NORTH TEXAS MUNICIPAL WATER DISTRICT · The District, a conservation and reclamation district and political subdivision of the state of Texas created in 1951, provides treated water,

NORTH TEXAS MUNICIPAL WATER DISTRICT WYLIE, TEXAS

COMPREHENSIVE ANNUAL FINANCIAL REPORT

FISCAL YEAR ENDED SEPTEMBER 30, 2012

AS PREPARED BY THE

NTMWD ACCOUNTING DEPARTMENT

North Texas Municipal Water DistrictCOMPREHENSIVE ANNUAL FINANCIAL REPORTFOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2012

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 3

Basic Financial Statements:Statement of Net Assets 9Statement of Revenues, Expenses and Changes in Net Assets 13Statement of Cash Flows 15Notes to the Basic Financial Statements 17

Required Supplementary Information-Pension Trend Information (Unaudited) 44

SEWER SYSTEM SUPPLEMENTAL STATEMENTS

Statement of Net Assets 46Statement of Revenues, Expenses and Changes in Net Assets 70Statement of Cash Flows 82

STATISTICAL SECTION (UNAUDITED)Schedule 1 – Net Assets by Component 94Schedule 2 – Changes in Net Assets 95Schedule 3 – Total Revenues by Source 96Schedule 4 – Total Expenses by Function 97Schedule 5 – Total Revenues by System 98Schedule 6 – Total Expenses by System 99Schedule 7 – Operating Revenues 100Schedule 8 – Operating Expenses 101Schedule 9 – Nonoperating Revenues and Expenses 102Schedule 10 – Net Additions to Capital Assets Excluding Construction in Progress 103Schedule 11 – Water Produced and Consumed, Wastewater Treated and

Solid Waste Disposed 104Schedule 12 – Historic Service Use 105Schedule 13 – Number of Water, Wastewater and Solid Waste Customers 107Schedule 14 – Water Rates 108Schedule 15 – Largest Customers 109Schedule 16 – Outstanding Debt by Type 110Schedule 17 – Revenue Coverage 111Schedule 18 – Demographic Statistics 112Schedule 19 – Principal Employers 113Schedule 20 – Number of Employees by Function 114Schedule 21 – Miscellaneous Statistical Data 115Schedule 22 – Operating and Capital Indicators 118Schedule 23 – Insurance in Force 119

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INTRODUCTORY SECTION


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NORTH TEXAS MUNICIPAL WATER DISTRICT

BOARD OF DIRECTORS

Charles McKissick President McKinney

Bill Lofland Vice-President Rockwall

Darwin L. Whiteside Secretary Royse City

Terry Sam Anderson Mesquite

Ken Bell Richardson

Don Cates Forney

Gary Downey Frisco

Joe Farmer Allen

Marvin Fuller Wylie

Don Gordon Garland

Darrell Grooms Forney

Bill Harrison Farmersville

Joe Joplin McKinney

James Kerr Allen

Jack May Garland

Jim Mellody Royse City

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

Engineering Manager Bruce Cole Real Estate Manager Bently Powell Regulatory Compliance Manager Vacant

Wastewater System Manager Ken Wesson Solid Waste System Manager Jeff Mayfield

Deputy Director Mike Rickman Information Technology Officer Jim Shirley Environmental Services Manager David Stephens

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 14, 2013 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, 2012. 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, 2012 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, 2012, 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 requires 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 May 2012 Water System rate projection includes funding for over $2.6 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 $319 million of revenue bonds in 2012 for several projects including the Lake Texoma to Wylie Water Treatment Plant Raw Water Pipeline Project. Other major bond issues included in the projection are a $250 million issue in 2015 and a $270 million issue in 2019 for the construction of the Lower Bois d’ Arc Creek Reservoir Project. Also, a $350 million bond issue is anticipated in 2028 for the development of the Sulphur River Basin Reservoir Project.

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The May 2012 water rate projections indicate that at least a $1.50 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. The December 2011 Wastewater System cost projection reflects several major improvement projects for 2013 including the Rowlett Creek Wastewater Treatment Plant Peak Flow Improvements Project and the Wilson Creek Wastewater Treatment Plant Filter Improvements Project. This cost projection includes funding for additional debt service requirements associated with the issuance of over $48 million of revenue bonds for these system improvements. 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, 2011. This was the twenty second 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, Assistant to the Accounting Manager, 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 Act). 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 the governing bodies of the respective Member City for two-year terms.

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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. Additional raw water supplies will need to be developed to meet the future water demands. NTMWD has identified numerous water management strategies which are included in the 2012 State Water Plan. Conservation and reuse strategies comprise 22% of the future water supply. Even if target conservation and reuse goals are met to extend the current water supplies, these strategies alone will not be sufficient to support the projected growth of the NTMWD service area. Therefore, it is vital that consumers become more knowledgeable regarding their water source and supplies. Since 2006, NTMWD has implemented Water IQ, the statewide public awareness and water conservation program, to facilitate and increase water efficient behaviors. Through the continued success of the Water IQ program combined with the Member Cities and Customer’s 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%. 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.

During the 2011-2012 Water Year (August 2011 – July 2012), NTMWD treated and delivered 96.8 billion gallons of water, a 5.14% decline as compared to 102.1 billion gallons delivered during the 2010-2011 Water Year. The Lavon Lake area began experiencing a drought in May 2010, and continued to be in a La Nina weather pattern from that point well into 2012. During the summer months of 2011, the Water System set record delivery demands with an all-time high delivery of 582 million gallons within one day. The triple digit temperatures also set a national record for the longest number of days above 100 degrees Fahrenheit. After much needed rainfall, Lavon Lake returned to full conservation pool level in mid-March 2012 and remained near that level through May 2012.

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. During the 2011-2012 Water Year, the Member Cities of the Water System utilized 84% of the total supply delivered with the remaining 16% being utilized by the Customers.

Effects of drought on northwestern arm of Lavon Lake

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During the 2011-2012 Operations Year (October 2011 - September 2012), Water System construction contracts totaled over $696 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 implementation; and the Lake Tawakoni WTP.

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

Expansions and modifications increasing water delivery were made to High Service Pump Station 3-1 to 350 MGD; expansion of the Frisco/McKinney Pump Station to 130 MGD; 55 MGD expansion to the Lake Jim Chapman Pump Station; and an installation of a second 50 MGD pump and improvements at the Apollo Pump Station.

Construction projects to the Wylie WTPs included: Residuals removal, WTP IV Conversion to Biologically Active Filtration; Chlorine Scrubber for WTPs I and II; and WTP III Filter Underdrain improvements. Additional construction projects included the Wylie-to-Garland 42-inch Waterline Relocation along Merritt Road at President George Bush Turnpike; waterline relocations for both the 24-inch and 20-Inch Pipelines along SH 78 from Kreymer Ln. in Wylie to FM6 in Lavon; U.S. Highway 380 14-inch Waterline Relocation, Lake Lavon to Farmersville; 14-inch and 60-inch Waterline Relocation along Brown Street from Ballard Avenue to FM 1378; the Wylie-Rockwall-Farmersville 36-inch Pipeline Relocation along East Brown Street, and the replacement of the Plano/Richardson Westside Pipeline. Other projects included security enhancements and several electrical and power improvements at various locations.

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.

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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 14 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 2011-2012 Operations Year (October 2011—September 2012). Of the total wastewater treated, 80% received treatment at one of the four regional wastewater treatment plants, while the remaining 20% received treatment through NTMWD’s Sewer System.

Construction contracts within the Wastewater System totaled over $124 million. The largest expenditures included the South Mesquite Regional Wastewater Treatment Plant (RWWTP) Expansion to 33 MGD; the Wilson Creek RWWTP Expansion to 56 MGD and Advanced Treatment Improvements; and the Panther Creek RWWTP Expansion to 10 MGD. Additional projects at wastewater plants included improvements to the Floyd Branch RWWTP Ultraviolet Disinfection Facilities; the Wilson Creek RWWTP Lift Station improvements; and the Rowlett Creek RWWTP improvements. Additional expansions, improvements, or rehabilitations to several force mains and lift stations included: the North McKinney Lift Station; the Rowlett Cottonwood Reinforced Concrete Pipe Transfer Sewer Rehabilitation; the McKinney East Side Extension Parallel Interceptor; the McKinney Lift Station Rehabilitation; the Upper Cottonwood Creek Emergency Generator; the Forney Force Main Replacement Line; the Gravity Interceptor Improvements; and the Indian Creek Lift Station Improvements. 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.

The Wilson Creek Regional Wastewater Treatment Plant serves the Cities of Allen, Frisco, McKinney, and Plano.

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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 unwanted 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.

During the 2011-2012 Operations Year (October 2011— September 2012), NTMWD safely disposed of over 722,000 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 $20 million. The Solid Waste construction projects included: the 121 RDF Entrance Road Rehabilitation; the 121 RDF Landfill Gas System Installation; the 121 RDF construction of Sector 3C Liner; the Custer Road Transfer Station Expansion; and the construction of Drainage Structure Closure Activities at the McKinney Landfill.

The Custer Road Transfer Station provides a central location for the Cities of Allen, Frisco, and Plano to unload municipal waste for safe

disposal at the 121 Regional Disposal Facility.

FINANCIAL SECTION

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INDEPENDENT AUDITOR’S REPORT Members of the Board of Directors North Texas Municipal Water District City of Wylie, Texas We have audited the accompanying financial statements of each major fund of the North Texas Municipal Water District, Texas (the District), as of and for the year ended September 30, 2012, which collectively comprise the District’s basic financial statements as listed in the table of contents. These basic financial statements are the responsibility of the North Texas Municipal Water District’s management. Our responsibility is to express opinions on the respective basic 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 basic financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our 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, Texas, as of September 30, 2012, and the respective changes in financial position and respective cash flows, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated January 15, 2013, on our consideration of the District’s internal control over financial reporting and 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 and should be considered in assessing the results of our audit. Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and the schedules of funding progress for the District’s Retirement Plan and Other Postemployment Benefits Plan pages 3 through 8 and pages 44 and 45 be presented to supplement the basic financial statements.

North Texas Municipal Water District Page 2

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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. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the North Texas Municipal Water District’s financial statements as a whole. The Introductory Section and Statistical Section are presented for purposes of additional analysis and are not a required part of the basic financial statements of the North Texas Municipal Water District. The Sewer System Supplemental Statements are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the 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.

WEAVER AND TIDWELL, L.L.P. Dallas, Texas January 15, 2013

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, 2012. Financial Highlights • Total assets at the end of the year were approximately $2.7 billion and exceeded liabilities by

approximately $919.7 million. • The District’s total net assets increased by approximately $54 million, or 6 percent. • During the year the District’s operating revenues increased by approximately $19 million, or 8

percent, and operating expenses increased by approximately $4 million, or 3 percent. • Construction of the Wylie Water Treatment Plant Ozonation Project, the Lake Texoma to Wylie Water

Treatment Plant Raw Water Pipeline Project, and the Wilson Creek Wastewater Treatment Plant 8 MGD Expansion Project led the way in capital expenditures totaling $184 million.

• The District issued $464 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 Assets presents information on all of the District’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets 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 Assets presents information showing how the District’s net assets changed during the most recent fiscal year. All changes in net assets 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 9 through 16 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 17 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 benefits to its employees. Required supplemental information can be found beginning on page 44 of this report. Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of the District’s financial position. In the case of the District, assets exceeded liabilities by $919,747,737 at the close of the most recent fiscal year.

North Texas Municipal Water District’s Net Assets

Percent2012 2011 Increase Change

ASSETS: Current and other assets 838,315,487$ 530,539,917$ 307,775,570$ 58.0 % Capital assets—net 1,890,251,199 1,739,881,102 150,370,097 8.6

Total assets 2,728,566,686 2,270,421,019 458,145,667 20.2

LIABILITIES: Current and other liabilities 128,977,033 113,274,908 15,702,125 13.9 Long-term liabilities outstanding 1,679,841,916 1,291,105,221 388,736,695 30.1

Total liabilities 1,808,818,949 1,404,380,129 404,438,820 28.8

NET ASSETS: Invested in capital assets—net of related debt 687,317,597 655,040,852 32,276,745 4.9 Restricted 129,622,913 102,802,273 26,820,640 26.1 Unrestricted 102,807,227 108,197,765 (5,390,538) (5.0)

Total net assets 919,747,737$ 866,040,890$ 53,706,847$ 6.2 %

As of September 30

The largest portion of the District’s net assets (75 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 assets (14 percent) represents resources that are subject to external restrictions on how they may be used. The District’s restricted net assets consist primarily of the reserve funds required by bond resolutions. The remaining balance of the District’s net assets represents unrestricted net assets (11 percent) and may be used to meet the District’s ongoing obligations. The increase in net assets of $53,706,847 or 6.2% during the current fiscal year indicates an improved financial position.

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While the Statement of Net Assets provides the components of the District’s assets, liabilities and net assets at year-end, the Statement of Revenues, Expenses and Changes in Net Assets provides information on the source of the change during the year. The primary source of the increase in net assets of $53,706,847 were operating income of $93,877,462 offset by interest expense of $49,572,489.

North Texas Municipal Water District’s Changes in Net Assets

Increase Percent2012 2011 (Decrease) Change

Operating revenues: Water sales 161,588,387$ 148,712,453$ 12,875,934$ 8.7 % Wastewater service fees 78,762,862 73,550,031 5,212,831 7.1 Solid waste service fees 24,257,060 23,526,336 730,724 3.1 Other operating revenues 1,874,036 1,458,897 415,139 28.5

Total operating revenues 266,482,345 247,247,717 19,234,628 7.8

Operating expenses: Personnel 46,772,079 44,509,650 2,262,429 5.1 Operating Supplies: Chemicals 23,490,278 22,741,133 749,145 3.3 Other supplies 10,023,917 8,900,756 1,123,161 12.6 Operating Services: Electric power 24,705,243 29,454,026 (4,748,783) (16.1) Wholesale water purchases 2,519,799 2,833,267 (313,468) (11.1) Other services 22,285,358 19,365,649 2,919,709 15.1 Depreciation and amortization 42,808,209 40,380,600 2,427,609 6.0

Total operating expenses 172,604,883 168,185,081 4,419,802 2.6

Operating income 93,877,462 79,062,636 14,814,826 18.7

Investment income 1,864,517 2,039,519 (175,002) (8.6) Miscellaneous revenue 3,042,601 1,475,598 1,567,003 106.2 Federal program revenues 4,330,095 3,799,922 530,173 14.0 Gain (loss) on sale of capital assets 164,661 - 164,661 100.0 Interest expense (49,572,489) (47,874,920) (1,697,569) 3.5

Net nonoperating expense (40,170,615) (40,559,881) 389,266 (1.0)

Change in Net Assets 53,706,847 38,502,755 15,204,092 39.5

Net Assets, Beginning of Year 866,040,890 827,538,135 38,502,755 4.7

Net Assets, End of Year 919,747,737$ 866,040,890$ 53,706,847$ 6.2%

Year Ended September 30

6

Total operating revenues for the District for the years ended September 30, 2012 and 2011 were $266,482,345 and $247,247,717, respectively. The $19,234,628 increase in total operating revenues was primarily due to a 9% increase in the water rate and a 7% increase in wastewater charges to fund capital projects and operating costs. Total operating expenses for the District for the years ended September 30, 2012 and 2011 were $172,604,883 and $168,185,081, respectively. The $4,419,802 increase in total operating expenses was primarily due to increasing staffing levels in the Water System to prepare for implementation of the Wylie Water Treatment Plant Ozonation Project and additional repair and maintenance costs for various facilities. Net non-operating expense decreased by $389,266 primarily due to the collection of additional health insurance premiums in the Water System. Capital Asset and Debt Administration Capital Assets The District’s investment in capital assets as of September 30, 2012, amounted to $1,890,251,199 (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 9%. Major capital asset events during the current fiscal year included the following: • The 30 MGD Lake Tawakoni Water Treatment Plant was placed in service; construction costs totaled

$82,448,925. • 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 $96,818,970. • Construction of the South Mesquite Wastewater Treatment Plant 8 MGD Expansion Project

continued; construction in progress at the end of the fiscal year totaled $46,904,093. • Construction of the Wylie Water Treatment Plant Ozonation Project continued; construction in

progress at the end of the fiscal year totaled $92,797,739. • Construction of the Wilson Creek Wastewater Treatment Plant 8 MGD Expansion Project continued;

construction in progress at the end of the fiscal year totaled $38,732,170. • 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 $63,941,069.

