

33,018 - 303,769 -

- - - - - - - -

771,194 2,149,480 8,214,580 1,576,459 - 3,367 11,486 11,486 - 53,402 117,903 44,759

771,194 2,206,249 8,343,969 1,632,704

(490,848) (1,777,047) (4,726,235) (1,036,004)

313,364 429,202 3,921,503 596,700

- 170 6,342 3,278 - - - -

- 170 6,342 3,278

- 97 3,250 1,667

313,364 429,469 3,931,095 601,645

336,633$ 459,161$ 4,614,767$ 775,578$


51

Panther Creek Sabine CreekASSETS WWTP WWTP

CURRENT ASSETS: Unrestricted Assets: Cash and cash equivalents 117,199$ 102,295$ Accounts receivable 61,615 - Due from other funds 252 126 Prepaid expenses 118,187 5,821 Total unrestricted assets 297,253 108,242 Restricted Assets: Cash and cash equivalents 2,359,884 347,671 Investments 3,911,595 689,551 Interest and accounts receivable 6,083 589

Total restricted assets 6,277,562 1,037,811

TOTAL CURRENT ASSETS 6,574,815 1,146,053

DEFERRED OUTFLOWS OF RESOURCES: Deferred customer billings (unrestricted assets) (6,020) 2,399 Deferred customer billings (restricted assets) - - Total deferred outflows of resources from current assets (6,020) 2,399

LONG-TERM ASSETS: Nondepreciable: Land - 375,774 Easements 19,042 - Construction-in-progress 23,062 -

Total nondepreciable assets 42,104 375,774 Depreciable: Land improvements - - Water treatment, storage, and transmission facilities - - Wastewater treatment and disposal facilities 51,820,475 7,803,906 Automobiles and trucks 24,140 11,486 Other equipment 25,494 23,962 Total depreciable assets 51,870,109 7,839,354

Less accumulated depreciation (5,230,898) (1,326,827) Net capital assets 46,681,315 6,888,301

DEFERRED OUTFLOWS OF RESOURCES: Long term deferred billings, less current portion 34,749 4,103 Deferred loss on refunding - 221,308

Total deferred outflows of resources from long-term assets 34,749 225,411

Net Pension Assets 19,731 2,084


TOTAL ASSETS 53,304,590$ 8,264,248$

52

Stewart Creek Muddy Creek Seis Lagos Royse CityWWTP WWTP WWTP WWTP

274,681$ 312,498$ 12,860$ 5,424$ - - (1,724) - 501 300 24 126

33,435 22,199 7,503 42 308,617 334,997 18,663 5,592

4,628,869 928,128 4,705 9,900 - 1,404,340 - - - 894 - -

4,628,869 2,333,362 4,705 9,900

4,937,486 2,668,359 23,368 15,492

15,260 (5,855) 342 47 - - - -

15,260 (5,855) 342 47

- - - - - 9,421 - -

24,703 - - -

24,703 9,421 - -

- 417,138 - - - - - -

6,896,732 28,265,888 - - 25,388 25,208 11,486 -

442,305 23,301 21,366 7,324 7,364,425 28,731,535 32,852 7,324

(3,015,051) (6,389,896) (27,087) (7,324)

4,374,077 22,351,060 5,765 -

57,244 132,113 1,362 187 16,455 375,049 - -

73,699 507,162 1,362 187

8,679 22,604 694 95

4,456,455 22,880,826 7,821 282

9,409,201$ 25,543,330$ 31,531$ 15,821$


53

FriscoFarmersville Cottonwood Creek

ASSETS WWTP WWTP

CURRENT ASSETS: Unrestricted Assets: Cash and cash equivalents 43,238$ 13,721$ Accounts receivable - - Due from other funds 126 24 Prepaid expenses 2,456 502 Total unrestricted assets 45,820 14,247 Restricted Assets: Cash and cash equivalents 14,348 9,432 Investments - - Interest and accounts receivable - -

Total restricted assets 14,348 9,432

TOTAL CURRENT ASSETS 60,168 23,679

DEFERRED OUTFLOWS OF RESOURCES: Deferred customer billings (unrestricted assets) 503 (1,498) Deferred customer billings (restricted assets) - - Total deferred outflows of resources from current assets 503 (1,498)


Total nondepreciable assets - - Depreciable: Land improvements - - Water treatment, storage, and transmission facilities - - Wastewater treatment and disposal facilities - - Automobiles and trucks 11,486 - Other equipment 12,933 - Total depreciable assets 24,419 -

Less accumulated depreciation (18,901) - Net capital assets 5,518 -

DEFERRED OUTFLOWS OF RESOURCES: Long term deferred billings, less current portion 2,051 931 Deferred loss on refunding - -

Total deferred outflows of resources from long-term assets 2,051 931

Net Pension Assets 1,050 1,498

TOTAL LONG-TERM ASSETS 8,619 2,429

TOTAL ASSETS 69,290$ 24,610$

54

LowerLavon Crandall Forney East ForkWWTP WWTP Interceptor Interceptor

8,590$ 1,573$ 14,323$ 10,841$ - - - 5,104 24 - 423 374

1,115 - 7,623 18,107 9,729 1,573 22,369 34,426

1,501 - 16,119 600,502 - - - 1,397,342 - - - 1,551

1,501 - 16,119 1,999,395

11,230 1,573 38,488 2,033,821

650 - (2,375) 109 - - - - 650 - (2,375) 109

- - - - - - 48,877 193,687 - - - -

- - 48,877 193,687

- - - - - - - - - - 1,856,524 15,137,968

11,486 - - - 12,726 - 189,025 - 24,212 - 2,045,549 15,137,968

(9,060) - (1,039,639) (1,589,455)

15,152 - 1,054,787 13,742,200

1,362 - 1,127 1,127 - - - -

1,362 - 1,127 1,127

694 - 494 494

17,208 - 1,056,408 13,743,821

29,088$ 1,573$ 1,092,521$ 15,777,751$


55

Muddy Creek Parker CreekASSETS Interceptor Interceptor

CURRENT ASSETS: Unrestricted Assets: Cash and cash equivalents 11,182$ (2,944)$ Accounts receivable - 2,957 Due from other funds - - Prepaid expenses 2,361 - Total unrestricted assets 13,543 13 Restricted Assets: Cash and cash equivalents 130,904 89,136 Investments 262,696 210,157 Interest and accounts receivable 292 233

Total restricted assets 393,892 299,526



LONG-TERM ASSETS: Nondepreciable: Land - - Easements 49,232 104,204 Construction-in-progress - -

Total nondepreciable assets 49,232 104,204 Depreciable: Land improvements - - Water treatment, storage, and transmission facilities - - Wastewater treatment and disposal facilities 3,411,083 2,465,984 Automobiles and trucks - - Other equipment - - Total depreciable assets 3,411,083 2,465,984

Less accumulated depreciation (845,728) (328,798) Net capital assets 2,614,587 2,241,390

DEFERRED OUTFLOWS OF RESOURCES: Long term deferred billings, less current portion - - Deferred loss on refunding - -

Total deferred outflows of resources from long-term assets - -



TOTAL ASSETS 3,022,022$ 2,540,929$

56

Sabine Creek Buffalo Creek McKinney Mustang CreekInterceptor Interceptor Interceptor Interceptor

(3,808)$ 24,981$ 2,835$ 989$ 3,808 180,213 - 348

- 721 - - - 11,561 - - - 217,476 2,835 1,337

76,546 971,339 202,985 2,502,513 168,732 1,003,100 - 599,479

187 639 - 512 245,465 1,975,078 202,985 3,102,504

245,465 2,192,554 205,820 3,103,841

- 108 - - - - - - - 108 - -

- - - - 70,341 1,253,590 16,150 -

- - - 7,891,098

70,341 1,253,590 16,150 7,891,098

- - - - - - - -

1,697,812 18,008,418 1,551,439 - - - - - - - - -

1,697,812 18,008,418 1,551,439 -

(203,741) (4,023,037) (896,721) -

1,564,412 15,238,971 670,868 7,891,098

- 1,127 - - - 595,409 - -

- 596,536 - -

- 495 - -

1,564,412 15,836,002 670,868 7,891,098

1,809,877$ 18,028,664$ 876,688$ 10,994,939$


57

Small Plants DewateringASSETS Clearing Operations

CURRENT ASSETS: Unrestricted Assets: Cash and cash equivalents 317,855$ (85,160)$ Accounts receivable - - Due from other funds 103,417 94,786 Prepaid expenses - 3,764 Total unrestricted assets 421,272 13,390 Restricted Assets: Cash and cash equivalents - 176,109 Investments - - Interest and accounts receivable - -

Total restricted assets - 176,109


DEFERRED OUTFLOWS OF RESOURCES: Deferred customer billings (unrestricted assets) - (1,829) Total deferred outflows of resources from current assets - (1,829)


Total nondepreciable assets - - Depreciable: Land improvements - - Water treatment, storage, and transmission facilities - - Wastewater treatment and disposal facilities - - Automobiles and trucks - - Other equipment - 690,445 Total depreciable assets - 690,445

Less accumulated depreciation - (665,729) Net capital assets - 24,716

DEFERRED OUTFLOWS OF RESOURCES: Long term deferred billings, less current portion - 1,741 Deferred loss on refunding - -

Total deferred outflows of resources from long-term assets - 1,741

Net Pension Assets - 2,331

TOTAL LONG-TERM ASSETS - 28,788

TOTAL ASSETS 421,272$ 216,458$

58

WastewaterPretreatment Total

Program Sewer System

121,810$ 1,526,418$ 9,315 335,081

- 201,287 3,007 247,604

134,132 2,310,390

- 14,728,850 - 12,251,072 - 13,206 - 26,993,128

134,132 29,303,518

1,160 5,363 1,160 5,363

- 469,516 - 3,156,163 - 7,938,863

- 11,564,542

- 417,138 - 31,540,496 - 151,627,942

44,753 191,772 18,726 1,683,671 63,479 185,461,019

(55,191) (40,007,857)

8,288 157,017,704

40,169 289,183 - 1,344,711

40,169 1,633,894

11,344 77,301

59,801 158,728,899

195,093$ 188,037,780$


59


LIABILITIES Facilities Facilities

CURRENT LIABILITIES: Payable from current assets: Accounts payable and accrued liabilities (1)$ (2)$ Due to other funds - 90,000 Customers’ advance payments 3,314 4,009

Total payable from current assets 3,313 94,007

Payable from restricted assets: Accounts payable and accrued liabilities 41,273 75,191 Due to other funds - - Accrued interest payable on revenue bonds 18,717 32,692 Current portion of revenue bonds 310,000 725,000

Total payable from restricted assets 369,990 832,883

TOTAL CURRENT LIABILITIES 373,303 926,890

LONG-TERM LIABILITIES: Accrued vacation—less current portion - - Accrued sick—less current portion - - Accrued OPEB liability - - Long-term debt—less current portion 3,264,780 2,562,619

