Memphis-Shelby County Airport Authority MEMPHIS, TENNESSEE

2014 COMPREHENSIVE ANNUAL FINANCIAL REPORT Memphis-Shelby County Airport Authority MEMPHIS, TENNESSEE For the Fiscal Years Ended June 30, 2014 and 2013 A COMPONENT UNIT OF THE CITY OF MEMPHIS Memphis-Shelby County Airport Authority MEMPHIS, TENNESSEE A COMPONENT UNIT OF THE CITY OF MEMPHIS Comprehensive Annual Financial Report For the Fiscal Years Ended June 30, 2014 and 2013 PREPARED BY THE FINANCE DIVISION Memphis-Shelby County Airport Authority JUNE 30, 2014 BOARD OF COMMISIONERS Jack Sammons, Chairman Herbert H. Hilliard, Vice-Chairman Pace Cooper J.W. Gibson II James Keras Jon K. Thompson OFFICERS AND KEY STAFF MEMBERS POSITION MEMBERS ............................................................................. POSITION Scott A. Brockman, A.A.E ........................................................................... President and Chief Executive Officer Forrest B. Artz, C.P.A. ...................... Vice President of Finance and Administration and Chief Financial Officer, Authority Treasurer John E. Greaud, P.E .......................................................................................................... Vice President Operations Brian L. Kuhn, Esquire ............................................................................. General Counsel and Authority Secretary George E. Mabon, P.H.R ..................................................................................... Vice President Human Resources, Authority Assistant Secretary Richard V. White, A.A.E ..................................................... Vice President Properties and Business Development Jeffrey W. Hanley ................................................................ Director of Finance and Authority Assistant Treasurer Mahi C. Chambers, C.P.A ................................................................................................. Director of Staff Services James A. Hay II .................................................................................................................. Director of Development Phillip Florey ....................................................................................................................... Director of Maintenance J. Jarrett Morgan ............................................................................................. Director of Information Technology T. E. Wallace III, A.A.E. ......................................................................... Director of Operations and Public Safety 2 TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal and Exhibits .......................................................................................................................... 5 Organizational Chart ............................................................................................................................................. 14 FINANCIAL SECTION INDEPENDENT AUDITORS’ REPORT ............................................................................................................ 15 MANAGEMENT’S DISCUSSION AND ANALYSIS ....................................................................................... 18 BASIC FINANCIAL STATEMENTS: Statements of Net Position .................................................................................................................................... 38 Statements of Revenues, Expenses and Changes in Net Position ........................................................................ 40 Statements of Cash Flows ..................................................................................................................................... 41 Notes to Basic Financial Statements ..................................................................................................................... 43 SUPPLEMENTAL SCHEDULES: Supplemental Schedule of Net Position Information by Airport .......................................................................... 66 Supplemental Schedule of Revenues, Expenses and Changes in Net Position Information by Airport .................................................................................................. 68 Supplemental Schedule of Cash Flows Information by Airport .......................................................................... 69 Supplemental Schedule of Operating Revenues by Source by Airport ............................................................... 71 Supplemental Schedule of Operating Expenses by Source by Airport ............................................................... 72 Supplemental Schedule of Debt Service Requirements - Cash Basis ................................................................. 74 STATISTICAL SECTION Operating Revenues, Expenses and Changes in Net Position - Last Ten Years ................................................. 78 Net Position - Last Ten Years ............................................................................................................................... 81 3 TABLE OF CONTENTS (CONTINUED) Passenger Enplanements Market Share - Last Ten Years ................................................................................... 82 Originating and Destination (O&D) Airline Passengers - Last Ten Years ......................................................... 84 Cost Per Enplaned Passenger - Last Ten Years ................................................................................................... 85 Cargo Market Share Enplaned - Last Ten Years ................................................................................................. 86 Landed Weights - Last Ten Years ........................................................................................................................ 88 Aircraft Operations - Last Ten Years ................................................................................................................... 90 Debt Service Coverage - Last Ten Years ............................................................................................................. 91 Ratio of Annual Bond Debt Service to Total Expenses Excluding Depreciation and Amortization - Last Ten Years .............................................................................. 92 Airport Revenue Bond Debt Per Enplaned Passenger - Last Ten Years ............................................................. 92 Use of Bond Proceeds .......................................................................................................................................... 93 Ten Largest Employers - Metropolitan Statistical Area ...................................................................................... 96 Population - Metropolitan Statistical Area ........................................................................................................... 96 Airlines Serving Memphis International Airport ................................................................................................. 97 Employers Located on Airport Property .............................................................................................................. 98 Full-time Equivalent Employees by Cost Center - Last Ten Years ..................................................................... 99 Insurance In Force .............................................................................................................................................. 100 COMPLIANCE SECTION SINGLE AUDIT INFORMATION: Schedule of Expenditures of Federal and State Awards ..................................................................................... 102 Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ............................................................................................. 105 Independent Auditors’ Report on Compliance for the Major Program and on Internal Control Over Compliance Required by OMB Circular A-133 ............................................................. 107 Schedule of Findings and Questioned Costs………………………….………………………………………. 109 4 INTRODUCTORY SECTION This Section Contains the Following: Letter of Transmittal and Exhibits Organizational Chart October 27, 2014 To the Board of Commissioners of the Memphis-Shelby County Airport Authority The Comprehensive Annual Financial Report (“CAFR”) of the Memphis-Shelby County Airport Authority (the “Authority”) for the fiscal year ended June 30, 2014, is hereby submitted. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the Finance Division of the Authority. To the best of our knowledge and belief, and as indicated by the opinion of our independent auditors, the enclosed data of the Authority is accurate in all material respects and reported in a manner designed to present fairly the financial position, results of operations, and cash flows in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All disclosures necessary to enable the reader to gain an understanding of the Authority’s financial activities have been included. In developing and evaluating the Authority’s accounting system, consideration is given to the adequacy of internal control. The objectives of internal control are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use

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