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


Land 21,926,726$ 21,868,590$ 58,136$ 0.3 % Easements 40,699,536 40,740,717 (41,181) (0.1)% Land improvements 2,762,193 2,973,829 (211,636) (7.1) Water treatment, storage and transmission facilities 635,963,417 547,344,482 88,618,935 16.2 Wastewater treatment and disposal facilities 348,824,429 352,930,800 (4,106,371) (1.2) Solid waste transfer and disposal facilities 30,286,071 30,691,020 (404,949) (1.3) Reservoir facilities and water rights 307,430,438 314,759,386 (7,328,948) (2.3) Buildings 23,999,294 24,696,646 (697,352) (2.8) Automobiles and trucks 6,032,711 5,612,698 420,013 7.5 Office furniture and fixtures 306,082 239,361 66,721 27.9 Other equipment 8,516,952 8,072,868 444,084 5.5 Construction in progress 463,503,350 389,950,705 73,552,645 18.9

Total 1,890,251,199$ 1,739,881,102$ 150,370,097$ 8.6 %

As of September 30

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

7

Debt Administration At the end of the current fiscal year, the District had total outstanding debt of $1,654,227,993. Of this amount 71% is reflected in the Water System and 9% is reflected in the Sewer System.

North Texas Municipal Water District’s Outstanding Debt


U.S. government contracts payable 36,417,993$ 37,656,812$ (1,238,819)$ (3.3)% Revenue bonds 1,617,810,000 1,276,795,000 341,015,000 26.7

Total 1,654,227,993$ 1,314,451,812$ 339,776,181$ 25.8 %

As of September 30

The District’s total debt increased by $339,776,181 (26% percent) during the September 30, 2012 fiscal year primarily as a result of the issuance of revenue bonds in the amount of $358,835,000 in the Water System to fund the Lake Texoma to Wylie Water Treatment Plant Raw Water Pipeline Project and other system improvements. 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 $5,223,562, $2,194,099 and $1,154,583 in the Water, Sewer and the Interceptor Systems, respectively. 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 2013 fiscal year. The 2013 Water System budget provides funding for a full year of debt service payments for the $359 million of bonds issued during fiscal year 2012 for the Lake Texoma to Wylie Water Treatment Plant Raw Water Pipeline Project and other system improvements. In order to fund these debt service requirements and other additional operations and maintenance costs, the budget requires a $.21 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.

8

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, TEXAS STATEMENT OF NET ASSETS SEPTEMBER 30, 2012

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

9

RegionalWater Wastewater

ASSETS System System

CURRENT ASSETS: Unrestricted Assets: Cash and cash equivalents 65,942,279$ 4,165,150$ Investments 24,968,139 - Accounts receivable 13,943,319 779,501 Due from other funds 124,901 24,575 Prepaid expenses 3,635,320 317,319 Deferred customer billings - 210,251

Total unrestricted assets 108,613,958 5,496,796

Restricted Assets: Cash and cash equivalents 236,301,961 26,642,204 Investments 289,787,380 15,527,833 Interest and accounts receivable 74,912 2,322 Due from other funds 37,077 - Deferred customer billings - -

Total restricted assets 526,201,330 42,172,359

TOTAL CURRENT ASSETS 634,815,288 47,669,155

LONG-TERM ASSETS: Nondepreciable: Land 8,965,180 1,739,328 Easements 28,764,718 - Construction-in-progress 339,634,906 89,402,134

Total nondepreciable assets 377,364,804 91,141,462

Depreciable: Land improvements 3,712,838 64,146 Water treatment, storage, and transmission facilities 811,656,621 - Wastewater treatment and disposal facilities - 169,611,434 Solid waste transfer and disposal facilities - - Reservoir facilities and water rights 366,121,044 - Buildings 12,798,905 75,911 Automobiles and trucks 7,502,238 1,622,303 Office furniture and fixtures 407,014 61,847 Other equipment 4,362,554 6,492,748

Total depreciable assets 1,206,561,214 177,928,389

Less accumulated depreciation (271,865,664) (73,120,453) Net capital assets 1,312,060,354 195,949,398

Long term deferred billings, less current portion - 490,897 Net pension assets 406,209 118,345 Bond issue costs, net 7,179,321 1,297,690

TOTAL LONG-TERM ASSETS 1,319,645,884 197,856,330

TOTAL ASSETS 1,954,461,172$ 245,525,485$

10

Solid TotalSewer Waste Interceptor EnterpriseSystem System System Funds

1,534,371$ 1,825,492$ 786,256$ 74,253,548$ - - - 24,968,139

122,639 333,183 353,478 15,532,120 219,235 103,154 57,240 529,105 270,553 225,320 101,291 4,549,803 55,564 195,637 25,323 486,775

2,202,362 2,682,786 1,323,588 120,319,490

21,392,768 12,044,245 45,094,480 341,475,658 8,484,908 3,542,245 38,680,523 356,022,889

7,135 10,617 10,714 105,700 - - - 37,077 - 4,985,860 - 4,985,860

29,884,811 20,582,967 83,785,717 702,627,184

32,087,173 23,265,753 85,109,305 822,946,674

469,516 10,752,702 - 21,926,726 3,156,164 - 8,778,654 40,699,536 1,367,481 4,741,145 28,357,684 463,503,350

4,993,161 15,493,847 37,136,338 526,129,612

417,138 2,237,030 - 6,431,152 31,540,496 - - 843,197,117

151,627,941 - 156,722,590 477,961,965 - 60,319,744 - 60,319,744 - - - 366,121,044 - 18,926,330 - 31,801,146

184,633 4,356,953 162,266 13,828,393 - - - 468,861

1,369,864 14,105,968 2,595,237 28,926,371

185,140,072 99,946,025 159,480,093 1,829,055,793

(34,486,566) (50,183,101) (35,278,422) (464,934,206)

155,646,667 65,256,771 161,338,009 1,890,251,199

208,742 682,536 46,608 1,428,783 47,146 110,989 8,250 690,939

2,418,969 612,265 1,740,846 13,249,091

158,321,524 66,662,561 163,133,713 1,905,620,012

190,408,697$ 89,928,314$ 248,243,018$ 2,728,566,686$

(Continued)

NORTH TEXAS MUNICIPAL WATER DISTRICT, TEXAS STATEMENT OF NET ASSETS SEPTEMBER 30, 2012


11


LIABILITIES System System

CURRENT LIABILITIES: Payable from unrestricted assets: Accounts payable and accrued liabilities 11,597,034$ 2,376,060$ Due to other funds 91,183 117,409 Customers’ advance payments 95,418 3,121,671 Accrued interest payable on U.S. government contracts 957,016 - Current portion of U.S. government contracts 1,278,839 -

Total payable from unrestricted assets 14,019,490 5,615,140

Payable from restricted assets: Accounts payable and accrued liabilities 20,099,507 3,319,228 Due to other funds 12,898 12,656 Accrued landfill closure and post-closure care cost - - Accrued interest payable on revenue bonds 8,078,414 1,991,485 Current portion of revenue bonds 29,555,000 7,895,000

Total payable from restricted assets 57,745,819 13,218,369

TOTAL CURRENT LIABILITIES 71,765,309 18,833,509

LONG-TERM LIABILITIES: Accrued landfill closure costs - - Accrued vacation—less current portion 660,133 199,731 Accrued sick—less current portion 1,243,055 298,085 Accrued OPEB liability 2,936,028 (6,918) Long-term debt—less current portion 1,206,858,677 131,422,813

TOTAL LONG-TERM LIABILITIES 1,211,697,893 131,913,711

TOTAL LIABILITIES 1,283,463,202 150,747,220

NET ASSETS: Invested in capital assets—net of related debt 496,694,095 78,765,015 Restricted for debt service 77,662,728 14,715,560 Unrestricted 96,641,147 1,297,690

TOTAL NET ASSETS 670,997,970$ 94,778,265$

12


1,049,840$ 1,833,980$ 722,188$ 17,579,102$ 276,282 14,242 29,989 529,105 685,038 945,554 721,700 5,569,381

- - - 957,016 - - - 1,278,839

2,011,160 2,793,776 1,473,877 25,913,443

827,228 2,597,997 1,842,817 28,686,777 4,727 - 6,796 37,077

- 4,232,065 - 4,232,065 2,019,394 148,891 1,659,487 13,897,671 8,570,000 2,580,000 7,610,000 56,210,000

11,421,349 9,558,953 11,119,100 103,063,590

13,432,509 12,352,729 12,592,977 128,977,033

- 753,795 - 753,795 88,881 207,784 8,777 1,165,306

123,787 481,246 38,560 2,184,733 (3,928) (6,494) (729) 2,917,959

139,963,005 40,052,083 154,523,545 1,672,820,123

140,171,745 41,488,414 154,570,153 1,679,841,916

153,604,254 53,841,143 167,163,130 1,808,818,949

16,738,652 31,381,508 63,738,327 687,317,597 17,408,472 4,093,399 15,742,754 129,622,913 2,657,319 612,264 1,598,807 102,807,227

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

(Concluded)

NORTH TEXAS MUNICIPAL WATER DISTRICT, TEXAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS YEAR ENDED SEPTEMBER 30, 2012


13


System System

OPERATING REVENUES: Water sales 161,588,387$ -$ Wastewater service fees - 37,739,440 Solid waste service fees - - Other operating revenues 511,559 72,015

Total operating revenues 162,099,946 37,811,455

OPERATING EXPENSES: Personnel 26,863,470 7,871,586 Operating Supplies: Chemicals 17,047,398 3,951,082 Other supplies 3,123,875 2,047,781 Operating Services: Electric power 17,133,881 4,126,392 Wholesale water purchases 2,519,799 Other services 5,972,908 6,239,776 Depreciation and amortization 26,094,343 4,964,306

Total operating expenses 98,755,674 29,200,923

OPERATING INCOME 63,344,272 8,610,532

NONOPERATING REVENUES (EXPENSES): Investment income 1,429,167 143,926 Miscellaneous revenue 3,042,601 - Federal program revenues 4,330,095 - Gain on sale of capital assets 67,723 11,297 Interest expense (35,711,289) (2,383,559)

Total nonoperating revenues (expenses) (26,841,703) (2,228,336)

CHANGE IN NET ASSETS 36,502,569 6,382,196

NET ASSETS AT OCTOBER 1, 2011 634,495,401 88,396,069

NET ASSETS AT SEPTEMBER 30, 2012 670,997,970$ 94,778,265$

14

Solid Total

Sewer Waste Interceptor EnterpriseSystem System System Funds

-$ -$ -$ 161,588,387$ 23,079,962 - 17,943,460 78,762,862

- 24,257,060 - 24,257,060 582,703 699,351 8,408 1,874,036

23,662,665 24,956,411 17,951,868 266,482,345

2,998,949 8,476,412 561,662 46,772,079

1,130,012 36,681 1,325,105 23,490,278 555,337 4,002,454 294,470 10,023,917

1,661,821 152,387 1,630,762 24,705,243 2,519,799

3,349,140 5,257,568 1,465,966 22,285,358 5,538,991 2,542,759 3,667,810 42,808,209

15,234,250 20,468,261 8,945,775 172,604,883

8,428,415 4,488,150 9,006,093 93,877,462

88,377 63,122 139,925 1,864,517 - - - 3,042,601 - - - 4,330,095

8,697 69,775 7,169 164,661 (5,998,287) (1,916,221) (3,563,133) (49,572,489)

(5,901,213) (1,783,324) (3,416,039) (40,170,615)

2,527,202 2,704,826 5,590,054 53,706,847

34,277,241 33,382,345 75,489,834 866,040,890

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

NORTH TEXAS MUNICIPAL WATER DISTRICT, TEXAS STATEMENT OF CASH FLOWS YEAR ENDED SEPTEMBER 30, 2012


15


System SystemCASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers 165,485,551$ 39,280,380$ Cash received from other funds 5,953,309 313,475 Cash received from (paid to) others 1,533,784 8,221 Cash paid to suppliers for goods and services (59,776,270) (15,544,068) Cash paid for employee services (17,686,176) (5,237,685) Cash paid to other funds - (3,747,578)

Net cash provided by operating activities 95,510,198 15,072,745

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from the issuance of bonds 373,915,045 14,295,947 Cash paid for capital assets (151,799,458) (20,367,965) Interest paid on long-term debt (39,612,608) (5,906,929) Interest paid on U.S. government contracts (1,219,782) - Principal payments on long-term debt (21,770,000) (8,035,000) Payments on U.S. government contracts (1,238,819) - Payments for bond issue costs (2,130,178) (301,817) Federal interest subsidy 4,330,095

Net cash provided by (used for) capital and related financing activities 160,474,295 (20,315,764)

CASH FLOWS FROM INVESTING ACTIVITIES: Sale and maturity of investments 232,174,419 20,162,105 Purchases of investments (376,474,505) (26,152,162) Interest received 944,155 119,538

Net cash provided by (used for) investing activities (143,355,931) (5,870,519)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 112,628,562 (11,113,538)

CASH AND CASH EQUIVALENTS—Beginning of year 189,615,678 41,920,892

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

RECONCILIATION OF TOTAL CASH TO THE STATEMENT OF NET ASSETSUnrestricted cash and cash equivalents 65,942,279$ 4,165,150$ Restricted cash and cash equivalents 236,301,961 26,642,204

302,244,240$ 30,807,354$

RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating income 63,344,272$ 8,610,532$

Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 25,672,634 4,771,147 Amortization 421,709 193,159 Change in current assets and liabilities: Accounts receivable and deferred billings (1,576,399) 337,662 Prepaid expenses (451,523) 148,724 Net pension assets (53,875) (11,768) Due to/from other funds 8,120 (64,834) Accounts payable, accrued liabilities, and developers’ deposits 7,217,269 198,724 Accrued vacation and Accrued sick (54,684) 4,610 Accrued OPEB 898,311 (16,096) Landfill liability Customers’ advance payments 84,364 900,885

Total adjustments 32,165,926 6,462,213 NET CASH PROVIDED BY OPERATING ACTIVITIES 95,510,198$ 15,072,745$

NONCASH TRANSACTION DISCLOSURESChange in landfill liability -$ -$ Gain on sale of capital assets 67,723 11,297 Interest capitalized on construction 7,062,641 3,296,924 Amortization of bond-related items (1,306,891) (37,975) Change in fair value of investments (190,147) (41,567) Change in actuarial value of net pension assets 53,875 11,768 Refunding bonds issued 39,410,000 - Refunding proceeds deposited in escrow 44,086,445 -

16


22,816,610$ 23,368,559$ 17,908,952$ 268,860,052$ 133,953 971,493 - 7,372,230

356 124,944 93 1,667,398 (4,683,402) (11,889,190) (4,147,727) (96,040,657) (1,949,193) (5,587,669) (373,688) (30,834,411) (2,119,955) (1,012,314) (497,885) (7,377,732)

14,198,369 5,975,823 12,889,745 143,646,880

11,345,558 - 51,610,033 451,166,583 (3,260,519) (4,527,897) (3,637,299) (183,593,138) (6,448,295) (1,924,982) (4,946,983) (58,839,797)

- - - (1,219,782) (7,895,000) (3,650,000) (7,285,000) (48,635,000)

- - - (1,238,819) (1,005,128) - (404,519) (3,841,642)

4,330,095

(7,263,384) (10,102,879) 35,336,232 158,128,500

10,501,571 3,601,534 2,683,498 269,123,127 (6,414,792) (3,555,136) (31,932,392) (444,528,987)

88,624 71,415 243,364 1,467,096

4,175,403 117,813 (29,005,530) (173,938,764)

11,110,388 (4,009,243) 19,220,447 127,836,616

11,816,751 17,878,980 26,660,289 287,892,590

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

1,534,371$ 1,825,492$ 786,256$ 74,253,548$ 21,392,768 12,044,245 45,094,480 341,475,658 22,927,139$ 13,869,737$ 45,880,736$ 415,729,206$

8,428,415$ 4,488,150$ 9,006,093$ 93,877,462$

5,249,138 2,453,687 3,515,370 41,661,976 289,853 89,072 152,440 1,146,233

36,967 (118,544) (76,823) (1,397,137) 4,600 (37,661) (6,824) (342,684)

(6,676) (9,921) (1,350) (83,590) 20,736 72,452 (36,474) -

551,951 (708,934) 291,548 7,550,558 (19,850) (14,505) 500 (83,929) (6,411) (15,096) (1,122) 859,586

219,169 219,169 (350,354) (442,046) 46,387 239,236

5,769,954 1,487,673 3,883,652 49,769,418

14,198,369$ 5,975,823$ 12,889,745$ 143,646,880$

-$ 219,169$ -$ 219,169$ 8,697 69,775 7,169 164,661

995 65,911 1,049,070 11,475,541 66,740 157,746 51,506 (1,068,874)

(42,520) (6,550) (43,398) (324,182) 6,676 9,921 1,350 83,590

23,460,000 - 9,765,000 72,635,000 25,656,024 - 11,237,463 80,979,932

NORTH TEXAS MUNICIPAL WATER DISTRICT NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2012

17

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.


