Canaveral Port Authority CAFR Opinion · Canaveral Port Authority • 445 Challenger Road, Suite...

For the Year Ended September 30, 2016 and 2015

Port Canaveral, Florida

CANAVERAL PORT AUTHORITY

COMPREHENSIVE ANNUAL FINANCIAL REPORT

Canaveral Port Authority • 445 Challenger Road, Suite 301 • Cape Canaveral, FL 32920

COMPREHENSIVE ANNUAL FINANCIAL REPORT of the

Canaveral Port Authority

For the Year Ended September 30, 2016 and 2015


Prepared by the Department of Finance

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Comprehensive Annual Financial Report

Year Ended September 30, 2016 and 2015

TABLE OF CONTENTS

Page

INTRODUCTORY SECTION

Table of Contents .................................................................................................. i - iv

Organizational Chart .......................................................................................................................... v

Listing of Principal Officials ..................................................................................................................... vii

Letter of Transmittal by Chief Financial Officer ....................................................................................... ix - xiv

Certificate of Achievement for Excellence in Financial Reporting ............................................................................ xv

FINANCIAL SECTION

Independent Auditors’ Report ......................................................................... xvii - xix

Management’s Discussion and Analysis ...................................................... xxi - xxviii

Financial Statements

Statements of Net Position .............................................................................. 2 - 3

Statements of Revenues, Expenses and Changes in Net Position ..................................................................................... 4

Statements of Cash Flows ............................................................................... 5 - 6

Notes to Financial Statements ....................................................................... 7 - 45

Required Supplementary Information

Schedule of Proportionate Share of Net Pension Liability – Ten Years .............. 47

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FINANCIAL SECTION (CONTINUED) Page

Schedule of Contributions – Ten Years ................................................................... 48

Schedule of Funding Progress of Other Postemployment Benefits ......................... 49

Supplementary Information

Schedule of Revenues, Expenses and Income before Capital Contributions Compared with Budget ........................................... 52 - 56

Schedule of Comparative Revenues, Expenses and Changes in Net Position, Years Ended September 30, 2016, 2015, 2014, 2013, and 2012 ......................................................................................... 58 - 61

Schedule of Comparative Operating Revenues by Activity, Years Ended September 30, 2016, 2015, 2014, 2013, and 2012 ................................................................................................ 62

Schedule of Construction in Progress and Capital Costs Compared with Budget ................................................................... 63 - 64

Schedule of Expenditures of Federal Awards and State Financial Assistance ................................................................ 65 – 66

Notes to the Schedule of Expenditures of Federal Awards and State Financial Assistance ....................................................................... 67

STATISTICAL SECTION - NOT COVERED BY AUDITORS’

OPINION

Narrative for Statistical Section ............................................................................ 70

A. Financial Trend Schedules

A-1 Net Position - Last Ten Fiscal Years ...................................................... 71

A-2 Operating Revenues By Source - Last Ten Fiscal Years .................................................................................... 72 - 73

A-3 Operating Revenues By Activity - Last Ten Fiscal Years ..................................................................... 74 - 75

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STATISTICAL SECTION (CONTINUED) Page

A-4 Non-Operating Revenues - Last Ten Fiscal Years ................................ 76

A-5 Total Revenue By Activity - Fiscal Year 2016 ........................................ 77

A-6 Operating Expenses - Last Ten Fiscal Years .................................. 78 - 79

A-7 Non-Operating Expenses - Last Ten Fiscal Years ................................. 80

A-8 Changes in Net Position - Last Ten Fiscal Years ................................... 81

A-9 Total Expenses - Fiscal Year 2016 ........................................................ 82

A-10 Operating Revenues and Expenses - Fiscal Years 1996 through 2016 ............................................................................... 83

B. Revenue Capacity Schedules

B-1 Cargo Revenue - Last Ten Fiscal Years ......................................... 84 - 85

B-2 Cargo Revenue - Last Ten Fiscal Years ................................................ 86

B-3 Cargo Revenue - Fiscal Year 2016 ........................................................ 87

B-4 Revenue Passengers - Last Ten Fiscal Years ....................................... 88

B-5 Revenue Passengers - Last Ten Fiscal Years ....................................... 89

B-6 Ten Largest Revenue Generating Customers - Fiscal Year 2007 & 2016 ................................................................ 90 - 91

C. Debt Capacity Information Schedule

C-1 Revenue Bond Coverage - Last Ten Fiscal Years .......................... 92 - 93

C-2 Ratios of Outstanding Debt by Type – Last Ten Fiscal Years ............... 94

D. Demographic and Economic Information Schedules

D-1 Demographic Statistics for Brevard County – Last Ten Fiscal Years ........................................................................... 95

D-2 Principal Employers – Brevard County 2016 & 2007 ............................. 96

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STATISTICAL SECTION (CONTINUED) Page

D-3 Map of Port District & Commission District ............................................ 97

E. Operating Information Schedules

E-1 Employee Positions by Function - Last Ten Fiscal Years ...................... 98

E-2 World Trading Partners Map .................................................................. 99

E-3 Cargo Tonnage - Last Ten Fiscal Years ..................................... 100 - 101

E-4 Operating Indicators by Function- Last Ten Fiscal Years .................... 102

E-5 Capital Assets by Function – Last Ten Fiscal Years ............................ 103

E-6 Capital Improvements - Last Ten Fiscal Years .................................... 104

COMPLIANCE SECTION

Additional Elements Required by Government Auditing Standards

and the Rules of the Auditor General

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 - 106

Independent Auditors’ Report on Compliance for the Major Federal Program and State Project; Report on Internal Control Over Compliance; and Required by the Uniform Guidance and Chapter 10.550, Rules of the Auditor General ............................... 107 - 108

Schedule of Findings and Questioned Costs – Federal Programs and State Projects ............................................ 109 - 111

OTHER INFORMATION - NOT COVERED BY AUDITORS’ OPINION

Schedule of Insurance in Force .................................................................... 112 - 113

Map of Port Canaveral ........................................................................................... 114

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THIS PAGE INTENTIONALLY LEFT BLANK

John H. “Hank” EvansCommissioner


2015/2016

Thomas “Tom” WeinbergCommission Secretary/Treasurer

Jerry W. AllenderCommission Chairman

Robert “Bruce” DeardoffCommissioner

Wayne E. JusticeCommission Vice-Chairman

John W. MurrayChief Executive Officer

Patricia G. PostonSenior Director of Finance

Rodger ReesDeputy Executive Director/Chief Financial Officer

Diana Mims-ReidController

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Listing of Principal Officials

As of September 30, 2016

Elected Officials

The Canaveral Port Authority, governing body of the Canaveral Harbor Port District, consists of five elected Commissioners. The Board meets on the third Wednesday of each month at 9:00 A.M. The meetings are held in the Board Room of the Port Authority office building located at 445 Challenger Road. In addition, special meetings and public hearings are scheduled throughout the year.

Years of Term

Commissioner Position Service Expires Jerry W. Allender Chairman 6 12/31/18 Wayne Justice Vice Chairman 2 12/31/18 Thomas W. Weinberg Secretary/Treasurer 6 12/31/18 R. Bruce Deardoff Commissioner 7 12/31/16 John H. Evans Commissioner 4 12/31/16

Appointed Officials

Years

of

Service Cpt. John Murray Chief Executive Officer 1

Rodger Rees Deputy Exec. Director/Chief Financial Officer 3

Jim Dubea Deputy Exec. Director/ Government & Strategic Partnerships

3

Craig Langley General Counsel 2

Amanda Brailsford-Urbnia Vice President of Human Resources 1

Brian Blanchard Sr. Director of Cruise Operations 3

Alberto Cabrera Sr. Director Cargo Business Development 2

William Crowe Director of Facilities, Construction & Engineering 1

Robert Giangrisostomi Sr. Director of Business Development 16

Rosalind P. Harvey Sr. Director of Communications & Community Affairs 17

Mark Lorusso Sr. Director of Information Technology 5

Clyde Mathis Sr. Director of Cargo & Logistics 2

Diana Mims-Reid Controller 16

Bob Musser Director of Environmental 1

Karen Pappas Director of Purchasing & Material Management 15

David T. Poston Director of Cruise, Tourism & Hospitality 16

Patricia G. Poston Sr. Director of Finance 19

Jim Reynolds Director of Public Safety & Security 1

Scott Shepard Director of Real Estate 1

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Port Canaveral445 Challenger Road Suite 301 Cape Canaveral, Florida 32920 USA321.783.7831 888.767.8226 www.portcanaveral.com

Port Canaveral445 Challenger Road Suite 301 Cape Canaveral, Florida 32920 USA321.783.7831 888.767.8226 www.portcanaveral.com

March 28, 2017

To the Canaveral Port Authority Commissioners, Chief Executive Officer (CEO) and Citizens of the Canaveral Harbor Port District:

State law requires that all general-purpose local governments, including special districts, publish within six months of the close of each fiscal year, a complete set of financial statements presented in conformity with U. S. general accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards and Government Auditing Standards by a firm of licensed certified public accountants. Pursuant to that requirement, we hereby issue the comprehensive annual financial report of the Canaveral Port Authority for the fiscal years ended September 30, 2016 and 2015.

This report consists of management’s representations concerning the finances of the Canaveral Port Authority (the Authority). 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 Canaveral Port Authority has established a comprehensive internal control framework that is designed to: 1) protect the government’s assets from loss, theft, or misuse and 2) compile sufficient reliable information for the preparation of the Authority’s basic financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the Authority’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 misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects.

RSM US, LLC, a firm of licensed certified public accountants, has audited the Canaveral Port Authority’s basic financial statements. The goal of the independent audit was to provide reasonable assurance that the financial statements of the Authority for the fiscal year ended September 30, 2016 and 2015, 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 auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the Canaveral Port Authority’s basic financial statements for the fiscal year ended September 30, 2016 and 2015, are fairly presented. These statements are included 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 the MD&A and should be read in conjunction with it. The Canaveral Port Authority’s MD&A can be found immediately following the report of the independent auditors.

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Profile of the Canaveral Port Authority

The Canaveral Harbor Port District, as presently structured, was created by House Bill Number 1136, Chapter 28922, from the Laws of Florida Special Acts of 1953, as amended and restated by Chapter 2003-335, Laws of Florida, Acts of 2003, and acts amendatory thereof and supplemental thereto. This bill created, organized and established a port district in Brevard County, Florida and designated the area as the Canaveral Harbor Port District. The Canaveral Port Authority is a quasi-public governmental body, an independent special taxing district that is a political subdivision of the state of Florida. As such, it is not under the jurisdiction of Brevard County or any neighboring city.

The Canaveral Port Authority has operated under the Commission-manager form of government since 1953. Five elected commissioners, representing the five Port districts, serve as a board of directors and have jurisdiction over all fiscal and regulatory policies and operations of the Port. Commissioners are chosen by the public via an at-large election and serve four-year terms. These terms are staggered, with three commissioners up for election at one time, and the remaining two up for election two years hence. As an independent special district of the State of Florida, the Canaveral Port Authority is empowered to levy ad valorem taxes to finance expansion and operation, incur indebtedness through the sale of bonds or use of bank loans, establish tariff rates, negotiate for government grants, condemn necessary land, zone its land, and exercise police powers. The commission is responsible, among other things, for passing policies, adopting a budget, appointing committees, and hiring both the government’s manager (CEO) and attorney. The CEO’s authority and responsibilities are similar to those of both the manager of a local government and the president of a sizable private corporation. The major goals of the Port Authority are to give the residents of the area the benefits of low-cost ocean transportation, a foreign trade zone and to create economic opportunity and jobs. The Authority also provides substantial facilities for recreation for the local population and visitors alike.

The annual budget serves as the foundation for the Canaveral Port Authority’s financial planning and control. All departments of the Port Authority are required to submit budget requests to the CEO during June of each year. The CEO uses these requests as the starting point for developing a proposed budget. The Chief Financial Officer (CFO) then prepares and presents this proposed budget to the commission for review prior to September 30. The commission holds two public hearings on the proposed budget and adopts a final budget no later than September 30, the close of the Canaveral Port Authority’s fiscal year. The budget is prepared by functional department. Due to operating or unforeseen activities during the year, department heads may request modifications to their departmental budget. Changes to the capital budget require the approval of the Commission. Budget-to-actual comparisons are provided in this report for each individual department.

Economic Conditions in Fiscal Year 2016

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 Canaveral Port Authority operates.

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Local Economy

The Canaveral Harbor Port District encompasses approximately the northern two-thirds of Brevard County. The County is home to a number of large employers, both public and private. According to the Florida Department of Economic Opportunity: Bureau of Labor Market Statistics, the County’s as well as the nation’s unemployment rate at September 2016 is estimated at 5.2% with the state of Florida’s unemployment rate at 4.9%.

Economic Outlook

Port Canaveral is strategically located on the central east coast of the state and enjoys a significant “drive-to” market for cruising. During fiscal year 2016, Port Canaveral served as homeport to 13 different multi-day cruise vessels and 23 different port-of-call ships. Of the 23 port-of-call ships, eleven of them made multiple port-of-call visits with twelve ships stopping for a single port-of-call visit. Total revenue passengers for multi-day cruises and port-of-calls in FY2016 were 3,951,127 vursus 3,860,225 in FY15, representing a 2.4% increase. Total revenues from cruise operations excluding cruise parking for FY2016 increased 10.1% over FY2015. Cruise parking revenues increased 1.9% over FY2015.

As compared to fiscal year 2015, cargo revenue increased by 26.3% and cargo tonnage increased 32.5% for FY16. Several commodities experienced an increase in volume with slag, granite/limestone, and petroleum increasing 50.5%, 17.2% and 36.5%, respectively, leading the way. FY2016 saw the Authority’s first scheduled weekly cargo service which moved over 2,000 containers utilizing the new north cargo terminal 5. The fourth quarter of FY2016 marked the first time that the Authority imported new automobiles with 1,867 units being imported.

The Authority continues to implement new security measures to ensure the safety of the traveling public as well as Port Canaveral tenants. The annual costs of these services exceeded $7.9 million for FY16. This is an increase of 4.3% over FY15. In addition to both police and fire protection provided to cargo and cruise operations and tenants, the Authority added several additional security personnel during peak cruise times to enhance security and aid the flow of traffic from increased passenger counts.

As of September 30, 2016, the Port completed $1.7 million in security infrastructure projects with an additional $701,000 not yet completed. We continue to work with Federal and State agencies to obtain funding assistance to help offset these important costs.

Long-Term Financial Planning

In addition to the Authority’s operating budget process, a $245 million five-year capital plan has been developed to assess future needs. As part of this capital plan, projects are continuously evaluated to determine whether any new projects will yield an appropriate rate of return before any investment is considered when additional funding is needed. The Authority continues to invest its cash resources to achieve the desired results along with prudent borrowing policies using bond financing and bank debt.

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Relevant Financial Policies

The Authority continues to follow financial policies in effect which includes policies governing budget, investment, fraud, leasing land, travel, purchasing, and Commissioners minor expenses. These policies are reviewed annually, with amendments approved by the Board.

Major Initiatives

The master cruise plan initiated in FY2013 and completed during FY2014 indicated continued growth for the Authority’s cruise market. With ship size expected to continue along its current growth trend and due to the Authority’s aging terminals inventory, the Authority undertook a major renovation project in FY2016 to upgrade its cruise terminals 5, 8 and 10. The cruise master plan indicated that the Authority could need additional terminal capacity in late 2017 or early 2018 when passenger count is expected to increase at an exponential rate. The cruise lines are building larger cruise ships and the Authority’s berthing capability will need to be expanded to accommodate a new class of ships. The Authority has started the planning process for additional terminal capacity in the event that a feasible revenue model presents itself. The Authority expanded its completed master cruise plan to include a Port-wide master plan.