TOTAL LONG-TERM LIABILITIES 3,264,780 2,562,619

TOTAL LIABILITIES 3,638,083 3,489,509

NET POSITION: Invested in capital assets—net of related debt 1,238,569 2,942,690 Restricted for debt service 584,420 956,364 Unrestricted 1 (89,998)


60

Royse City Kaufman 4-1 McKinney-Frisco Rockwall-HeathWater Transmission Water Distribution Water Transmission Water Storage

Facilities Facilities Facilities Facilities

-$ 5,260$ -$ 1$ - 941 - - 219 12,623 - 4

219 18,824 - 5

29,663 74,089 - - - - - -

16,959 - - 29,053 90,000 - - 135,000

136,622 74,089 - 164,053

136,841 92,913 - 164,058

- - - - - - - - - - - -

910,000 - - 1,980,000

910,000 - - 1,980,000

1,046,841 92,913 - 2,144,058

226,050 - - 160,227 174,783 - - 277,082

- 1 - (1)

400,833$ 1$ -$ 437,308$


61


LIABILITIES Facilities Facilities

CURRENT LIABILITIES: Payable from current assets: Accounts payable and accrued liabilities (2)$ 2$ Due to other funds - - Customers’ advance payments 11 6

Total payable from current assets 9 8

Payable from restricted assets: Accounts payable and accrued liabilities - - Due to other funds - - Accrued interest payable on revenue bonds 169,100 24,753 Current portion of revenue bonds 285,000 95,000






NET POSITION: Invested in capital assets—net of related debt (691,632) 6,499 Restricted for debt service 928,682 202,016 Unrestricted 2 (2)

TOTAL NET POSITION 237,052$ 208,513$

62



(15)$ 652$ 61,259$ 22,002$ - 364 11,315 52,573

3,539 5,270 74,635 54,636

3,524 6,286 147,209 129,211

3,803 23,505 - 46,462 - - - - 833 - 52,285 -

60,000 - 240,000 -

64,636 23,505 292,285 46,462

68,160 29,791 439,494 175,673

- 110 4,269 2,228 - - 53 14 - 60 2,020 1,036 - - 2,602,845 -

- 170 2,609,187 3,278

68,160 29,961 3,048,681 178,951

253,364 429,202 1,078,658 596,700 15,332 - 487,507 -

(223) (2) (79) (73)

268,473$ 429,200$ 1,566,086$ 596,627$


63

Panther Creek Sabine CreekLIABILITIES WWTP WWTP

CURRENT LIABILITIES: Payable from current assets: Accounts payable and accrued liabilities 291,663$ 35,439$ Due to other funds 19,305 38,631 Customers’ advance payments - 44,518


Payable from restricted assets: Accounts payable and accrued liabilities 5,044 5,234 Due to other funds - - Accrued interest payable on revenue bonds 692,476 47,217 Current portion of revenue bonds 2,310,000 430,000

Total payable from restricted assets 3,007,520 482,451

TOTAL CURRENT LIABILITIES 3,318,488 601,039

LONG-TERM LIABILITIES: Accrued vacation—less current portion 15,230 2,785 Accrued sick—less current portion 7,256 22 Accrued OPEB liability 12,263 1,295 Long-term debt—less current portion 41,781,046 5,453,100



NET POSITION: Invested in capital assets—net of related debt 2,725,230 1,226,509 Restricted for debt service 5,445,081 985,360 Unrestricted (4) (5,862)


64


146,460$ 211,204$ 13,343$ 564$ 12,501 13,140 3,167 79

173,597 127,405 3,262 5,089

332,558 351,749 19,772 5,732

3,941,780 17,798 4,705 9,900 - - - -

15,695 222,633 - - 475,000 1,225,000 - -

4,432,475 1,465,431 4,705 9,900

4,765,033 1,817,180 24,477 15,632

13,090 33,219 928 128 38,760 84,846 2 - 5,394 14,048 432 59

2,505,000 16,286,663 - -

2,562,244 16,418,776 1,362 187

7,327,277 18,235,956 25,839 15,819

5,181,342 5,214,446 5,765 - 695,184 2,092,931 - -

(3,794,602) (3) (73) 2

2,081,924$ 7,307,374$ 5,692$ 2$


65


LIABILITIES WWTP WWTP

CURRENT LIABILITIES: Payable from current assets: Accounts payable and accrued liabilities 9,693$ 5,101$ Due to other funds 18,547 - Customers’ advance payments 19,208 9,145


Payable from restricted assets: Accounts payable and accrued liabilities 14,348 9,432 Due to other funds - - Accrued interest payable on revenue bonds - - Current portion of revenue bonds - -



LONG-TERM LIABILITIES: Accrued vacation—less current portion 1,392 - Accrued sick—less current portion 6 - Accrued OPEB liability 653 931 Long-term debt—less current portion - -

TOTAL LONG-TERM LIABILITIES 2,051 931

TOTAL LIABILITIES 63,847 24,609

NET POSITION: Invested in capital assets—net of related debt 5,518 - Restricted for debt service - - Unrestricted (75) 1

TOTAL NET POSITION 5,443$ 1$

66


4,297$ 634$ 14,358$ 34,365$ 4,780 - 1,388 660 2,072 456 3,760 -

11,149 1,090 19,506 35,025

1,501 - 16,119 19,870 - - - - - - - 204,016 - - - 815,000

1,501 - 16,119 1,038,886

12,650 1,090 35,625 1,073,911

928 - 820 820 2 - - -

432 - 307 307 - - - 13,520,821

1,362 - 1,127 13,521,948

14,012 1,090 36,752 14,595,859

15,152 - 1,054,787 (593,621) - - - 1,775,510 (76) 483 982 3

15,076$ 483$ 1,055,769$ 1,181,892$


67

Muddy Creek Parker CreekLIABILITIES Interceptor Interceptor

CURRENT LIABILITIES: Payable from current assets: Accounts payable and accrued liabilities 2,362$ 14$ Due to other funds - - Customers’ advance payments 11,182 -

Total payable from current assets 13,544 14

Payable from restricted assets: Accounts payable and accrued liabilities 22,278 1,000 Due to other funds - - Accrued interest payable on revenue bonds 34,933 28,065 Current portion of revenue bonds 165,000 135,000






NET POSITION: Invested in capital assets—net of related debt 274,587 541,390 Restricted for debt service 336,680 270,461 Unrestricted - (1)


68


(1)$ 20,952$ 40$ 1,337$ - - - - - 197,128 2,795 -

(1) 218,080 2,835 1,337

5,122 26,914 5,122 283,848 - - - 5,034

22,621 188,043 4,583 134,156 110,000 925,000 135,000 165,000

137,743 1,139,957 144,705 588,038

137,742 1,358,037 147,540 589,375

- 820 - - - - - - - 307 - -

1,260,000 13,354,642 140,000 10,571,621

1,260,000 13,355,769 140,000 10,571,621

1,397,742 14,713,806 287,540 11,160,996

194,412 1,554,738 395,868 (825,881) 217,723 1,760,120 193,280 659,824

- - - -

412,135$ 3,314,858$ 589,148$ (166,057)$


69

Small Plants DewateringLIABILITIES Clearing Operations

CURRENT LIABILITIES: Payable from current assets: Accounts payable and accrued liabilities 1,267$ 13,890$ Due to other funds 681 - Customers’ advance payments - -


Payable from restricted assets: Accounts payable and accrued liabilities - 176,109 Due to other funds - - Accrued interest payable on revenue bonds - - Current portion of revenue bonds - -

Total payable from restricted assets - 176,109


LONG-TERM LIABILITIES: Accrued vacation—less current portion - 292 Accrued sick—less current portion - - Accrued OPEB liability - 1,449 Long-term debt—less current portion - -

TOTAL LONG-TERM LIABILITIES - 1,741

TOTAL LIABILITIES 1,948 191,740

NET POSITION: Invested in capital assets—net of related debt - 24,716 Restricted for debt service - - Unrestricted 419,324 2


70



51,064$ 947,202$ 436 268,508

95,136 853,019

146,636 2,068,729

- 4,860,110 - 5,034 - 1,938,830 - 8,830,000

- 15,633,974

146,636 17,702,703

14,272 91,331 18,847 149,808 7,050 48,043

- 132,214,255

40,169 132,503,437

186,805 150,206,140

8,288 23,243,573 - 18,058,340 - (3,470,273)

8,288$ 37,831,640$

NORTH TEXAS MUNICIPAL WATER DISTRICT SEWER SYSTEM SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION YEAR ENDED SEPTEMBER 30, 2013

71


Facilities Facilities

OPERATING REVENUES: Wastewater service fees 425,541$ 816,511$ Other operating revenues - -

Total operating revenues 425,541 816,511

OPERATING EXPENSES: Personnel - - Operating Supplies: Chemicals - - Other supplies - - Operating Services: Electric power - - Other services 66,716 4,475 Depreciation and amortization 103,519 231,467

Total operating expenses 170,235 235,942

OPERATING INCOME (LOSS) 255,306 580,569

NONOPERATING REVENUES (EXPENSES): Investment income 1,157 2,529 Gain (loss) on sale of capital assets - - Interest expense (68,656) (88,248)

Total nonoperating revenues (expenses) (67,499) (85,719)

CHANGE IN NET POSITION 187,807 494,850

NET POSITION AT OCTOBER 1, 2012 (As Previously Stated) 1,635,183 3,402,451

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE - (88,245)



72

Royse City Kaufman 4-1 Rockwall-HeathWater Transmission Water Distribution Water Storage

Facilities Facilities Facilities

143,546$ 54,352$ 227,051$ - - -

143,546 54,352 227,051

- - -

- - - - 2,605 -

- 38,266 - 3,953 13,488 4,060

41,916 - 52,005

45,869 54,359 56,065

97,677 (7) 170,986

513 8 831 - - -

(53,483) - (91,167)

(52,970) 8 (90,336)

44,707 1 80,650

367,870 - 388,443

(11,744) - (31,785)

356,126 - 356,658

400,833$ 1$ 437,308$


73


Facilities Facilities

OPERATING REVENUES: Wastewater service fees 791,034$ 169,554$ Other operating revenues - -


OPERATING EXPENSES: Personnel - - Operating Supplies: Chemicals - - Other supplies - - Operating Services: Electric power - - Other services 4,061 4,060 Depreciation and amortization 300,978 48,306



NONOPERATING REVENUES (EXPENSES): Investment income 2,922 591 Gain (loss) on sale of capital assets - - Interest expense (515,002) (75,606)


CHANGE IN NET POSITION (26,085) 42,173

CHANGE IN REPORTING (104,201) (39,281)

NET POSITION AT OCTOBER 1, 2012 (As Restated) 263,137 166,340

NET POSITION AT SEPTEMBER 30, 2013 237,052$ 208,513$

74



67,661$ 23,279$ 990,795$ 404,433$ - 444 21,247 998

67,661 23,723 1,012,042 405,431

- 4,207 148,378 76,605

- - 45,765 64,212 71 58 53,611 20,147

250 785 278,227 62,133 846 18,989 206,934 179,121

23,201 79,545 269,845 41,346

24,368 103,584 1,002,760 443,564

43,293 (79,861) 9,282 (38,133)