18

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED 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 Assets, Statement of Revenues, Expenses and Changes in Net Assets, Statement of Cash Flows, Notes to the Financial Statements, and Trend Information for the Retirement Plan.

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.

Private-sector standards of accounting and financial reporting issued on or before November 30, 1989, generally are followed in the proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board.

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 72% 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.


19

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED 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.

Accounts Receivable

Management considers accounts receivable to be fully collectible as of September 30, 2012; accordingly, no allowance for doubtful accounts is deemed necessary. As of September 30, 2012, member cities Allen, Garland, McKinney, Mesquite, Plano, Princeton, Richardson, Rockwall, Rowlett and Wylie accounted for approximately 74% 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.


20

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Capital Assets

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, 2012, $11,475,541 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, 2012, a liability of $2,376,982 for unused vacation and $3,541,603 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. A summary of changes in accrued vacation and sick leave for the year ended September 30, 2012 is as follows:

Beginning Ending Amount due

Liability Additions Reductions Liability within one year

Vacation 2,277,764$ 1,625,292$ 1,526,074$ 2,376,982$ 1,211,676$ Sick 3,556,892 524,624 539,913 3,541,603 1,356,870

Net Assets

Net assets are reported as (1) invested in capital assets net of related debt; (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.


21

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED 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.

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. The cash and cash equivalents, investments, interest and accounts receivable components of each fund represented by restricted assets are as follows:


22

NOTE 2. RESTRICTED ASSETS – CONTINUED

Cash and Interest andCash Accounts

Fund Equivalents Investments Receivable

Water: Construction Fund 215,296,707$ 204,950,684$ -$ Interest and Redemption Fund 25,044 15,550,226 - Reserve Fund 804,490 69,286,470 74,912 Contingency Fund 19,655,847 - - Reserve for Maintenance Fund 519,873 - -

236,301,961 289,787,380 74,912

Regional Wastewater: Construction Fund 19,854,264 4,999,250 - Interest and Redemption Fund 5,956,085 - - Reserve Fund 220,055 10,528,583 2,322 Reserve for Maintenance Fund 611,800 - -

26,642,204 15,527,833 2,322

Sewer: Construction Fund 9,717,191 - - Interest and Redemption Fund 5,401,416 - - Reserve Fund 5,534,407 8,484,908 7,135 Reserve for Maintenance Fund 692,331 - - Reserve for Equipment Replacement 47,423 - -

21,392,768 8,484,908 7,135

Solid Waste: Construction Fund 9,762,863 - - Interest and Redemption Fund 396,548 - - Reserve Fund 292,880 3,542,245 10,617 Reserve for Maintenance Fund 836,716 - - Reserve for Equipment Replacement 755,238 - -

12,044,245 3,542,245 10,617 Interceptor: Construction Fund 37,115,607 27,967,550 - Interest and Redemption Fund 6,323,143 - - Reserve Fund 355,411 10,712,973 10,714 Reserve for Maintenance Fund 1,300,319 - -

45,094,480 38,680,523 10,714

Total 341,475,658$ 356,022,889$ 105,700$


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NOTE 2. RESTRICTED ASSETS – CONTINUED Deferred customer billings of $4,985,860 that are reflected as restricted assets 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. A. Deposits

At September 30, 2012, the carrying amount of cash deposits was $3,802,282 and total bank balances was $13,301,514. During 2011-2012, 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, 2012, 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, 2012, 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.


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NOTE 3. CASH AND INVESTMENTS – CONTINUED 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 804,430$ 102,359$ 45,857$ 56,572$ 96,527$ 1,105,745$ Arbitrage reduction 434,590 - - - - 434,590 Net changes in the fair value of investments 190,147 41,567 42,520 6,550 43,398 324,182

Investment income 1,429,167$ 143,926$ 88,377$ 63,122$ 139,925$ 1,864,517$

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, 2012:


System System System System System Total

Unrestricted Cash and cash equivalents 65,942,279$ 4,165,150$ 1,534,371$ 1,825,492$ 786,256$ 74,253,548$ Investments 24,968,139 - - - - 24,968,139

Total unrestricted 90,910,418 4,165,150 1,534,371 1,825,492 786,256 99,221,687

Restricted Cash and cash equivalents 236,301,961 26,642,204 21,392,768 12,044,245 45,094,480 341,475,658 Investments 289,787,380 15,527,833 8,484,908 3,542,245 38,680,523 356,022,889

Total restricted 526,089,341 42,170,037 29,877,676 15,586,490 83,775,003 697,498,547

Total 616,999,759$ 46,335,187$ 31,412,047$ 17,411,982$ 84,561,259$ 796,720,234$


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NOTE 3. CASH AND INVESTMENTS – CONTINUED

At September 30, 2012, 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 3,802,242$ n/a Cash on hand Not Rated 1,500 n/a TexPool AAAm 38,194,476 41 Days LOGIC AAAm 32,255,330 50 Days

Total Cash Equivalents 74,253,548

Investments—Securities of U.S. Government Agencies: FNMA - Fannie Mae Discount Note P-1 13,917,302 305 Days Treasury Bill - U.S. Treasuries P-1 11,050,837 298 Days

Total Securities of U.S. Government Agencies 24,968,139

Total Unrestricted Investments and Cash Equivalents 99,221,687

Restricted Cash and InvestmentsCash and Cash Equivalents Deposits with a financial institution Not Rated 40 n/a TexPool AAAm 49,729,026 41 Days LOGIC AAAm 226,747,892 50 Days FHLB - Federal Home Loan Bank Discount Note Aaa 64,998,700 31 Days

Total Cash Equivalents 341,475,658

Investments—Securities of U.S. Government Agencies: FRE - Freddie Mac Discount Note P-1 212,949,484 127 Days FHLB - Federal Home Loan Bank Agency Note Aaa 36,907,971 626 Days FNMA - Fannie Mae Discount Note P-1 18,975,870 305 Days FNMA - Fannie Mae Agency Note Aaa 62,221,564 217 Days Treasury Bill - U.S. Treasuries P-1 24,968,000 298 Days

Total Securities of U.S. Government Agencies 356,022,889

Total Restricted Investments and Cash Equivalents 697,498,547

Total Cash and Investments 796,720,234$


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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, 2012, 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 discount notes 64,998,700$ FNMA Federal agency discount notes 32,893,172$ FRE Federal agency discount notes 212,949,484$ FNMA Federal agency notes 62,221,564$ FHLB Federal agency notes 36,907,971$ T-Bill Treasury Bill 36,018,837$

The District held a total of $445,989,728 in securities that equated to 56.0% 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, 2012, $36,907,971 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,

2011 Transfers Transfers Adjustments 2012

Nondepreciable:Land 21,868,590$ 58,136$ -$ -$ 21,926,726$ Easements 40,740,717 235,280 276,461 - 40,699,536 Construction in progress 389,950,705 193,608,905 120,056,260 - 463,503,350

Total nondepreciable assets 452,560,012 193,902,321 120,332,721 - 526,129,612 Depreciable:Land improvements 6,431,152 - - - 6,431,152 Water treatment, storage and transmission facilities 733,525,839 96,602,846 - 13,068,432 843,197,117 Wastewater treatment and disposal facilities 473,617,764 17,718,746 306,113 (13,068,432) 477,961,965 Solid waste transfer and disposal facilities 59,874,254 445,490 - - 60,319,744 Reservoir facilities and water rights 366,121,044 - - - 366,121,044 Buildings 31,700,988 100,158 - - 31,801,146 Automobiles and trucks 13,357,243 1,070,189 599,039 - 13,828,393 Office furniture and fixtures 365,007 103,854 - - 468,861 Other equipment 26,133,567 3,150,928 358,124 - 28,926,371

Total depreciable assets 1,711,126,858 119,192,211 1,263,276 - 1,829,055,793 Less accumulated depreciation on: Land improvements (3,457,323) (211,636) (3,668,959) Water treatment, storage and transmission facilities (186,181,357) (17,600,902) (3,451,441) (207,233,700) Wastewater treatment and disposal facilities (120,686,964) (11,902,013) 3,451,441 (129,137,536) Solid waste transfer and disposal facilities (29,183,234) (850,439) (30,033,673) Reservoir facilities and water rights (51,361,658) (7,328,948) (58,690,606) Buildings (7,004,342) (797,510) (7,801,852) Automobiles and trucks (7,744,545) (649,145) (598,008) (7,795,682) Office furniture and fixtures (125,646) (37,133) (162,779) Other equipment (18,060,699) (2,706,844) (358,124) (20,409,419)

Total accumulated depreciation (423,805,768) (42,084,570) (956,132) - (464,934,206)

Total depreciable assets—net 1,287,321,090 77,107,641 307,144 - 1,364,121,587

TOTAL CAPITAL ASSETS—Net 1,739,881,102$ 271,009,962$ 120,639,865$ -$ 1,890,251,199$

NOTE 5. INTERFUND BALANCES

At September 30, 2012, interfund balances consisted of the following:

Due From Due toOther Funds Other Funds

Water System 161,978$ 104,081$ Regional Wastewater System 24,575 130,065 Sewer System 219,235 281,009 Solid Waste System 103,154 14,242 Interceptor System 57,240 36,785

Total 566,182$ 566,182$

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, 2012, accounts payable and accrued liabilities consisted of the following:

Regional SolidWater Wastewater Sewer Waste InterceptorSystem System System System System Total

Payable to vendors/contractors 28,097,850$ 4,370,424$ 845,829$ 1,818,924$ 1,222,884$ 36,355,911$ Insurance claims liability 958,098 - - - - 958,098 Payable to cities - 611,800 739,754 1,591,954 1,300,319 4,243,827 Compensated absences 1,591,233 481,461 163,143 315,015 17,694 2,568,546 Accrued payroll and related benefits 1,049,360 231,603 128,342 706,084 24,108 2,139,497

Total 31,696,541$ 5,695,288$ 1,877,068$ 4,431,977$ 2,565,005$ 46,265,879$

Payable from unrestricted assets 11,597,034$ 2,376,060$ 1,049,840$ 1,833,980$ 722,188$ 17,579,102$ Payable from restricted assets 20,099,507 3,319,228 827,228 2,597,997 1,842,817 28,686,777

Total 31,696,541$ 5,695,288$ 1,877,068$ 4,431,977$ 2,565,005$ 46,265,879$


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NOTE 7. LONG-TERM DEBT Long-term debt consists of the following at September 30, 2012:

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

2011 Issued Refunded 2012 One YearWater System:Water revenue bonds03/13-09/40, .174-6.123% 836,470,000$ 358,835,000$ 61,180,000$ 1,134,125,000$ 29,555,000$ U.S. govt contracts payable,12/12-10/51, 3.225-3.253% 37,656,812 - 1,238,819 36,417,993 1,278,839

874,126,812 358,835,000 62,418,819 1,170,542,993 30,833,839 Regional Wastewater: Wastewater revenue bonds,12/12-06/31, 3.0-5.0% 131,695,000 14,105,000 8,035,000 137,765,000 7,895,000 Sewer System: Murphy contract revenue bonds, 01/13-07/14, 6.25% 175,000 - 55,000 120,000 60,000 Rockwall contract revenue bonds, 12/12-06/28, 4.50-5.75% 3,330,000 - 220,000 3,110,000 235,000 Mustang Creek Interceptor System - 10,620,000 - 10,620,000 260,000 revenue bonds, 12/12-06/42, 3.00-6.00% Rockwall-Heath contract revenue bonds 12/12-06/25, 3.75-4.625% 2,370,000 - 125,000 2,245,000 130,000 Terrell contract revenue bonds 12/12-06/35, 4.5-5.0% 11,550,000 - 260,000 11,290,000 270,000 McKinney contract revenue bonds, 12/12-06/15, 5.0% 520,000 - 120,000 400,000 125,000 Plano contract revenue bonds, 12/12-06/18, 2.0-3.641% 4,615,000 - 670,000 3,945,000 700,000 Stewart Creek contract revenue bonds, 12/12-06/19, 1.580% 3,770,000 3,840,000 4,165,000 3,445,000 465,000 Royse City contract revenue bonds, 12/12-06/22, 4.6-5.25% 1,165,000 - 80,000 1,085,000 85,000 Little Elm contract revenue bonds, 12/12-06/23, 3.7-4.5% 3,955,000 - 250,000 3,705,000 260,000 Parker Creek Interceptor System, revenue bonds, 12/12-06/23, 4.375-5.125% 1,955,000 - 125,000 1,830,000 130,000 Sabine Creek Interceptor System revenue bonds, 12/12-6/23, 4.375-5.125% 1,575,000 - 100,000 1,475,000 105,000 Sabine Creek Wastewater System revenue bonds, 12/12-6/23, 4.375-5.125% 6,475,000 - 415,000 6,060,000 435,000 Muddy Creek Wastewater System revenue bonds 12/12-06/26, 2.0-5.0% 19,575,000 9,615,000 11,345,000 17,845,000 1,185,000 Muddy Creek Interceptor revenue bonds 12/12-06/24, 4.0-4.875% 2,645,000 - 150,000 2,495,000 155,000 Buffalo Creek Interceptor revenue bonds 12/12-06/27, 3.0-5.0% 15,505,000 10,005,000 11,435,000 14,075,000 885,000 Rockwall Water Pumping Facilities bonds 12/12-06/26, 4.5-4.75% 1,800,000 - 85,000 1,715,000 90,000 Panther Creek Wastewater System bonds 12/12-06/29, 3.0-5.0% 48,180,000 - 2,130,000 46,050,000 2,220,000 Lower East Fork Interceptor bonds 12/12-06/26, 4.0-4.875% 15,795,000 740,000 15,055,000 775,000 144,955,000 34,080,000 32,470,000 146,565,000 8,570,000 Solid Waste System--revenue bonds, 03/13-09/28, 2.0-5.375% 46,950,000 - 3,650,000 43,300,000 2,580,000 Interceptor System-revenue bonds, 12/12-06/32, 2.0-5.0% 116,725,000 57,205,000 17,875,000 156,055,000 7,610,000

Total 1,314,451,812$ 464,225,000$ 124,448,819$ 1,654,227,993$ 57,488,839$


30

NOTE 7. LONG-TERM DEBT – CONTINUED In the Statement of Net Assets, the long-term liabilities include premiums net of discounts of $72,070,064 in the Water System, $3,070,464 in the Regional Wastewater System, $3,049,305 in the Sewer System, $751,232 in the Solid Waste System and $6,860,074 in the Interceptor System and are also shown net of deferred losses on refunding of $4,920,541 in the Water System, $1,517,651 in the Regional Wastewater System, $1,081,300 in the Sewer System, $1,419,149 in the Solid Waste System and $781,529 in the Interceptor System. Other long term debt activity for the year ended September 30, 2012, was as follows:

Balance at Balance atOctober 1, September 30,

2011 Additions Deletions 2012

Water System:Premiums $18,448,538 56,994,476$ (3,372,950)$ $72,070,064Deferred Loss (1,755,253) (3,340,813) 175,525 (4,920,541)

16,693,285 53,653,663 (3,197,425) 67,149,523

Regional WastewaterPremiums 3,415,538 144,311 (489,385) 3,070,464 Deferred Loss (1,775,901) - 258,250 (1,517,651)

1,639,637 144,311 (231,135) 1,552,813

Sewer SystemPremiums 758,838 2,874,013 (394,144) 3,238,707 Discounts (210,689) - 21,287 (189,402) Deferred Loss - (1,175,686) 94,386 (1,081,300)

548,149 1,698,327 (278,471) 1,968,005

Solid Waste SystemPremiums 1,028,133 - (140,847) 887,286 Discounts (151,121) - 15,067 (136,054) Deferred Loss (1,613,603) - 194,454 (1,419,149)

(736,591) - 68,674 (667,917)

Interceptor SystemPremiums 1,637,096 5,398,156 (175,178) 6,860,074 Deferred Loss (144,760) (711,013) 74,244 (781,529)

1,492,336 4,687,143 (100,934) 6,078,545

Total 19,636,816$ 60,183,444$ (3,739,291)$ 76,080,969$

Revenue bonds outstanding at September 30, 2012, are secured as follows: - Water Revenue Bonds—Assignment of the gross revenues to be derived from the

operation of the District’s wholesale water distribution system.