In early FY2015, the 180,000 square feet Cruise Terminal One, its new cruise ship berth and 1,000 car parking garage was completed at a cost of $111 million. The new multi-purpose terminal will serve as a homeport terminal for a global cruise line who has agreed to reimburse the Authority for approximately 44% of the construction costs over the next ten years. During FY2016, the terminal was used for 195 home-port visits, 27 port-of-call visits and 13 special events for the community. Financing for the project was provided by two national banks in the amount of $105 million along with a $1.8 million grant from the Florida Department of Transportation for dredging and passenger transportation equipment.

Cruise Terminal 5 underwent a $45.6 million renovation that was started during FY2015 and completed in June of 2016 and was designed to increase internal and external spaces for more efficient operations. The project increased the 24-year-old terminal capacity from 2,500 to 3,500 passengers. The scope of the construction includes a new security lobby, expanded luggage facilities, vertical transportation, new seating capacity, two new gangways, berth improvements and a small pier extension. Also included in the project are new interior finishes, HVAC systems and a new 1,044 space parking facility.

Cruise Terminal 8 underwent a $2.4 million renovation to upgrade the facility with a new roof, interior painting, a HVAC system and replacement of its translucent exterior wall system. The renovation is expected to be completed in FY2017.

Planning as well as the design and permitting for the Cruise Terminal 10 renovation project commenced in FY2015 with the formal solicitation process for construction began in the first month of FY2016. Construction began in June of 2016 and was expected to be completed in November 2016 (FY2017) at a cost of $35 million. The renovation, upgrade and expansion scope will be similar to Cruise Terminal 5 but will not include a parking facility.

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The Authority completed Northside Cargo Improvements including the construction of a 10 acre paved multi-use cargo area adjacent to the North Cargo Pier 5 container yard, vehicle staging area and stormwater system, at a cost of $16.1 million. The Authority received $12.7 million in state transportation grant money for the North side projects. Other projects completed in FY2016 included an auto processing and staging center on the South Cargo area at a cost of $7.9 million, the rebuilding of Marlin Road which was completed at a cost of $2 million and Security Projects at a cost of $2.1 million. The Security Projects were funded by FEMA, in a Port Security Grant Program in the amount of $1.6 Million.

To fund construction draws associated with the projects during the construction period, the Authority maintained a $50 million revolving line of credit with a national bank. During FY2016, the line-of-credit was partially satisfied by permanent financing provided by two national banks in the amount of $62.1 million. While this financing only covered approximately 73% of the financing needed, additional permanent financing will be completed in FY2017.

During FY2016, the Authority purchased a newly constructed 242,000 square feet warehouse building located off-port in Titusville, Florida. The Authority had previously entered into a lease-purchase agreement with a third party developer to lease the building. The purchase price was approximately $18 million and was financed on a second line of credit with a different national bank. As of September 30, 2016, the building was place in service and was available for rent to tenants.

In conjunction with the Authority’s cargo initiative and continuing the work started with the U. S. Department of Transportation’s Surface Transportation Board in FY2013, the Authority’splan to connect the Port with regular rail traffic from the mainland continued to be paused atthe request of the Authority’s Board of Commissioners in order to more fully study thepotential alternate routes.

The widening and deepening of the Authority’s shipping channel commenced in FY2014 and continues to be a priority to allow the Port to accommodate larger cruise ships and the massive container ships currently in use or on order by the world’s major shipping lines. Phase 1 of the project was completed in FY2016 at a cost to the Authority of $47.4 million with $27.3 million be reimbursed to the Authority by the U.S Department of Transportation. Phase 2 consists of dredging the west turning basin at a budgeted cost of $14.9 million with grant reimbursement anticipated to be approximately $6.2 million. Upon completion, the depth of the Port will 44 feet deep in the channel west of the middle turning basin and up to 46 feet deep from there to the ocean entrance to the Port. The sand bypass is anticipated to be completed in early FY2017 through federal program to refurbish beaches south of the ports entrance.

During FY2014, a contract was signed with the local county sheriff’s department transferring port security services. The agreement outlined services to be performed in accordance with the approved Port Security Plan and is renewed on an annual basis. During FY2015, the contract was renewed for FY2016 in the amount of $5.7 million.

Nearly all of the above improvements will be funded from existing cash flow as a result of the increased revenues from existing and projected cruise, cargo, and land lease operations,

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Federal and State grants and bank financing. The Port continues to seek federal and state assistance in the form of grants and capital improvement funding. The Authority has received federal funding for portions of the security infrastructure and funding from the Florida Department of Transportation for the deepening and widening of the Port’s channel, cargo expansion projects and the Ports road system.

Awards and Acknowledgments

The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Canaveral Port Authority for its comprehensive annual financial report for the fiscal year ended September 30, 2015. This was the twenty-fifth consecutive year that the Authority has received this prestigious award. In order to be awarded a Certificate of Achievement, the Authority published an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report 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 Finance Department. I would like to extend my this report, with special recognition given to Controller, Diana Mims-Reid. Thanks and appreciation are also extended to the Governmental Affairs department Tracy Krutz with her help on reviewing and coordinating this report and also to the firm of RSM US, LLC for their professional approach and high standards in the conduct of their independent audit of the Authority’s financial records and transactions as well as their assistance in the preparation of this report.

Finally, I would also like to express my appreciation to the Canaveral Port Authority Board of Commissioners and CEO John Murray for their guidance and support throughout the year. I appreciate their interest and leadership in planning and conducting the financial operation of the Authority in a progressive and responsible manner.

Respectfully submitted,

Rodger Rees Deputy Executive Director/ Chief Financial Officer

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Independent Auditor’s Report

To the Members of the Board of Commissioners Canaveral Port Authority Cape Canaveral, Florida

We have audited the accompanying financial statements of the Canaveral Port Authority (the Authority), as of and for the year ended September 30, 2016, and the related notes to the financial statements, which collectively comprise the Authority’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Authority, as of September 30, 2016, and the changes in financial position and cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Prior Auditors The financial statements of the Authority, as of and for the year ended September 30, 2015, were audited by other auditors whose report dated April 20, 2016 expressed an unmodified opinion on those statements.

Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis (MD&A), the schedule of funding progress of other post-employment benefits, the schedules of the Authority’ proportionate share of the net pension liability, and the schedules of Authority contributions be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Supplementary Information Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the Authority’s basic financial statements. The schedule of revenues, expenses and income before capital contributions compared with budget, schedule of comparative revenues, expenses and changes in net position, schedule of comparative operating revenues by activity, schedule of construction in progress and capital costs compared with budget, the schedule of expenditures of federal awards and state financial assistance, as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and Chapter 10.550, Rules of the Auditor General, State of Florida, and the introductory section, statistical section and other information section are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The schedule of expenditures of federal awards and state financial assistance is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards and state financial assistance is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

The schedule of revenues, expenses and income before capital contributions compared with budget, schedule of comparative revenues, expenses and changes in net position, schedule of comparative operating revenues by activity, the schedule of construction in progress and capital costs compared with budget, and the introductory section, statistical section and other information section 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.

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Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our reports dated March 17, 2017 on our consideration of the Authority's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Authority’s internal control over financial reporting and compliance.

Melbourne, Florida March 17, 2017

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THIS PAGE IS INTENTIONALLY LEFT BLANK.

Canaveral Port Authority Management's Discussion and Analysis (unaudited)

As management of the Canaveral Port Authority (the “Authority”), we offer readers of the Canaveral Port Authority's financial statements this narrative overview and analysis of the financial activities of the Canaveral Port Authority for the fiscal years ended September 30, 2016 and 2015. All amounts, unless otherwise indicated, are expressed in thousands of dollars.

Financial Highlights

• The assets of the Authority exceeded its liabilities at the close of the most recent fiscal yearby $336,653 (net position). Of this amount, $28,982 is the unrestricted net position and isavailable to meet the Authority's ongoing obligations to creditors.

• The Authority's total net position increased by $9,770. This increase consists of $3,136 ofincome before capital contributions and capital contributions of $6,634.

• At the end of the current fiscal year, the unrestricted net position was 34.7 percent of totalexpenses.

Overview of the Financial Statements

This discussion and analysis is intended to serve as an introduction to the Authority's basic financial statements. The Authority's basic financial statements are comprised of two components: fund financial statements and notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves.

The basic financial statements report information about the Authority using full accrual accounting methods as utilized by similar business activities in the private sector. The financial statements include a statement of net position, a statement of revenues, expenses, and changes in net position, and a statement of cash flows.

The statement of net position presents information on all of the Authority's assets and deferred outflows of resources as well as liabilities and deferred inflows of resources, with the difference between the two groups reported as total net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Canaveral Port Authority is improving or deteriorating.

During fiscal year 2015, the Authority adopted GASB Statement No. 68, Accounting and Financial Reporting for Pensions. This pronouncement required the restatement of the September 30, 2013 net position in the enterprise fund. This change is in accordance with generally accepted accounting principles.

During fiscal year 2016, the Authority adopted GASB Statement No. 72, Fair Value Measurement. This pronouncement required the Authority to report at fair value using quoted market price or other fair value techniques.

The statement of revenues, expenses, and changes in net position presents information showing how the Authority's net position changed during the fiscal year. All changes in net position are

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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.

The statement of cash flows presents changes in cash and cash equivalents from operational, financing, and investing activities. This statement presents cash receipt and disbursement information without consideration of the earnings event, when an obligation arises, or depreciation of capital assets.

The basic enterprise fund financial statements can be found on pages 2-6 of this report.

The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the basic financial statements. The notes to the financial statements can be found on pages 9-45 of this report.

In addition to the basic financial statements and accompanying notes, this report also presents other supplementary information. This supplementary information can be found on pages 50-68 of this report.

Financial Analysis

As noted earlier, net position may serve over time as a useful indicator of an entity’s financial position. Assets exceeded liabilities as of September 30, 2016 and 2015 by $336,653 and $326,883, respectively.

The following table reflects the condensed statement of net position:

CANAVERAL PORT AUTHORITY’S NET POSITION (In thousands)

2016 2015 2014

(Restated) Current and other assets $ 39,666 $ 36,632 $ 91,129 Capital assets 599,227 522,907 454,733

Total assets 638,893 559,539 545,862 Deferred outflows of resources 1,195 1,171 1,310 Current liabilities 64,224 45,958 48,867 Noncurrent liabilities 239,135 187,790 200,721

Total liabilities 303,359 233,748 249,588 Deferred inflows of resources 76 79 185 Net position: Net investment in capital

assets 305,846 301,897 245,995 Restricted 1,825 1,825 4,566 Unrestricted 28,982 23,161 46,838 Total net position $ 336,653 $ 326,883 $ 297,399


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By far the largest portion of the Canaveral Port Authority's net position as of September 30, 2016 and 2015 (90.9 percent and 92.4 percent, respectively) reflects its investment in capital assets (e.g., land, buildings, improvements, equipment, intangibles, and construction in progress); less any related debt used to acquire those assets that are still outstanding. These assets are not available for future spending. Although the Canaveral Port Authority'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 operations, since the capital assets themselves cannot be used to liquidate these liabilities.

In addition, a portion of the Canaveral Port Authority's net position as of September 30, 2016 and 2015 (0.5 percent and 0.6 percent, respectively) represents the reserve for maximum debt service restricted in accordance with existing bond covenants and was funded from operations. The remaining balance of unrestricted net position may be used to meet the Authority's ongoing obligations to creditors. At the end of the current fiscal year, the Canaveral Port Authority’s unrestricted net position increased by $5,821. In the prior year, unrestricted net position decreased by $23,677.

The Authority's total net position increased by $9,770 during the current fiscal year. Of this amount, $3,136 represents net income before capital contributions. The remaining $6,634 represents capital contributions (grant proceeds) from federal, state and local sources. There is no assurance that these capital contributions from other sources will continue in the future.

Net Position

The following table shows condensed revenue and expense data:

CANAVERAL PORT AUTHORITY’S CHANGES IN NET POSITION (in thousands)

2016 2015 2014

(Restated) Operating revenues:

Fees and charges for services $ 85,478 $ 77,705 $ 71,929 Non-operating revenues:

Investment earnings 165 193 67 Other 986 181 307

Total non-operating revenues 1,151 374 374 Total revenues 86,629 78,079 72,303

$0

$40,000

$80,000

$120,000

$160,000

$200,000

$240,000

$280,000

$320,000

2016 2015 2014

Net investment in capital assets

Restricted

Unrestricted


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Operating expenses: Operations, facilities and

security 23,424 21,647 19,334 Executive, finance and administration 7,909 7,664 7,729 Engineering and environmental 1,936 1,970 2,001 Other 6,230 5,479 6,147 Depreciation and amortization 35,830 33,226 26,180

Total operating expenses 75,329 69,986 61,391

Non-operating expenses Interest 6,976 5,640 3,708 Other 1,188 380 3,444 Total non-operating expenses 8,164 6,020 7,152

Total expenses 83,493 76,006 68,543 Income before contributions 3,136 2,073 3,760 Special Item - (422) (694) Capital contributions 6,634 27,833 13,184 Change in net position 9,770 29,484 16,250 Net position – beginning 326,883 297,399 281,149 Net position – ending $ 336,653 $ 326,883 $ 297,399

Key elements of the increase in net position for the fiscal year ended September 30, 2016 are as follows.

• Overall fees and charges for services increased 10.0 percent. Included in the overall feesand charges were revenues from cruise operations, cargo and recreation which increased10.2 percent, 34.1 percent and 5.0 percent, respectively. Parking and land leases increased2.0 percent and 13.4 percent, respectively. Other revenues increased 8.6 percent.

• Overall, non-operating revenues increased by 207.6 percent. Investment earnings andgains on equipment disposal decreased by 14.7 percent and 83.4 percent, respectively butwere offset by an increase in grant revenues of 114.0%. A one-time gain from a legalsettlement fiscal year 2016 accounted for 70.5 percent of the non-operating revenues.

• Capital contributions from federal and state grants for capitalized projects decreasedduring the current fiscal year by $21,199 or 76.2 percent. This decrease was mainly due tothe completion of previously approved grant projects associated with work on our newcargo berths 5 and 6 and associated storm water systems, refurbishment of cranes,deepening and widening of the Canaveral Port Authority channel as well as State Road 401improvements and close out of fiscal years 2015 and 2014 security projects. Also includedin the projects was the Canaveral Inlet Management Plan with the state Department ofEnvironmental Protection. These grant funds contributed $6,634 to the change in netposition in the current fiscal year.

Key elements of the increase in net position for the fiscal year ended September 30, 2015 are as follows.

• Overall fees and charges for services increased 8.0 percent. Included in the overall fees andcharges were revenues from cruise operations, cargo and recreation which increased


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8.1 percent, 15.8 percent and 10.4 percent, respectively. Parking and land leases increased 7.2 percent and 2.4 percent, respectively. Other revenues did not increase.

• Overall, non-operating revenues increased less than 1 percent. Investment earningsincreased by 188.6 percent but were offset by grant revenues and gain on equipmentdisposals which decreased 59.5 percent and 14.7 percent, respectively.