38 2 1,672 97 - 314 314 314

(6,666) - (168,140) -

(6,628) 316 (166,154) 411

36,665 (79,545) (156,872) (37,722)

(565) - (71,705) -

231,808 508,745 1,722,958 634,349

268,473$ 429,200$ 1,566,086$ 596,627$


75

Panther Creek Sabine CreekWWTP WWTP

OPERATING REVENUES: Wastewater service fees 6,717,182$ 1,268,637$ Other operating revenues 8,379 928

Total operating revenues 6,725,561 1,269,565

OPERATING EXPENSES: Personnel 820,066 95,789 Operating Supplies: Chemicals 547,820 5,011 Other supplies 101,280 35,277 Operating Services: Electric power 377,891 136,571 Other services 779,002 438,049 Depreciation and amortization 1,300,869 264,862

Total operating expenses 3,926,928 975,559

OPERATING INCOME (LOSS) 2,798,633 294,006

NONOPERATING REVENUES (EXPENSES): Investment income 19,479 2,692 Gain (loss) on sale of capital assets - 314 Interest expense (2,100,397) (175,113)

Total nonoperating revenues (expenses) (2,080,918) (172,107)


CHANGE IN REPORTING (562,359) -



76


1,893,414$ 4,402,674$ 140,205$ 9,482$ 206,116 353,837 359 40

2,099,530 4,756,511 140,564 9,522

427,098 958,318 31,922 4,439

257,506 235,967 9,181 - 87,135 113,286 24,141 16

256,597 432,492 21,851 417 657,467 1,129,870 50,205 4,869 256,590 960,233 2,919 -

1,942,393 3,830,166 140,219 9,741

157,137 926,345 345 (219)

1,544 9,852 49 5 - - 314 214

(54,725) (587,584) - -

(53,181) (577,732) 363 219

103,956 348,613 708 -

(59,153) (313,885) - -

1,977,968 6,958,761 4,984 2

2,081,924$ 7,307,374$ 5,692$ 2$


77


WWTP WWTP

OPERATING REVENUES: Wastewater service fees 187,993$ 128,563$ Other operating revenues 475 31


OPERATING EXPENSES: Personnel 47,881 38,632 Operating Supplies: Chemicals 5,993 2,906 Other supplies 16,011 9,035 Operating Services: Electric power 28,995 34,935 Other services 86,337 43,111 Depreciation and amortization 1,934 -


OPERATING INCOME (LOSS) 1,317 (25)

NONOPERATING REVENUES (EXPENSES): Investment income 62 25 Gain (loss) on sale of capital assets 314 - Interest expense - -

Total nonoperating revenues (expenses) 376 25

CHANGE IN NET POSITION 1,693 -

CHANGE IN REPORTING - -

NET POSITION AT OCTOBER 1, 2012 (As Restated) 3,750 1

NET POSITION AT SEPTEMBER 30, 2013 5,443$ 1$

78


128,142$ (456)$ 159,568$ 1,587,776$ 364 479 431 509

128,506 23 159,999 1,588,285

31,922 - 21,988 22,061

3,743 - 50,851 56,910 24,522 - 7,286 20,759

- - 41,381 43,316 65,052 3,144 38,522 29,358 3,173 - 67,513 302,760

128,412 3,144 227,541 475,164

94 (3,121) (67,542) 1,113,121

44 2 28 5,308 314 - - - - - - (629,549)

358 2 28 (624,241)

452 (3,119) (67,514) 488,880

- - - (156,383)

14,624 3,602 1,123,283 693,012

15,076$ 483$ 1,055,769$ 1,181,892$


79

Muddy Creek Parker CreekInterceptor Interceptor

OPERATING REVENUES: Wastewater service fees 295,316$ 230,642$ Other operating revenues 145 -


OPERATING EXPENSES: Personnel - - Operating Supplies: Chemicals 22,435 - Other supplies - 4,686 Operating Services: Electric power - 256 Other services 6,051 6,707 Depreciation and amortization 111,943 49,320



NONOPERATING REVENUES (EXPENSES): Investment income 1,002 793 Gain (loss) on sale of capital assets - - Interest expense (109,837) (87,988)



CHANGE IN REPORTING (30,806) (36,922)



80


184,783$ 1,603,938$ 149,875$ 740,798$ - 612 - -

184,783 1,604,550 149,875 740,798

- 22,141 - -

- 59,082 - - 12 5,818 - -

- 27,179 316 - 9,280 32,439 4,566 84,315

33,956 610,271 54,941 -

43,248 756,930 59,823 84,315

141,535 847,620 90,052 656,483

640 6,221 220 11,091 - - - -

(70,927) (480,257) (17,916) (295,849)

(70,287) (474,036) (17,696) (284,758)

71,248 373,584 72,356 371,725

(31,820) (257,978) (1,930) (485,971)

340,887 2,941,274 516,792 (537,782)

412,135$ 3,314,858$ 589,148$ (166,057)$


81

Small Plants DewateringClearing Operations

OPERATING REVENUES: Wastewater service fees -$ 755$ Other operating revenues - 1,040

Total operating revenues - 1,795

OPERATING EXPENSES: Personnel - 111,480 Operating Supplies: Chemicals - 26,402 Other supplies - 8,427 Operating Services: Electric power - - Other services - (152,446) Depreciation and amortization - 15,657

Total operating expenses - 9,520

OPERATING INCOME (LOSS) - (7,725)

NONOPERATING REVENUES (EXPENSES): Investment income - - Gain (loss) on sale of capital assets - - Interest expense - -

Total nonoperating revenues (expenses) - -

CHANGE IN NET POSITION - (7,725)

CHANGE IN REPORTING - -



82



624,503$ 24,567,547$ 2,895 599,329

627,398 25,166,876

427,320 3,290,247

- 1,393,784 36,775 570,958

- 1,781,858 156,383 3,978,984

4,881 5,233,950

625,359 16,249,781

2,039 8,917,095

116 69,533 - 2,412 - (5,677,110)

116 (5,605,165)

2,155 3,311,930

- (2,284,733)

6,133 34,519,710

8,288$ 37,831,640$

NORTH TEXAS MUNICIPAL WATER DISTRICT SEWER SYSTEM SCHEDULE OF CASH FLOWS YEAR ENDED SEPTEMBER 30, 2013

83

Little Elm Plano Water

TransmissionWater

TransmissionFacilities Facilities

CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers 424,820$ 812,313$ Cash received from other funds - - Cash received from (paid to) others - - Cash paid to suppliers for goods and services (9,807) (17,799) Cash paid for employee services - - Cash paid to other funds (165) (215)

Net cash provided by (used for) operating activities 414,848 794,299

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from the issuance of bonds (20,000) - Cash paid for capital assets 5,000 - Interest paid (99,765) (112,075) Principal payments on long-term debt and capital leases (280,000) (700,000) Payments for bond issue costs 6,505 -

Net cash provided by (used for) capital and related financing activities (388,260) (812,075)

CASH FLOWS FROM INVESTING ACTIVITIES: Sale and maturity of investments - - Purchases of investments (239,048) (629,125) Interest received 1,051 2,221

Net cash provided by (used for) investing activities (237,997) (626,904) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (211,409) (644,680)

CASH AND CASH EQUIVALENTS—Beginning of year 619,738 1,082,895

CASH AND CASH EQUIVALENTS—End of year 408,329$ 438,215$

RECONCILIATION OF TOTAL CASH TO THE STATEMENT OF NET POSITIONUnrestricted cash and cash equivalents 3,314$ 4,009$ Restricted cash and cash equivalents 405,015 434,206

408,329$ 438,215$

RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating income 255,306$ 580,569$

Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 103,519 231,467 Amortization - - Change in current assets and liabilities: Accounts receivable and deferred billings (204) (538) Prepaid expenses - - Net pension assets - - Due to/from other funds - (13,000) Accounts payable, accrued liabilities, and developers’ deposits 56,948 (2) Accrued vacation and Accrued sick - - Accrued OPEB - - Customers’ advance payments (721) (4,197)

Total adjustments 159,542 213,730 NET CASH PROVIDED BY OPERATING ACTIVITIES 414,848$ 794,299$

NONCASH TRANSACTION DISCLOSURESGain (loss) on sale of capital assets - - Interest capitalized on construction - - Amortization of bond-related items 2,130 (19,160) Change in fair value of investments (163) (428) Change in actuarial value of net pension assets - - Refunding bonds issued 3,555,000 - Refunding proceeds deposited in escrow 3,518,123 -

84

Royse City Kaufman 4-1 Rockwall-HeathWater

TransmissionWater

Distribution Water Storage

Facilities Facilities Facilities

143,954$ 67,489$ 227,045$ - - - - - -

(4,069) (59,239) (4,255) - - - - (12,201) -

- 139,885 (3,951) 222,790

- - - - - -

(54,786) - (93,171) (85,000) - (130,000)

- - -

(139,786) - (223,171)

- - - (139,028) - (229,046)

455 76 692

(138,573) 76 (228,354) (138,474) (3,875) (228,735)

220,868 91,153 305,495

82,394$ 87,278$ 76,760$

219$ 13,189$ 4$ 82,175 74,089 76,756 82,394$ 87,278$ 76,760$

97,677$ (7)$ 170,986$

41,916 - 52,005 - - -

70 514 (196) - (5) - - - - - 568 -

3 (2,073) 3 - - - - - - 219 (2,948) (8)

42,208 (3,944) 51,804

139,885$ (3,951)$ 222,790$

- - - - - - - - - (95) - (156) - - - - - - - - -


85

Terrell RockwallWater

TransmissionWater Pump

StationFacilities Facilities

CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers 725,138$ 168,824$ Cash received from other funds - - Cash received from (paid to) others - - Cash paid to suppliers for goods and services (4,765) (4,194) Cash paid for employee services - - Cash paid to other funds - -


CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from the issuance of bonds Cash paid for capital assets - - Interest paid (519,450) (78,532) Principal payments on long-term debt and capital leases (270,000) (90,000) Payments for bond issue costs - -


CASH FLOWS FROM INVESTING ACTIVITIES: Sale and maturity of investments - - Purchases of investments (819,163) (159,032) Interest received 2,433 494


CASH AND CASH EQUIVALENTS—Beginning of year 1,097,323 229,952


RECONCILIATION OF TOTAL CASH TO THE STATEMENT OF NET POSITIONUnrestricted cash and cash equivalents (65,910)$ 6$ Restricted cash and cash equivalents 277,426 67,506

211,516$ 67,512$


Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 300,978 48,306 Amortization - - Change in current assets and liabilities: Accounts receivable and deferred billings (66,608) (136) Prepaid expenses - - Net pension assets - - Due to/from other funds - - Accounts payable, accrued liabilities, and developers’ deposits (3) 4 Accrued vacation and Accrued sick - - Accrued OPEB - - Customers’ advance payments 11 (732)