31

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.

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

Forney, 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 regional wastewater system and payments made to the District by the Cities of Frisco and The Colony, Texas.

- Royse City Contract Revenue Bonds—Assignment of the gross revenues to be

derived from the operation of water transport system serving 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. Premiums and discounts on bonds are amortized over the life of the debt using the effective interest method.


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NOTE 7. LONG-TERM DEBT – CONTINUED Amortization of deferred costs in connection with the issuance of bonded indebtedness is amortized using the straight-line method over the lives of related revenue bonds. During the year, the District issued $319,425,000 of revenue bonds in the Water System primarily for the Lake Texoma to Wylie Water Treatment Plant Raw Water Pipeline Project, $14,105,000 in the Wastewater System primarily for system improvements, $10,620,000 in the Sewer System for the Mustang Creek Interceptor and $47,440,000 in the Interceptor System primarily for system improvements. The District also issued revenue refunding bonds in the amounts of $39,410,000 in the Water System, $23,460,000 in the Sewer System and $9,765,000 in the Interceptor System to refund a portion of existing debt. The District issued $39,410,000 in “Regional Water System Revenue Refunding Bonds, Series 2012” to refund a portion of the District’s outstanding debt. The net proceeds of the refunding of $44,086,445 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 $5,223,562 and realized an economic gain (difference between present value of debt service payment of the old debt and the new debt) of $5,252,829.

The District issued $23,460,000 in “Regional Sewer System Revenue Refunding Bonds, Series 2012” to refund a portion of the District’s outstanding debt. The net proceeds of the refunding of $25,656,024 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 $2,194,099 and realized an economic gain (difference between present value of debt service payment of the old debt and the new debt) of $1,859,991. The District issued $9,765,000 in “Regional Upper East Fork Interceptor System Revenue Refunding Bonds, Series 2012” to refund a portion of the District’s outstanding debt. The net proceeds of the refunding of $11,237,463 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 $1,154,583 and realized an economic gain (difference between present value of debt service payment of the old debt and the new debt) of $981,410. At September 30, 2012 defeased bonds outstanding totaled $74,575,000. 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, 2012, the amount of the unamortized deferred amount on refundings is $9,720,170.


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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

2013 29,555,000$ 57,910,733$ 87,465,733$ 7,895,000$ 5,974,456$ 13,869,456$ 2014 34,185,000 53,194,189 87,379,189 8,230,000 5,689,006 13,919,006 2015 35,595,000 51,723,424 87,318,424 8,570,000 5,391,006 13,961,006 2016 37,145,000 50,279,647 87,424,647 8,935,000 5,050,056 13,985,056 2017 38,755,000 48,620,891 87,375,891 9,160,000 4,708,506 13,868,506 2018-2022 220,640,000 215,042,107 435,682,107 46,880,000 17,363,863 64,243,863 2023-2027 246,590,000 159,128,724 405,718,724 35,525,000 7,747,483 43,272,483 2028-2032 284,805,000 96,840,048 381,645,048 12,570,000 888,200 13,458,200 2033-2037 164,975,000 36,121,525 201,096,525 - - - 2038-2042 41,880,000 4,210,405 46,090,405 - - -

1,134,125,000$ 773,071,693$ 1,907,196,693$ 137,765,000$ 52,812,576$ 190,577,576$

Water Fund Regional Wastewater Fund


2013 8,570,000$ 6,278,162$ 14,848,162$ 2,580,000$ 1,786,694$ 4,366,694$ 2014 8,815,000 6,044,817 14,859,817 2,680,000 1,688,694 4,368,694 2015 9,070,000 5,694,694 14,764,694 2,775,000 1,582,250 4,357,250 2016 9,310,000 5,351,123 14,661,123 2,880,000 1,471,988 4,351,988 2017 9,545,000 4,998,758 14,543,758 2,960,000 1,383,581 4,343,581 2018-2022 48,755,000 18,846,675 67,601,675 16,510,000 5,056,969 21,566,969 2023-2027 36,815,000 7,717,405 44,532,405 11,240,000 1,910,675 13,150,675 2028-2032 8,125,000 2,350,988 10,475,988 1,675,000 90,031 1,765,031 2033-2037 4,600,000 1,012,763 5,612,763 - - - 2038-2042 2,960,000 331,563 3,291,563

146,565,000$ 58,626,948$ 205,191,948$ 43,300,000$ 14,970,882$ 58,270,882$

Solid Waste FundSewer Fund


2013 7,610,000$ 5,949,860$ 13,559,860$ 56,210,000$ 77,899,905$ 134,109,905$ 2014 7,510,000 6,163,363 13,673,363 61,420,000 72,780,069 134,200,069 2015 7,815,000 5,920,075 13,735,075 63,825,000 70,311,449 134,136,449 2016 8,165,000 5,656,700 13,821,700 66,435,000 67,809,514 134,244,514 2017 8,495,000 5,346,100 13,841,100 68,915,000 65,057,836 133,972,836 2018-2022 43,835,000 20,903,363 64,738,363 376,620,000 277,212,977 653,832,977 2023-2027 46,740,000 10,535,300 57,275,300 376,910,000 187,039,587 563,949,587 2028-2032 25,885,000 2,120,969 28,005,969 333,060,000 102,290,236 435,350,236 2033-2037 - - - 169,575,000 37,134,288 206,709,288 2038-2042 - - - 44,840,000 4,541,968 49,381,968

156,055,000$ 62,595,730$ 218,650,730$ 1,617,810,000$ 962,077,829$ 2,579,887,829$

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 Total

2013 1,278,839$ 1,179,762$ 2,458,601$ 2014 1,320,151 1,138,450 2,458,601 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 2018-2022 7,996,143 4,296,860 12,293,003 2023-2027 7,485,972 2,949,055 10,435,027 2028-2032 2,161,740 2,159,662 4,321,402 2033-2037 2,536,978 1,784,423 4,321,401 2038-2042 2,977,352 1,344,049 4,321,401 2043-2047 3,494,165 827,235 4,321,400 2048-2051 2,944,760 234,420 3,179,180

36,417,993$ 19,067,825$ 55,485,818$

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.


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NOTE 8. RETIREMENT PLAN - CONTINUED - Late Retirement (after normal retirement date)—The benefit accrued to the late

retirement date. - 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, 2012, the participants comprised the following:

Active participants 451Terminated vested participants 38Disabled Participants 2Retired participants 55Beneficiaries 3

Total number of participants 549

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, 2012, are as follows: (a) rate of return on investment of present and future assets of 7% 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, 2011, 2010, and 2009, the District made contributions of $3,925,000, $3,345,000, and $3,351,291, respectively which represent 16.2%, 14.2% and 14.9%, respectively of annual covered payroll. These contributions were based on actuarially determined contribution requirements through an actuarial valuation performed at January 1, 2012, 2011, and 2010.


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NOTE 8. RETIREMENT PLAN - CONTINUED The net pension obligation (asset) at September 30, 2012 is as follows:

Annual Required Contribution (ARC) 4,549,091$ Interest on Prior Year's Net Pension Asset (55,275) Adjustment to the ARC 61,374

Annual Pension Cost 4,555,190

Contributions made (4,638,780)

Increase in Net Pension Asset 83,590 Net Pension Asset, Beginning of Year 607,349

Net Pension Asset, End of Year 690,939$

The actuarial value of assets was determined using market values. The actuarial value of the plan’s assets was $36,145,178 at January 1, 2012. 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)

2010 3,309,477$ 3,290,731$ 100.6$ (553,078)$ 2011 3,895,681 3,841,410 101.4 (607,349) 2012 4,638,780 4,555,190 101.8 (690,939)

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

Actuarial valuation date January 1, 2012Actuarial value of plan assets 36,145,178$ Actuarial accrued liability (AAL) 55,435,846 Unfunded AAL 19,290,668 Covered payroll 24,256,075 Unfunded AAL as a % of covered payroll 79.53%Funded ratio 65.20%

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 17 participants currently eligible for benefits. For the year ended September 30, 2012, the District recorded OPEB expense of $950,000, related to these benefits, of which $551,878 was allocated to the Water System, $164,095 was allocated to the Wastewater System, $61,797 was allocated to the Sewer System, $162,125 was allocated to the Solid Waste System, $10,105 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, solid waste, and interceptor construction contracts as of September 30, 2012 were, $330,043,116, $10,325,667, $3,214,319, $1,969,768, and $5,491,137 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, 2012. 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 met or come to agreement on the amount of the costs which will ultimately be the District’s responsibility. The amount of final settlement cannot be reasonably estimated, these costs have not been accrued in the financial statements. 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, 2012.

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, 2012, a liability of $4,985,860 for landfill closure and postclosure care costs has been accrued in the Solid Waste System Fund in the accompanying statement of net assets.


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NOTE 10. CLOSURE AND POSTCLOSURE CARE COSTS - CONTINUED

Beginning EndingLiability Additions Reductions Liability

4,766,691$ 219,169$ -$ 4,985,860$

The $4,985,860 reported as landfill closure and postclosure care liability at September 30, 2012, includes $91,561 for Transfer Stations, $1,379,426 for the Maxwell Creek Landfill, $3,015,427 for the McKinney Landfill and $499,446 for the 121 Regional Disposal Facility, which represents the cumulative amount reported to date based on the use of 8% 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 $5,936,719 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, 2012. 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. 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.


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NOTE 11. RISK MANAGEMENT – CONTINUED

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 assets. Changes in the employees’ health claims liability amount in fiscal year September 30, 2012 and 2011 were:

ClaimsLiability Incurred and Current Year Liability

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

2011 834,592$ 7,052,659 6,964,387$ 922,864$ 2012 922,864 6,475,805 6,440,571 958,098

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 is not required to establish an irrevocable trust fund to accumulate assets for payment of future OPEB benefits, and has elected not to do so for fiscal year 2012. The District may make a determination to establish an irrevocable trust in the future. Currently, payments of OPEB benefits are made on a pay-as-you-go basis in amounts necessary to provide current benefits to the recipients. For fiscal year 2012, the District contributed $254,586 to the program, including $34,375 for the current health and dental premiums and an additional $220,211 for benefits.


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NOTE 12. OTHER POSTEMPLOYMENT BENEFITS – CONTINUED Funding Policy – Continued

The District’s annual OPEB cost, percentage of annual OPEB costs contributed to its plan and net OPEB obligation for fiscal year 2012 and the two preceding years were as follows:

2012 2011 2010

Annual required contribution 1,150,873$ 919,840$ 865,930$ Interest on prior year Net OPEB obligation 82,335 52,690 23,043 Adjustment to annual required contribution (119,036) (76,177) (33,314) Annual OPEB cost 1,114,172 896,353 855,659 Contributions made 254,586 155,238 114,467 Increase in net OPEB obligation 859,586 741,115 741,192 Net OPEB obligation - beginning of year 2,058,373 1,317,258 576,066 Net OPEB obligation - end of year 2,917,959 2,058,373 1,317,258

Percentage of annual OPEB costs contributed 23% 17% 13%

Funded Status and Funding Progress

The funded status of other postemployment benefits as of October 1, 2011, the date of the latest actuarial valuation, was as follows:

Actuarial accrued liability (AAL) 9,801,016$ Actuarial value of plan assets - Unfunded actuarial accrued liability 9,801,016$

Funded ratio (actuarial value of plan asset/AAL) 0.0%Covered Payroll 24,256,075 Unfunded actuarial accrued liability as a percentage of covered payroll 40.41%

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, 2011, actuarial valuation, the entry age actuarial cost method was used. The key actuarial assumptions include: (a) Benefit liabilities as of October 1, 2011, (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 6.9% rate in 2013 to 6.6% by 2025.

NOTE 13. RECENTLY ISSUED GASB STATEMENTS

GASB Statement No. 57, "OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans" is effective for the District beginning in fiscal year 2012. This statement is to address issues related to the use of the alternative measurement method and the frequency and timing of measurements by employers that participate in agent multiple-employer other post-employment benefit (OPEB) plans. The District had no activity of this type during 2012. In the future if there is activity that applies to this statement the District will account for it appropriately.

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. This standard will be implemented by the District in its fiscal year 2013 financial statements. 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. This standard will be implemented by the District in its fiscal year 2013 financial statements.

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:


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NOTE 13. RECENTLY ISSUED GASB STATEMENTS– CONTINUED 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 will be implemented by the District in its fiscal year 2013 financial statements.

GASB Statement No. 65, “Items Previously Reported as Assets and Liabilities" which is effective for the District beginning 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 will be implemented by the District in its fiscal year 2013 financial statements.

GASB Statement No. 67, “Financial Reporting for Pension Plans" which is effective for the District beginning in fiscal year 2014. 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 local governmental entities and amends GASB Statements No. 25 and No. 50. This standard will be implemented by the District in its fiscal year 2014 financial statements GASB Statement No. 68, “Accounting and Financial Reporting for Pensions" which is effective for the District beginning in fiscal year 2015. The objective of this statement is to improve financial reporting of state and local governmental pension plans. This statement applies to all state and governmental entities and amends GASB Statements No. 27 and No. 50. This standard will be implemented by the District in its fiscal year 2015 financial statements.

NOTE 14 SUBSEQUENT EVENTS

The District has evaluated all events or transaction that occurred after September 30, 2012 up through January 14, 2013, the date the financial statements were available to be issued. During this period there were no subsequent events requiring disclosure. .


REQUIRED SUPPLEMENTAL INFORMATION

NORTH TEXAS MUNICIPAL WATER DISTRICT REQUIRED SUPPLEMENTARY INFORMATION

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(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)

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

North Texas Municipal Employee Retirement System

NORTH TEXAS MUNICIPAL WATER DISTRICT REQUIRED SUPPLEMENTARY INFORMATION

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(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)

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 102,019 678,085 15.0 2010 114,467 865,930 13.2 2011 155,238 919,840 16.9

North Texas Municipal Employee Other Postemployment Benefits Plan


NORTH TEXAS MUNICIPAL WATER DISTRICT, TEXAS SEWER SYSTEM SUPPLEMENTAL STATEMENTS STATEMENT OF NET ASSETS SEPTEMBER 30, 2012

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Little Elm Plano Water Transmission Water Transmission

ASSETS Facilities Facilities

CURRENT ASSETS: Unrestricted Assets: Cash and cash equivalents 4,035$ 8,207$ Accounts receivable - - Due from other funds - - Prepaid expenses - - Deferred customer billings - -

Total unrestricted assets 4,035 8,207

Restricted Assets: Cash and cash equivalents 615,703 1,074,688 Investments - - Interest and accounts receivable - -

Total restricted assets 615,703 1,074,688

TOTAL CURRENT ASSETS 619,738 1,082,895

LONG-TERM ASSETS: Nondepreciable: Land - - Easements 1,148,575 - Construction-in-progress - -

Total nondepreciable assets 1,148,575 -

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 (508,970) (2,771,996) Net capital assets 4,780,379 6,461,775

Long term deferred billings, less current portion - - Net Pension Assets - - Bond issue costs, net 32,295 88,245

TOTAL LONG-TERM ASSETS 4,812,674 6,550,020

TOTAL ASSETS 5,432,412$ 7,632,915$

47

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

Facilities Facilities Facilities Facilities

(189)$ 17,134$ -$ 10$ 189 6,097 - - - - - - - 48 - - - - - -

- 23,279 - 10

221,057 74,019 - 305,485 - - - - - - - -

221,057 74,019 - 305,485

221,057 97,298 - 305,495

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

- - - -

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

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

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

(326,356) - - (273,027)

1,267,966 - - 2,327,232

- - - - - - - -

11,744 - - 31,785

1,279,710 - - 2,359,017

1,500,767$ 97,298$ -$ 2,664,512$


48

Terrell RockwallWater Transmission Water Pump Station

ASSETS Facilities Facilities

CURRENT ASSETS: Unrestricted Assets: Cash and cash equivalents (14)$ 736$ Accounts receivable 14 - Due from other funds - - Prepaid expenses - - Deferred customer billings - -