• Capital contributions from federal and state grants for capitalized projects increased duringthe current fiscal year by $14,649 or 111.1 percent. This increase was mainly due to thecollection of previously approved grant funds associated with work on our new cargoberths 5 and 6 and associated storm water systems, refurbishment of cranes, deepeningand widening of the Canaveral Port Authority channel as well as State Road 401improvements and close out of fiscal years 2013 and 2014 security projects. These grantfunds contributed $27,833 to the change in net position in the current fiscal year.

Total Revenues and Expenses

Capital Asset and Debt Administration

Capital assets. The Canaveral Port Authority's capital assets as of September 30, 2016 and 2015 amount to $599,227 and $522,907, respectively, (net of accumulated depreciation). These balances include land, buildings, improvements, equipment, intangibles, and construction in progress. The total increase in the Canaveral Port Authority's capital assets was 14.6 percent and 15.0 percent for fiscal years 2016 and 2015, respectively.

Major capital asset events during the current fiscal year include the following: • Construction began or continued on several major projects for the Authority, including

extensive Cruise Terminal 5 and 10 renovations, Cruise Terminal 8 upgrades, Marlin Streetimprovements, automobile terminal, purchase of the off port distribution and warehousefacility, Northside roadway design and cargo backup areas as well as the West Turning BasinWidening and Deepening. These additions totaled $109,933 and were offset by the totalvalue of projects completed and moved from Construction in Progress to capital assets of$137,005.

$30,000 $35,000 $40,000 $45,000 $50,000 $55,000 $60,000 $65,000 $70,000 $75,000 $80,000 $85,000 $90,000

2016 2015 2014

Total Revenues

Total Expenses


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Several major projects included in Construction in Progress were completed in fiscal year 2016 including:

• Cruise Terminals 5, 8, and 10 at a cost of $44,625• West Turning Basin Widening and Deepening at a cost of $44,037• Northside Terminal Backup area and storm water improvements at a cost of $15,203• State Road 401 Improvements at a cost of $704• Auto Terminal expansion at a cost of $7,956• Off-Port distribution and warehouse facility at a cost of $17,603

Additions for the year ended September 30, 2016 were offset by depreciation expense of $34,555 and amortization expense of $1,275.

Major capital asset events for the fiscal year ended September 30, 2015 were as follows: • Construction began or continued on several major projects for the Authority, including,

Northside Land Improvements, Northside Cargo Backup Area and Paving, Auto Terminal,Cruise Terminal 5 Upgrades and West Turning Basin Widening and Deepening. Theseadditions totaled $101,881 and were offset by the total value of projects completed andmoved from Construction in Progress to capital assets of $181,526.

Several major projects included in Construction in Progress were completed in fiscal year 2015 including:

• North Cargo Piers 5 and 6 at a cost of $35,689• Container Cranes at a cost of $12,225• Land, building and lease acquisitions at a cost of $7,155• Cruise Terminal 1 at a cost of $104,740• Cruise Terminal 6 building and gangway upgrade at a cost of $1,621

Additions for the year ended September 30, 2015 were offset by depreciation expense of $31,507 and amortization expense of $1,719.

CANAVERAL PORT AUTHORITY’S CAPITAL ASSETS (net of depreciation)

(in thousands)

2016 2015 2014 Land $ 4,603 $ 4,603 $ 4,603 Buildings 143,655 99,924 43,945 Improvements other than

Buildings 370,631 312,820 232,785 Equipment 33,619 33,338 20,971 Intangibles Construction in progress

1,082 45,637

2,213 70,009

2,775 149,654

Total $ 599,227 $ 522,907 $ 454,733


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Additional information on the Canaveral Port Authority's capital assets can be found in note 3.C. on pages 17-18 of this report.

Long-term debt. At September 30, 2016 and 2015, the Canaveral Port Authority had total bonded debt outstanding of $246,427 and $197,370, respectively, net of unamortized discounts and premiums. The Canaveral Port Authority's debt represents bonds secured solely by operating revenues (i.e., revenue bonds).

CANAVERAL PORT AUTHORITY’S OUTSTANDING DEBTREVENUE BONDS (in thousands)

2016 2015 2014 Revenue Refunding Bonds, Series 2005 $ - $ - $ 11,995Revenue Refunding Bonds, Series 2006A 9,760 11,720 13,600Revenue Bonds, Series 2006B 1,330 1,330 1,330 Revenue Bonds, Series 2008 22,763 24,310 25,810 Revenue Bonds, Series 2010 24,280 27,338 30,304

Revenue Bonds, Series 2012 5,049 5,988 6,916 Revenue Bonds, Series 2013 12,875 13,750 14,599 Revenue Bonds, Series 2014 99,325 102,325 105,000 Revenue Bonds, Series 2015 8,975 10,660 - Revenue Bonds, Series 2016A 24,070 - - Revenue Bonds, Series 2016B 38,000 - - Less deferred amounts for discounts - - (51) (68) Plus deferred amounts for premiums - - 124

Total revenue bonds $ 246,427 $ 197,370 $ 209,610

The Canaveral Port Authority's total revenue bonds increased by $49,057 (24.9 percent) during the current fiscal year and decreased by $12,240 (5.8 percent) during the prior year. The major factor for the increase during the current fiscal year was due to issuance Revenue Bonds Series 2016A and Series 2016B in the amounts of $24,070 and $38,000, respectively offset by regular scheduled principal payments on previously issued revenue bonds of $13,013. Revenue Bond Series 2016A included proceeds that were used to refund the Series 2005 Bonds. The major factor for the increase during the prior fiscal year was due to issuance of Revenue Bonds, Series 2015. Due to the change in reporting requirements the deferred loss on refunding has been removed from this calculation for fiscal year 2014 and forward. The outstanding Revenue Refunding Bonds Series 2006A and Series 2006B of the Canaveral Port Authority are the only outstanding debt that are insured by Financial Guarantee Insurance Company (FGIC), which is currently not rated by the three national rating agencies. The underlying rating assigned by all three national rating agencies is in the “A” category.

Additional information on the Canaveral Port Authority's long-term debt can be found in note 3.F. on pages 21 - 26 of this report.

Economic Factors and Next Year's Budgets and Rates

• Charges for services are budgeted to increase 8.5 percent for the fiscal year endingSeptember 30, 2017 due to anticipated increase in cargo and cruise related business.


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Operating expenses are budgeted to increase 11.1 percent, due to the addition of new services in the ground transportation and facilities management departments. Due to larger cruise ships calling at the Port resulting in higher passenger count, public safety costs are projected to increases 6.8 percent. Over $137,000 in completed assets were transferred from construction in progress to completed assets resulting in an increase of 11.42 percent in depreciation expense over current year levels.

• Income before capital contributions, for the fiscal year ending September 30, 2017 isbudgeted at $2,276. This represents a 26.8 percent decrease over the current year.

Requests for Information

This financial report is designed to provide a general overview of the Canaveral Port Authority's finances for all those with an interest in the Authority's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Finance Department, Canaveral Port Authority, 445 Challenger Road, Suite 301, Cape Canaveral, Florida, 32920.

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BASIC FINANCIAL STATEMENTS

Canaveral Port Authority Statements of Net Position

The accompanying notes are an integral part of these financial statements. - 2 -

September 30, 2016 2015

ASSETS Current assets

Cash and cash equivalents $ 17,709,749 $ 10,623,552 Cash and cash equivalents reserved for debt service 6,794,737 2,734,023 Investments 2,220,640 5,463,444 Accounts receivable - trade, net 5,841,025 6,266,769 Prepaid expenses 3,023,432 2,992,443 Due from other governmental units 1,231,041 5,649,453 Inventory 99,377 37,944 Other receivables, current 169,702 645,869

Total current assets 37,089,703 34,413,497

Noncurrent assets Restricted cash and equivalents 1,824,500 1,824,500 Other receivables, long-term 751,406 394,136 Capital assets (net of accumulated depreciation or amortization):

Land 4,602,954 4,602,954 Buildings 143,654,840 99,923,410 Improvements other than buildings 370,631,311 312,819,817 Equipment 33,619,072 33,338,304

Intangible assets 1,081,947 2,212,710 Construction in progress 45,637,199 70,009,436 Total noncurrent assets 601,803,229 525,125,267

Total assets 638,892,932 559,538,764

DEFERRED OUTFLOWS OF RESOURCES Deferred outflow - pension 180,340 75,788 Deferred loss on bond debt refunding 1,015,102 1,095,202

Total deferred outflows of resources 1,195,442 1,170,990

Canaveral Port Authority Statements of Net Position (continued)


September 30, 2016 2015

LIABILITIES Current liabilities

Accounts payable and accrued expenses 17,633,196 17,585,236 Unearned revenue 880,294 738,333 Payroll and sales taxes payable 131,588 103,887 Revenue bonds payable, current portion 11,256,854 12,411,356 Note payable, current portion 108,027 122,718 Compensated absences, current portion 7,130 305 Line of credit 31,023,249 11,404,709 Other liabilities, current portion 173,511 812,988 Payable from restricted assets:

Accrued interest payable 2,330,139 2,125,301 Revenue bonds payable, current portion 680,000 653,333

Total current liabilities 64,223,988 45,958,166

Noncurrent liabilities Revenue bonds payable, less current portion 234,489,729 184,305,290

Note payable, less current portion - 108,027 Compensated absences, less current portion 606,599 586,350 Other liabilities, long-term portion 1,001,874 522,500 Project insurance liability 816,617 284,130 Net OPEB liability 1,704,000 1,591,000 Net pension liability 516,582 392,927

Total noncurrent liabilities 239,135,401 187,790,224

Total liabilities 303,359,389 233,748,390

DEFERRED INFLOWS OF RESOURCES Deferred inflow - pension 75,715 78,582

Total deferred inflows of resources 75,715 78,582

NET POSITION Net investment in capital assets 305,846,091 301,897,216

Restricted for debt service 1,824,500 1,824,500 Unrestricted 28,982,679 23,161,066

Total net position $ 336,653,270 $ 326,882,782

Canaveral Port Authority Statements of Revenues, Expenses and Changes in Net Position


Years ended September 30, 2016 2015 Operating revenues

Fees and charges for services $ 85,478,213 $ 77,705,203 Operating expenses

Operations 6,650,628 5,601,931 Facilities 8,906,166 8,501,598 Public safety 7,867,211 7,543,563 Parks and recreation 1,475,926 1,479,180 Fire training facility 179,964 196,661 Commission 458,217 310,845 Executive 1,906,848 1,555,030 Finance and accounting 1,556,369 1,530,154 Administrative services 4,445,721 4,578,866 Engineering and environmental 1,935,733 1,969,934 Business development 1,519,800 1,517,277 Tenant development 1,111,560 519,388 Communications 695,726 710,681 Exploration Tower 788,997 745,218 Depreciation 34,555,085 31,506,831 Amortization 1,274,811 1,718,755

Total operating expenses 75,328,762 69,985,912 Operating income 10,149,451 7,719,291 Non-operating revenues

Investment earnings 164,880 193,291 Grant revenue 156,592 73,179 Gain on legal settlement 811,944 - Gain on sale/disposal of assets 17,922 107,814

Total non-operating revenues 1,151,338 374,284 Non-operating expenses

Interest expense 6,976,059 5,639,606 Amortization of bond discounts 226,421 182,870 Loss on disposal of capital assets 626,509 60,692 Commissions and fees 295,368 100,474 Grant administration fee 40,000 36,866

Total non-operating expenses 8,164,357 6,020,508 Income before capital contributions and special item 3,136,432 2,073,067

Special item (Note 5) - (421,690) Capital contributions 6,634,056 27,832,677

Change in net position 9,770,488 29,484,054 Net position, beginning of year 326,882,782 297,398,728 Net position, end of year $ 336,653,270 $ 326,882,782

Canaveral Port Authority Statements of Cash Flows


Year ended September 30, 2016 2015 Cash flows from operating activities:

Cash received from customers and users $ 86,164,815 $ 76,478,059 Cash paid to suppliers for goods and services (31,066,733) (26,926,052) Cash payments to employees for services (10,088,344) (10,748,347)

Net cash provided by operating activities 45,009,738 38,803,660

Cash flows from non-capital financing activities: Grant revenue received 156,592 51,731

Net cash provided by non-capital financing activities 156,592 51,731

Cash flows from capital and related financing activities: Interest paid on revenue bonds (7,248,413) (5,872,081)

Proceeds from revenue bond 62,070,000 11,080,000 Costs of bond issuance (521,789) (75,565) Principal payments on revenue bonds (13,064,689) (23,212,455) Acquisition and construction of capital assets (109,228,424) (116,614,474) Proceeds from the sale of capital assets 17,922 107,814 Net draws on line of credit 19,618,540 11,404,709 Contributed capital 11,052,468 34,851,484 Principal payments on note payable (122,718) (115,590)

Net cash used in capital and related financing activities (37,427,103) (88,446,158)

Cash flows from investing activities: Interest received on investments 164,880 193,291

Sale of investments 5,463,444 1,557,753 Purchase of investments (2,220,640) (5,463,444)

Net cash provided by (used in) investing activities 3,407,684 (3,712,400) Net increase (decrease) in cash and cash equivalents 11,146,911 (53,303,167) Cash and cash equivalents, beginning of year 15,182,075 68,485,242 Cash and cash equivalents, end of year $ 26,328,986 $ 15,182,075

Canaveral Port Authority Statements of Cash Flows (continued)


Year ended September 30, 2016 2015 Reconciliation of operating income to net cash provided by

operating activities: Operating income $ 10,149,451 $ 7,719,291

Adjustment to reconcile operating income to net cash provided by operating activities Depreciation expense 34,555,085 31,506,831

Amortization expense 1,274,811 1,718,755 Gain (loss) on sale of assets 608,587 (47,122) Grant administration (40,000) (36,866) Gain on legal settlement 811,944 - (Increase) decrease in assets:

Accounts receivable 425,744 (1,502,140) Inventory (61,432) (17,781) Other receivables 118,897 133,648 Prepaid expenses (30,989) (511,936) Deferred outflows of resources - pension (104,552) 16,029

Increase (decrease) in liabilities: Accounts payable and accrued expenses (3,500,714) (303,603)

Unearned revenue 141,961 141,348 Compensated absences 27,074 96,668 Net OPEB liability 113,000 103,000 Net pension liability 123,655 109,879 Deferred inflows of resources - pension (2,868) (106,234) Other liabilities (160,103) (216,050) Payroll and sales tax payable 27,700 (57) Project insurance liability 532,487 -

Total adjustments 34,860,287 31,084,369 Net cash provided by operating activities $ 45,009,738 $ 38,803,660

- -

Supplemental schedule of non-cash investing, capital and financing activities: During 2016 and 2015, the Authority recorded an unrealized gain (loss) on investments of

$1,440 and $(21,110), respectively. During 2016 and 2015, the Authority's balance in due from other governmental units relating

to capital contributions is $1,231,041 and $5,649,453, respectively.

