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This financial analysis was conducted using the audited financial statements
for Fiscal Year (“FY”) 2005 and 2006, and the unaudited consolidated
financial statements for the periods of March 31, 2007 and June 30, 2007.
Additionally, year to date (“YTD”) 2007 actuals, forecasted 2007 year end
numbers, and pro forma statements for FY 2008 and FY 2009 were used for
this analysis.
The financial leverage of NURFC remains quite high at 40%, which is due to
the $50 million Adjustable Rate Demand Revenue Bonds borrowed to fund
the project. These Bonds require sinking fund payments of $10 million per
year from 2034 to 2038; however, the reimbursement agreement requires
redemption at varying amounts from 2007 through 2023. The Bonds are fully
backed by letters of credit through April 15, 2009 by which NURFC is also
required to uphold three covenants through December 31, 2008. They are
as follows:
1. Cash and Investments must maintain a balance of $30 million;
2. Borrowing Base cannot fall below $49 million,
3. And a cumulative surplus of $3.5 million for FY 06 and FY 07 must be
achieved.
As of August 31, 2007, the Cash and Investment balance and Borrowing
Base were met and the cumulative surplus of $2.7 million for FY06 was
satisfied. Management has forecasted a total surplus of $800,000 for
FY 07and believes that this is achievable.
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In reviewing the income statement, NURFC has achieved a 3% increase in
total support and revenue from FY 05 to FY 06. This increase was
comprised primarily of $2.8 million gain in net contributions coupled with $1.8
million and $791,174 decreases in government grants and earned revenue.
Total support and revenue for FY 06 was $15.6 million. Management has
forecasted total earned revenue for FY 07 as $1.81 million as compared to
FY 06 earned revenue of $1.83 million. Earned revenue as of August 31,
2007 is $1.2 million or 67% achieved with four months remaining. Based on
past experience, these projections appear to be reasonable.
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