Total unrestricted assets - 736

Restricted Assets: Cash and cash equivalents 1,097,337 229,216 Investments - - Interest and accounts receivable - -

Total restricted assets 1,097,337 229,216

TOTAL CURRENT ASSETS 1,097,337 229,952

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 - -


Less accumulated depreciation (1,404,565) (241,535) Net capital assets 10,634,568 1,690,702



TOTAL ASSETS 11,836,106$ 1,959,935$

49

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

Interceptor WWTP WWTP WWTP

3,235$ 4,223$ 174,673$ 52,624$ - - - 19,116 - 77 44 293 - 135 6,024 4,886 - 8 229 103

3,235 4,443 180,970 77,022

20,932 23,483 665,484 46,419 - - - - - - - -

20,932 23,483 665,484 46,419

24,167 27,926 846,454 123,441

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

33,018 - 303,769 -

- - - - - - - -

771,194 2,149,480 8,214,579 1,576,459 - 4,827 8,889 8,889 - 53,402 117,885 44,741

771,194 2,207,709 8,341,353 1,630,089

(467,647) (1,698,962) (4,457,482) (995,748)

336,565 508,747 4,187,640 634,341

- 427 4,029 2,100 - 55 1,629 868 565 - 71,705 -

337,130 509,229 4,265,003 637,309

361,297$ 537,155$ 5,111,457$ 760,750$


50

Panther Creek Sabine CreekASSETS WWTP WWTP

CURRENT ASSETS: Unrestricted Assets: Cash and cash equivalents 203,217$ 104,905$ Accounts receivable - - Due from other funds 451 11 Prepaid expenses 112,611 3,488 Deferred customer billings 27,284 251


Restricted Assets: Cash and cash equivalents 2,734,753 997,157 Investments 3,815,184 - Interest and accounts receivable 4,550 -

Total restricted assets 6,554,487 997,157

TOTAL CURRENT ASSETS 6,898,050 1,105,812

LONG-TERM ASSETS: Nondepreciable: Land - 375,774 Easements 19,042 - Construction-in-progress 18,121 -

Total nondepreciable assets 37,163 375,774

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 8,889 Other equipment 25,494 23,944


Less accumulated depreciation (3,930,029) (1,063,057) Net capital assets 47,977,243 7,149,456

Long term deferred billings, less current portion 21,218 2,625 Net Pension Assets 11,920 1,086 Bond issue costs, net 562,359 101,941


TOTAL ASSETS 55,470,790$ 8,360,920$

51

Stewart Creek Muddy Creek Seis Lagos Royse CityWWTP WWTP WWTP WWTP

128,789$ 316,530$ 22,010$ 6,438$ - 15,968 - - 770 375 264 324

48,852 32,043 1,336 81 8,091 15,078 45 7

186,502 379,994 23,655 6,850

967,398 862,723 4,700 9,891 - 1,460,904 - - - 322 - -

967,398 2,323,949 4,700 9,891

1,153,900 2,703,943 28,355 16,741

- - - - - 9,421 - -

(24,085) - - -

(24,085) 9,421 - -

- 417,138 - - - - - -

6,896,732 28,265,888 - - 25,388 25,208 8,889 1,278

143,466 23,301 21,348 7,324

7,065,586 28,731,535 30,237 8,602

(2,459,623) (5,429,662) (25,260) (8,602)

4,581,878 23,311,294 4,977 -

48,734 80,572 876 136 5,448 13,692 362 56

59,153 313,885 - -

4,695,213 23,719,443 6,215 192

5,849,113$ 26,423,386$ 34,570$ 16,933$


52

FriscoFarmersville Cottonwood Creek

ASSETS WWTP WWTP

CURRENT ASSETS: Unrestricted Assets: Cash and cash equivalents 23,268$ 29,806$ Accounts receivable - - Due from other funds 138 26 Prepaid expenses 2,439 596 Deferred customer billings 244 (889)


Restricted Assets: Cash and cash equivalents 12,336 9,423 Investments - - Interest and accounts receivable - -

Total restricted assets 12,336 9,423

TOTAL CURRENT ASSETS 38,425 38,962



Depreciable: Land improvements - - Water treatment, storage, and transmission facilities - - Wastewater treatment and disposal facilities - - Automobiles and trucks 8,889 - Other equipment 12,915 -

Total depreciable assets 21,804 -

Less accumulated depreciation (18,058) - Net capital assets 3,746 -

Long term deferred billings, less current portion 1,313 (60) Net Pension Assets 547 889 Bond issue costs, net - -

TOTAL LONG-TERM ASSETS 5,606 829

TOTAL ASSETS 44,031$ 39,791$

53

LowerLavon Crandall Forney East ForkWWTP WWTP Interceptor Interceptor

4,979$ 7,986$ 19,834$ 36,561$ - - - - 30 128 680 705

1,149 1,156 11,734 17,249 45 78 (49) (49)

6,203 9,348 32,199 54,466

1,000 - 14,105 575,801 - - - 1,425,665 - - - 1,551

1,000 - 14,105 2,003,017

7,203 9,348 46,304 2,057,483

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

- - 48,877 193,687

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

8,889 5,705 - - 12,708 108 189,025 -

21,597 5,813 2,045,549 15,137,968

(6,978) (2,213) (972,126) (1,286,694)

14,619 3,600 1,122,300 14,044,961

876 1,540 809 809 362 651 304 304 - - - 156,383

15,857 5,791 1,123,413 14,202,457

23,060$ 15,139$ 1,169,717$ 16,259,940$


54

Muddy Creek Parker CreekASSETS Interceptor Interceptor

CURRENT ASSETS: Unrestricted Assets: Cash and cash equivalents 27,431$ 6,023$ Accounts receivable - 7,631 Due from other funds 10 - Prepaid expenses 4,788 - Deferred customer billings - -


Restricted Assets: Cash and cash equivalents 124,937 83,976 Investments 268,021 214,417 Interest and accounts receivable 292 233

Total restricted assets 393,250 298,626


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 - -


Less accumulated depreciation (733,785) (279,479) Net capital assets 2,726,530 2,290,709



TOTAL ASSETS 3,182,815$ 2,639,911$

55

Sabine Creek Buffalo Creek McKinney Mustang CreekInterceptor Interceptor Interceptor Interceptor

531$ 49,696$ 724$ -$ - 62,162 - - - 289 - - - 11,535 - - - (49) - -

531 123,633 724 -

74,448 847,576 202,766 9,320,013 172,152 1,128,565 - -

187 - - -

246,787 1,976,141 202,766 9,320,013

247,318 2,099,774 203,490 9,320,013

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

- - - 1,373,445

70,341 1,253,590 16,150 1,373,445

- - - - - - - -

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

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

(169,785) (3,412,766) (841,779) -

1,598,368 15,849,242 725,810 1,373,445

- 809 - - - 304 - -

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

1,630,188 16,108,333 727,740 1,859,416

1,877,506$ 18,208,107$ 931,230$ 11,179,429$


56

Small Plants DewateringASSETS Clearing Operations

CURRENT ASSETS: Unrestricted Assets: Cash and cash equivalents 309,075$ (103,804)$ Accounts receivable - - Due from other funds 110,798 103,821 Prepaid expenses 419 5,204 Deferred customer billings - (754)


Restricted Assets: Cash and cash equivalents - 175,942 Investments - - Interest and accounts receivable - -

Total restricted assets - 175,942




Depreciable: Land improvements - - Water treatment, storage, and transmission facilities - - Wastewater treatment and disposal facilities - - Automobiles and trucks - - Other equipment - 682,513

Total depreciable assets - 682,513

Less accumulated depreciation - (650,072) Net capital assets - 32,441

Long term deferred billings, less current portion - (146) Net Pension Assets - 1,551 Bond issue costs, net - -

TOTAL LONG-TERM ASSETS - 33,846

TOTAL ASSETS 420,292$ 214,255$

57

WastewaterPretreatment Total

Program Sewer System

75,698$ 1,534,371$ 11,462 122,639

1 219,235 4,780 270,553 5,891 55,564

97,832 2,202,362

- 21,392,768 - 8,484,908 - 7,135

- 29,884,811

97,832 32,087,173

- 469,516 - 3,156,164 - 1,367,481

- 4,993,161

- 417,138 - 31,540,496 - 151,627,941

44,753 184,633 11,690 1,369,864

56,443 185,140,072

(50,310) (34,486,566)

6,133 155,646,667

42,075 208,742 7,118 47,146

- 2,418,969

55,326 158,321,524

153,158$ 190,408,697$


58


LIABILITIES Facilities Facilities

CURRENT LIABILITIES: Payable from current assets: Accounts payable and accrued liabilities 1$ -$ Due to other funds - 103,000 Customers’ advance payments 4,035 8,206

Total payable from current assets 4,036 111,206

Payable from restricted assets: Accounts payable and accrued liabilities 36,237 75,120 Due to other funds - - Accrued interest payable on revenue bonds 51,956 37,359 Current portion of revenue bonds 260,000 700,000

Total payable from restricted assets 348,193 812,479

TOTAL CURRENT LIABILITIES 352,229 923,685

LONG-TERM LIABILITIES: Accrued vacation—less current portion - - Accrued sick—less current portion - - Accrued OPEB liability - - Long-term debt—less current portion 3,445,000 3,306,779

TOTAL LONG-TERM LIABILITIES 3,445,000 3,306,779

TOTAL LIABILITIES 3,797,229 4,230,464

NET ASSETS: Invested in capital assets—net of related debt 1,075,379 2,454,996 Restricted for debt service 527,510 962,209 Unrestricted 32,294 (14,754)

TOTAL NET ASSETS 1,635,183$ 3,402,451$

59

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

Facilities Facilities Facilities Facilities

-$ 7,335$ -$ -$ - 373 - - - 15,571 - 12

- 23,279 - 12

29,635 74,019 - - - - - -

18,262 - - 31,057 85,000 - - 130,000

132,897 74,019 - 161,057

132,897 97,298 - 161,069

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

1,000,000 - - 2,115,000

1,000,000 - - 2,115,000

1,132,897 97,298 - 2,276,069

182,966 - - 82,232 173,160 - - 274,428 11,744 - - 31,783

367,870$ -$ -$ 388,443$


60


LIABILITIES Facilities Facilities

CURRENT LIABILITIES: Payable from current assets: Accounts payable and accrued liabilities (1)$ -$ Due to other funds - - Customers’ advance payments - 738

Total payable from current assets (1) 738

Payable from restricted assets: Accounts payable and accrued liabilities - - Due to other funds - - Accrued interest payable on revenue bonds 173,150 26,177 Current portion of revenue bonds 270,000 90,000






NET ASSETS: Invested in capital assets—net of related debt (661,051) (36,697) Restricted for debt service 924,187 203,039 Unrestricted 104,202 39,279

TOTAL NET ASSETS 367,338$ 205,621$

61



(15)$ 1,882$ 56,951$ 22,739$ - 15 8,236 55,143

3,473 2,603 117,408 -

3,458 4,500 182,595 77,882

3,799 23,483 - 46,419 - - - -

1,667 - 56,060 - 60,000 - 235,000 -

65,466 23,483 291,060 46,419

68,924 27,983 473,655 124,301

- 119 3,502 1,828 - 19 563 294 - 289 (36) (22)

60,000 - 2,839,110 -

60,000 427 2,843,139 2,100

128,924 28,410 3,316,794 126,401

216,565 508,747 1,113,530 634,341 15,466 - 609,424 -

342 (2) 71,709 8

232,373$ 508,745$ 1,794,663$ 634,349$


62

Panther Creek Sabine CreekLIABILITIES WWTP WWTP

CURRENT LIABILITIES: Payable from current assets: Accounts payable and accrued liabilities 334,175$ 30,524$ Due to other funds 12,326 42,320 Customers’ advance payments 8,986 36,894


Payable from restricted assets: Accounts payable and accrued liabilities 4,040 5,229 Due to other funds - - Accrued interest payable on revenue bonds 724,309 99,220 Current portion of revenue bonds 2,220,000 435,000

Total payable from restricted assets 2,948,349 539,449

TOTAL CURRENT LIABILITIES 3,303,836 649,187

LONG-TERM LIABILITIES: Accrued vacation—less current portion 22,706 2,286 Accrued sick—less current portion 382 367 Accrued OPEB liability (1,870) (28) Long-term debt—less current portion 44,130,785 5,625,000



NET ASSETS: Invested in capital assets—net of related debt 2,449,580 1,089,456 Restricted for debt service 5,003,016 892,708 Unrestricted 562,355 101,944

TOTAL NET ASSETS 8,014,951$ 2,084,108$

63


140,489$ 190,558$ 9,111$ 489$ 6,314 10,203 1,792 15

45,148 192,930 13,108 6,400

191,951 393,691 24,011 6,904

127,361 17,781 4,700 9,891 - - - -

18,144 229,614 - - 465,000 1,185,000 - -

610,505 1,432,395 4,700 9,891

802,456 1,826,086 28,711 16,795

12,746 22,468 762 119 36,378 59,150 122 19

(390) (1,047) (9) (2) 2,960,802 17,244,083 - -

3,009,536 17,324,654 875 136

3,811,992 19,150,740 29,586 16,931

1,180,631 4,882,211 4,977 - 797,338 2,076,554 - - 59,152 313,881 7 2

2,037,121$ 7,272,646$ 4,984$ 2$


64


LIABILITIES WWTP WWTP

CURRENT LIABILITIES: Payable from current assets: Accounts payable and accrued liabilities 8,240$ 4,584$ Due to other funds 17,930 9,391 Customers’ advance payments 461 16,452


Payable from restricted assets: Accounts payable and accrued liabilities 12,336 9,423 Due to other funds - - Accrued interest payable on revenue bonds - - Current portion of revenue bonds - -



LONG-TERM LIABILITIES: Accrued vacation—less current portion 1,143 - Accrued sick—less current portion 184 - Accrued OPEB liability (13) (60) Long-term debt—less current portion - -

TOTAL LONG-TERM LIABILITIES 1,314 (60)

TOTAL LIABILITIES 40,281 39,790

NET ASSETS: Invested in capital assets—net of related debt 3,746 - Restricted for debt service - - Unrestricted 4 1

TOTAL NET ASSETS 3,750$ 1$

65


2,609$ 4,357$ 27,849$ 26,161$ 2,025 3,402 250 1,991 1,927 2,238 3,421 26,615

6,561 9,997 31,520 54,767

1,000 - 14,105 19,851 - - - - - - - 216,610 - - - 775,000

1,000 - 14,105 1,011,461

7,561 9,997 45,625 1,066,228

762 1,371 835 835 122 220 - -

(9) (51) (26) (26) - - - 14,343,508

875 1,540 809 14,344,317

8,436 11,537 46,434 15,410,545

14,619 3,600 1,122,300 (1,073,547) - - - 1,766,556

5 2 983 156,386

14,624$ 3,602$ 1,123,283$ 849,395$


66

Muddy Creek Parker CreekLIABILITIES Interceptor Interceptor

CURRENT LIABILITIES: Payable from current assets: Accounts payable and accrued liabilities 13,344$ 13,656$ Due to other funds - - Customers’ advance payments 18,886 -


Payable from restricted assets: Accounts payable and accrued liabilities 22,257 - Due to other funds - - Accrued interest payable on revenue bonds 37,452 29,961 Current portion of revenue bonds 155,000 130,000






NET ASSETS: Invested in capital assets—net of related debt 231,530 460,709 Restricted for debt service 333,541 268,665 Unrestricted 30,805 36,920


67


(1)$ 17,144$ 40$ 78,757$ - 272 - - 531 106,523 684 -

530 123,939 724 78,757

5,117 21,892 5,117 82,474 - - - 4,727

24,152 190,008 6,667 47,569 105,000 885,000 125,000 260,000

134,269 1,096,900 136,784 394,770

134,799 1,220,839 137,508 473,527

- 835 - - - - - - - (26) - -

1,370,000 13,787,207 275,000 10,757,713

1,370,000 13,788,016 275,000 10,757,713

1,504,799 15,008,855 412,508 11,231,240

123,368 1,369,213 325,810 (1,059,133) 217,518 1,572,063 190,982 600,108 31,821 257,976 1,930 407,214

372,707$ 3,199,252$ 518,722$ (51,811)$


68

Small Plants DewateringLIABILITIES Clearing Operations

CURRENT LIABILITIES: Payable from current assets: Accounts payable and accrued liabilities 73$ 6,016$ Due to other funds 895 - Customers’ advance payments - -