Canaveral Port Authority Notes to Financial Statements

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Note Contents PAGE

1. Summary of Significant Accounting Policies A. Reporting Entity 9 B. Measurement, Focus, Basis of Accounting and Financial

Statement Presentation 9 C. Assets, Liabilities and Net Position 10 D. Revenues and Expenses 12

2. Budgetary Information 13

3. Detail Notes A. Deposits and Investments 14 B. Restricted Assets and Reserved for Debt Service 16 C. Capital Assets 17 D. Accounts Payable and Accrued Expenses 19 E. Other Liabilities 20 F. Revenue Bonds Payable 21 G. Note Payable 26 H. Line of Credit 27 I. Changes in Long-term Liabilities 27 J. Restricted Net Position 28 K. Retirement Plan 28 L. Defined Contribution Plan 37

M. Other Postemployment Benefits 38 N. Leasing and Operating Agreement Arrangements

with Authority as Lessor 41 O. Major Customers 41 P. Risk Management 41 Q. Capital Contributions 42

4. Commitments and Contingencies A. Construction 42 B. Marine Terminal Leases 42 C. Litigation 43 D.

E. Employment Agreement Grant Programs

43 43

5. Special Item 43

6. Future Accounting Pronouncements 44

7. Subsequent Events 44

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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The Canaveral Port Authority (the “Authority”) is the governing body of the Canaveral Harbor Port District, an independent special taxing Authority and a political subdivision of the state of Florida which was established in 1953 by Chapter 28922, Laws of Florida, and Special Acts of 1953, as amended in 2014. The Authority is composed of a one commissioner elected from each of the five districts created by the Act. B. Measurement Focus, Basis of Accounting and Financial Statement Presentation The Authority is a special purpose government entity engaged in business type activities and thus uses the proprietary fund accounting for the presentation of its financial statements. Proprietary fund financial statements are reported using the economic resources measurement focus and the 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 Canaveral Port Authority operates as an enterprise fund that accounts for the construction, operation and maintenance of the Authority. An enterprise fund is a type of proprietary fund that provides services to the general public. This fund is used to account for the acquisition, operation and maintenance of governmental facilities and services which are entirely or predominantly self-supported by user charges. The operations of the Authority are accounted for in such a manner as to show a profit or loss. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the Authority are fees and charges for cruise ships, cargo ships and land leases. Operating expenses include costs to operate and maintain facilities of the Authority, administrative expenses and depreciation and amortization expenses related to long-lived assets. All revenues and expenses not meeting these definitions are reported as non-operating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the Authority’s policy to use restricted resources first, then unrestricted resources as they are needed. Prior period financial statement amounts have been reclassified to conform to current period presentation. Net investment in capital assets and unrestricted net position have been reclassified for fiscal year 2015 to conform to fiscal year 2016 financial statement presentation.


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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Assets, Liabilities and Net Position 1. Cash and Cash Equivalents State statutes authorize the Authority to invest in the Local Government Surplus Funds Trust Fund or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperation Act, SEC registered money market funds with the highest credit quality rating, interest-bearing time deposits or savings accounts in qualified public depositories, and direct obligations of the U. S. Treasury. The Canaveral Port Authority invests certain surplus funds in an external investment pool, the Local Government Surplus Funds Trust Fund (the “State Pool”). The State Pool is administered by the Florida State Board of Administration (the “SBA”), who provides regulatory oversight. The Florida PRIME (formally LGIP) has adopted operating procedures consistent with the requirements for a 2a7-like fund. The Canaveral Port Authority’s investment in the Florida PRIME is reported at amortized cost. The value of the Authority’s position in the pool is equal to the value of pooled shares. Cash and cash equivalents include cash deposits, short term investments with original maturities of three months or less from the date of acquisition and investments held in the Florida PRIME. 2. Accounts and Other Receivables Management considers most accounts and other receivables to be fully collectible; however it has created an allowance for those, where based upon historical attempts at collection, it deems collection to be unlikely. The allowance for the years ended September 31, 2016 and 2015 were $15,000 and $15,000, respectively. 3. Inventory Inventories are valued at cost on the lower of cost or market. Inventory consists of materials held for consumption. The cost is recorded as expenditure at the time individual inventory items are issued. 4. Capital Assets Capital assets are defined by the Authority as assets with an initial cost of more than $1,000 and an estimated useful life in excess of one year. Such assets are recorded at cost, if purchased and at acquisition value at date of gift, if donated. Major additions are capitalized while maintenance and repairs, which do not improve or extend the life of the respective assets, are charged to expense. Contributions received in aid of construction are recorded as capital contributions and do not reduce the cost of the assets acquired with such contributions. Costs associated with deepening


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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Assets, Liabilities and Net Position (Continued) and widening the channel increases the potential service utility of the port and is recorded as non-depreciable capital assets. Depreciation is recognized on the straight-line method over the estimated useful lives of the assets. The following estimated useful lives are used for depreciation purposes:

Classification Range of Lives Buildings 30 years Improvements Other Than Buildings 5-40 years Equipment 3-20 years

5. Deferred outflows of resources The deferred amount for loss on bond debt refunding is classified as deferred outflows of resources and was $1,015,102 and $1,095,202 at September 30, 2016 and 2015, respectively. The deferred outflows related to pensions are an aggregate of items related to pensions as calculated in accordance with GASB Statement No. 68, Accounting and Financial Reporting for Pensions. They consist of contributions subsequent to the measurement date, differences between expected and actual experience, effect of changes of assumptions, net difference between actual and projected investment earnings and change in proportionate share. Total deferred outflows of resources related to pensions were $180,340 and $75,788, respectively, for the years ended September 30, 2016 and 2015. 6. Restricted Assets Debt proceeds and funds set aside for payment of revenue bonds and construction projects are classified as restricted assets on the statement of net position because their use is limited by applicable debt covenants. 7. Compensated Absences All permanent employees of the Authority are eligible for annual leave. Each employee working a normal week earns vacation leave at certain rates depending on the employee's length of service. All annual leave is accrued when earned in the statement of net position. There is no liability for unpaid accumulated sick leave since the Authority does not have a policy to pay such amounts upon termination or retirement.


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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Assets, Liabilities and Net Position (Continued) 8. Deferred inflows of resources The deferred inflows related to pensions are an aggregate of items related to pensions as calculated in accordance with GASB Statement No. 68, Accounting and Financial Reporting for Pensions. They consist of differences between expected and actual experience, effect of changes of assumptions, net difference between actual and projected investment earnings and change in proportionate share. Total deferred inflows of resources related to pensions were $75,715 and $78,582, respectively, for the years ended September 30, 2016 and 2015. 9. Net Position – Net Investment in Capital Assets The net investment in capital assets component of net position consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. 10. Net Position – Restrictions The Authority’s statement of net position reports a restriction on net position that is maintained for a specific purpose. The nature and purpose of this restriction represents, in accordance with legal restrictions, amounts for payment of principal and interest maturing in later years. 11. Net Position – Unrestricted At September 30, 2016 and at the end of the prior year, the Authority had an unrestricted net position and continued to be funded normal operations. The Authority made capital investments that were expected to have a significant return on investment. D. Revenues and Expenses

1. Operating Revenues and Expenses

Operating revenues are recorded when earned and expenses are recorded when incurred. Revenues and expenses relating to the Authority’s property and operations included wharfage, dockage, line handling, water services, crane rentals, property leases, commercial vehicle, parks and recreation entrance and usage fees, fire training, parking fees and other port services. All other revenues and expense are classified as non-operating. Operating revenues and expenses are reported in the Statements of Revenues, Expenses and Changes in Net Position.


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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

D. Revenues and Expenses (Continued) 2. Grants

Grants restricted for capital acquisition and construction are recorded as capital contributions. Grant revenue that can be used for operating purposes is recognized when earned. Both are considered earned when all applicable eligibility requirements have been met and it is earned by the Authority. 3. Amortization

The Authority recognizes amortization on these intangible assets as follows:

Category Period Method Deferred expenses 3-30 years straight-line Spoil dike 30 years straight-line Beach restoration 5 years straight-line Software 10 years straight-line Trademarks 5 years straight-line

4. Capitalized Interest The Authority’s policy is to capitalize interest costs related to construction projects in accordance with generally accepted accounting principles. The net effect of interest expense and interest income generated from borrowings used for construction projects in progress are capitalized through the date the project is substantially complete and ready for its intended use. During the years ended September 30, 2016 and 2015, $0 and $1,140,311 of interest expense was capitalized. NOTE 2: BUDGETARY INFORMATION The Authority’s enabling legislation requires adoption of an annual operating budget. The Authority adopts an annual operating and capital improvement budget resolution prior to September 30, for the next ensuing fiscal year. The Authority’s budgets are prepared on the accrual basis of accounting which is consistent with generally accepted accounting principles. Operating budgets for the enterprise fund are based on level of service expectations. Capital improvement projects are budgeted to provide control over authorized project expenses and ensure compliance with board approved projects. Budget control is maintained at the departmental level. Actions which change the annual budget must be authorized by the Board of Commissioners. Budget amounts have been adjusted for legally authorized revisions of the annual budgets approved during the year. The Authority’s schedule of revenues, expenses and income before capital contributions compared with the legally adopted budget is presented as supplementary information on pages 52 through 56.


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NOTE 3: DETAIL NOTES A. Deposits and Investments The Authority has statutory authority to levy ad valorem taxes up to three (3) mills annually on all taxable property within the Authority’s district boundaries for operation, maintenance and improvement of Authority facilities. The Authority has not levied property taxes since 1986 and does not expect to do so in the foreseeable future. At September 30, 2016 and 2015, the carrying amount of the Authority’s recorded deposits with banks, investments and savings and loans was $3,200,050 and $5,851,078, respectively, and the bank balance was $7,840,327 and $8,237,520, respectively. In addition, the Authority held $500 of petty cash at September 30, 2016 and 2015. Florida Statues, Chapter 280, Florida Security for Public Deposits Act (the “Act” prescribes the deposit authority of the Authority’s policy conforms to state statue. Deposits whose value exceeds the limits of federal depository insurance are entirely insured or collateralized pursuant to Florida Statues, Chapter 280. Under the Act, every qualified public depository shall deposit with the Treasurer eligible collateral of the depository to be held subject to his or her order. The Treasurer, by rule, shall establish minimum required collateral pledging levels. The pledging level may range from 25% to 200% of the average monthly balance of public deposits with an approved financial institution. The Public Deposit Security Trust Funds have a procedure to allocate and recover losses in the event of default or insolvency. The Authority depositories at year-end were designated as qualified public depositories. All bank balances were covered by federal deposit insurance and the banks’ participation in the Florida Security for Public Deposits Act. Credit Risk The Authority’s investment policy addresses credit risk by restricting the types of investments in which it can invest, consistent with limitations defined in Florida Statutes, as described in Note 1.C.1. Custodial Credit Risk For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the Authority will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The Authority’s investment policy requires securities be held by a third party custodian and be properly designated as an asset of the Authority and held in the Authority’s name. As of September 30, 2016, the Authority’s investment portfolio was held with a third-party custodian, and designated as Authority assets, as required by the Authority’s investment policy.


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NOTE 3: DETAIL NOTES (Continued) A. Deposits and Investments (Continued) Interest rate risk The Authority’s investment policy does not limit the maturities of investments to reduce the interest rate risk. However, in accordance with the Authority’s investment policy, investments should be invested to match investment maturities with known cash needs and anticipated cash flow requirements. Fair Value Measurements The Authority’s investments are reported at fair value using quoted market price or other fair value techniques as required by FASB Statement 72, Fair Value Measurements. Fair value is defined by GASB Statement No. 72, as the price that would be received to sell an asset or to transfer a liability in an orderly transaction between market participants at the measurement date. Categorizes within the fair value hierarchy include: Level 1 inputs are quoted priced in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 are unobservable inputs. As of September 30, 2016 and 2015, the Authority reported investments at fair value. Fair value for all of the Authority investments was measured using level 1 techniques, excluding Florida Prime, which is valued using net asset value and the certificates of deposits which are not subject to fair value hierarchy. Concentration of credit risk The Authority’s investment policy does not specifically address concentration of credit risk. However, the policy indicates that investments should be diversified to control the risk of loss resulting from over concentration of assets.


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NOTE 3: DETAIL NOTES (Continued) A. Deposits and Investments (Continued) At September 30, 2016, the Authority had the following investments:

Investment Maturities (in years)

Investment Type Fair Value Less than 1 1-5 6-10 Rating Agency SBA Florida PRIME $ 1,150,228 $ 1,150,228 - - AAAm S&P Certificates of Deposit 469,035 469,035 -

- Not Rated -

US Government Securities 2,599,632 2,199,648 399,984 - AA+ S&P Agency Discount notes 20,178,121 20,178,121 - - AA+ S&P Agency notes 952,060 952,060 - - AA+ S&P $ 25,349,076 $ 24,949,092 $ 399,984 $ -

At September 30, 2015, the Authority had the following investments:

Investment Type Fair Value Less than 1 1-5 6-10 Rating AgencySBA Florida PRIME 1,144,012$ 1,144,012$ -$ -$ AAAm S&PCertificates of Deposit 468,566 468,566 - - Not Rated -US Government Securities 2,349,771 425,392 1,924,379 - AA+ S&PAgency Discount notes 8,356,023 8,356,023 - - AA+ S&PAgency notes 2,475,569 1,521,570 953,999 - AA+ S&P

14,793,941$ 11,915,563$ 2,878,378$ -$

Investment Maturities (in years)

B. Restricted Assets and Reserved For Debt Service

Debt proceeds and funds set aside for payment of revenue bonds and construction projects are classified as restricted cash, and cash and cash equivalents reserved for debt service and investments since their use is limited by applicable bond indentures or have been set aside and reserved by management. During fiscal year 2015 the Authority changed to a new financial institution which had no requirement to maintain a compensating balance on deposit. 2016 2015 Series 2006-A and 2006-B, Series 2008 Bond, Series 2010 Bond, Series 2012 Bond, Series 2013 Bond, Series 2014 Bond, Series 2015 Bond, 2016-A and 2016-B Bond Debt Service and Reserve

Daily Investment Pool $ 2,658,767 $ 2,658,231 Construction Trust Account 5,960,470 1,900,292

Total $ 8,619,237 $ 4,558,523


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NOTE 3: DETAIL NOTES (Continued)

C. Capital Assets Capital asset activity for the years ended September 30, 2016 and 2015 was as follows: 2016

Balance October

1, 2015 Increases Decreases Balance

September 30, 2016 Capital assets, not being

depreciated/amortized: Land $ 4,602,954 $ - $ - $ 4,602,954

Construction in progress 70,009,436 112,777,097 (137,149,334) 45,637,199 Total capital assets, not being

depreciated/amortized 74,612,390 112,777,097 (137,149,334) 50,240,153 Capital assets, being

depreciated/amortized: Buildings 122,146,379 49,885,112 (974,958) 171,056,533

Improvements other than buildings 500,399,150 77,841,999 (4,448,353) 573,792,796 Equipment 58,808,718 9,278,176 (336,862) 67,750,032 Intangible assets 16,957,800 144,049 - 17,101,849 Total capital assets being

depreciated/amortized 698,312,047 137,149,336 (5,760,173) 829,701,210 Less accumulated

depreciation/amortization for: Buildings (22,222,969) (6,148,415) 969,691 (27,401,693)

Improvements other than buildings (187,579,333) (19,412,004) 3,829,852 (203,161,485) Equipment (25,470,414) (8,994,666) 334,120 (34,130,960) Intangible assets (14,745,090) (1,274,812) - (16,019,902) Total accumulated

depreciation/amortization (250,017,806) (35,829,897) 5,133,663 (280,714,040) Total capital assets, being

depreciated/amortized, net 448,294,241 101,319,440 (626,510) 548,987,171 Capital assets, net $ 522,906,631 $ 214,096,537 $ (137,775,844) $ 599,227,324


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NOTE 3: DETAIL NOTES (Continued) C. Capital Assets (Continued) 2015

Balance October

1, 2014 Increases Decreases Balance

September 30, 2015 Capital assets, not being

depreciated/amortized: Land $ 4,602,954 $ - $ - $ 4,602,954

Construction in progress 149,653,938 101,881,393 (181,525,895) 70,009,436 Total capital assets, not being

depreciated/amortized 154,256,892 101,881,393 (181,525,895) 74,612,390 Capital assets, being

depreciated/amortized: Buildings 61,559,760 60,589,784 (3,165) 122,146,379

Improvements other than buildings 401,224,470 99,257,209 (82,529) 500,399,150 Equipment 41,629,241 20,523,106 (3,343,629) 58,808,718 Intangible assets 15,802,005 1,155,795 - 16,957,800 Total capital assets being

depreciated/amortized 520,215,476 181,525,894 (3,429,323) 698,312,047 Less accumulated

depreciation/amortization for: Buildings (17,614,951) (4,611,183) 3,165 (22,222,969)

Improvements other than buildings (168,439,431) (19,221,425) 81,523 (187,579,333) Equipment (20,658,445) (7,674,224) 2,862,255 (25,470,414) Intangible assets (13,026,335) (1,718,755) - (14,745,090) Total accumulated

depreciation/amortization (219,739,162) (33,225,587) 2,946,943 (250,017,806) Total capital assets, being

depreciated/amortized, net 300,476,314 148,300,307 (482,380) 448,294,241 Capital assets, net $ 454,733,206 $ 250,181,700 $ (182,008,275) $ 522,906,631 Intangible assets include deferred expenses, which consist of maintenance dredging; costs incurred in developing an inlet management plan; costs of constructing a spoil dike and an off-shore sand berm; and beach restoration projects. Intangible assets also consist of computer software and a trademark.