NONCASH TRANSACTION DISCLOSURESGain (loss) on sale of capital assets - - Interest capitalized on construction - - Amortization of bond-related items (398) (1,502) Change in fair value of investments (558) (108) Change in actuarial value of net pension assets - - Refunding bonds issuedRefunding proceeds deposited in escrow

86

Murphy South Rockwall North Rockwall

WWTP/ Wylie (Buffalo Creek) (Squabble Creek)


67,727$ 26,187$ 944,972$ 474,634$ - - - - - - 19,614 44

(957) (20,366) (479,533) (196,245) - (2,554) (85,189) (44,447)

(210) (1,771) (159,099) (163,807) -

66,560 1,496 240,765 70,179

- 314 (2,792) (2,792)

(7,500) - (168,180) - (60,000) - (235,000) -

- - - -

(67,500) 314 (405,972) (2,792)

- - - - - - (388,077) - 42 24 1,438 140

42 24 (386,639) 140 (898) 1,834 (551,846) 67,527

24,167 27,706 840,157 99,043

23,269$ 29,540$ 288,311$ 166,570$

3,301$ 6,035$ 137,161$ 120,107$ 19,968 23,505 151,150 46,463 23,269$ 29,540$ 288,311$ 166,570$

43,293$ (79,861)$ 9,282$ (38,133)$

23,201 79,545 269,845 41,346 - - - -

- 225 (3,922) 15,284 - 35 811 331 - (35) (1,404) (686) - 414 3,123 (2,328)

(1,243) 6,630 409 - (23) (2,380) (1,227) - (228) 2,073 1,067 66 2,667 (42,773) 54,636

23,267 81,357 232,003 108,832

66,560$ 1,496$ 241,285$ 70,699$

- 314 314 314 - - - - - - 3,735 - - - (264) - - 35 1,404 686


87

Panther Creek Sabine CreekWWTP WWTP

CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers 6,654,189$ 1,270,226$ Cash received from other funds Cash received from (paid to) others 107 128 Cash paid to suppliers for goods and services (1,494,176) (251,160) Cash paid for employee services (571,034) (55,569) Cash paid to other funds (577,134) (237,404)

Net cash provided by (used for) operating activities 4,011,952 726,221

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from the issuance of bonds - (42,000) Cash paid for capital assets (2,983) (2,792) Interest paid (2,172,928) (227,205) Principal payments on long-term debt and capital leases (2,220,000) (435,000) Payments for bond issue costs - 15,531

Net cash provided by (used for) capital and related financing activities (4,395,911) (691,466)

CASH FLOWS FROM INVESTING ACTIVITIES: Sale and maturity of investments 2,296,852 - Purchases of investments (2,399,184) (689,136) Interest received 25,404 2,285


CASH AND CASH EQUIVALENTS—Beginning of year 2,937,970 1,102,062

CASH AND CASH EQUIVALENTS—End of year 2,477,083$ 449,966$

RECONCILIATION OF TOTAL CASH TO THE STATEMENT OF NET POSITIONUnrestricted cash and cash equivalents 117,199$ 102,295$ Restricted cash and cash equivalents 2,359,884 347,671

2,477,083$ 449,966$

RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating income 2,798,633$ 294,006$

Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 1,300,869 264,862 Amortization - - Change in current assets and liabilities: Accounts receivable and deferred billings (43,375) (4,215) Prepaid expenses (5,576) (2,333) Net pension assets (7,811) (856) Due to/from other funds 7,178 (3,804) Accounts payable, accrued liabilities, and developers’ deposits (87,253) 171,662 Accrued vacation and Accrued sick 44,140 (1,539) Accrued OPEB 14,133 1,334 Customers’ advance payments (8,986) 7,624

Total adjustments 1,213,319 432,735 NET CASH PROVIDED BY OPERATING ACTIVITIES 4,011,952$ 726,741$

NONCASH TRANSACTION DISCLOSURESGain (loss) on sale of capital assets - 314 Interest capitalized on construction 958 - Amortization of bond-related items (39,739) (88) Change in fair value of investments (5,522) (469) Change in actuarial value of net pension assets 7,811 856 Refunding bonds issued - 5,785,000 Refunding proceeds deposited in escrow - 5,760,963

88


2,017,667$ 4,329,238$ 125,216$ 8,096$

67 87 64 - (862,994) (1,254,504) (71,911) (6,238) (268,594) (611,309) (18,521) (2,554) (326,524) (581,537) (41,251) (537)

- 559,622 1,881,975 (6,403) (1,233)

- - - - 3,765,514 - (2,792) 214

(54,431) (702,034) - - (465,000) (1,185,000) - -

- - - -

3,246,083 (1,887,034) (2,792) 214

- 1,462,678 - - - (1,399,524) - -

1,658 3,278 50 14

1,658 66,432 50 14 3,807,363 61,373 (9,145) (1,005)

1,096,187 1,179,253 26,710 16,329

4,903,550$ 1,240,626$ 17,565$ 15,324$

274,681$ 312,498$ 12,860$ 5,424$ 4,628,869 928,128 4,705 9,900 4,903,550$ 1,240,626$ 17,565$ 15,324$

157,137$ 926,345$ 345$ (219)$

256,590 960,233 2,919 - - - - -

(15,679) (15,212) 941 (91) 15,417 9,844 (6,167) 39 (3,231) (8,912) (285) (32) 6,456 3,012 1,615 262

22,612 98,795 4,656 103 (13,913) (41,700) (506) (46)

5,784 15,095 445 62 128,449 (65,525) (9,846) (1,311)

402,485 955,630 (6,228) (1,014)

559,622$ 1,881,975$ (5,883)$ (1,233)$

- - 314 214 - - - -

2,743 (107,469) - - - (3,594) - -

3,231 8,912 285 32 - - - - - - - -


89


WWTP WWTPCASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers 205,919$ 120,968$ Cash received from other funds Cash received from (paid to) others 11 7 Cash paid to suppliers for goods and services (82,675) (105,456) Cash paid for employee services (27,783) - Cash paid to other funds (72,771) (31,629)

Net cash provided by (used for) operating activities 22,701 (16,110)

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from the issuance of bonds - - Cash paid for capital assets (792) - Interest paid - - Principal payments on long-term debt and capital leases - - Payments for bond issue costs - -

Net cash provided by (used for) capital and related financing activities (792) -

CASH FLOWS FROM INVESTING ACTIVITIES: Sale and maturity of investments - - Purchases of investments - - Interest received 73 34

Net cash provided by (used for) investing activities 73 34 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 21,982 (16,076)

CASH AND CASH EQUIVALENTS—Beginning of year 35,604 39,229


RECONCILIATION OF TOTAL CASH TO THE STATEMENT OF NET POSITIONUnrestricted cash and cash equivalents 43,238$ 13,721$ Restricted cash and cash equivalents 14,348 9,432

57,586$ 23,153$

RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating income 1,317$ (25)$

Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 1,934 - Amortization - - Change in current assets and liabilities: Accounts receivable and deferred billings (997) (382) Prepaid expenses (17) 94 Net pension assets (432) (609) Due to/from other funds 629 (9,389) Accounts payable, accrued liabilities, and developers’ deposits 2,131 517 Accrued vacation and Accrued sick (763) - Accrued OPEB 672 991 Customers’ advance payments 18,747 (7,307)

Total adjustments 21,904 (16,085) NET CASH PROVIDED BY OPERATING ACTIVITIES 23,221$ (16,110)$

NONCASH TRANSACTION DISCLOSURESGain (loss) on sale of capital assets 314 - Interest capitalized on construction - - Amortization of bond-related items - - Change in fair value of investments - - Change in actuarial value of net pension assets 432 609 Refunding bonds issuedRefunding proceeds deposited in escrow

90


127,313$ -$ 165,899$ 1,554,629$

64 - - 7 (53,833) (4,040) (132,920) (132,343) (18,519) (171) (14,879) (14,879) (48,665) (2,203) (23,640) (17,255)

6,360 (6,414) (5,540) 1,390,159

- - - - (2,292) - 2,000 -

- - - (649,830) - - - (775,000) - - - -

(2,292) - 2,000 (1,424,830)

- - - - - - - - 44 1 43 33,652

44 1 43 33,652 4,112 (6,413) (3,497) (1,019)

5,979 7,986 33,939 612,362

10,091$ 1,573$ 30,442$ 611,343$

8,590$ 1,573$ 14,323$ 10,841$ 1,501 - 16,119 600,502

10,091$ 1,573$ 30,442$ 611,343$

94$ (3,121)$ (67,542)$ 1,113,121$

3,173 - 67,513 302,760 - - - -

(1,091) 1,618 2,008 (5,580) 34 1,156 4,111 (858)

(285) - (190) (190) 2,761 (3,274) 1,395 (1,000) 2,110 (4,131) (13,174) 8,521 (506) - (333) (333) 445 - 333 333 145 (1,782) 339 (26,615)

6,786 (6,413) 62,002 277,038

6,880$ (9,534)$ (5,540)$ 1,390,159$

314 - - - - - - - - - - (7,687) - - - 2,759 285 - 190 190


91

Muddy Creek Parker CreekInterceptor Interceptor

CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers 290,039$ 235,316$ Cash received from other funds - - Cash received from (paid to) others - - Cash paid to suppliers for goods and services (37,372) (24,425) Cash paid for employee services - - Cash paid to other funds (1,940) (868)


CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from the issuance of bonds - - Cash paid for capital assets - 1,000 Interest paid (112,356) (89,884) Principal payments on long-term debt and capital leases (155,000) (130,000) Payments for bond issue costs - -


CASH FLOWS FROM INVESTING ACTIVITIES: Sale and maturity of investments - - Purchases of investments - - Interest received 6,347 5,054

Net cash provided by (used for) investing activities 6,347 5,054 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (10,282) (3,807)



RECONCILIATION OF TOTAL CASH TO THE STATEMENT OF NET POSITIONUnrestricted cash and cash equivalents 11,182$ (2,944)$ Restricted cash and cash equivalents 130,904 89,136

142,086$ 86,192$


Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 111,943 49,320 Amortization - - Change in current assets and liabilities: Accounts receivable and deferred billings - 4,674 Prepaid expenses 2,427 - Net pension assets - - Due to/from other funds 10 - Accounts payable, accrued liabilities, and developers’ deposits (10,981) (13,644) Accrued vacation and Accrued sick - - Accrued OPEB - - Customers’ advance payments (7,704) -


NONCASH TRANSACTION DISCLOSURESGain (loss) on sale of capital assets - - Interest capitalized on construction - - Amortization of bond-related items - - Change in fair value of investments 518 415 Change in actuarial value of net pension assets - - Refunding bonds issued - - Refunding proceeds deposited in escrow - -

92


180,444$ 1,575,908$ 151,986$ 740,450$ - - - - - - - -

(4,855) (113,957) (4,711) (4,015) - (14,883) - -

(4,439) (14,530) (170) (5) -

171,150 1,432,538 147,105 736,430

- - - - - 5,000 - (6,220,886)