Total payable from current assets 968 6,016

Payable from restricted assets: Accounts payable and accrued liabilities - 175,942 Due to other funds - - Accrued interest payable on revenue bonds - - Current portion of revenue bonds - -

Total payable from restricted assets - 175,942

TOTAL CURRENT LIABILITIES 968 181,958

LONG-TERM LIABILITIES: Accrued vacation—less current portion - - Accrued sick—less current portion - - Accrued OPEB liability - (146) Long-term debt—less current portion - -

TOTAL LONG-TERM LIABILITIES - (146)

TOTAL LIABILITIES 968 181,812

NET ASSETS: Invested in capital assets—net of related debt - 32,441 Restricted for debt service - - Unrestricted 419,324 2


69



52,773$ 1,049,840$ 389 276,282

51,788 685,038

104,950 2,011,160

- 827,228 - 4,727 - 2,019,394 - 8,570,000

- 11,421,349

104,950 13,432,509

16,564 88,881 25,967 123,787

(456) (3,928) - 139,963,005

42,075 140,171,745

147,025 153,604,254

6,133 16,738,652 - 17,408,472 - 2,657,319

6,133$ 36,804,443$

NORTH TEXAS MUNICIPAL WATER DISTRICT, TEXAS SEWER SYSTEM SUPPLEMENTAL STATEMENTS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS YEAR ENDED SEPTEMBER 30, 2012

70


Facilities Facilities

OPERATING REVENUES: Wastewater service fees 419,210 813,498 Other operating revenues - -

Total operating revenues 419,210 813,498

OPERATING EXPENSES: Personnel - - Operating Supplies: Chemicals - - Other supplies - - Operating Services: Electric power - - Other services 4,272 (21,119) Depreciation and amortization 108,836 263,164

Total operating expenses 113,108 242,045

OPERATING INCOME (LOSS) 306,102 571,453

NONOPERATING REVENUES (EXPENSES): Investment income 1,853 3,342 Gain (loss) on sale of capital assets - - Interest expense (163,992) (107,528)

Total nonoperating revenues (expenses) (162,139) (104,186)

CHANGE IN NET ASSETS 143,963 467,267



71

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

Facilities Facilities Facilities

140,354 52,564 226,940 - - -

140,354 52,564 226,940

- - -

- - - - 942 -

- 39,863 - 4,364 11,775 4,256

44,047 - 56,395

48,411 52,580 60,651

91,943 (16) 166,289

595 16 953 - - -

(57,159) - (97,026)

(56,564) 16 (96,073)

35,379 - 70,216

332,491 318,227

367,870$ -$ 388,443$


72


Facilities Facilities

OPERATING REVENUES: Wastewater service fees 791,129 168,824 Other operating revenues - -


OPERATING EXPENSES: Personnel - - Operating Supplies: Chemicals - - Other supplies - - Operating Services: Electric power - - Other services 4,164 3,336 Depreciation and amortization 308,535 53,301



NONOPERATING REVENUES (EXPENSES): Investment income 3,356 706 Gain (loss) on sale of capital assets - - Interest expense (526,843) (79,646)


CHANGE IN NET ASSETS (45,057) 33,247

NET ASSETS AT OCTOBER 1, 2011 412,395 172,374

NET ASSETS AT SEPTEMBER 30, 2012 367,338$ 205,621$

73



66,317 23,412 1,081,809 374,646 - 586 20,088 495

66,317 23,998 1,101,897 375,141

- 3,968 116,936 61,840

- - 28,624 23,290 500 18 47,964 40,641

249 766 252,147 45,711 836 19,983 220,409 202,344

23,751 80,004 275,731 41,144

25,336 104,739 941,811 414,970

40,981 (80,741) 160,086 (39,829)

47 6 2,208 119 360 730 730 730

(10,174) - (178,776) -

(9,767) 736 (175,838) 849

31,214 (80,005) (15,752) (38,980)

201,159 588,750 1,810,415 673,329

232,373$ 508,745$ 1,794,663$ 634,349$


74

Panther Creek Sabine CreekWWTP WWTP

OPERATING REVENUES: Wastewater service fees 6,555,722 1,213,369 Other operating revenues 4,194 558

Total operating revenues 6,559,916 1,213,927

OPERATING EXPENSES: Personnel 756,843 77,327 Operating Supplies: Chemicals 445,341 1,787 Other supplies 101,615 31,907 Operating Services: Electric power 334,835 113,454 Other services 576,990 260,937 Depreciation and amortization 1,366,893 280,415

Total operating expenses 3,582,517 765,827

OPERATING INCOME (LOSS) 2,977,399 448,100

NONOPERATING REVENUES (EXPENSES): Investment income 27,652 3,513 Gain (loss) on sale of capital assets - 730 Interest expense (2,182,036) (309,420)

Total nonoperating revenues (expenses) (2,154,384) (305,177)




75


1,892,406 3,888,359 104,276 9,310 203,388 349,404 169 20

2,095,794 4,237,763 104,445 9,330

383,878 826,002 25,787 4,022

241,606 245,973 2,566 - 70,662 90,212 13,607 18

256,871 427,153 15,859 917 570,838 1,017,056 45,263 5,059 275,206 1,009,599 2,564 157

1,799,061 3,615,995 105,646 10,173

296,733 621,768 (1,201) (843)

1,665 10,568 66 5 2,544 - 730 683

(107,482) (674,132) - -

(103,273) (663,564) 796 688

193,460 (41,796) (405) (155)

1,843,661 7,314,442 5,389 157

2,037,121$ 7,272,646$ 4,984$ 2$


76


WWTP WWTP

OPERATING REVENUES: Wastewater service fees 178,437 106,328 Other operating revenues 263 20


OPERATING EXPENSES: Personnel 38,661 36,014 Operating Supplies: Chemicals 7,111 2,275 Other supplies 19,141 3,081 Operating Services: Electric power 21,137 33,368 Other services 91,303 31,645 Depreciation and amortization 1,769 -


OPERATING INCOME (LOSS) (422) (35)

NONOPERATING REVENUES (EXPENSES): Investment income 73 33 Gain (loss) on sale of capital assets 730 - Interest expense - -

Total nonoperating revenues (expenses) 803 33

CHANGE IN NET ASSETS 381 (2)

NET ASSETS AT OCTOBER 1, 2011 3,369 3

NET ASSETS AT SEPTEMBER 30, 2012 3,750$ 1$

77


95,973 175,293 160,056 1,480,292 177 72 295 304

96,150 175,365 160,351 1,480,596

25,787 46,379 20,160 20,088

2,845 2,465 36,945 31,161 13,447 28,312 6,844 9,705

- - 42,726 41,108 46,229 96,119 38,735 26,686 2,578 974 67,243 322,619

90,886 174,249 212,653 451,367

5,264 1,116 (52,302) 1,029,229

51 69 52 15,053 730 - - - - - - (666,432)

781 69 52 (651,379)

6,045 1,185 (52,250) 377,850

8,579 2,417 1,175,533 471,545

14,624$ 3,602$ 1,123,283$ 849,395$


78

Muddy Creek Parker CreekInterceptor Interceptor

OPERATING REVENUES: Wastewater service fees 289,441 233,572 Other operating revenues 65 -


OPERATING EXPENSES: Personnel - - Operating Supplies: Chemicals 16,923 - Other supplies 12 15,170 Operating Services: Electric power - 247 Other services 6,614 (824) Depreciation and amortization 116,546 55,411



NONOPERATING REVENUES (EXPENSES): Investment income 2,841 2,260 Gain (loss) on sale of capital assets - - Interest expense (117,232) (93,425)





79


179,209 1,602,634 151,971 - - 324 - -

179,209 1,602,958 151,971 -

- 20,164 - -

- 16,323 - - 126 11,039 - -

- 35,176 234 - 4,096 27,419 6,746 54,765

39,199 649,662 56,173 -

43,421 759,783 63,153 54,765

135,788 843,175 88,818 (54,765)

1,814 6,541 253 2,538 - - - -

(75,291) (527,859) (24,000) 166

(73,477) (521,318) (23,747) 2,704

62,311 321,857 65,071 (52,061)

310,396 2,877,395 453,651 250

372,707$ 3,199,252$ 518,722$ (51,811)$


80

Small Plants DewateringClearing Operations

OPERATING REVENUES: Wastewater service fees - (1,046) Other operating revenues (3,750) 529

Total operating revenues (3,750) (517)

OPERATING EXPENSES: Personnel - 108,873 Operating Supplies: Chemicals - 24,777 Other supplies (1) 15,461 Operating Services: Electric power - - Other services (3,750) (157,560) Depreciation and amortization - 30,833

Total operating expenses (3,751) 22,384

OPERATING INCOME (LOSS) 1 (22,901)

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

Total nonoperating revenues (expenses) - -

CHANGE IN NET ASSETS 1 (22,901)



81



605,657 23,079,962 1,752 582,703

607,409 23,662,665

426,220 2,998,949

- 1,130,012 34,914 555,337

- 1,661,821 146,404 3,349,140

6,242 5,538,991

613,780 15,234,250

(6,371) 8,428,415

129 88,377 - 8,697 - (5,998,287)

129 (5,901,213)

(6,242) 2,527,202

12,375 34,277,241

6,133$ 36,804,443$

NORTH TEXAS MUNICIPAL WATER DISTRICT, TEXAS SEWER SYSTEM SUPPLEMENTAL STATEMENTS STATEMENT OF CASH FLOWS YEAR ENDED SEPTEMBER 30, 2012

82

Little Elm Plano Water

TransmissionWater

TransmissionFacilities Facilities

CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers 423,740$ 813,757$ Cash received from other funds Cash received from (paid to) others Cash paid to suppliers for goods and services (7,821) 9,690 Cash paid for employee services Cash paid to other funds (210) (415)

Net cash provided by (used for) operating activities 415,709 823,032

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from the issuance of bonds Cash paid for capital assets 5,000 (25,796) Interest paid (168,053) (138,876) Principal payments on long-term debt and capital leases (250,000) (670,000) Payments for bond issue costs

Net cash provided by (used for) capital and related financing activities (413,053) (834,672)

CASH FLOWS FROM INVESTING ACTIVITIES: Sale and maturity of investments 415,434 714,738 Purchases of investments Interest received 1,873 783

Net cash provided by (used for) investing activities 417,307 715,521

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 419,963 703,881

CASH AND CASH EQUIVALENTS—Beginning of year 199,775 379,014

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

RECONCILIATION OF TOTAL CASH TO THE STATEMENT OF NET ASSETSUnrestricted cash and cash equivalents 4,035$ 8,207$ Restricted cash and cash equivalents 615,703 1,074,688

619,738$ 1,082,895$

RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating income 306,102$ 571,453$

Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 103,519 231,467 Amortization 5,317 31,697 Change in current assets and liabilities: Accounts receivable and deferred billings 1,241 157 Prepaid expenses - - Net pension assets - - Due to/from other funds - (12,000) Accounts payable, accrued liabilities, and developers’ deposits - Accrued vacation and Accrued sick - - Accrued OPEB - - Customers’ advance payments (470) 258

Total adjustments 109,607 251,579 NET CASH PROVIDED BY OPERATING ACTIVITIES 415,709$ 823,032$

NONCASH TRANSACTION DISCLOSURESGain (loss) on sale of capital assets - - Interest capitalized on construction - - Amortization of bond-related items 5,317 9,283 Change in fair value of investments 396 (2,352) Change in actuarial value of net pension assets - - Refunding bonds issuedRefunding proceeds deposited in escrow

83

Royse City Kaufman 4-1 Rockwall-HeathWater

TransmissionWater

Distribution Water Storage

Facilities Facilities Facilities

139,665$ 75,093$ 226,235$

(3,961) (46,981) (3,604)

(10,631) -

135,704 17,481 222,631

5,000 (58,346) (98,952) (80,000) (125,000)

(138,346) 5,000 (223,952)

135,092 217,365 -

624 99 944

135,716 99 218,309

133,074 22,580 216,988

87,794 68,573 88,507

220,868$ 91,153$ 305,495$

(189)$ 17,134$ 10$ 221,057 74,019 305,485 220,868$ 91,153$ 305,495$

91,943$ (16)$ 166,289$

41,916 - 52,005 2,131 - 4,390

214 2,214 649 - (3) - - - - - 217 -

(246) - - - - - - -

(500) 15,315 (702)

43,761 17,497 56,342

135,704$ 17,481$ 222,631$

- - - - - -

2,131 4,390 129 - 207 - - -


84

Terrell RockwallWater

TransmissionWater Pump

StationFacilities Facilities

CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers 790,478$ 169,772$ Cash received from other funds Cash received from (paid to) others Cash paid to suppliers for goods and services (1,831) (2,855) 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 (531,150) (82,570) Principal payments on long-term debt and capital leases (260,000) (85,000) Payments for bond issue costs


CASH FLOWS FROM INVESTING ACTIVITIES: Sale and maturity of investments 781,098 160,486 Purchases of investments Interest received 3,322 699




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

RECONCILIATION OF TOTAL CASH TO THE STATEMENT OF NET ASSETSUnrestricted cash and cash equivalents (14)$ 736$ Restricted cash and cash equivalents 1,097,337 229,216

1,097,323$ 229,952$


Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 300,978 48,306 Amortization 7,557 4,995 Change in current assets and liabilities: Accounts receivable and deferred billings 2,319 691 Prepaid expenses - - Net pension assets - - Due to/from other funds - - Accounts payable, accrued liabilities, and developers’ deposits Accrued vacation and Accrued sick - - Accrued OPEB - - Customers’ advance payments (637) 738


NONCASH TRANSACTION DISCLOSURESGain (loss) on sale of capital assets - - Interest capitalized on construction - - Amortization of bond-related items 7,150 3,418 Change in fair value of investments 745 153 Change in actuarial value of net pension assets - - Refunding bonds issuedRefunding proceeds deposited in escrow

85

Murphy South Rockwall North Rockwall

WWTP/ Wylie (Buffalo Creek) (Squabble Creek)


68,251$ 16,480$ 1,233,626$ 330,662$

1 12 13 (1,385) (19,838) (432,819) (154,640)

(2,324) (68,409) (35,708) (200) (1,051) (168,453) (144,585)

- 66,666 (6,732) 563,957 (4,258)

360 (2,976) (38,694) (1,430)

(10,938) (178,246) (55,000) (220,000)

(65,578) (2,976) (436,940) (1,430)

401,469 -

50 35 724 171

50 35 402,193 171

1,138 (9,673) 529,210 (5,517)

23,029 37,379 310,947 104,560

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

3,235$ 4,223$ 174,673$ 52,624$ 20,932 23,483 665,484 46,419 24,167$ 27,706$ 840,157$ 99,043$

40,981$ (80,741)$ 160,086$ (39,829)$

23,201 80,004 266,847 41,144 550 - 8,884 -

- (20) 15,777 (19,397) - (21) (1,042) (789) - (4) (130) (86) - 636 (16,099) 31,674

365 13,376 7,676 - (31) (929) (485) - (8) (221) (118)

1,934 (6,912) 117,408 (24,048)

25,685 74,009 403,871 35,571

66,666$ (6,732)$ 563,957$ (4,258)$

360 730 730 730 - - - - 550 12,771 - - (1,321) - - 4 130 86


86

Panther Creek Sabine CreekWWTP WWTP

CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers 6,113,397$ 1,228,298$ Cash received from other funds Cash received from (paid to) others 65 111 Cash paid to suppliers for goods and services (1,358,137) (227,283) Cash paid for employee services (488,295) (44,647) Cash paid to other funds (405,496) (184,008)

Net cash provided by (used for) operating activities 3,861,534 772,471

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from the issuance of bonds Cash paid for capital assets (370,235) (18,739) Interest paid (2,250,578) (315,300) Principal payments on long-term debt and capital leases (2,130,000) (415,000) Payments for bond issue costs

Net cash provided by (used for) capital and related financing activities (4,750,813) (749,039)

CASH FLOWS FROM INVESTING ACTIVITIES: Sale and maturity of investments 3,906,424 740,081 Purchases of investments (3,820,481) Interest received 16,269 782


NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (787,067) 764,295

CASH AND CASH EQUIVALENTS—Beginning of year 3,725,037 337,767

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

RECONCILIATION OF TOTAL CASH TO THE STATEMENT OF NET ASSETSUnrestricted cash and cash equivalents 203,217$ 104,905$ Restricted cash and cash equivalents 2,734,753 997,157