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NOTE 3: DETAIL NOTES (Continued) D. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses are comprised of the following as of September 30: 2016 2015 Accounts and contracts payable $ 14,054,815 $ 9,757,631 Retainages payable 2,857,391 6,997,903 Accrued payroll and employee benefits 720,990 829,702 $ 17,633,196 $ 17,585,236

E. Other Liabilities In 1995, the Authority discovered a toxic, contaminated area east of the Authority’s former office. During fiscal year 1996, the Authority assessed the degree of contamination at the site, removed contaminated materials and prepared a contamination assessment report. A liability for $1,100,000 was recorded on the balance sheet at September 30, 1996. The pollution remediation obligation is an estimate and subject to changes resulting from price increases or reductions, technology, or changes in applicable laws or regulations. During fiscal year 1996, the Authority reached an agreement, in writing, with the previous lessee of the contaminated site to indemnify the Authority for 75% of the future out-of-pocket costs incurred to monitor and clean-up the site. At September 30, 1996, the Authority accrued a receivable of $1,299,561 for amounts due under this agreement. During the ensuing years, the Authority retained the services of a professional site assessment and remediation firm to determine an estimated cost to complete the clean-up and recognized any additional expenses, if any, with adjustments recorded annually to the respective liability and receivable accounts. During fiscal year 2009, the Authority implemented Governmental Accounting Standards Board ("GASB") Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations, which required a change in the methodology used to calculate the Authority’s liability related to cleanup of the contaminated area. The Authority is now required to utilize the expected cash flow technique, which measures the liability as the sum of probability-weighted amounts in a range of possible estimated amounts. As a result of implementing GASB Statement No. 49 and new estimates provided by the engineers, the Authority accrued an additional liability of approximately $1,132,000 to complete the soil decontamination. A corresponding additional receivable of approximately $849,000 was accrued as the estimated receivable from the former lessee based on the agreement reached in 1996. In fiscal year 2012, during a collaborative meeting between the Authority, professional site assessment and remediation firm, all related subcontracting firms and with feedback from a state monitoring agency, it was determined that the remediation plan in place was producing successful


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NOTE 3: DETAIL NOTES (Continued) E. Other Liabilities (Continued) remediation of the site. It was agreed to maintain the current estimates for a period of five years, barring any unforeseen events. It was further agreed to meet again in 5 years to review the status of the plan and remediation progress. The group reconvened in September 2016 and again confirmed the current estimates in place were sufficient, and would remain the same with plans to meet again for review in 5 years. During fiscal years 2016, 2015, 2014, 2013 and 2012, there were no additional estimated costs for cleanup and therefore no additional accruals necessary. At September 30, 2016 and 2015, the liability balances for the clean-up are $1,175,385 and $1,335,488, respectively. These liabilities are reported as other liabilities, current portion in the amount of $173,511 and $812,988 at September 30, 2016 and 2015, respectively, and as other liabilities, long-term portion in the amount of $1,001,874 and $522,500, respectively. In accordance with GASB Statement No. 49, the September 30, 2016 pollution remediation liability of $1,175,385 is based on the weighted average probability of expected outlays (($330,602 x 0.05) + ($839,989 x 0.45) + ($1,419,331 x 0.45) + ($2,852,211 x 0.05)) for a total other liabilities balance for the clean-up of $1,175,385. The $1,335,488 liability for the year ended September 30, 2015 is based on the weighted average probability of expected outlays as follows: outlays (($375,635 x 0.05) + ($953,271 x 0.45) + ($1,612,663 x 0.45) + ($3,240,720 x 0.05)). As of September 30, 2016, management believes the actual liability recorded in the Statement of Net Position will more than cover the future costs expected to be incurred for the clean-up. The receivable balances remaining at September 30, 2016 and 2015 are $921,108 and $1,040,005, respectively. These receivables are included in other receivables, current in the amount of $169,702 and $645,869 at September 30, 2016 and 2015, respectively, and in other receivables, long-term in the amount of $751,408 and $394,136, respectively. A reconciliation of changes in the aggregate liabilities for the claims related to the contamination follows:

Claims Liability October 1, 2015

Fiscal Year 2016 Incurred Claims

Fiscal Year 2016 Payment on Claims

Claims Liability September 30, 2016

$ 1,335,488 $ - $ (160,103) $ 1,175,385

Claims Liability October 1, 2014

Fiscal Year 2015 Incurred Claims

Fiscal Year 2015 Payment on Claims

Claims Liability September 30, 2015

$ 1,551,538 $ - $ (216,050) $ 1,335,488

*Payments on claims are reimbursed by the former lessee at a rate of 75%.


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F. Revenue Bonds Payable The revenue bonds are secured by and payable from the gross operating revenues of the Canaveral Port Authority. The proceeds of these issues were used for capital improvements and refunding certain outstanding issues of the Authority. The resolutions applicable to the revenue bonds require the establishment of various bond principal and interest sinking funds and reserve accounts with various requirements for deposits. These requirements have been met for the fiscal years ended September 30, 2016 and 2015.

A summary of long-term debt at September 30, 2016 and 2015 is as follows:

2016 2015 Port Revenue Refunding Bonds, Series 2006A $ 9,760,000 $ 11,720,000 Port Improvement Revenue Bonds, Series 2006B 1,330,000 1,330,000 Port Improvement Revenue Bonds, Series 2008 22,763,000 24,310,000 Port Improvement Revenue Bonds, Series 2010 24,279,583 27,338,272 Port Revenue Refunding Bonds, Series 2012 5,049,000 5,988,000 Port Improvement Revenue Bonds, Series 2013 12,875,000 13,750,000 Port Improvement Revenue Bonds, Series 2014 99,325,000 102,325,000 Port Revenue Refunding Bonds, Series 2015 8,975,000 10,660,000 Port Improvement Revenue Bonds, Series 2016A 24,070,000 - Port Improvement Revenue Bonds, Series 2016B 38,000,000 -

Total revenue bonds 246,426,583 197,421,272 Less: unamortized discounts - (51,293) Plus: unamortized premiums - - 246,426,583 197,369,979 Less: current maturities (11,936,854) (13,064,689) Revenue bonds payable, less current portion $ 234,489,729 $ 184,305,290

PORT REVENUE REFUNDING BONDS, SERIES 2006A and 2006B On March 27, 2006, the Canaveral Port Authority issued Port Revenue Refunding Bonds, Series 2006A in the principal amount of $16,915,000 (i) to currently refund all of the Authority’s Port Improvement Revenue Refunding Bonds, Series 1996A and (ii) to pay bond issuance costs. Gross revenues are pledged for repayment of these bonds. The Series 2006A bonds bear interest at rates ranging from 3.4% to 5.0% per annum, payable semi-annually on June 1 and December 1. Principal is due annually beginning June 1, 2006, in amounts increasing from $165,000 to $1,075,000 at final maturity in 2021.


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NOTE 3: DETAIL NOTES (Continued) F. Revenue Bonds Payable (Continued) The Series 2006A and 2006B bonds maturing on or after June 1, 2017 are subject to redemption prior to their respective dates of maturity, on or after June 1, 2016, at the option of the Authority, in whole or in part, at a redemption price equal to 100% of the principal amount of the Series 2006A bonds to be redeemed, plus accrued interest to the redemption date. PORT IMPROVEMENT REVENUE BONDS, SERIES 2006B On March 27, 2006, the Canaveral Port Authority issued Port Improvement Revenue Bonds, Series 2006B in the principal amount of $1,330,000 to (i) fund various capital improvements and (ii) to pay bond issuance costs. Gross revenues are pledged for repayment of these bonds. The Series 2006B bonds bear interest at a rate of 3.40% to 4.25% per annum, payable semi-annually on June 1 and December 1. Principal is due June 1, 2021. The Series 2006B bonds maturing on or after June 1, 2017 are subject to redemption prior to their respective dates of maturity, on or after June 1, 2016, at the option of the Authority, in whole or in part, at a redemption price equal to 100% of the principal amount of the Series 2006B bonds to be redeemed, plus accrued interest to the redemption date. PORT IMPROVEMENT REVENUE BONDS, SERIES 2008 On July 1, 2008, the Canaveral Port Authority issued Port Improvement Revenue Bonds, Series 2008 in the principal amount of $32,000,000 to fund various capital improvements. Gross revenues are pledged for repayment of these bonds. The Series 2008 bonds bore interest at a rate of 4.752% per annum, payable semi-annually on June 1 and December 1. Principal was due annually beginning December 1, 2008, in amounts increasing from $860,000 to $7,935,000 at final maturity in 2023. On November 15, 2013, the Series 2008 bonds were refinanced for $26,613,000. All the Series 2008 bonds now bear an interest rate of 3.10% per annum, payable semi-annually on June 1 and December 1. Principal is due semi-annually beginning December 1, 2013, in amounts increasing from $803,000 to $2,231,000 at final maturity in 2028. The difference in cash flows required to service the new debt versus the old debt is a decrease of approximately $872,416. The economic gain resulting from the refunding is $510,052. At any time up to and including June 1, 2018, the Series 2008 bonds are subject to redemption in whole or in part on any principal due date, at the option of the Authority, for 103% of the principal amount being redeemed, plus accrued interest to the redemption date. At any time after June 1, 2018, the Series 2008 bonds shall be subject to redemption in whole only, at the option of the Authority, for 100% of the principal amount being redeemed, plus accrued interest to the redemption date.


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NOTE 3: DETAIL NOTES (Continued) F. Revenue Bonds Payable (Continued) PORT IMPROVEMENT REVENUE BONDS, SERIES 2010 On December 21, 2010, the Canaveral Port Authority issued Port Improvement Revenue Bonds, Series 2010 in the principal amount of $42,000,000 to fund various capital improvements. Gross revenues are pledged for repayment of these bonds. The Series 2010 bonds bear interest at a rate of 3.144% per annum, payable semi-annually on June 1 and December 1. Principal is due annually beginning June 1, 2011, in amounts increasing from $2,702,460 to $3,798,771 at final maturity in 2023. On or prior to June 1, 2017, the Series 2010 bonds are subject to redemption upon notice prior to maturity, at election of the Issuer, as a whole at any time, or in part on any interest date, at the redemption price of 100% of the principal amount being redeemed, plus accrued interest to the redemption date, plus the cost of prepayment as laid out in the bond document. At any time after June 1, 2017, the Series 2010 bonds shall be subject to redemption upon notice prior to maturity at the election of the Issuer, as a whole at any time, or in part on an interest date, at the redemption price of 100% of the principal amount being redeemed, plus accrued interest to the redemption date. PORT REVENUE REFUNDING BONDS, SERIES 2012 On March 6, 2012, the Canaveral Port Authority issued Port Revenue Refunding Bonds, Series 2012 in the principal amount of $8,747,000 (i) to currently refund all of the Authority’s Port Improvement Revenue Refunding Bonds, Series 2002B and (ii) to pay bond issuance costs. Gross revenues are pledged for repayment of these bonds. The Series 2012 bonds bear interest at a fixed rate of 1.75% per annum, payable semi-annually on June 1 and December 1. Principal is due annually beginning June 1, 2012, in amounts increasing from $27,000 to $1,030,000 at final maturity in 2021. The Series 2012 bonds maturing on or after June 1, 2016 are subject to redemption upon notice prior to maturity, in whole or in part on any interest date payment, at a redemption price set forth below, together with accrued interest to the redemption date.

Redemption Date Redemption Price

June 1, 2016 through May 31, 2017 101% June 1, 2017 and thereafter 100%


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NOTE 3: DETAIL NOTES (Continued) F. Revenue Bonds Payable (Continued) PORT IMPROVEMENT REVENUE BONDS, SERIES 2013 On November 15, 2013, the Canaveral Port Authority issued Port Improvement Revenue Bonds, Series 2013 in the principal amount of $15,053,000 to fund the capital improvement project of a welcome center at the Cove. Gross revenues are pledged for repayment of these bonds. The Series 2013 bonds bear interest at a rate of 3.10% per annum, payable semi-annually on June 1 and December 1. Principal is due annually beginning June 1, 2014, in amounts increasing from $454,000 to $1,262,000 at final maturity in 2028. On or prior to June 1, 2018, the Series 2013 bonds are subject to redemption upon notice prior to maturity, at election of the Issuer, as a whole at any time, or in part on any interest date, at the redemption price of 100% of the principal amount being redeemed, plus accrued interest to the redemption date, plus the cost of prepayment as laid out in the bond document. At any time after June 1, 2018, the Series 2013 bonds shall be subject to redemption upon notice prior to maturity at the election of the Issuer, as a whole at any time, or in part on an interest date, at the redemption price of 100% of the principal amount being redeemed, plus accrued interest to the redemption date. PORT IMPROVEMENT REVENUE BONDS, SERIES 2014 On June 13, 2014, the Canaveral Port Authority issued Port Improvement Revenue Bonds, Series 2014 in the principal amount of $105,000,000 to fund improvements to Cruise Terminal 1. Gross revenues are pledged for repayment of these bonds. The Series 2014 bonds bear interest at a rate of 3.39% per annum, payable semi-annually on June 1 and December 1. Principal is due semi-annually beginning December 1, 2014, in amounts from $750,000 to $5,335,000 at final maturity in 2034. On or prior to June 1, 2018, the Series 2014 bonds are subject to redemption upon notice prior to maturity, at election of the Issuer, as a whole at any time, or in part on any interest date, at the redemption price of 100% of the principal amount being redeemed, plus accrued interest to the redemption date, plus the cost of prepayment as laid out in the bond document. At any time after June 1, 2018, the Series 2014 bonds shall be subject to redemption upon notice prior to maturity at the election of the Issuer, as a whole at any time, or in part on an interest date, at the redemption price of 100% of the principal amount being redeemed, plus accrued interest to the redemption date. PORT REVENUE REFUNDING BONDS, SERIES 2015 On March 3, 2015, the Canaveral Port Authority issued Port Revenue Refunding Bonds, Series 2015 in the principal amount of $11,080,000 (i) to currently refund all of the Authority’s Port Revenue