(72,457) (585,196) (20,000) (331,823) (105,000) (885,000) (125,000) (260,000)

- - - (151,847)

(177,457) (1,465,196) (145,000) (6,964,556)

- 1,128,452 - - - (999,660) - (599,119)

4,066 2,914 225 10,734

4,066 131,706 225 (588,385) (2,241) 99,048 2,330 (6,816,511)

74,979 897,272 203,490 9,320,013

72,738$ 996,320$ 205,820$ 2,503,502$

(3,808)$ 24,981$ 2,835$ 989$ 76,546 971,339 202,985 2,502,513 72,738$ 996,320$ 205,820$ 2,503,502$

141,535$ 847,620$ 90,052$ 656,483$

33,956 610,271 54,941 - - - - -

(3,808) (119,165) - (860) - (26) - - - (191) - - - (704) - - (2) 4,128 1 80,807

- (333) - - - 333 - -

(531) 90,605 2,111 -

29,615 584,918 57,053 79,947

171,150$ 1,432,538$ 147,105$ 736,430$

- - - - - - - 101,469 - (102,974) - (21,092) 333 (3,344) - (408) - 191 - - - - - - - - - -


93

Small Plants DewateringClearing Operations

CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers -$ -$ Cash received from other funds - 168,232 Cash received from (paid to) others - 33 Cash paid to suppliers for goods and services 6,961 (78,659) Cash paid for employee services 2,822 (61,083) Cash paid to other funds (1,003) (1,950)


CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from the issuance of bonds - - Cash paid for capital assets - (7,932) Interest paid - - Principal payments on long-term debt and capital leases - - Payments for bond issue costs - -

Net cash provided by (used for) capital and related financing activities - (7,932)

CASH FLOWS FROM INVESTING ACTIVITIES: Sale and maturity of investments - - Purchases of investments - - Interest received - 170

Net cash provided by (used for) investing activities - 170 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 8,780 18,811



RECONCILIATION OF TOTAL CASH TO THE STATEMENT OF NET POSITIONUnrestricted cash and cash equivalents 317,855$ (85,160)$ Restricted cash and cash equivalents - 176,109

317,855$ 90,949$

RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating income -$ (7,725)$

Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation - 15,657 Amortization - - Change in current assets and liabilities: Accounts receivable and deferred billings - (812) Prepaid expenses 419 1,440 Net pension assets - (780) Due to/from other funds 7,167 9,035 Accounts payable, accrued liabilities, and developers’ deposits 1,194 7,826 Accrued vacation and Accrued sick - 337 Accrued OPEB - 1,595 Customers’ advance payments - -


NONCASH TRANSACTION DISCLOSURESGain (loss) on sale of capital assets - - Interest capitalized on construction - - Amortization of bond-related items - - Change in fair value of investments - - Change in actuarial value of net pension assets - 780 Refunding bonds issued - - Refunding proceeds deposited in escrow - -

94



676,634$ 24,513,240$ 168,232

10 20,243 (162,651) (5,677,163) (328,647) (2,137,793) (132,316) (2,455,239)

- 53,030 14,431,520

- (62,000) (7,035) (2,474,046)

- (6,151,603) - (8,590,000) - (129,811)

(7,035) (17,407,460)

- 4,887,982 - (8,689,142) 117 105,229

117 (3,695,931) 46,112 (6,671,871)

75,698 22,927,139

121,810$ 16,255,268$

121,810$ 1,526,418 - 14,728,850

121,810$ 16,255,268$

2,039$ 8,917,095

4,881 5,233,950 - -

8,784 (248,753) 1,773 22,949

(4,226) (30,155) 48 10,174

(38,755) 297,799 27,632 8,507 7,506 51,973

43,348 167,981

50,991 5,514,425

53,030$ 14,431,520$

- 2,412 - 102,427 - (291,501) - (11,084)

4,226 30,155 - 9,340,000 - 9,279,086

STATISTICAL SECTION

Contents Schedule #s

Financial Trends 1 thru 9These tables contain trend information to help the reader understand how the District's financial performance and well-being have changed over time.

Revenue Capacity 10 thru 15These tables contain information to help the reader assess the District's various revenue sources.

Debt Capacity 16 & 17These tables present information to help the reader assess the affordability of the District's current levels of outstanding debt and the District's ability to issue additional debt in the future.

Economic and Demographic Information 18 thru 20These tables offer economic and demographic indicators to help the reader understand the environment within which the District's financial activities take place.

Operating Information 21 thru 23

These tables contain service and infrastructure data to help the reader understand how the information in the District's financial report relates to the services the District provides.

This part of the North Texas Municipal Water District's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the District's overall financial health. This information has not been audited by the independent auditor.

Source: Unless otherwise noted, the information in these tables is derived from the comprehensive annual financial reports for the relevant year.

NORTH TEXAS MUNICIPAL WATER DISTRICT SCHEDULE 1 NET POSITION BY COMPONENT (UNAUDITED) LAST TEN FISCAL YEARS

95

2004 2005 2006

Net investment in capital assets 385,992,464$ 445,990,542$ 454,831,973$ Restricted for debt service 29,373,605 37,994,652 60,987,506Unrestricted 119,760,668 110,354,459 129,337,359 Total 535,126,737$ 594,339,653$ 645,156,838$

2007 2008 2009


2010 2011 2012


2013

Net investment in capital assets 747,192,747$ Restricted for debt service 134,554,194Unrestricted 83,782,522 Total 965,529,463$

Source: Statement of Net Position for the North Texas Municipal Water District.

NORTH TEXAS MUNICIPAL WATER DISTRICT SCHEDULE 2 CHANGES IN NET POSITION (UNAUDITED) LAST TEN FISCAL YEARS

96

Nonoperating Change Prior Fiscal Operating Operating Operating Revenues/ Other in Net PeriodYear Revenues Expenses Income (Expenses) Items (1) Position Adjustment (2)

2004 141,281,506$ 74,859,788$ 66,421,718$ (6,323,681)$ (611,720)$ 59,486,317$ -$ 2005 153,704,172 88,622,672 65,081,500 (5,682,478) (186,106) 59,212,916 - 2006 168,857,045 114,996,849 53,860,196 (3,043,011) - 50,817,185 - 2007 180,723,392 112,404,186 68,319,206 561,584 - 68,880,790 - 2008 200,461,423 135,201,435 65,259,988 (5,075,990) - 60,183,998 - 2009 220,001,152 174,371,455 45,629,697 (19,016,830) - 26,612,867 - 2010 230,990,723 169,457,931 61,532,792 (31,244,507) - 30,288,285 (3,584,643) 2011 247,247,717 168,185,081 79,062,636 (40,559,881) - 38,502,755 - 2012 266,482,345 172,604,883 93,877,462 (40,170,615) - 53,706,847 - 2013 294,318,335 185,544,056 108,774,279 (49,877,698) - 58,896,581 (13,114,855)

Source: Statement of Revenues, Expenses and Changes in Net Position for the North Texas Municipal Water District.

(1) Other items includes special and extraordinary items beginning in fiscal year 2003.(2) 2013 amount reflects the cumulative effect of change in accounting principle.

NORTH TEXAS MUNICIPAL WATER DISTRICT SCHEDULE 3 TOTAL REVENUES BY SOURCE (UNAUDITED) LAST TEN FISCAL YEARS

97

Wastewater Solid WasteWater Service Service Investment

Year Sales Fees Fees Income Miscellaneous Total

2004 82,080,288$ 42,885,061$ 16,216,233$ 3,018,181$ 116,753$ 144,316,516$ 2005 88,418,520 46,695,321 18,325,772 7,141,008 377,792 160,958,413 2006 95,229,396 54,537,238 18,470,012 15,575,375 1,280,654 185,092,675 2007 100,901,474 58,988,815 19,263,463 29,045,305 1,801,388 210,000,445 2008 110,771,168 65,714,584 22,435,070 12,266,911 1,909,808 213,097,541 2009 122,135,437 73,823,795 22,146,863 6,874,381 5,535,297 230,515,773 2010 129,079,671 77,238,181 23,154,120 1,626,312 5,966,568 237,064,852 2011 148,712,453 73,550,031 23,526,336 2,039,519 6,734,417 254,562,756 2012 161,588,387 78,762,862 24,257,060 1,864,517 9,411,393 275,884,219 2013 184,641,152 83,357,407 24,553,966 1,261,442 6,686,736 300,500,703


NOTE: Total revenue includes water sales, wastewater sales, wastewater service fees, solid waste service fees, investment income, and miscellaneous income.

NORTH TEXAS MUNICIPAL WATER DISTRICT SCHEDULE 4 TOTAL EXPENSES BY FUNCTION (UNAUDITED) LAST TEN FISCAL YEARS

98

Operating andMaintenance Interest

Year Expenses Expense Depreciation Amortization Miscellaneous Total

2004 56,535,605$ 9,358,691$ 17,936,002$ 388,181$ -$ 84,218,479$ 2005 68,537,398 12,932,644 19,652,597 432,677 4,075 101,559,391 2006 94,186,532 19,097,272 20,383,272 427,045 180,804 134,274,925 2007 89,407,742 28,707,108 22,429,175 567,269 8,361 141,119,655 2008 109,643,334 17,683,227 24,968,068 590,033 28,881 152,913,543 2009 139,032,903 29,525,984 34,678,755 659,797 5,467 203,902,906 2010 130,142,166 36,311,906 38,315,439 1,000,326 1,006,730 206,776,567 2011 127,804,481 47,874,920 39,262,832 1,117,768 - 216,060,001 2012 129,796,674 49,572,489 41,661,976 1,146,233 - 222,177,372 2013 140,151,618 56,060,066 45,392,438 - - 241,604,122


depreciation, amortization, and miscellaneous expenses.NOTE: Total expenses includes operating and maintenance expenses, interest expense,

NORTH TEXAS MUNICIPAL WATER DISTRICT SCHEDULE 5 TOTAL REVENUES BY SYSTEM (UNAUDITED) LAST TEN FISCAL YEARS

99


Year System System System System System Total

2004 83,893,122$ 24,702,020$ 9,835,746$ 16,452,389$ 9,433,239$ 144,316,516$ 2005 93,284,944 25,923,373 12,319,544 18,822,580 10,607,972 160,958,413 2006 106,655,478 27,729,125 16,333,510 19,916,781 14,457,781 185,092,675 2007 122,957,373 29,888,091 22,399,276 20,612,617 14,143,088 210,000,445 2008 119,482,896 33,263,176 21,650,281 23,441,552 15,259,636 213,097,541 2009 128,499,761 38,483,393 22,297,706 23,448,502 17,786,411 230,515,773 2010 134,628,838 38,459,665 20,417,285 23,982,504 19,576,560 237,064,852 2011 155,773,667 38,475,101 18,866,637 24,196,146 17,251,205 254,562,756 2012 170,969,532 37,966,678 23,759,739 25,089,308 18,098,962 275,884,219 2013 189,952,267 41,092,579 25,238,821 25,893,780 18,323,256 300,500,703

Source: Statement of Revenues, Expenses and Changes in Net Position for the North Texas MunicipalWater District.