2,937,970$ 1,102,062$

RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating income 2,977,399$ 448,100$

Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 1,300,490 263,596 Amortization 66,403 16,819 Change in current assets and liabilities: Accounts receivable and deferred billings 14,835 (313) Prepaid expenses (2,823) (1,259) Net pension assets (2,843) (108) Due to/from other funds 1,143 16,776 Accounts payable, accrued liabilities, and developers’ deposits (21,978) 13,292 Accrued vacation and Accrued sick (7,754) (606) Accrued OPEB (1,621) (148) Customers’ advance payments (461,717) 16,322

Total adjustments 884,135 324,371 NET CASH PROVIDED BY OPERATING ACTIVITIES 3,861,534$ 772,471$

NONCASH TRANSACTION DISCLOSURESGain (loss) on sale of capital assets - 730 Interest capitalized on construction 829 - Amortization of bond-related items 24,573 16,819 Change in fair value of investments (16,902) (2,435) Change in actuarial value of net pension assets 2,843 108 Refunding bonds issuedRefunding proceeds deposited in escrow

87


1,776,515$ 3,962,830$ 114,364$ 13,368$

44 39 16 (793,519) (1,162,075) (49,020) (6,895) (256,264) (578,357) (14,891) (2,324) (281,000) (518,405) (33,778) (929)

- 445,776 1,704,032 16,691 3,220

41,754 76,568 (210,749) 4 (1,430) 684 (121,118) (828,420) (395,000) (1,135,000) (75,326) (217,158)

(760,439) (2,104,006) (1,430) 684

1,734,760 (1,465,859)

1,808 5,970 70 17

1,808 274,871 70 17

(312,855) (125,103) 15,331 3,921

1,409,042 1,304,356 11,379 12,408

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

128,789$ 316,530$ 22,010$ 6,438$ 967,398 862,723 4,700 9,891

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

296,733$ 621,768$ (1,201)$ (843)$

258,239 961,875 2,564 157 16,967 47,724 - -

153 (1,457) (119) (19) (1,054) 12,097 (28) (18)

(671) (1,576) (36) (5) (2,297) 1,187 1,253 (166) (3,772) 5,959 4,362 75

26 (4,353) (202) (31) (741) (1,862) (49) (8)

(117,807) 62,670 10,147 4,078

149,043 1,082,264 17,892 4,063

445,776$ 1,704,032$ 16,691$ 3,220$

2,544 - 730 683 - - - -

19,710 (60,038) - (6,916) - - 671 1,576 36 5

3,840,000 9,615,000 3,798,246 10,626,464


88


WWTP WWTPCASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers 164,247$ 102,979$ Cash received from other funds Cash received from (paid to) others 4 2 Cash paid to suppliers for goods and services (83,117) (71,614) Cash paid for employee services (22,322) Cash paid to other funds (74,480) (27,473)

Net cash provided by (used for) operating activities (15,668) 3,894

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from the issuance of bonds Cash paid for capital assets 570 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 570 -

CASH FLOWS FROM INVESTING ACTIVITIES: Sale and maturity of investments Purchases of investments Interest received 87 46

Net cash provided by (used for) investing activities 87 46

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (15,011) 3,940


CASH AND CASH EQUIVALENTS—End of year 35,604$ 39,229$

RECONCILIATION OF TOTAL CASH TO THE STATEMENT OF NET ASSETSUnrestricted cash and cash equivalents 23,268$ 29,806$ Restricted cash and cash equivalents 12,336 9,423

35,604$ 39,229$

RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating income (422)$ (35)$

Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 1,769 - Amortization - - Change in current assets and liabilities: Accounts receivable and deferred billings (358) 221 Prepaid expenses (213) 164 Net pension assets (54) (100) Due to/from other funds 5,112 9,365 Accounts payable, accrued liabilities, and developers’ deposits (5,363) (1,866) Accrued vacation and Accrued sick (303) - Accrued OPEB (74) (121) Customers’ advance payments (15,762) (3,734)

Total adjustments (15,246) 3,929 NET CASH PROVIDED BY OPERATING ACTIVITIES (15,668)$ 3,894$

NONCASH TRANSACTION DISCLOSURESGain (loss) on sale of capital assets 730 - Interest capitalized on construction - - Amortization of bond-related itemsChange in fair value of investments - - Change in actuarial value of net pension assets 54 100 Refunding bonds issuedRefunding proceeds deposited in escrow

89


94,055$ 171,196$ 182,343$ 1,498,425$

17 7 (35,478) (102,007) (146,378) (99,690) (14,890) (26,782) (13,750) (13,751) (37,400) (62,432) (16,316) (15,533)

- 6,304 (20,018) 5,899 1,369,451

(7,393) (3,165) (12,992) (686,830) (740,000)

(7,393) (3,165) (12,992) (1,426,830)

51 68 67 33,746

51 68 67 33,746

(1,038) (23,115) (7,026) (23,633)

7,017 31,101 40,965 635,995

5,979$ 7,986$ 33,939$ 612,362$

4,979$ 7,986$ 19,834$ 36,561$ 1,000 - 14,105 575,801 5,979$ 7,986$ 33,939$ 612,362$

5,264$ 1,116$ (52,302)$ 1,029,229$

2,578 974 67,243 302,760 - - - 19,859

(119) (211) 17,045 (323) (109) (194) (44) (778) (36) (64) (35) (35) 881 671 (1,086) 1,335 374 (17,986) (27,902) (1,331)

(202) (364) (400) (400) (49) (89) (41) (41)

(2,278) (3,871) 3,421 19,176

1,040 (21,134) 58,201 340,222

6,304$ (20,018)$ 5,899$ 1,369,451$

730 - - - - - - -

11,794 - - - (6,764) 36 64 35 35


90

Muddy Creek Parker CreekInterceptor Interceptor

CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers 301,710$ 225,275$ Cash received from other funds Cash received from (paid to) others Cash paid to suppliers for goods and services (20,601) (1,199) Cash paid for employee services Cash paid to other funds (2,503) (229)


CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from the issuance of bonds Cash paid for capital assets (5,114) Interest paid (119,668) (95,196) Principal payments on long-term debt and capital leases (150,000) (125,000) Payments for bond issue costs


CASH FLOWS FROM INVESTING ACTIVITIES: Sale and maturity of investments Purchases of investments Interest received 6,375 5,072





RECONCILIATION OF TOTAL CASH TO THE STATEMENT OF NET ASSETSUnrestricted cash and cash equivalents 27,431$ 6,023$ Restricted cash and cash equivalents 124,937 83,976

152,368$ 89,999$


Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 111,943 49,320 Amortization 4,603 6,091 Change in current assets and liabilities: Accounts receivable and deferred billings 3,151 (7,631) Prepaid expenses (472) - Net pension assets - - Due to/from other funds (10) - Accounts payable, accrued liabilities, and developers’ deposits 390 13,164 Accrued vacation and Accrued sick - - Accrued OPEB - - Customers’ advance payments 9,590 (665)


NONCASH TRANSACTION DISCLOSURESGain (loss) on sale of capital assets - - Interest capitalized on construction - - Amortization of bond-related items 4,603 6,091 Change in fair value of investments (1,272) (1,017) Change in actuarial value of net pension assets - - Refunding bonds issuedRefunding proceeds deposited in escrow

91


178,609$ 1,603,389$ 149,658$

(4,185) (87,520) (6,728) 542,590 (13,753)

(35) (14,767) (258) -

174,389 1,487,349 142,672 542,590

161,954 11,065,282 (2,565,492)

(76,708) (661,346) (26,000) (100,000) (840,000) (120,000)

(226,673) (485,971)

(176,708) (1,566,065) (146,000) 8,013,819

1,294,624 (1,128,452)

4,073 1,677 258 2,535

4,073 167,849 258 2,535

1,754 89,133 (3,070) 8,558,944

73,225 808,139 206,560 761,069

74,979$ 897,272$ 203,490$ 9,320,013$

531$ 49,696$ 724$ -$ 74,448 847,576 202,766 9,320,013 74,979$ 897,272$ 203,490$ 9,320,013$

135,788$ 843,175$ 88,818$ (54,765)$

33,956 610,271 54,941 - 5,243 39,391 1,232 -

- (27,703) - - - (209) - - - (35) - - - (676) - -

(5,308) (6) 597,355 - (400) - - - (41) - -

(598) 28,884 (2,313) -

38,601 644,174 53,854 597,355

174,389$ 1,487,349$ 142,672$ 542,590$

- - - - - - - 166

5,243 (63,655) 1,232 (817) (4,354) - - - 35 - -

10,005,000 11,231,314


92

Small Plants DewateringClearing Operations

CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers 5,504$ Cash received from other funds 133,953 Cash received from (paid to) others 8 Cash paid to suppliers for goods and services 5,089 (92,886) Cash paid for employee services 5,773 (62,705) Cash paid to other funds (3,282) (2,863)

Net cash provided by (used for) operating activities 7,580 (18,989)

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 200

Net cash provided by (used for) investing activities - 200

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 7,580 (26,721)



RECONCILIATION OF TOTAL CASH TO THE STATEMENT OF NET ASSETSUnrestricted cash and cash equivalents 309,075$ (103,804)$ Restricted cash and cash equivalents - 175,942

309,075$ 72,138$

RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating income 1$ (22,901)$

Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation - 30,833 Amortization - - Change in current assets and liabilities: Accounts receivable and deferred billings - 659 Prepaid expenses (144) 345 Net pension assets - (184) Due to/from other funds 7,997 (24,904) Accounts payable, accrued liabilities, and developers’ deposits (274) (2,885) Accrued vacation and Accrued sick - 259 Accrued OPEB - (211) Customers’ advance payments - -

Total adjustments 7,579 3,912 NET CASH PROVIDED BY OPERATING ACTIVITIES 7,580$ (18,989)$

NONCASH TRANSACTION DISCLOSURESGain (loss) on sale of capital assets - - Interest capitalized on construction - - Amortization of bond-related itemsChange in fair value of investments - - Change in actuarial value of net pension assets - 184 Refunding bonds issuedRefunding proceeds deposited in escrow

93



642,689$ 22,816,610$ 133,953

17 356 (216,704) (4,683,402) (295,794) (1,949,193) (113,223) (2,119,955)

- 16,985 14,198,369

11,345,558 (3,260,519) (6,448,295) (7,895,000) (1,005,128)

- (7,263,384)

10,501,571 (6,414,792)

129 88,624

129 4,175,403

17,114 11,110,388

58,584 11,816,751

75,698$ 22,927,139$

75,698$ 1,534,371 - 21,392,768

75,698$ 22,927,139$

(6,371)$ 8,428,415

6,242 5,249,138 - 289,853

35,311 36,967 1,194 4,600 (674) (6,676) (273) 20,736

(15,520) 551,951 (3,675) (19,850)

(968) (6,411) 1,719 (350,354)

23,356 5,769,954

16,985$ 14,198,369$

- 8,697 - 995

11,382 - (42,520) 674 6,676

23,460,000 25,656,024


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 23These 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, TEXAS SCHEDULE 1 NET ASSETS BY COMPONENT (UNAUDITED) LAST TEN FISCAL YEARS

94

2003 2004 2005

Invested in capital assets, net of related debt 340,133,509$ 385,992,464$ 445,990,542$ Restricted for debt service 26,060,110 29,373,605 37,994,652Unrestricted 109,446,801 119,760,668 110,354,459 Total 475,640,420$ 535,126,737$ 594,339,653$

2006 2007 2008


2009 2010 2011


2012

Invested in capital assets, net of related debt 687,317,597$ Restricted for debt service 129,622,913Unrestricted 102,807,227 Total 919,747,737$

Source: Statement of Net Assets for the North Texas Municipal Water District.

NORTH TEXAS MUNICIPAL WATER DISTRICT, TEXAS SCHEDULE 2 CHANGES IN NET ASSETS (UNAUDITED) LAST TEN FISCAL YEARS

95

Nonoperating Change Prior Fiscal Operating Operating Operating Revenues/ Other in Net PeriodYear Revenues Expenses Income (Expenses) Items (1) Assets Adjustment

2003 129,279,831$ 73,132,444$ 56,147,387$ (8,964,330)$ -$ 47,183,057$ -$ 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 -

Source: Statement of Revenues, Expenses and Changes in Net Assets for the North Texas Municipal Water District.

(1) Other items includes special and extraordinary items beginning in fiscal year 2003.

NORTH TEXAS MUNICIPAL WATER DISTRICT, TEXAS SCHEDULE 3 TOTAL REVENUES BY SOURCE (UNAUDITED) LAST TEN FISCAL YEARS

96

Wastewater Solid WasteWater Service Service Investment

Year Sales Fees Fees Income Miscellaneous Total

2003 75,811,394$ 39,659,015$ 13,699,569$ 2,743,104$ 152,991$ 132,066,073$ 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


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, TEXAS SCHEDULE 4 TOTAL EXPENSES BY FUNCTION (UNAUDITED) LAST TEN FISCAL YEARS

97

Operating andMaintenance Interest

Year Expenses Expense Depreciation Amortization Miscellaneous Total

2003 51,214,915$ 11,750,572$ 21,506,656$ 410,873$ -$ 84,883,016$ 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


depreciation, amortization, and miscellaneous expenses.NOTE: Total expenses includes operating and maintenance expenses, interest expense,

NORTH TEXAS MUNICIPAL WATER DISTRICT, TEXAS SCHEDULE 5 TOTAL REVENUES BY SYSTEM (UNAUDITED) LAST TEN FISCAL YEARS

98


Year System System System System System Total

2003 77,495,321$ 23,155,628$ 8,612,427$ 13,928,530$ 8,874,167$ 132,066,073$ 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

Source: Statement of Revenues, Expenses and Changes in Net Assets for the North Texas MunicipalWater District.

NORTH TEXAS MUNICIPAL WATER DISTRICT, TEXAS SCHEDULE 6 TOTAL EXPENSES BY SYSTEM (UNAUDITED) LAST TEN FISCAL YEARS

99



2003 38,221,207$ 16,951,481$ 7,015,448$ 16,336,792$ 6,358,088$ 84,883,016$ 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


NORTH TEXAS MUNICIPAL WATER DISTRICT, TEXAS SCHEDULE 7 OPERATING REVENUES (UNAUDITED) LAST TEN FISCAL YEARS

100

Wastewater Solid Waste OtherFiscal Water Service Service OperatingYear Sales Fees Fees Revenues Total

2003 75,811,394$ 39,659,015$ 13,699,569$ 109,853$ 129,279,831$ 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


NORTH TEXAS MUNICIPAL WATER DISTRICT, TEXAS SCHEDULE 8 OPERATING EXPENSES (UNAUDITED) LAST TEN FISCAL YEARS

101

Operating DepreciationFiscal Electric Supplies and andYear Personnel Power Chemicals Services Amortization Total

2003 15,604,414$ 11,557,193$ 9,071,534$ 14,981,774$ 21,917,529$ 73,132,444$ 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

Source: Statement of Revenues, Expenses and Changes in Net Assets 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, TEXAS SCHEDULE 9 NONOPERATING REVENUES AND EXPENSES (UNAUDITED) LAST TEN FISCAL YEARS

102

Gain (Loss) onFiscal Investment Miscellaneous Sale of InterestYear Income Revenue Capital Assets Expense Total

2003 2,743,104$ -$ 43,138$ (11,750,572)$ (8,964,330)$ 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)


NORTH TEXAS MUNICIPAL WATER DISTRICT, TEXAS SCHEDULE 10 NET ADDITIONS TO CAPITAL ASSETS EXCLUDING CONSTRUCTION IN PROGRESS (UNAUDITED) LAST TEN FISCAL YEARS

103



2003 65,415,606$ 870,873$ 229,762$ 3,672,204$ 716,066$ 70,904,511$ 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

Source: Based on information provided in NTMWD schedule of fixed assets

NORTH TEXAS MUNICIPAL WATER DISTRICT, TEXAS SCHEDULE 11 WATER PRODUCED AND CONSUMED, WASTEWATER TREATED AND SOLID WASTE DISPOSED (UNAUDITED) LAST TEN FISCAL YEARS

104

Gallons of Gallons of Gallons ofWater Water Water Water PercentYear Produced Consumed Unbilled Unbilled Members Customer

2003 84,084,000,000 82,462,091,000 1,621,909,000 1.9% 0.87$ 0.92$ 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$

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

2003 29,200,924,000 639,730 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

Source: Based on information provided in NTMWD Operations Report.