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NOTE 3: DETAIL NOTES (Continued) F. Revenue Bonds Payable (Continued) Refunding Bonds, Series 2005 and (ii) to pay bond issuance costs. Gross revenues are pledged for repayment of these bonds. The refunded bonds are considered defeased and the liability has been removed from the statement of net position. The reacquisition price exceeded the net carrying amount of the old debt by $20,730. This amount is included in the deferred loss on refunding. The Series 2015 bonds bear interest at rates ranging from 2.08% per annum, payable semi-annually on June 1 and December 1. Principal is due annually beginning June 1, 2015, in amounts increasing from $420,000 to $1,870,000 at final maturity in 2021. The Series 2015 bonds are subject to redemption prior to their respective dates of maturity, at any time, at the option of the Authority, in whole or in part, at a redemption price equal to 100% of the principal amount of the Series 2015 bonds to be redeemed, plus accrued interest to the redemption date. PORT IMPROVEMENT REVENUE BONDS, SERIES 2016A On May 26, 2016, the Canaveral Port Authority issued Port Revenue Refunding Bonds, Series 2016A in the principal amount of $24,070,000 (i) to finance various cruise terminal improvements and other capital investments previously financed using short term funds (ii) to pay bond issuance costs. Gross revenues are pledged for repayment of these bonds. The Series 2016A bonds bear interest at rates ranging from 2.35% per annum, payable semi-annually on June 1 and December 1. Principal is due annually beginning June 1, 2022, in amounts increasing from $2,100,000 to $2,695,000 at final maturity in 2031. The Series 2016A bonds are subject to redemption prior to their respective dates of maturity, at any time, at the option of the Authority, in whole or in part, at redemption price equal to 100% of the principal amount of the Series 2016A bonds to be redeemed, plus accrued interest to the redemption date subject to a “make whole provision” as described in the bond documents. PORT IMPROVEMENT REVENUE BONDS, SERIES 2016B On August 25, 2016, the Canaveral Port Authority issued Port Revenue Refunding Bonds, Series 2016B in the principal amount of $38,000,000 (i) to finance various cruise terminal improvements and other capital investments a portion of which may have been previously financed using short term funds (ii) to pay bond issuance costs. Gross revenues are pledged for repayment of these bonds.


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NOTE 3: DETAIL NOTES (Continued) F. Revenue Bonds Payable (Continued) The Series 2016B bonds bear interest at rates ranging from 2.19% per annum, payable semi-annually on June 1 and December 1. Principal is due annually beginning June 1, 2022, in amounts increasing from $1,775,000 to $5,040,000 at final maturity in 2031. The Series 2016B bonds are subject to redemption prior to their respective dates of maturity, at any time, at the option of the Authority, in whole or in part, at redemption price equal to 100% of the principal amount of the Series 2016B bonds to be redeemed, plus accrued interest to the redemption date. FUTURE MATURITIES Future maturities requirements for all outstanding revenue bonds payable as of September 30, 2016 are as follows: Principal Interest Total 2017 $ 11,936,854 $ 7,171,886 $ 19,108,740 2018 12,206,043 6,992,900 19,198,943 2019 14,010,350 6,605,595 20,615,945 2020 14,344,873 6,167,299 20,512,172 2021 14,696,715 5,718,191 20,414,906 2022 to 2026 66,085,748 22,576,549 88,662,297 2027 to 2031 82,186,000 12,120,699 94,306,699 2032 to 2034 30,960,000 1,860,347 32,820,347

Total $ 246,426,583 $ 69,213,466 $ 315,640,049

The total future principal and interest on all the bonds is $315,640,049 and the current principal and interest is $19,108,739. The current pledged revenue is $85,478,213. The current principal and interest due is 22.4% of current pledged revenue. The bonds may be redeemed at the option of the Authority. G. Note Payable During 2007, the Authority entered into a $1,000,000 note payable agreement related to the purchase of certain capital assets. Monthly repayments of $11,102 are required for 120 months, which include interest at a fixed rate of 6%. The note matures on July 1, 2017. Future maturities for the note payable, as of September 30, 2016, are as follows:

Principal Interest Total2017 108,027$ 2,993$ 111,020$

Total 108,027$ 2,993$ 111,020$


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H. Line of Credit

On March 2, 2015, the Authority authorized entering into an agreement with a bank for a line of credit not to exceed $30,000,000. On December 16, 2015 the Authority authorized an increase in the line of credit to $50,000,000. The line of credit matures December 15, 2017 and contains a provision for a one year automatic renewal. The interest rate on the debt is the highest of the: (i) the bank’s prime rate, (ii) Daily LIBOR + 100 basis points or (iii) Federal Funds Open Rate + 50 basis points. The interest rate as of September 30, 2015 was based on the 1-month LIBOR rate plus 75 basis points and was 1.28%. The balance at September 30, 2016 and 2015 was $31,023,249 and $11,404,709, respectively. I. Changes in Long-Term Liabilities Long-term liability activity for the years ended September 30, 2016 and 2015 was as follows:

Balance October

1,2015 Additions Reductions

Balance September 30,

2016 Due Within

One Year Revenue bonds payable $ 197,421,272 $ 62,070,000 $ (13,064,689) $ 246,426,583 $ 11,936,854 Less deferred amounts:

For issuance discounts (51,293) - 51,293 - - For issuance premiums - - - - -

Note payable 230,745 - (122,718) 108,027 108,027 Compensated absences 586,655 27,074 - 613,729 7,130 Net OPEB liability 1,591,000 113,000 - 1,704,000 - Other liabilities, long-term 1,335,488 - (160,103) 1,175,385 173,511 Project insurance liability 284,130 532,487 - 816,617 - Net pension liability 392,927 123,655 - 516,582 -

Long-term liabilities $ 201,790,924 $ 62,866,216 $ (13,296,217) $ 251,360,923 $ 12,225,522

Balance October

1, 2014 Additions Reductions

Balance September 30,

2015 Due Within

One Year Revenue bonds payable $ 209,553,726 $ 11,080,000 $ (23,212,454) $ 197,421,272 $ 13,064,689 Less deferred amounts:

For issuance discounts (68,247) - 16,954 (51,293) - For issuance premiums 124,930 - (124,930) - -

Note payable 346,335 - (115,590) 230,745 122,718 Compensated absences 489,987 96,668 - 586,655 305 Net OPEB liability 1,488,000 103,000 - 1,591,000 - Other liabilities, long-term 1,551,538 - (216,050) 1,335,488 812,988 Project insurance liability 284,130 - - 284,130 - Net pension liability 283,048 109,879 - 392,927

Long-term liabilities $ 214,053,447 $ 11,389,547 $ (23,652,070) $ 201,790,924 $ 14,000,700


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NOTE 3: DETAIL NOTES (Continued) J. Restricted Net Position The following schedule lists the amounts of net position that are restricted as of September 30, 2016 and 2015, in accordance with the provisions of the respective bond indentures. These amounts represent restricted assets less certain current liabilities payable from restricted assets included in the various debt service, reserve, bond and interest sinking fund accounts. 2016 2015 Restricted for Future Debt Service

Series 2006A $ 1,691,500 $ 1,691,500 Series 2006B 133,000 133,000

Total debt service restrictions $ 1,824,500 $ 1,824,500

K. Retirement Plan Florida Retirement System: General Information - The Authority participates in the Florida Retirement System (the “System”). Generally, membership is compulsory for all full time and part time employees hired prior to January 1, 1996. The employer paid all contributions through June 30, 2011. Effective July 1, 2011, employees were required to contribute 3% of gross salary. As provided by Chapters 121 and 112, Florida Statutes, the FRS provides two cost sharing, multiple employer defined benefit plans administered by the Florida Department of Management Services, Division of Retirement, including the FRS Pension Plan (“Pension Plan”) and the Retiree Health Insurance Subsidy (“HIS Plan”). Under Section 121.4501, Florida Statutes, the FRS also provides a defined contribution plan (“Investment Plan”) alternative to the FRS Pension Plan, which is administered by the State Board of Administration (“SBA”). As a general rule, membership in the FRS is compulsory for all employees working in a regularly established position for a state agency, Authority government, district school board, state university, community college, or a participating city or special district within the State of Florida. The FRS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Benefits are established by Chapter 121, Florida Statutes, and Chapter 60S, Florida Administrative Code. Amendments to the law can be made only by an act of the Florida State Legislature. The State of Florida annually issues a publicly available financial report that includes financial statements and required supplementary information for the FRS. The latest available report may be obtained by writing to the State of Florida Division of Retirement, Department of Management Services, P.O. Box 9000, Tallahassee, Florida 32315-9000, or from the Web site: www.dms.myflorida.com/workforce_operations/retirement/publications.


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K. Retirement Plan (Continued)

Pension Plan

Plan Description – The Pension Plan is a cost-sharing multiple-employer defined benefit pension plan, with a Deferred Retirement Option Program (“DROP”) for eligible employees.

Benefits Provided - Benefits under the Pension Plan are computed on the basis of age, average final compensation, and service credit. For Pension Plan members enrolled before July 1, 2011, Regular class members who retire at or after age 62 with at least six years of credited service or 30 years of service regardless of age are entitled to a retirement benefit payable monthly for life, equal to 1.6% of their final average compensation based on the five highest years of salary, for each year of credited service. Vested members with less than 30 years of service may retire before age 62 and receive reduced retirement benefits. Special Risk Administrative Support class members who retire at or after age 55 with at least six years of credited service or 25 years of service regardless of age are entitled to a retirement benefit payable monthly for life, equal to 1.6% of their final average compensation based on the five highest years of salary, for each year of credited service. Special Risk class members (sworn law enforcement officers, firefighters, and correctional officers) who retire at or after age 55 with at least six years of credited service, or with 25 years of service regardless of age, are entitled to a retirement benefit payable monthly for life, equal to 3.0% of their final average compensation based on the five highest years of salary for each year of credited service. Senior Management Service class members who retire at or after age 62 with at least six years of credited service or 30 years of service regardless of age are entitled to a retirement benefit payable monthly for life, equal to 2.0% of their final average compensation based on the five highest years of salary for each year of credited service. Elected Officers’ class members who retire at or after age 62 with at least six years of credited service or 30 years of service regardless of age are entitled to a retirement benefit payable monthly for life, equal to 3.0% (3.33% for judges and justices) of their final average compensation based on the five highest years of salary for each year of credited service.

For Plan members enrolled on or after July 1, 2011, the vesting requirement is extended to eight years of credited service for all these members and increasing normal retirement to age 65 or 33 years of service regardless of age for Regular, Senior Management Service, and Elected Officers’ class members, and to age 60 or 30 years of service regardless of age for Special Risk and Special Risk Administrative Support class members. Also, the final average compensation for all these members will be based on the eight highest years of salary.

As provided in Section 121.101, Florida Statutes, if the member is initially enrolled in the Pension Plan before July 1, 2011, and all service credit was accrued before July 1, 2011, the annual cost-of- living adjustment is three percent per year. If the member is initially enrolled before July 1, 2011, and has service credit on or after July 1, 2011, there is an individually calculated cost-of-living adjustment. The annual cost-of-living adjustment is a proportion of three percent determined by dividing the sum of the pre-July 2011 service credit by the total service credit at retirement multiplied by three percent. Plan members initially enrolled on or after July 1, 2011, will not have a cost-of-living adjustment after retirement.


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NOTE 3 - DETAIL NOTES (Continued) K. Retirement Plan (Continued) In addition to the above benefits, the DROP program allows eligible members to defer receipt of monthly retirement benefit payments while continuing employment with a FRS employer for a period not to exceed 60 months after electing to participate. Deferred monthly benefits are held in the FRS Trust Fund and accrue interest. There are no required contributions by DROP participants. Contributions – Effective July 1, 2011, all enrolled members of the FRS, other than DROP participants, are required to contribute three percent of their salary to the FRS. In addition to member contributions, governmental employers are required to make contributions to the FRS based on state-wide contribution rates established by the Florida Legislature. These rates are updated as of July 1 of each year. Employer contribution rates ranged from 7.26% to 12.88% during 2016, 7.26% to 12.88% during 2015 and 7.37% to 12.28% during 2014. The amount of covered payroll for the years ended September 30, 2016, 2015 and 2014 was $517,920, $527,368 and $567,320, respectively. The Authority’s contributions to the System for the three years ended September 30, 2016, 2015 and 2014 were $39,942, $43,828 and $47,462, respectively and are equal to the required contributions for each year. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions – At September 30, 2016 and 2015, the Authority reported a liability of $327,425 and $208,521, respectively, for its proportionate share of the Pension Plan’s net pension liability. The net pension liability was measured as of June 30, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2016. The Authority’s proportionate share of the net pension liability was based on the Authority’s 2015-16 fiscal year contributions relative to the 2014-15 fiscal year contributions of all participating members. At June 30, 2016, the Authority's proportionate share was .0013 percent, which was a decrease of .0003 percent from its proportionate share measured as of June 30, 2015. For the fiscal year ended September 30, 2016 and 2015, the Authority recognized pension expense of $35,182 and a pension benefit of $10,417 respectively. In addition the Authority reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:


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NOTE 3 - DETAIL NOTES (Continued) K. Retirement Plan (Continued)

Deferred Outflows

Deferred Inflows

September 30, 2016 of Resources of Resources Differences between expected and

actual experience $ 25,070 $ 3,049

Changes of assumptions 19,808

Net differences between projected and actual earnings on Pension Plan investments 84,635

-

Changes in proportion and differences between Authority Pension Plan contributions and proportionate share of contributions 12,376

52,283

Authority Pension Plan contributions subsequent to the measurement date 8,123 -

$ 150,012 $ 55,332

Deferred Outflows

Deferred Inflows

September 30, 2015 of Resources of Resources Differences between expected and

actual experience $ 22,014 $ 4,946


-

Net differences between projected and actual earnings on Pension Plan investments -

49,792

Changes in proportion and differences between Authority Pension Plan contributions and proportionate share of contributions 16,126

17,906

Authority Pension Plan contributions subsequent to the measurement date 6,741 -

$ 58,721 $ 72,644


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The deferred outflows of resources related to the Pension Plan, totaling $8,123 and $6,741 for the years ending September 30, 2016 and 2015, respectively, resulting from Authority contributions to the Plan subsequent to the measurement date, will be recognized as a decrease in net pension liability in the subsequent fiscal years. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to the Pension Plan will be recognized in pension expense as follows:

Fiscal Year Ending September 30, Amount

2017

$ 11,085 2018

11,085

2019

43,966 2020

24,900

2021

(2,946) Thereafter

(1,533)

Total

$ 86,557

Actuarial Assumptions – The total pension liability in the June 30, 2016 and 2015 actuarial valuation was determined using the following actuarial assumption, applied to all period included in the measurement:

Inflation 2.60 % Salary increases 3.25%, average, including inflation Investment rate of return 7.60% (2016) and 7.65% (2015), net of pension plan

investment including inflation

Mortality rates were based on the Generational RP-2000 with Projection Scale BB tables.

The actuarial assumptions used in the July 1, 2016 and 2015, valuation were based on the results of an actuarial experience study for the period July 1, 2008 through June 30, 2013.

