2020 Comprehensive Annual Financial Report MEMPHIS-SHELBY COUNTY AIRPORT AUTHORITY memphis, tennessee For the fiscal years ended June 30, 2020 and 2019 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, 2020 and 2019 PREPARED BY THE FINANCE DIVISION Memphis-Shelby County Airport Authority JUNE 30, 2020 BOARD OF COMMISIONERS Pace Cooper, Chairman Jack Sammons, Vice-Chairman Gregory Fletcher, Secretary Pamela Z. Clary Michael E. Keeney James J. Keras, Jr. Darrell K. Thomas 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 Terry S. Blue, A.A.E. ...................................................................................................... Vice President Operations Janet Shipman, Esquire ............................................... Acting General Counsel and Authority Assistant Secretary Jeffrey W. Hanley ............................................................... Director of Finance and Authority Assistant Treasurer Phillip Florey ..................................................................................................................... Director of Maintenance James A. Hay II................................................................................................................. Director of Development Nathan Luce ....................................................................................................................... Director of Procurement Jason S. McBride ................................................................................................................... Director of Properties J. Jarrett Morgan ............................................................................................ Director of Information Technology Julie A. Stewart .......................................................................................................... Director of Human Resources Glen A. Thomas ................................................................. Director of Strategic Marketing and Communications 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 REQUIRED SUPPLEMENTARY INFORMATION: Schedule of Proportionate Share of the Net Pension Liability and Related Ratios ..............................................76 Schedule of Employer Pension Contributions ......................................................................................................76 Schedule of Proportionate Share of the Net OPEB Liability and Related Ratios ................................................77 Schedule of Employer OPEB Contributions.........................................................................................................77 Notes to Required Supplementary Information ....................................................................................................78 SUPPLEMENTAL SCHEDULES: Supplemental Schedule of Net Position Information by Airport ..........................................................................81 Supplemental Schedule of Revenues, Expenses and Changes in Net Position Information by Airport ..................................................................................................83 Supplemental Schedule of Cash Flows Information by Airport ..........................................................................84 Supplemental Schedule of Operating Revenues by Source by Airport ...............................................................86 Supplemental Schedule of Operating Expenses by Source by Airport ................................................................87 Supplemental Schedule of Debt Service Requirements - Cash Basis ..................................................................89 Supplemental Schedule of Changes in Long-Term Debt ....................................................................................91 3 TABLE OF CONTENTS (CONTINUED) STATISTICAL SECTION Operating Revenues, Expenses and Changes in Net Position - Last Ten Years ..................................................92 Net Position - Last Ten Years ...............................................................................................................................95 Passenger Enplanements Market Share - Last Ten Years ...................................................................................96 Originating and Destination (O&D) Airline Passengers - Last Ten Years ..........................................................98 Cost Per Enplaned Passenger - Last Ten Years ...................................................................................................99 Cargo Market Share Enplaned - Last Ten Years ...............................................................................................100 Landed Weights - Last Ten Years .....................................................................................................................102 Aircraft Operations - Last Ten Years .................................................................................................................104 Debt Service Coverage - Last Ten Years ...........................................................................................................105 Ratio of Annual Bond Debt Service to Total Expenses Excluding Depreciation and Amortization - Last Ten Years .............................................................................106 Airport Revenue Bond Debt Per Enplaned Passenger - Last Ten Years ...........................................................106 Use of Bond Proceeds ........................................................................................................................................107 Ten Largest Employers - Metropolitan Statistical Area ....................................................................................109 Population - Metropolitan Statistical Area ........................................................................................................109 Airlines Serving Memphis International Airport ...............................................................................................110 Employers Located on Airport Property ............................................................................................................111 Full-time Equivalent Employees by Cost Center - Last Ten Years ...................................................................112 Insurance In Force ..............................................................................................................................................113 COMPLIANCE SECTION SINGLE AUDIT INFORMATION: Schedule of Expenditures of Federal and State Awards .....................................................................................115 Notes to Schedule of Expenditures of Federal and State Awards ......................................................................117 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.............................................................................................118 Report on Compliance for the Major Program and on Internal Control Over Compliance Required by the Uniform Guidance ............................................................120 Schedule of Findings and Questioned Costs………………………….………………………………………. .122 4 INTRODUCTORY SECTION This Section Contains the Following: Letter of Transmittal and Exhibits Organizational Chart December 11, 2020 To the Board of Commissioners of the Memphis-Shelby County Airport Authority The Comprehensive Annual Financial Report (“CAFR”) of the Memphis-Shelby County Airport