NORTH TEXAS MUNICIPAL WATER DISTRICT SCHEDULE 6 TOTAL EXPENSES BY SYSTEM (UNAUDITED) LAST TEN FISCAL YEARS

100



2004 39,641,849$ 18,470,442$ 7,556,329$ 12,356,664$ 6,193,195$ 84,218,479$ 2005 45,921,442 23,907,592 8,450,679 16,739,001 6,540,677 101,559,391 2006 71,963,146 26,038,670 11,872,173 16,097,589 8,303,872 134,275,450 2007 75,810,118 25,728,557 13,957,739 17,724,536 7,898,705 141,119,655 2008 79,896,481 27,860,710 16,290,315 20,611,697 8,254,340 152,913,543 2009 120,636,425 32,916,158 20,362,370 20,481,786 9,506,167 203,902,906 2010 122,239,215 32,413,410 20,568,052 20,826,161 10,729,729 206,776,567 2011 131,111,892 32,066,017 20,190,437 21,740,087 10,951,568 216,060,001 2012 134,466,963 31,584,482 21,232,537 22,384,482 12,508,908 222,177,372 2013 145,776,078 36,087,104 21,926,891 23,261,880 14,552,169 241,604,122


NORTH TEXAS MUNICIPAL WATER DISTRICT SCHEDULE 7 OPERATING REVENUES (UNAUDITED) LAST TEN FISCAL YEARS

101

Wastewater Solid Waste OtherFiscal Water Service Service OperatingYear Sales Fees Fees Revenues Total

2004 82,080,288$ 42,885,061$ 16,216,233$ 99,924$ 141,281,506$ 2005 88,418,520 46,695,321 18,325,772 264,559 153,704,172 2006 95,229,396 54,537,238 18,470,012 620,399 168,857,045 2007 100,901,474 58,988,815 19,263,463 1,569,640 180,723,392 2008 110,771,168 65,714,584 22,435,070 1,540,601 200,461,423 2009 122,135,437 73,823,795 22,146,863 1,895,057 220,001,152 2010 129,079,671 77,238,181 23,154,120 1,518,751 230,990,723 2011 148,712,453 73,550,031 23,526,336 1,458,897 247,247,717 2012 161,588,387 78,762,862 24,257,060 1,874,036 266,482,345 2013 184,641,152 83,357,407 24,553,966 1,765,810 294,318,335


NORTH TEXAS MUNICIPAL WATER DISTRICT SCHEDULE 8 OPERATING EXPENSES (UNAUDITED) LAST TEN FISCAL YEARS

102

Operating DepreciationFiscal Electric Supplies and andYear Personnel Power Chemicals Services Amortization Total

2004 17,156,212$ 13,006,231$ 8,435,037$ 17,938,125$ 18,324,183$ 74,859,788$ 2005 18,777,276 16,650,751 10,296,768 22,812,603 20,085,274 88,622,672 2006 20,894,927 29,319,772 15,615,734 28,356,099 20,810,317 114,996,849 2007 31,185,659 20,654,688 18,980,400 18,586,995 22,996,444 112,404,186 2008 35,174,646 25,504,019 21,266,391 27,698,278 25,558,101 135,201,435 2009 41,148,956 36,452,486 31,559,396 29,872,065 35,338,552 174,371,455 2010 43,373,126 31,396,882 26,431,408 28,940,750 39,315,765 169,457,931 2011 44,509,650 29,454,026 22,741,133 31,099,672 40,380,600 168,185,081 2012 46,772,079 24,705,243 23,490,278 34,829,074 42,808,209 172,604,883 2013 48,000,657 28,667,812 23,398,387 40,084,762 45,392,438 185,544,056

Source: Statement of Revenues, Expenses and Changes in Net Position for the North Texas Municipal

Water District.

Note: Prior to 2006 Personnel only included Salaries & Wages. Personnel was re-stated beginning in 2007 to include all personnel related items (insurance, taxes, social security, retirement).

NORTH TEXAS MUNICIPAL WATER DISTRICT SCHEDULE 9 NONOPERATING REVENUES AND EXPENSES (UNAUDITED) LAST TEN FISCAL YEARS

103

Gain (Loss) onFiscal Investment Miscellaneous Sale of InterestYear Income Revenue Capital Assets Expense Total

2004 3,018,181$ -$ 16,829$ (9,358,691)$ (6,323,681)$ 2005 7,141,008 74,671 34,487 (12,932,644) (5,682,478) 2006 15,575,375 4,450 475,001 (19,097,837) (3,043,011) 2007 29,045,305 162,150 61,237 (28,707,108) 561,584 2008 12,266,911 360,509 (20,183) (17,683,227) (5,075,990) 2009 6,874,381 3,607,677 27,096 (29,525,984) (19,016,830) 2010 1,626,312 4,395,324 (954,237) (36,311,906) (31,244,507) 2011 2,039,519 5,275,520 - (47,874,920) (40,559,881) 2012 1,864,517 7,372,696 164,661 (49,572,489) (40,170,615) 2013 1,261,442 4,740,486 180,440 (56,060,066) (49,877,698)


NORTH TEXAS MUNICIPAL WATER DISTRICT SCHEDULE 10 NET ADDITIONS TO CAPITAL ASSETS EXCLUDING CONSTRUCTION IN PROGRESS (UNAUDITED) LAST TEN FISCAL YEARS

104



2004 1,186,572$ 549,835$ (2,393,975)$ 3,898,026$ 20,545$ 3,261,003$ 2005 43,809,122 48,721,966 1,569,948 9,031,502 1,773,520 104,906,058 2006 746,334 646,637 36,980,457 2,192,358 122,809 40,688,595 2007 59,125,009 1,096,433 5,040,376 1,183,109 4,996,816 71,441,743 2008 217,271,666 915,563 53,426,921 9,861,935 26,790,287 308,266,372 2009 284,522,680 14,101,945 34,804,787 24,952,092 16,341,285 374,722,789 2010 59,428,177 787,189 904,541 4,048,279 2,739,993 67,908,179 2011 37,945,874 3,504,095 23,018,671 4,503,898 30,415,197 99,387,735 2012 97,175,728 900,820 610,798 1,708,150 17,550,394 117,945,890 2013 103,316,959 90,768,086 320,947 5,979,869 30,382,947 230,768,808

Source: Based on information provided in NTMWD schedule of fixed assets

NORTH TEXAS MUNICIPAL WATER DISTRICT SCHEDULE 11 WATER PRODUCED AND CONSUMED, WASTEWATER TREATED AND SOLID WASTE DISPOSED (UNAUDITED) LAST TEN FISCAL YEARS

105

Gallons of Gallons of Gallons ofWater Water Water Water PercentYear Produced Consumed Unbilled Unbilled Members Customer

2004 83,641,000,000 82,142,056,000 1,498,944,000 1.8% 0.92$ 0.97$ 2005 86,040,000,000 83,852,093,000 2,187,907,000 2.5% 0.97$ 1.02$ 2006 104,451,000,000 100,565,249,000 3,885,751,000 3.7% 0.97$ 1.02$ 2007 80,288,000,000 77,502,272,000 2,785,728,000 3.5% 1.02$ 1.07$ 2008 93,501,966,897 90,254,296,000 3,247,670,897 3.5% 1.08$ 1.13$ 2009 96,036,110,124 93,224,065,000 2,812,045,124 2.9% 1.18$ 1.23$ 2010 90,683,355,747 88,163,732,000 2,519,623,747 2.8% 1.25$ 1.30$ 2011 104,965,486,000 102,097,794,000 2,867,692,000 2.7% 1.37$ 1.42$ 2012 98,209,915,613 96,846,812,000 1,363,103,613 1.4% 1.49$ 1.54$ 2013 98,031,722,000 93,366,805,000 4,664,917,000 4.8% 1.70$ 1.75$

Note: Water production and consumption is based on the NTMWD Water Year (August 1 through July 31).

Gallons of Tons ofFiscal Wastewater Solid WasteYear Treated Disposed

2004 31,029,178,000 676,100 2005 30,567,781,000 666,812 2006 28,585,109,000 699,238 2007 34,164,515,000 791,773 2008 32,065,925,000 816,994 2009 31,348,246,000 750,018 2010 36,263,799,000 743,171 2011 30,875,276,000 751,787 2012 32,789,293,000 722,813 2013 32,919,670,000 786,441

Note: Wastewater treated and solid waste disposed is based on the NTMWD Fiscal Year (October 1 through September 30).

Source: Based on information provided in NTMWD Operations Report.

Water Rates(per 1,000 gallons)

NORTH TEXAS MUNICIPAL WATER DISTRICT SCHEDULE 12 HISTORIC SERVICE USE (UNAUDITED) LAST TEN YEARS

106

2003-2004 2004-2005 2005-2006 2006-2007

WATER CONSUMPTION (GALLONS IN THOUSANDS): Member cities 72,650,460 73,816,373 87,396,751 67,359,017 Customer cities 9,479,318 10,027,439 13,158,818 10,136,235 Individual meters 12,278 8,281 9,680 7,020

Total 82,142,056 83,852,093 100,565,249 77,502,272

Total rainfall (in inches) 41.24 31.24 18.46 54.10

WASTEWATER VOLUME TREATED (GALLONS IN THOUSANDS): Regional system 25,881,960 25,113,699 23,565,864 27,602,153 Small plant system 5,147,218 5,454,082 5,019,245 6,562,362

Total 31,029,178 30,567,781 28,585,109 34,164,515

SOLID WASTE VOLUME (IN TONS): Transfer stations 416,006 438,529 451,929 480,424 Landfill 260,094 228,283 247,309 311,349

Total 676,100 666,812 699,238 791,773


Note: Data for water consumption is based on the NTMWD water year (August 1 through July 31). Data for wastewater volume treated and solid waste volume is reported on the NTMWD fiscal year (October 1 through September 30).