The long-term expected rate of return on Pension Plan investments was not based on historical returns, but instead is based on a forward-looking capital market economic model. The allocation policy’s description of each asset class was used to map the target allocation to the asset classes shown below. Each asset class assumption is based on a consistent set of underlying assumptions and includes an adjustment for the inflation assumption. The target allocation and best estimates of arithmetic and geometric real rates of return for each major asset class are summarized in the following table:


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Compound

Annual Annual

Target Arithmetic (Geometric Standard Asset Class Allocation (1) Return Return) Deviation

Cash 1% 3.0% 3.00% 1.70% Fixed Income 18% 4.7% 4.60% 4.60% Global Equity 53% 8.1% 6.80% 17.20% Real Estate 10% 6.4% 5.80% 12.00% Private Equity 6% 11.5% 7.80% 30.00% Strategic Investments 12% 6.1% 5.60% 11.10%

100%

Assumed Inflation - Mean

2.60% 1.90%

(1) As outlined in the Pension Plan's investment policy

Discount Rate - The discount rate used to measure the total pension liability was 7.60%. The Pension Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the discount rate for calculation of the total pension liability is equal to the long-term expected rate of return.

Sensitivity of the Authority’s Proportionate Share of the Net Position Liability to Changes in the Discount Rate - The following represents the Authority’s proportionate share of the net pension liability calculated at September 30, 2016 and 2015 using the discount rate of 7.60% and 7.65%, respectively. If the Authority’s proportionate share of the net pension liability using a discount rate that is one percentage point lower or one percentage point higher than the current rate, the effect of that is reflected in the table below:

Current

1% Decrease Discount Rate 1% Increase September 30, 2016 (6.60%) (7.60%) (8.60%) Authority's proportionate share of

the net pension liability $ 602,811 $ 327,425 $ 98,202

Current


the net pension liability $ 540,325 $ 208,521 $ (67,594)


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NOTE 3: DETAIL NOTES (Continued) K. Retirement Plan (Continued Pension Plan Fiduciary Net Position – Detailed information regarding the Pension Plan’s fiduciary net position is available in the separately issued FRS Pension Plan and Other State-Administered Systems Comprehensive Annual Financial Report. HIS Plan

Plan Description – The HIS Plan is a cost-sharing multiple-employer defined benefit pension plan established under Section 112.363, Florida Statutes, and may be amended by the Florida legislature at any time. The benefit is a monthly payment to assist retirees of State-administered retirement systems in paying their health insurance costs and is administered by the Florida Department of Management Services, Division of Retirement.

Benefits Provided – For the fiscal year ended September 30, 2016 and 2015, eligible retirees and beneficiaries received a monthly HIS payment of $5 for each year of creditable service completed at the time of retirement, with a minimum HIS payment of $30 and a maximum HIS payment of $150 per month. To be eligible to receive these benefits, a retiree under a State-administered retirement system must provide proof of health insurance coverage, which may include Medicare.

Contributions – The HIS Plan is funded by required contributions from FRS participating employers as set by the Florida Legislature. Employer contributions are a percentage of gross compensation for all active FRS members. For the fiscal year ended September 30, 2016 and 2015, the HIS contribution for the period October 1, 2013 through June 30, 2014, October 1, 2014 through June 30, 2015 and from October 1, 2015 through September 30, 2016 was 1.20%, 1.26% and 1.66%, respectively. For both years the Authority contributed 100% of its statutorily required contributions for the current and preceding three years. HIS Plan contributions are deposited in a separate trust fund from which payments are authorized. HIS Plan benefits are not guaranteed and are subject to annual legislative appropriation. In the event legislative appropriation or available funds fail to provide full subsidy benefits to all participants, benefits may be reduced or cancelled.

The Authority’s contributions to the HIS Plan totaled $8,319 and $6,456 for the fiscal year ended September 30, 2016 and 2015, respectively.

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions – At September 30, 2016 and 2015, the Authority reported a liability of $189,157 and $184,406, respectively, for its proportionate share of the HIS Plan’s net pension liability. The net pension liability was measured as of June 30, 2015 and June 30, 2014, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2016 and July 1, 2015. The Authority’s proportionate share of the net pension liability was based on the Authority’s 2015-16 and 2014-15 fiscal year contributions relative to the 2015-16 and 2014-15 fiscal year contributions of all participating members.


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NOTE 3 - DETAIL NOTES (CONTINUED) K. Retirement Plan (Continued) At June 30, 2016, the Authority's proportionate share was .0016 percent, which was a decrease of .0002 percent from its proportionate share measured as of June 30, 2015. At June 30, 2015, the Authority’s proportionate share was .0018 percent which was a decrease of .0001 percent from its proportionate share measured as of June 30, 2014. For the fiscal year ended September 30, 2016 and 2015, the Authority recognized pension expense of $10,417 and $11,134, respectively. In addition the Authority reported deferred outflows of resources and deferred in flows of resources related to pensions from the following sources:

Deferred Outflows

Deferred Inflows

September 30, 2016 of Resources of Resources Difference between expected and actual experience $ -

$ 431


-

Net differences between projected and actual earnings on HIS Plan investments 96

-

Changes in proportion and differences between Authority HIS Plan contributions and proportionate share of contributions 549

19,952

Authority HIS Plan contributions subsequent to the measurement date 2,057 -

$ 30,328 $ 20,383

Deferred Outflows

Deferred Inflows

September 30, 2015 of Resources of Resources Changes of assumptions $ 14,508

$ -

Net differences between projected and actual earnings on HIS Plan investments 101

-

Changes in proportion and differences between Authority HIS Plan contributions and proportionate share of contributions 681

5,938

Authority HIS Plan contributions subsequent to the measurement date 1,777 -

$ 17,067 $ 5,938


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NOTE 3: DETAIL NOTES (Continued) K. Retirement Plan (Continued) The deferred outflows of resources related to the HIS Plan, totaling $2,057 and $1,777 for the years ending September 30, 2016 and 2015, respectively, resulting from Authority contributions to the HIS Plan subsequent to the measurement date, will be recognized as a reduction of the net pension liability in the subsequent fiscal years ended September 30, 2017. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to the HIS Plan will be recognized in pension expense as follows:

Fiscal Year Ending September 30, Amount

2017

$ 1,527 2018

1,527

2019

1,527 2020

1,527

2021

1,054 Thereafter

726

Total

$ 7,888

Actuarial Assumptions – The total pension liability in the July 1, 2016 and 2015, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation 2.60 % Salary increases 3.25%, average, including inflation Municipal bond rate 2.85%

Mortality rates were based on the Generational RP-2000 with Projection Scale BB tables. The actuarial assumptions used in the July 1, 2016 and 2015, valuation were based on the results of an actuarial experience study for the period July 1, 2008 through June 30, 2013. Discount Rate - The discount rate used to measure the total pension liability was 2.85%. In general, the discount rate for calculating the total pension liability is equal to the single rate equivalent to discounting at the long-term expected rate of return for benefit payments prior to the projected depletion date. Because the HIS benefit is essentially funded on a pay-as-you-go basis, the depletion date is considered to be immediate, and the single equivalent discount rate is equal to the municipal bond rate selected by the HIS Plan sponsor. The Bond Buyer General Obligation 20-Bond Municipal Bond Index was adopted as the applicable municipal bond index.


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NOTE 3: DETAIL NOTES (Continued) K. Retirement Plan (Continued) Sensitivity of the Authority’s Proportionate Share of the Net Position Liability to Changes in the Discount Rate - The following represents the Authority’s proportionate share of the net pension liability calculated at September 30, 2016 and 2015 using the discount rate of 7.60% and 4.29%, respectively. If the Authority’s proportionate share of the net pension liability using a discount rate that is one percentage point lower or one percentage point higher than the current rate, the effect of that is reflected in the table below:

Current


the net pension liability $ 217,006 $ 189,157 $ 166,044

Current


the net pension liability $ 210,122 $ 184,406 $ 162,963 Pension Plan Fiduciary Net Position - Detailed information regarding the HIS Plan’s fiduciary net position is available in the separately issued FRS Pension Plan and Other State-Administered Systems Comprehensive Annual Financial Report. L. Defined Contribution Plan Effective January 1, 1996, the Authority adopted Resolution 96-12, pursuant to 95-338 Laws of Florida, whereby the Authority revoked its participation in the System and established the Canaveral Port Authority Defined Contribution Plan and Trust (the “Plan”) for employees hired after January 1, 1996. The Plan is administered by the Authority as a Qualified Retirement Plan as defined by Section 401 (a) of the Internal Revenue Service Code. Plan provisions and contribution requirements are established and may be amended by the Board of Commissioners. The Authority contributes 10.77% of the employees’ eligible compensation to the Plan; employee contributions to the Plan are not permitted. The amount of covered payroll by the Plan for the years ended September 30, 2016 and 2015 was $9,901,799 and $8,497,008, respectively. The amount of retirement expense related to the Plan for the years ended September 30, 2016 and 2015 was $1,066,424 and $905,441, respectively.


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NOTE 3: DETAIL NOTES (Continued) M. Other Postemployment Benefits The Authority follows GASB Statement No. 45, Accounting and Reporting by Employers for Postemployment Benefits Other than Pensions (OPEB), for certain postemployment health care benefits provided by the Authority. Plan description. The Authority administers a single-employer defined benefit healthcare plan (the “Healthcare Plan”) that provides health care benefits including medical coverage and prescription drug benefits to its employees and their eligible dependents. Pursuant to Section 112.0801 Florida Statutes, the Authority is required to provide eligible retirees (as defined in the Authority’s ordinances) the opportunity to participate in this Healthcare Plan at the same cost that is applicable to active employees. Employees who are active participants in the Healthcare Plan at the time of retirement and are either age 62 with completion of six years of service or have 30 years of service are eligible to receive benefits. The Healthcare Plan has 17 retirees and spouses receiving benefits and has a total of 190 active participants and dependents. Of that total, 152 are not yet eligible to receive benefits. Benefit provisions can only be amended by the Board of Commissioners of the Authority. The Board approves the Authority’s annual budget and, therefore, indirectly approves the annual costs associated with the Healthcare Plan. The Authority has not established a trust or agency fund for the Healthcare Plan. The Authority does not issue standalone financial statements for the Healthcare Plan. All financial information related to the Healthcare Plan is accounted for in the Authority’s basic financial statements. Funding policy. The Authority is funding the Healthcare Plan on a pay-as-you-go basis. The annual premium costs are between $9,660 and $22,869 for retirees and spouses under age 65 and between $2,028 and $3,552 for retirees and spouses over age 65. Employees who retired from the Authority prior to October 1, 2014, elected medical insurance plan coverage under either the employee group medical insurance plan or the Medicare-eligible medical insurance plan with the majority of cost incurred by the retiree. The Authority may subsidize a portion of the premium cost based on retiree only vs. retiree/spouse/family elections and increased costs of the Medicare-eligible Point of Service (POS) and employee group insurance coverage premiums. Employees and Commissioners who retire after October 1, 2014, will be able to elect medical insurance coverage under either the employee medical insurance plan or the Medicare-eligible medical insurance plan per the guidelines set in policy outlined vesting schedule, cost share and age limitations for both employees and Commissioners. For the years ended September 30, 2016 and 2015, the contributions made by the Authority were $29,000 and $29,000, respectively, which includes both an estimate of the implied subsidy described above and the explicit subsidy paid on behalf of eligible retirees.


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M. Other Postemployment Benefits (Continued)

Annual OPEB cost and net OPEB obligation. The Authority’s annual OPEB cost (expense) is calculated based on the annual required contribution ("ARC") of the employer, an amount actuarially determined in accordance with the parameters of GASB 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortize any unfunded actuarial accrued liabilities (or funding excess) over a period not to exceed 30 years. The following table shows the components of the Authority’s annual OPEB cost for the last three fiscal years, the amount actually contributed to the Healthcare Plan, and changes in the Authority’s net OPEB obligation to the Healthcare Plan:

September 30, 2014 2015 2016 Annual required contribution $ 491,000 $ 249,000 $ 268,000 Interest on net OPEB obligation 47,000 60,000 64,000 Adjustment to annual required contribution (138,000) (176,000) (189,000)

Annual OPEB cost (expense) 400,000 133,000 143,000 Contributions made (75,000) (29,000) (29,000) Interest on employer contributions (1,000) (1,000) (1,000)

Increase in net OPEB obligation 324,000 103,000 113,000 Net OPEB obligation – beginning of year 1,164,000 1,488,000 1,591,000 Net OPEB obligation – end of year $ 1,488,000 $ 1,591,000 $ 1,704,000

The Authority’s annual OPEB cost, the percentage of annual OPEB cost contributed to the Healthcare Plan, and the net OPEB obligation for the fiscal years ending September 30, 2016, 2015 and 2014, were as follows:

Year Ending Annual OPEB Cost

Percentage of Annual OPEB Cost

Contributed Net OPEB Obligation September 30, 2016 $ 143,000 21% $ 1,704,000 September 30, 2015 133,000 22% 1,591,000 September 30, 2014 400,000 19% 1,488,000

Funded status and funding progress. Because the Authority has greater than 200 members in the prior year, the Authority is required to obtain an actuarial valuation at least every two years. The most recent actuarial valuation was performed as of October 1, 2015. Accordingly, the Authority will be required to obtain a subsequent actuarial valuation within two years of that date. As of the October 1, 2015 valuation, the actuarial accrued liability for benefits for the Authority was $915,000 all of which was unfunded. The covered payroll (annual payroll of active employees covered by the Healthcare Plan) was approximately $9,345,000, and the ratio of unfunded actuarial accrued liability ("UAAL") to the covered payroll was 9.8%.


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NOTE 3: DETAIL NOTES (Continued) M. Other Postemployment Benefits (Continued) Actuarial valuations for an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Actuarially determined amounts are subject to continuous revision as actual results are compared to past expectations and new estimates about the future are formulated. Although the valuation results reflect a long-term perspective and, as such, are merely an estimate of what future costs may be, deviations in any of several factors, such as future interest rates, medical cost inflation, Medicare coverage and changes in marital status, could result in actual costs being less or greater than estimated. The schedule of funding progress presented as required supplementary information following the notes to the financial statements, will present multi-year 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. Fiscal year 2009 was the first year of implementation of GASB Statement No. 45. The Authority elected to apply the statement prospectively. Actuarial methods and assumptions. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) 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 the effects of 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, 2015 actuarial valuation, the projected unit credit cost method was used. The actuarial assumptions included a 4.0% investment rate of return (including inflation of 2.75%) and an annual healthcare cost trend rate of 8% initially, reduced by decrements to an ultimate rate of 5.5% after seven years. The actuarial methods and assumptions used 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. The UAAL is being amortized using a level-dollar payment method over a 10 year open period.


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N. Leasing and Operating Agreement Arrangements with Authority as Lessor

The Authority leases land and enters into marine terminal facilities agreements with various businesses throughout the Port Authority area. All of the leases and agreements are accounted for as operating leases and agreements. Revenue from leases and agreements was $5,588,459 for 2016 and $5,069,270 for 2015. Future lease payments to be received are as follows: 2017 $ 5,733,759 2018 5,196,008 2019 4,940,920 2020 4,672,689 2021 4,534,965 2022 to 2026 19,732,511 2027 to 2031 15,098,169 2032 to 2036 13,779,259 2037 to 2041 6,902,894 2042 to 2046 4,478,291 2047 to 2051 894,542 2052 to 2056 144,420 2057 to 2061 144,420 2062 to 2066 115,390

Total $ 86,368,237

O. Major Customers

Gross revenues from three cruise line companies totaled $17,193,579, $15,693,378 and $15,356,510 in 2016. At September 30, 2016, the outstanding trade accounts receivable balances of these three cruise line companies amounted to $1,310,452, $1,305,192 and $1,452,504

Gross revenues from three cruise line companies totaled $17,209,609, $12,910,561 and $12,920,024 in 2015. At September 30, 2014, the outstanding trade accounts receivable balances of these three cruise line companies amounted to $1,540,977, $1,063,239 and $1,445,629.