Note: Wastewater treated and solid waste disposed is based on the NTMWD Fiscal Year (October 1 through September 30).

Water Rates(per 1,000 gallons)

NORTH TEXAS MUNICIPAL WATER DISTRICT, TEXAS SCHEDULE 12 HISTORIC SERVICE USE (UNAUDITED) LAST TEN YEARS

105

2002-2003 2003-2004 2004-2005 2005-2006

WATER CONSUMPTION (GALLONS IN THOUSANDS): Member cities 73,478,024 72,650,460 73,816,373 87,396,751 Customer cities 8,974,170 9,479,318 10,027,439 13,158,818 Individual meters 9,897 12,278 8,281 9,680

Total 82,462,091 82,142,056 83,852,093 100,565,249

Total rainfall (in inches) 31.64 41.24 31.24 18.46

WASTEWATER VOLUME TREATED (GALLONS IN THOUSANDS): Regional system 24,545,952 25,881,960 25,113,699 23,565,864 Small plant system 4,654,972 5,147,218 5,454,082 5,019,245

Total 29,200,924 31,029,178 30,567,781 28,585,109

SOLID WASTE VOLUME (IN TONS): Transfer stations 404,680 416,006 438,529 451,929 Landfill 235,050 260,094 228,283 247,309

Total 639,730 676,100 666,812 699,238


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).

106

2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012

67,359,017 77,535,389 79,197,589 74,574,835 85,966,816 81,019,601 10,136,235 12,713,053 14,019,682 13,583,041 16,126,637 15,822,993

7,020 5,854 6,794 5,856 4,341 4,218

77,502,272 90,254,296 93,224,065 88,163,732 102,097,794 96,846,812

54.10 34.89 39.02 41.45 31.18 35.16

27,602,153 26,159,510 25,254,348 29,189,205 24,721,535 26,347,832 6,562,362 5,906,415 6,093,898 7,074,594 6,153,841 6,441,461

34,164,515 32,065,925 31,348,246 36,263,799 30,875,376 32,789,293

480,424 490,400 465,440 473,322 471,825 459,167 311,349 326,594 284,578 269,849 279,962 263,646

791,773 816,994 750,018 743,171 751,787 722,813

NORTH TEXAS MUNICIPAL WATER DISTRICT, TEXAS SCHEDULE 13 NUMBER OF WATER, WASTEWATER AND SOLID WASTE CUSTOMERS (UNAUDITED) LAST TEN FISCAL YEARS

107

Wastewater Solid WasteFiscal Member Customer Total Member MemberYear Cites Cities Cities Cities Cities

2003 13 28 41 8 52004 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 5


Water

NORTH TEXAS MUNICIPAL WATER DISTRICT, TEXAS SCHEDULE 14 WATER RATES (UNAUDITED) LAST TEN FISCAL YEARS

108

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Water Rates (per 1,000 gallons) Member Cities 0.87$ 0.92$ 0.97$ 0.97$ 1.02$ 1.08$ 1.18$ 1.25$ 1.37$ 1.49$ Customer Cities 0.92$ 0.97$ 1.02$ 1.02$ 1.07$ 1.13$ 1.23$ 1.30$ 1.42$ 1.54$

Source: Based on information provided in NTMWD Budget Resolution.

NORTH TEXAS MUNICIPAL WATER DISTRICT, TEXAS SCHEDULE 15 LARGEST CUSTOMERS (UNAUDITED) CURRENT YEAR AND NINE YEARS AGO

109

Customer Amount % Amount % Amount %

Garland 11,733,053$ 15.48% -$ 0.00% -$ 0.00%McKinney 5,121,839 6.76% 3,939,035 9.93% 2,132,105 15.56%Mesquite 6,800,025 8.97% 5,172,676 13.04% - 0.00%Plano 22,451,275 29.61% 15,528,867 39.16% 4,886,010 35.67%Richardson 9,410,021 12.41% 3,307,808 8.34% 2,642,132 19.29%

Subtotal 55,516,213 73.23% 27,948,386 70.47% 9,660,247 70.51%

Other Customers 20,295,181 26.77% 11,710,629 29.53% 4,039,322 29.49%

Grand Total 75,811,394$ 100.00% 39,659,015$ 100.00% 13,699,569$ 100.00%

Customer Amount % Amount % Amount %

Frisco 14,495,524$ 8.97% 10,730,948$ 13.62% 3,243,330$ 13.37%Garland 19,890,333 12.31% - 0.00% - 0.00%McKinney 14,895,981 9.22% 11,219,669 14.25% 4,818,298 19.86%Mesquite 11,653,640 7.21% 7,114,728 9.03% - 0.00%Plano 37,648,633 23.30% 22,155,665 28.13% 7,398,953 30.50%Richardson 15,501,567 9.59% 5,393,830 6.85% 3,554,291 14.66%

Subtotal 114,085,678 70.60% 56,614,840 71.88% 19,014,872 78.39%

Other Customers 47,502,709 29.40% 22,148,022 28.12% 5,242,188 21.61%

Grand Total 161,588,387$ 100.00% 78,762,862$ 100.00% 24,257,060$ 100.00%

Source: Based on information provided in NTMWD Revenue Report.

Fiscal Year 2003

Fiscal Year 2012Water Sales Wastewater Service Fees Solid Waste Service Fees

Wastewater Service Fees Solid Waste Service FeesWater Sales

NORTH TEXAS MUNICIPAL WATER DISTRICT, TEXAS SCHEDULE 16 OUTSTANDING DEBT BY TYPE (UNAUDITED) LAST TEN FISCAL YEARS

110

U.S PerFiscal Revenue Government Capital District CapitaYear Bonds Notes Leases Total Population Debt

2003 283,428,148$ 45,937,978$ 29,167$ 329,395,293$ 582,933 565.1$ 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 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 2012 "District Population" and the "Per Capita Debt" information at the time of publication of this report.

NORTH TEXAS MUNICIPAL WATER DISTRICT, TEXAS SCHEDULE 17 REVENUE COVERAGE (UNAUDITED) LAST TEN FISCAL YEARS

111

LessOperating

{a} Expenses NetFiscal Total (excluding Available CoverageYear Revenues depreciation) Revenues Principal {b} Adjustment Interest Paid Total Ratio

2003 132,066,073$ 51,214,915$ 80,851,158$ 26,134,342$ 8,127,538$ 34,261,880$ 2.362004 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 60,059,579 109,933,398 1.33

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, TEXAS SCHEDULE 18 DEMOGRAPHIC STATISTICS (UNAUDITED) LAST TEN CALENDAR YEARS

112

Personal PerIncome Capita

Calendar District (thousand Personal UnemploymentYear Population dollars) Income Rate

2002 550,772 18,822,850$ 34,175$ 3.9%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%

Source: Years 2002 - 2011 was based on information provided by North Central Texas Council of Governments; however, the District was unable to obtain this information for 2012 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, TEXAS SCHEDULE 19 PRINCIPAL EMPLOYERS (UNAUDITED) CURRENT YEAR AND FIVE YEARS AGO

113

PercentageEmployer Employees of Total

JC Penney 5,100 0.98%HP (formerly EDS) 5,000 0.96%Bank of America (formerly Countrywide Home Loans) 4,646 0.89%Dell (formerly Perot Systems) 2,950 0.57%Raytheon 2,500 0.48%CHC Acquisition Corp 2,000 0.38%Frito-Lay Inc 2,000 0.38%Alcatel 1,830 0.35%T-Mobile 1,500 0.29%

Total 27,526 5.28%

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 2011 was based on information provided by North Central Texas Council of Governments; however, the District was unable to obtain this information for 2012 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

2011

2006

NORTH TEXAS MUNICIPAL WATER DISTRICT, TEXAS SCHEDULE 20 NUMBER OF EMPLOYEES BY FUNCTION (UNAUDITED) LAST TEN FISCAL YEARS

114

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Water: General 9.0 7.0 9.0 10.0 13.0 14.0 18.0 18.0 29.0 29.0 Public Information 1.0 1.0 1.0 1.0 1.0 2.0 2.0 2.0 2.0 2.0 Planning 0.0 8.0 8.0 8.0 8.0 8.0 0.0 0.0 0.0 0.0 Administration 15.0 16.0 17.0 18.0 20.0 22.0 22.0 23.0 21.0 21.0 Plant Operations 25.0 25.0 25.0 28.0 29.0 34.0 40.0 45.0 47.0 66.0 Tawakoni Raw Water Pump St 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5.0 10.0 11.0 East Fork Raw Water Supply 0.0 0.0 0.0 0.0 0.0 5.0 7.0 7.0 7.0 7.0 Bonham Water Treatment 0.0 0.0 0.0 0.0 0.0 8.0 10.0 11.0 11.0 11.0 Facilities Service 25.0 26.0 26.0 27.0 29.0 31.0 40.0 40.5 40.5 43.5 Technical Service 41.0 41.0 42.0 45.0 46.0 50.0 53.0 56.5 55.5 56.5 Laboratory 13.0 14.0 16.0 16.0 18.0 23.3 24.3 25.3 25.3 25.3 Engineering 28.0 23.0 23.0 30.0 34.0 35.0 40.0 40.0 40.0 43.0 Environmental Service 5.0 5.0 5.0 5.0 5.0 4.5 5.5 5.7 7.7 7.7

Total 162.0 166.0 172.0 188.0 203.0 236.8 261.8 279.0 296.0 323.0

Wastewater: Willson Creek WWTP 34.0 41.0 47.0 48.0 50.0 51.8 52.8 52.8 52.8 55.8 Floyd Branch WWTP 7.0 7.0 7.0 6.0 6.0 6.3 6.3 6.3 6.3 6.3 Rowlett Creek WWTP 18.0 18.0 20.0 21.0 21.0 20.8 21.8 21.8 21.8 21.8 Mesquite WWTP 18.5 18.5 19.5 22.5 24.5 27.8 29.8 29.8 29.8 32.8 Panther Creek WWTP 0.0 0.0 0.0 0.0 0.0 6.1 6.1 6.1 12.1 12.1 Muddy Creek WWTP 0.0 0.0 5.0 5.0 6.0 12.1 12.1 12.1 12.1 12.1 Stewart Creek WWTP 5.0 5.0 5.0 5.0 6.0 6.1 6.1 6.1 6.1 6.1 Seagoville WWTP 3.0 3.0 3.0 3.0 3.0 0.0 0.0 0.0 0.0 0.0 Small WWTPs 7.5 7.5 6.5 6.5 6.5 6.5 6.5 5.5 5.5 5.5 Pretreatment 3.0 3.0 4.0 4.0 4.0 5.2 5.2 5.0 5.0 5.0 Dewatering 6.0 6.0 4.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 Upper East Fork Interceptor 4.0 4.0 6.0 6.0 6.0 5.9 6.9 6.9 6.9 7.9

Total 106.0 113.0 127.0 129.0 135.0 150.2 155.2 154.0 160.0 167.0

Solid Waste: Transfer Station 33.0 39.0 41.0 44.0 46.0 49.5 52.8 52.8 50.8 48.8 Landfills 28.0 29.0 29.0 35.0 36.0 8.3 8.3 2.5 0.0 0.0 Disposal Facility 0.0 0.0 0.0 0.0 0.0 30.3 33.0 37.8 39.3 40.3 Fleet Maintenance Shop 9.0 9.0 9.0 10.0 11.0 11.0 13.0 13.0 13.0 12.0

Total 70.0 77.0 79.0 89.0 93.0 99.0 107.0 106.1 103.0 101.0

Total Employees 338 356 378 406 431 486 524 539 559 591

Source: Based on information provided in NTMWD Annual Budget.

NORTH TEXAS MUNICIPAL WATER DISTRICT, TEXAS SCHEDULE 21 MISCELLANEOUS STATISTICAL DATA (UNAUDITED) YEAR ENDED SEPTEMBER 30, 2012

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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 acresAverage annual rainfall 38.0 inchesTotal employees 591

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 44.6 Wilson Creek Reuse 44.0 East Fork Raw Water Supply 27.0 Lake Ray Hubbard Pass Through 18.8

Total 369.2 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


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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 135 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 32.0 Million gallons NTMWD Transmission system storage 368.0

400.0 Million gallons

TOTAL CITY DELIVERY POINTS 78

WASTEWATER SYSTEM Permitted CapacityREGIONAL SYSTEM: Regional wastewater plants: Floyd Branch RWWTP * 4.750 MGD South Mesquite RWWTP * 33.000 Rowlett Creek RWWTP * 24.000 Wilson Creek RWWTP * 48.000

SEWER SYSTEM: City: Crandall Crandall Plant 0.900 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


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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 144.655 MGD

Total number of plants 18 *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, TEXAS SCHEDULE 22 OPERATING AND CAPITAL INDICATORS (UNAUDITED) LAST TEN FISCAL YEARS

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2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Water: Size of Service Area (square miles) 1,600 1,600 1,875 1,875 1,976 1,985 1,985 1,985 1,985 2,200 Water Supply (MGD) 248 248 261 276 276 298 333 369 369 369 Treatment Capacity (MGD) 630 630 630 630 630 777 777 777 777 807 Miles of Transmission Pipelines 375 375 395 395 408 482 482 482 487 518 Water Storage Capacity (MG) 290 292 299 385 387 443 314 400 400 400 City Delivery Points 59 59 61 63 59 59 78 78 78 78 Total Rainfall (Inches) 32 41 31 18 54 35 39 41 31 35 Annual Consumption (BG) 82 82 84 101 78 90 93 88 102 97

Wastewater: Miles of Interceptor Lines 96 96 110 132 165 188 210 210 226 243 Number of Treatment Plants 19 19 20 18 18 16 18 18 18 18 Treatment Capacity (MGD) 100 116 121 122 122 121 132 132 137 145 Annual Volume Treated (BG) 29 31 31 29 34 32 31 36 31 33

Solid Waste: Number of Transfer Stations 3 3 3 3 3 3 3 3 3 3 Number of Landfills 2 3 3 3 3 3 3 3 3 3 Annual Volume (thousand tons) 640 676 667 699 792 817 750 743 752 723

Source: Based on information provided in NTMWD Operation Report.

NORTH TEXAS MUNICIPAL WATER DISTRICT, TEXAS SCHEDULE 23 INSURANCE IN FORCE (UNAUDITED)

119

AproximateAnnual

Carrier Policy No Coverage Policy Limits Term Premium

Texas Water Conservation 7 Workers's compensation Statutory up to $100,000 7-01-12 to 7-01-13 441,352$ Association Risk (each accident) Management Fund

Texas Water Conservation 7 General libility $5,000,000 per occurrence 7-01-12 to 7-01-13 68,912$ Association Risk $5,000,000 annual aggregate Management Fund

Texas Water Conservation 7 Automobile liability $5,000,000 per occurrence 7-01-12 to 7-01-13 104,667$ Association Risk $5,000,000 annual aggregate Management Fund

Texas Water Conservation 7 Directors' and officers' $3,000,000 per occurrence 7-01-12 to 7-01-13 74,701$ Association Risk liability $3,000,000 annual aggregate Management Fund

Texas Water Conservation 7 Automobile physical damage Actual cash value 7-01-12 to 7-01-13 109,752$ Association Risk Management Fund

Chubb & Son Insurance 35822344 Fire and extended coverage $231,734,000 scheduled 1-01-12 to 1-01-13 149,762$ property

Chubb & Son Insurance 6615026 Commercial floater $21,810,096 scheduled & 5-01-12 to 5-01-13 69,960$ $470,000 unscheduled property

Fidelity & Deposit of 105364181 Fidelity bond $1,000,000 annual aggregate 1-01-12 to 1-01-13 4,670$ Maryland

Anco Insurance B/CS 04T061309 General liability $1,000,000 per occurrence 12-01-11 to 12-01-12 1,035$ Pollution storage tanks $1,000,000 annual aggregate

Anco Insurance B/CS EIL025163-10-1 General liability $5,000,000 per occurrence 4-01-10 to 4-01-13 10,974$ Environmental Insurane $5,000,000 annual aggregate

Source: Based on information provided in NTMWD Insurance Policies.

Documents

NORTH TEXAS MUNICIPAL WATER DISTRICT · The District, a conservation and reclamation district and political subdivision of the state of Texas created in 1951, provides treated water,