107

2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013

77,535,389 79,197,589 74,574,835 85,966,816 81,019,601 78,407,137 12,713,053 14,019,682 13,583,041 16,126,637 15,822,993 14,956,602

5,854 6,794 5,856 4,341 4,218 3,066

90,254,296 93,224,065 88,163,732 102,097,794 96,846,812 93,366,805

34.89 39.02 41.45 31.18 35.16 29.17

26,159,510 25,254,348 29,189,205 24,721,535 26,347,832 26,734,851 5,906,415 6,093,898 7,074,594 6,153,841 6,441,461 6,184,819

32,065,925 31,348,246 36,263,799 30,875,376 32,789,293 32,919,670

490,400 465,440 473,322 471,825 459,167 475,072 326,594 284,578 269,849 279,962 263,646 311,369

816,994 750,018 743,171 751,787 722,813 786,441

NORTH TEXAS MUNICIPAL WATER DISTRICT SCHEDULE 13 NUMBER OF WATER, WASTEWATER AND SOLID WASTE CUSTOMERS (UNAUDITED) LAST TEN FISCAL YEARS

108

Wastewater Solid WasteFiscal Member Customer Total Member MemberYear Cites Cities Cities Cities Cities

2004 13 28 41 8 52005 13 29 42 10 52006 13 29 42 10 52007 13 30 43 11 52008 13 31 44 12 52009 13 32 45 12 52010 13 32 45 12 52011 13 32 45 12 52012 13 32 45 12 52013 13 33 46 12 5


Water

NORTH TEXAS MUNICIPAL WATER DISTRICT SCHEDULE 14 WATER RATES (UNAUDITED) LAST TEN FISCAL YEARS

109

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013Water Rates (per 1,000 gallons) Member Cities 0.92$ 0.97$ 0.97$ 1.02$ 1.08$ 1.18$ 1.25$ 1.37$ 1.49$ 1.70$ Customer Cities 0.97$ 1.02$ 1.02$ 1.07$ 1.13$ 1.23$ 1.30$ 1.42$ 1.54$ 1.75$

Source: Based on information provided in NTMWD Budget Resolution.

NORTH TEXAS MUNICIPAL WATER DISTRICT SCHEDULE 15 LARGEST CUSTOMERS (UNAUDITED) CURRENT YEAR AND NINE YEARS AGO

110

Customer Amount % Amount % Amount %

Garland 12,357,732$ 15.06% -$ 0.00% -$ 0.00%McKinney 5,889,188 7.17% 5,069,986 11.82% 2,690,820 16.59%Mesquite 7,112,847 8.67% 5,246,857 12.23% - 0.00%Plano 23,668,166 28.84% 16,238,090 37.86% 5,623,875 34.68%Richardson 9,840,392 11.99% 3,324,942 7.75% 3,010,628 18.57%

Subtotal 58,868,325 71.72% 29,879,875 69.67% 11,325,323 69.84%

Other Customers 23,211,963 28.28% 13,005,186 30.33% 4,890,910 30.16%

Grand Total 82,080,288$ 100.00% 42,885,061$ 100.00% 16,216,233$ 100.00%

Customer Amount % Amount % Amount %

Frisco 16,645,894$ 9.02% 11,149,140$ 13.38% 2,976,464$ 12.12%Garland 22,431,264 12.15% - 0.00% - 0.00%McKinney 17,148,225 9.29% 11,780,658 14.13% 4,569,593 18.61%Mesquite 13,104,748 7.10% 7,505,648 8.99% - 0.00%Plano 43,466,729 23.54% 22,729,196 27.27% 6,993,790 28.48%Richardson 17,868,807 9.68% 6,180,020 7.41% 3,262,780 13.29%

Subtotal 130,665,667 70.78% 59,344,662 71.18% 17,802,627 72.50%

Other Customers 53,975,485 29.22% 24,012,745 28.82% 6,751,339 27.50%

Grand Total 184,641,152$ 100.00% 83,357,407$ 100.00% 24,553,966$ 100.00%

Source: Based on information provided in NTMWD Revenue Report.

Fiscal Year 2004

Fiscal Year 2013Water Sales Wastewater Service Fees Solid Waste Service Fees

Wastewater Service Fees Solid Waste Service FeesWater Sales

NORTH TEXAS MUNICIPAL WATER DISTRICT SCHEDULE 16 OUTSTANDING DEBT BY TYPE (UNAUDITED) LAST TEN FISCAL YEARS

111

U.S PerFiscal Revenue Government Capital District CapitaYear Bonds Notes Leases Total Population Debt

2004 357,581,476$ 45,086,268$ 103,366$ 402,771,110$ 616,973 652.8 2005 345,519,028 44,207,068 70,741 389,796,837 653,000 596.9 2006 659,565,000 43,293,094 36,320 702,894,414 690,500 1,017.9 2007 786,435,000 42,236,354 0 828,671,354 724,900 1,143.2 2008 950,630,000 41,145,477 0 991,775,477 748,500 1,325.0 2009 1,102,650,000 40,019,360 0 1,142,669,360 764,500 1,494.7 2010 1,181,140,000 75,497,946 0 1,256,637,946 786,250 1,598.3 2011 1,276,795,000 37,656,812 0 1,314,451,812 791,470 1,660.8 2012 1,617,810,000 36,417,993 0 1,654,227,993 834,642 1,982.0 2013 1,580,770,000 35,139,154 0 1,615,909,154 n/a n/a

Source : Notes to the Basic Financial Statements for the North Texas Municipal Water District.

Note : The District provides service to portions of Collin, Hunt, Rockwall, Dallas, Kaufman, Ellis, Rains, Fannin, and Denton Counties. The majority of the District's population served resides in Collin County. Therefore, this schedule reflects data for Collin County only.

The District was unable to obtain the 2013 "District Population" and the "Per Capita Debt" information at the time of publication of this report.

NORTH TEXAS MUNICIPAL WATER DISTRICT SCHEDULE 17 REVENUE COVERAGE (UNAUDITED) LAST TEN FISCAL YEARS

112

LessOperating

{a} Expenses NetFiscal Total (excluding Available CoverageYear Revenues depreciation) Revenues Principal {b} Adjustment Interest Paid Total Ratio

2004 144,316,516$ 56,535,605$ 87,780,911$ 28,107,511$ 13,799,774$ 41,907,285$ 2.092005 160,958,413 68,537,398 92,421,015 29,216,824 17,560,572 46,777,396 1.982006 185,092,675 94,186,532 90,906,143 24,816,760 20,149,760 44,966,520 2.022007 210,000,445 89,407,742 120,592,703 36,141,740 37,476,257 73,617,997 1.642008 213,097,541 109,643,334 103,454,207 32,840,877 38,357,048 71,197,925 1.452009 230,515,773 139,032,903 91,482,870 36,471,117 48,520,843 84,991,960 1.082010 237,064,852 130,142,166 106,922,686 46,021,961 56,034,581 102,056,542 1.052011 254,562,756 127,804,481 126,758,275 83,806,133 (36,641,083) 61,388,483 108,553,533 1.172012 275,884,219 129,796,674 146,087,545 49,873,819 61,388,483 111,262,302 1.312013 300,500,703 140,151,618 160,349,085 62,918,838 79,055,732 141,974,570 1.13

Source: Statements of Revenues, Expenses & Changes in Net Assets and Statement of Cash Flows for the North Texas Municipal Water DistrictDebt services amounts obtained from First Southwest Company maturity schedules.

{a} Amount represents operating revenue plus nonoperating revenues excluding interest expense and loss on disposal of capital assets.

{b} Advance payment of debt.

Note: The District currently does not maintain any debt covenants requiring a coverage ratio of greater than 1.00.

Debt Service

NORTH TEXAS MUNICIPAL WATER DISTRICT SCHEDULE 18 DEMOGRAPHIC STATISTICS (UNAUDITED) LAST TEN CALENDAR YEARS

113

Personal PerIncome Capita

Calendar District (thousand Personal UnemploymentYear Population dollars) Income Rate

2003 582,933 20,168,511$ 34,598$ 4.3%2004 616,973 21,610,375$ 35,026$ 4.8%2005 653,000 23,155,318$ 35,460$ 5.1%2006 690,500 24,788,079$ 35,899$ 5.6%2007 724,900 26,345,030$ 36,343$ 6.0%2008 748,500 27,539,359$ 36,793$ 6.4%2009 764,500 28,476,127$ 37,248$ 6.9%2010 786,250 29,648,689$ 37,709$ 7.3%2011 791,470 30,214,869$ 38,176$ 7.3%2012 834,642 30,941,848$ 37,072$ 4.5%

Source: Years 2003 - 2011 was based on information provided by North Central Texas Council of Governments; Year 2012 was based on information provided by the U.S. Census Bureau; however, the District was unable to obtain this information for 2013 at the time of publication of this report.

Note: The District provides service to portions of Collin, Hunt, Rockwall, Dallas, Kaufman, Ellis, Rains, Fanin and Denton Counties. The majority of the District's population served resides in Collin County. Therefore, this schedule reflects data for Collin County only.

NORTH TEXAS MUNICIPAL WATER DISTRICT SCHEDULE 19 PRINCIPAL EMPLOYERS (UNAUDITED) CURRENT YEAR AND FIVE YEARS AGO

114

PercentageEmployer Employees of Total

Plano ISD 6,904 1.33%Frisco ISD 5,100 0.98%HP Enterprise Services 4,800 0.92%Bank of America (formerly Countrywide Home Loans) - Corporate Dr. 4,646 0.89%PJC Penney Co., Inc. 3,800 0.73%Capital Co. 3,500 0.67%Bank of America (formerly Countrywide Home Loans) - Legacy Dr. 3,264 0.63%Medical City Plano (HCA Inc.) 3,000 0.58%McKinney ISD 2,571 0.49%

Total 37,585 7.22%

PercentageEmployer Employees of Total

Countrywide Home Loans 4,402 1.13%EDS 4,310 1.11%JC Penney 4,300 1.10%University of Texas at Dallas 3,058 0.78%Raytheon 2,850 0.73%Perot Systems 2,732 0.70%Raytheon Corp 2,400 0.62%Alcatel 2,280 0.58%AT&T Inc 2,140 0.55%

Total 28,472 7.30%

Source: Years 2006 and 2012 was based on information provided by North Central Texas Council of Governments; however, the District was unable to obtain this information for 2013 at the time of publication of this report.

Note 1: The District provides service to portions of Collin, Hunt, Rockwall, Dallas, Kaufman, Ellis, Rains, Fanin and Denton Counties. The majority of the District's population served resides in Collin County. Therefore, this schedule reflects data for Collin County only.

Note 2: Data prior to 2006 is not available

2012

2006

NORTH TEXAS MUNICIPAL WATER DISTRICT SCHEDULE 20 NUMBER OF EMPLOYEES BY FUNCTION (UNAUDITED) LAST TEN FISCAL YEARS

115

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Water: General 7.0 9.0 10.0 13.0 14.0 18.0 18.0 29.0 29.0 31.0 Public Information 1.0 1.0 1.0 1.0 2.0 2.0 2.0 2.0 2.0 2.0 Planning 8.0 8.0 8.0 8.0 8.0 0.0 0.0 0.0 0.0 0.0 Administration 16.0 17.0 18.0 20.0 22.0 22.0 23.0 21.0 21.0 21.0 Plant Operations 25.0 25.0 28.0 29.0 34.0 40.0 45.0 47.0 66.0 78.0 Tawakoni Raw Water Pump St 0.0 0.0 0.0 0.0 0.0 0.0 5.0 10.0 11.0 11.0 East Fork Raw Water Supply 0.0 0.0 0.0 0.0 5.0 7.0 7.0 7.0 7.0 7.0 Bonham Water Treatment 0.0 0.0 0.0 0.0 8.0 10.0 11.0 11.0 11.0 11.0 Facilities Service 26.0 26.0 27.0 29.0 31.0 40.0 40.5 40.5 43.5 46.5 Technical Service 41.0 42.0 45.0 46.0 50.0 53.0 56.5 55.5 56.5 58.5 Laboratory 14.0 16.0 16.0 18.0 23.3 24.3 25.3 25.3 25.3 27.3 Engineering 23.0 23.0 30.0 34.0 35.0 40.0 40.0 40.0 43.0 44.0 Environmental Service 5.0 5.0 5.0 5.0 4.5 5.5 5.7 7.7 7.7 7.7

Total 166.0 172.0 188.0 203.0 236.8 261.8 279.0 296.0 323.0 345.0

Wastewater: Willson Creek WWTP 41.0 47.0 48.0 50.0 51.8 52.8 52.8 52.8 55.8 55.8 Floyd Branch WWTP 7.0 7.0 6.0 6.0 6.3 6.3 6.3 6.3 6.3 6.3 Rowlett Creek WWTP 18.0 20.0 21.0 21.0 20.8 21.8 21.8 21.8 21.8 21.8 Mesquite WWTP 18.5 19.5 22.5 24.5 27.8 29.8 29.8 29.8 32.8 32.8 Panther Creek WWTP 0.0 0.0 0.0 0.0 6.1 6.1 6.1 12.1 12.1 12.1 Muddy Creek WWTP 0.0 5.0 5.0 6.0 12.1 12.1 12.1 12.1 12.1 12.1 Stewart Creek WWTP 5.0 5.0 5.0 6.0 6.1 6.1 6.1 6.1 6.1 6.1 Seagoville WWTP 3.0 3.0 3.0 3.0 0.0 0.0 0.0 0.0 0.0 0.0 Small WWTPs 7.5 6.5 6.5 6.5 6.5 6.5 5.5 5.5 5.5 5.5 Pretreatment 3.0 4.0 4.0 4.0 5.2 5.2 5.0 5.0 5.0 5.0 Dewatering 6.0 4.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 Upper East Fork Interceptor 4.0 6.0 6.0 6.0 5.9 6.9 6.9 6.9 7.9 8.9

Total 113.0 127.0 129.0 135.0 150.2 155.2 154.0 160.0 167.0 168.0

Solid Waste: Transfer Station 39.0 41.0 44.0 46.0 49.5 52.8 52.8 50.8 48.8 47.8 Landfills 29.0 29.0 35.0 36.0 8.3 8.3 2.5 0.0 0.0 0.0 Disposal Facility 0.0 0.0 0.0 0.0 30.3 33.0 37.8 39.3 40.3 39.3 Fleet Maintenance Shop 9.0 9.0 10.0 11.0 11.0 13.0 13.0 13.0 12.0 12.0

Total 77.0 79.0 89.0 93.0 99.0 107.0 106.1 103.0 101.0 99.0

Total Employees 356 378 406 431 486 524 539 559 591 612

Source: Based on information provided in NTMWD Annual Budget.

NORTH TEXAS MUNICIPAL WATER DISTRICT SCHEDULE 21 MISCELLANEOUS STATISTICAL DATA (UNAUDITED) YEAR ENDED SEPTEMBER 30, 2012

116

Authority created under Chapter 62, Acts of 1951, 52nd Legislature of Texas, Regular Session

Year of creation 1951Domicile Wylie, TexasDistrict population 1,600,000+District service area 2,200 square milesWater Treatment Plant 420 acres10 year average annual rainfall 36 inchesTotal employees 612

REGIONAL WATER SYSTEM

RAW WATER SUPPLY—SAFE YIELD: Lavon Lake 102.6 MGD Lake Texoma 82.8 Jim Chapman Lake 44.6 Lake Bonham 4.8 Lake Tawakoni 45.7 Wilson Creek Reuse 44.0 East Fork Raw Water Supply 27.0 Lake Ray Hubbard Pass Through 18.8

Total 370.3 MGD

WATER TREATMENT PLANTS: Wylie—WTP I 70.0 MGD Wylie—WTP II 280.0 Wylie—WTP III 280.0 Wylie—WTP IV 140.0 Bonham WTP 6.6 Tawakoni WTP 30.0

Total 806.6 MGD

TRANSMISSION PIPELINES: 12“ to 24” diameter 115.6 Miles 30“ to 54” diameter 171.0 60“ to 96” diameter 231.3

Total 517.9 Miles

RAW WATER PUMP STATIONS: Lake Lavon—3 sites: Total water pumps 17 Total raw water pumping capacity 940 MGD


117

Lake Texoma—1 site: Total water pumps 2 Total raw water pumping capacity 90 MGD

Jim Chapman Lake—1 site: Total water pumps 3 Total raw water pumping capacity 165 MGD

East Fork Raw Water Supply—2 sites: Total water pumps 8 Total raw water pumping capacity 270 MGD

Lake Tawakoni—2 sites: Total water pumps 7 MGD Total raw water pumping capacity 168

Wylie Water Plant - Treated Water Pump Stations 7 Wylie Water Plant - Treated Water Pumping Capacity 953.5 MGD

TREATED WATER STORAGE RESERVOIRS: NTMWD Treatment plant storage 35.0 Million gallons NTMWD Transmission system storage 368.0

403.0 Million gallons

TOTAL CITY DELIVERY POINTS 77

WASTEWATER SYSTEM Permitted Capacity

REGIONAL SYSTEM: Regional wastewater plants: Floyd Branch RWWTP * 4.750 MGD South Mesquite RWWTP * 33.000 Rowlett Creek RWWTP * 24.000 Wilson Creek RWWTP * 56.000

SEWER SYSTEM: City: Farmersville Farmersville No. 1 Plant 0.225

Farmersville No. 2 Plant 0.530 Frisco Cottonwood Creek Plant 0.300

Panther Creek Plant * 10.000 Stewart Creek West Plant * 5.000

Lavon Bear Creek Plant 0.250 Rockwall North Rockwall Plant * 1.200

South Rockwall Plant * 2.250


118

Royce City Royse City Plant 0.500 Royce City and Fate Sabine Creek Plant * 1.500 Seis Lagos MUD Seis Lagos Plant 0.250 Wylie and Murphy Muddy Creek Plant * 10.000 Wylie Wylie Plant * 2.000

Total treatment capacity 151.755 MGD

Total number of plants 17 *Number of plants owned by NTMWD 11

INTERCEPTOR SYSTEMS Pipeline Length

Upper East Fork Interceptor System 193.6 Miles Lakeside Interceptor (Rockwall) 4.3 Muddy Creek Interceptor 4.1 Forney Interceptor 6.8 Sabine Creek Interceptor 3.2 Parker Creek Interceptor 5.1 Buffalo Creek Interceptor 16.2 Lower East Fork Interceptor System 9.2

Total 242.5 Miles

SOLID WASTE SYSTEM Permitted Capacity

TRANSFER STATIONS (3): Lookout Drive Transfer Station 500 Tons/day Parkway Transfer Station 770 Custer Road Transfer Station 1,900

Total transfer capacity 3,170 Tons/day

LANDFILLS (3): 121 Regional Disposal Facility Permit Boundary 673 Acres Landfillable 433 Acres Permitted Airspace 135 M yd3

Maxwell Creek Landfill* Permit Boundary 193 Acres Landfillable 139 Acres Permitted Airspace 6 M yd3

McKinney Landfill** Permit Boundary 169 Acres Landfillable 94 Acres Permitted Airspace 13 M yd3

* Closed in 2006.**Ceased waste acceptance on December 31, 2008 and is undergoing closure

NORTH TEXAS MUNICIPAL WATER DISTRICT SCHEDULE 22 OPERATING AND CAPITAL INDICATORS (UNAUDITED) LAST TEN FISCAL YEARS

119

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Water: Size of Service Area (square miles) 1,600 1,875 1,875 1,976 1,985 1,985 1,985 1,985 2,200 2,200 Water Supply (MGD) 248 261 276 276 298 333 369 369 369 370 Treatment Capacity (MGD) 630 630 630 630 777 777 777 777 807 807 Miles of Transmission Pipelines 375 395 395 408 482 482 482 487 518 518 Water Storage Capacity (MG) 292 299 385 387 443 314 400 400 400 403 City Delivery Points 59 61 63 59 59 78 78 78 78 77 Total Rainfall (Inches) 41 31 18 54 35 39 41 31 35 29 Annual Consumption (BG) 82 84 101 78 90 93 88 102 97 93

Wastewater: Miles of Interceptor Lines 96 110 132 165 188 210 210 226 243 243 Number of Treatment Plants 19 20 18 18 16 18 18 18 18 17 Treatment Capacity (MGD) 116 121 122 122 121 132 132 137 145 152 Annual Volume Treated (BG) 31 31 29 34 32 31 36 31 33 33

Solid Waste: Number of Transfer Stations 3 3 3 3 3 3 3 3 3 3 Number of Landfills 3 3 3 3 3 3 3 3 3 3 Annual Volume (thousand tons) 676 667 699 792 817 750 743 752 723 786

Source: Based on information provided in NTMWD Operation Report.

NORTH TEXAS MUNICIPAL WATER DISTRICT SCHEDULE 23 INSURANCE IN FORCE (UNAUDITED)

120

AproximateAnnual

Carrier Policy No Coverage Policy Limits Term Premium

Texas Water Conservation 7 Workers's compensation Statutory up to $100,000 7-01-13 to 7-01-14 413,112$ Association Risk (each accident) Management Fund

Texas Water Conservation 7 General libility $5,000,000 per occurrence 7-01-13 to 7-01-14 100,437$ Association Risk $5,000,000 annual aggregate Management Fund

Texas Water Conservation 7 Automobile liability $5,000,000 per occurrence 7-01-13 to 7-01-14 166,392$ Association Risk $5,000,000 annual aggregate Management Fund

Texas Water Conservation 7 Directors' and officers' $5,000,000 per occurrence 7-01-13 to 7-01-14 94,849$ Association Risk liability $5,000,000 annual aggregate Management Fund

Texas Water Conservation 7 Automobile physical damage Actual cash value 7-01-13 to 7-01-14 105,056$ Association Risk Management Fund

Chubb & Son Insurance 35822344 Fire and extended coverage $231,734,000 scheduled 1-01-13 to 1-01-14 172,257$ property

Chubb & Son Insurance 6615026 Commercial floater $21,590,096 scheduled & 5-01-13 to 5-01-14 68,741$ $470,000 unscheduled property

Fidelity & Deposit of 105364181 Fidelity bond $1,000,000 annual aggregate 1-01-13 to 1-01-14 4,454$ Maryland

Anco Insurance B/CS 04T061309 General liability $1,000,000 per occurrence 12-01-12 to 12-01-13 1,062$ Pollution storage tanks $1,000,000 annual aggregate

Anco Insurance B/CS 04T061309 General liability $5,000,000 per occurrence 2-18-13 to 2-17-16 23,605$ Environmental Insurance $5,000,000 annual aggregate

Source: Based on information provided in NTMWD Insurance Policies.

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