P. Risk Management

The Authority purchases commercial insurance to cover risk of loss for general liability, property and casualty, worker’s compensation, auto coverage, comprehensive crime and flood and fire.

The Authority bases its need for commercial insurance on “An Analysis of Risk Exposures to Natural Hazards” prepared by the Authority's engineering consulting firm. This analysis showed the Authority has limited exposure in the area of piers and bulkheads and therefore the costs of carrying such insurance do not outweigh the benefits. The Authority is, in essence, insuring itself in these areas. In the past three years, there have been no claims settled exceeding the Authority's insurance coverage. As of September 30, 2016 and 2015, there were no outstanding claims.


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NOTE 3: DETAIL NOTES (Continued) Q. Capital Contributions For the years ending September 30, 2016, and 2015, the Authority recognized capital contributions of $6,634,056 and $27,832,677, respectively, composed primarily of federal and state grants used for various capital projects. NOTE 4: COMMITMENTS AND CONTINGENCIES A. Construction Commitments for the repair, modification, improvements, materials and new construction of Port Authority owned property at September 30, 2016 totaled approximately $37,000,000. B. Marine Terminal Leases During 2008, the Authority entered into a marine terminal lease agreement with a commercial cruise line company, whereby the cruise line company will offer new passenger cruise services initiating from the Canaveral Port Authority. The agreement requires a commitment from the cruise line company through December 31, 2022. The agreement requires the Authority to complete cruise terminal improvements, including dock extension, gangway modifications and an additional parking garage. The estimated costs of such improvements were approximately $22,000,000. The improvements were completed by December 31, 2010. In return, the cruise line company guaranteed repayment to the Authority over the life of the agreement, in an amount equal to the cost of the improvements, via a passenger facility charge to be charged by the cruise line company. This repayment is considered as revenues from the cruise line. The Authority bills the cruise line based on passenger count until the entire cost of the improvements plus interest is recovered. It is anticipated that the entire cost of the improvements will be recovered in FY2017. In the event that passenger count is insufficient, the cruise line will reimburse the Authority for the unreimbursed costs. During fiscal years 2016, and 2015, the Authority collected $4,506,043 and $4,558,295 in passenger facility charges, respectively, under this agreement. During 2014, the Authority entered into a marine terminal lease agreement with a commercial cruise line company. The agreement requires a commitment from the cruise line company through March 30, 2024. The agreement requires the Authority to construct a new cruise terminal, including building, landside, waterside, gangway and parking garage. The estimated cost of the new construction including related relocation of existing infrastructure was $111 million. The new construction was completed and the facility received its first cruise passenger ship in December 2014. The cruise line company guaranteed repayment of the cost of the cruise terminal building, an agreed $48.5 million, plus the debt service interest. This repayment is considered as revenues from the cruise line. The cruise line’s guarantee to the Authority is based on a certain number of ships calling at the Authority’s terminals annually. The repayment is to be spread over the life of the agreement which is ten years. The repayment agreement went into effect April 1, 2015. During fiscal years 2016 and 2015, the Authority collected $5,870,106 and $2,946,096 in passenger facility charges under this agreement which is a reduction of the $48.5 million guaranteed to the Authority.


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NOTE 4: COMMITMENTS AND CONTINGENCIES (Continued) B. Marine Terminal Leases, continued Revenue from these cruise contracts is reported in the Statements of Revenues, Expenses and Changes in Net Position under Operating revenues. C. Litigation The Authority is named as a defendant in various lawsuits. The outcome of the lawsuits is not determinable at this time. It is the opinion of management and of the Authority’s legal counsel that the resolution of these matters will not have a material adverse effect on the financial condition of the Authority. D. Employment Agreement On January 20, 2016, the Port entered into a three year, with successive one year options for extension by the Board, agreement with a new CEO commencing February 15, 2016. The agreement between the Board of Commissioners of the Authority (the “Board”) and the Chief Executive Officer (CEO) provides for termination benefits. If the Board terminates its agreement with the CEO without cause, the Board shall continue to pay his then current base salary and supplemental deferred income benefits for a period of twenty weeks from the date of termination as an agreed upon severance payment and pay for employee and family coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 for a period of six months. In the event the CEO terminates his employment agreement or the Board terminates its agreement with the CEO for cause, the Board shall have no further obligation to the CEO other than for base salary and benefits accrued and/or earned to the date of termination. E. Grants Programs The Authority participates in Federal and state assisted grant programs that are subject to review and audit by the grantor agencies. Entitlement to these resources is general conditional upon compliance with the terms and conditions of the grant agreements and applicable federal and state regulations. Any disallowance resulting from a regulatory audit may become a liability to the Authority. Assessments from such audits, if any, are recorded when the amounts of such assessments become reasonably determinable. NOTE 5: SPECIAL ITEM In September 2014, the Canaveral Port Authority executed an agreement with the Brevard County Sheriff’s Department to provide seaport security and law enforcement services on behalf of the Canaveral Port Authority. The three year agreement commenced on October 1, 2014 and requires the Sheriff to provide services in compliance with the Standing Port Security Plan and encompasses duties and functions under the jurisdiction of and customarily rendered by the Sheriff pursuant to Florida Statutes. The agreement included provisions that both parties will agree on the contract


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NOTE 5: SPECIAL ITEM (Continued) amount every 12 months. The Sheriff’s department is responsible for security at each cruise terminal, parking lots and garages, debarkation and embarkation processing, assistance to the U.S. Customs and Border Protection agency and concealed weapons enforcement. Also included in the agreement are marine services including waterside security sweeps, vessel escort and zone enforcement as well as special event staffing. For fiscal year 2016, the Authority agreed to a contract amount of $5,688,000 and will be paid in twelve equal monthly installments beginning on October 1, 2015. During fiscal year 2015, Canaveral Port Authority determined that furniture and fixtures, transportation equipment and operational software should be transferred to the Sheriff’s department. Canaveral Port Authority transferred assets with acquisition costs of $2.7M and a net book value of $421,690. NOTE 6: FUTURE ACCOUNTING PRONOUNCEMENTS The Government Accounting Standards Board has issued statements that will become effective in 2017. The statements address:

• Accounting and financial reporting for postemployment benefits other than pensions • Accounting for certain asset retirement obligation

The Authority is currently evaluating the effects that these statements will have on its 2017 and 2018 financial statements.

NOTE 7: SUBSEQUENT EVENTS On October 5-6, 2016 Hurricane Matthew passed east of Port Canaveral as a Category 3 storm with sustained winds of 120 MPH. Port Canaveral sustained damages to property, loss of income due to port closure, and excess costs associated with storm preparations and labor totaling an estimated $5.2 million. Insurance coverage in place carries a deductible of 2% with a maximum of $750,000. Under FEMA regulations we may be eligible to recuperate uninsured damages including storm preparation/recovery labor costs, mitigation fees to upgrade to stronger facilities, and insurance deductibles. Additionally, the Port sustained shoaling of 4-6 feet at the entrance of the port channel as a result of Hurricane Matthew. This shoaling was evaluated by third party surveyors and compared to current surveys on file and deemed that it was not a direct hazard to maritime vessels but would require additional maintenance dredging. It is estimated that the cost to dredge the entrance to remove the shoaling totals approximately $2.5 million and is included in the total estimated damages of $5.2 million. A Continuing Resolution for funding related to natural disasters including


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NOTE 7: SUBSEQUENT EVENTS (Continued) Hurricane Matthew was passed by the Federal Government in 2016. Project Managers are currently working with the Army Corp of Engineers to secure funding to pay for maintenance dredging to return the channel to its authorized project depth of -46 MLW at no cost to the Port. The Authority issued two separate emergency $2 million purchase orders under two continuing contracts to allow for immediate repairs resulting from Hurricane Matthew. On November 15, 2016, the Authority issued $37,450,000 of Port Improvement and Refunding Revenues Bonds, Series 2016C. The Series 2016C Bonds were subject to alternative minimum tax and carried a weighted average interest rate of 3.98% with the last maturity date being June 1, 2046. Principal is due annually beginning September 30, 2017, in varying amounts from $250,000 to $2,650,000 at final maturity in 2046. The proceeds from the Series 2016C issue were utilized to extinguish the Series 2006A bonds, complete the permanent financing for renovation of three cruise terminals, a portion of which were financed on Authority’s line of credit. Proceeds were also used to complete a road project and building renovation and are currently under construction. The Authority used available funds from cash on hand to extinguish the Series 2006B Bonds. Also on November 15, 2016, the Authority issued $27,145,000 of Port Improvement Revenue Bonds, Series 2016D. The Series 2016D taxable bonds carried a weighted average interest rate of 4.26% with the last maturity date being June 1, 2046. Principal is due annually beginning September 30, 2032, in varying amounts from $1,300,000 to $2,440,000 at final maturity in 2046. The proceeds from the Series 2016D were utilized to provide permanent financing for building renovations, road improvements including signage, vehicle staging areas and a completed fuel pipeline serving the Authority’s south side berths. All projects are currently under construction or the design phase, with the exception of the completed pipeline, and are anticipated to be placed in service during fiscal years 2017 and 2018. On December 20, 2016 the Authority’s Board of Commissioners approved as $8.4 million contract with a dredging company to begin work on the West Turning Basin deepening project. The contract is a reimbursable contract with the state transportation department with the Authority required to pay 25% of the costs. Work is expected to begin in the first quarter of 2017.

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REQUIRED SUPPLEMENTARY INFORMATION

Canaveral Port Authority Schedule of Proportionate Share of Net Pension Liability

Ten Years

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Florida Retirement System (FRS)*

2016 2015 2014

Authority's proportion of the net pension liability 0.001296727% 0.001614396% 0.001750831%

Authority's proportionate share of the net pension liability $ 327,425 $ 208,521 $ 106,826

Authority's covered-employee payroll $ 517,920 $ 527,368 $ 567,320

Authority's proportionate share of the net pension liability as a percentage of its covered-employee payroll 63.22% 39.54% 18.83%

Plan fiduciary net position as a percentage of the total pension liability (Note 2) 84.88% 92.00% 96.09%

Health Insurance Subsidy (HIS)*

2016 2015 2014

Authority's proportion of the net pension liability 0.00162302% 0.00180818% 0.00188468%

Authority's proportionate share of the net pension liability $ 189,157 $ 176,222 $ 184,406


Authority's proportionate share of the net pension liability as a percentage of its covered-employee payroll 36.52% 33.42% 32.50%

Plan fiduciary net position as a percentage of the total pension liability (Note 2) 0.50% 0.50% 0.99%

* The amounts presented for each fiscal year were determined as of 6/30.

Note 1: GASB 68 requires information for 10 years. However, until a full 10-year trend is compiled,

the Authority is presenting information for only those years for which information is available.

Note 2: The Plan's fiduciary net position as a percentage of the total pension liability is published in Note 3K of the Plan's Comprehensive Annual Financial Report.

Canaveral Port Authority Schedule of Contributions

Ten Years

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Florida Retirement System (FRS)*

2016 2015 2014 Contractually required contribution $ 31,623 $ 39,360 $ 38,351

Contributions in relation to the contractually required contribution (31,623) (39,360) (38,351)

Contribution deficiency (excess) $ - $ - $ -


Contributions as a percentage of covered-employee payroll 6.10% 7.46% 6.76%

Health Insurance Subsidy (HIS)*

2016 2015 2015

Contractually required contribution $ 8,319 $ 4,468 $ 9,111

Contributions in relation to the contractually required contribution (8,319) (4,468) (9,111)

Contribution deficiency (excess) $ - $ - $ -


Contributions as a percentage of covered-employee payroll 2.00% 0.85% 1.61%

* The amounts presented for each fiscal year were determined as of 9/30.

Note 1: GASB 68 requires information for 10 years. However, until a full 10-year trend is compiled,

the Authority is presenting information for only those years for which information is available.

Canaveral Port Authority Schedule of Funding Progress of Other Postemployment Benefits

Most Recent Actuarial Valuation

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UAAL as

Actuarial Unfunded a % ofActuarial Actuarial Accrued AAL Funded Covered

Valuation Value of Liability (UAAL) Ratio Covered PayrollDate Assets (a) AAL (b) (b-a) (a/b) Payroll (c) ((b-a)/c)

10/01/15 - 915,000$ 915,000$ 0% 9,345,000$ 9.8%12/01/13 - 1,762,000 1,762,000 0% 8,731,000 20.2%07/01/11 - 1,692,000 1,692,000 0% 6,696,000 25.3%

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SUPPLEMENTARY INFORMATION

- 51 -


Canaveral Port Authority Schedule of Revenues, Expenses and Income before Capital Contributions

Compared to Budget

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For period ended September 30, 2016 Budget Actual

Variance Positive

(Negative) Operating revenues

Dockage $ 6,795,400 $ 7,106,444 $ 311,044 Wharfage 50,102,780 50,601,459 498,679 Leases 5,748,700 5,588,459 (160,241) Water 1,288,120 1,365,761 77,641 Parking 15,590,500 14,967,052 (623,448) Line handling 1,201,200 1,048,527 (152,673) Permits 194,000 63,236 (130,764) Badging fees 96,000 48,777 (47,223) Commercial vehicle 817,000 633,874 (183,126) Miscellaneous 592,800 824,894 232,094 Camping 1,624,000 1,530,277 (93,723) Recreational parking 655,000 762,217 107,217 Fire training 147,400 110,403 (36,997) Other park revenues 248,900 322,005 73,105 Exploration Tower 494,500 494,102 (398) Concessions 12,100 10,726 (1,374)

Total operating revenues 85,608,400 85,478,213 (130,187)

Non-operating revenues Investment earnings 50,000 164,880 114,880

Grant revenue 301,000 156,592 (144,408) Gain on sale/disposal of assets - 17,922 17,922 Gain on legal settlement - 811,944 811,944

Total non-operating revenues

351,000 1,151,338 800,338 Total revenues 85,959,400 86,629,551 670,151

Operating expenses Operations Salaries 2,138,700 2,089,601 49,099

Benefits 1,146,700 1,070,478 76,222 Utilities 41,000 39,865 1,135 Cruise terminal maintenance 324,500 323,251 1,249 Promotions 1,548,050 1,548,017 33 Other 141,900 142,595 (695) Maintenance and supplies 136,800 132,168 4,632 Service contracts 1,287,350 1,290,477 (3,127) Travel 13,600 14,176 (576)

Total operations 6,778,600 6,650,628 127,972


Compared to Budget (continued)

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Variance Positive

(Negative) Facilities

Salaries 2,447,400 2,318,349 129,051 Benefits 1,530,400 1,435,644 94,756 Utilities 3,223,050 3,219,918 3,132 Fleet maintenance 3,000 2,622 378 Other 34,050 31,922 2,128 Maintenance and supplies 768,500 699,655 68,845 Fuel 74,250 70,643 3,607 Service contracts 1,123,400 1,126,621 (3,221) Travel 1,400 792 608

Total facilities 9,205,450 8,906,166 299,284 Public safety

Salaries 284,400 266,993 17,407 Benefits 99,000 97,716 1,284 Security badging 3,500 3,208 292 Fire protection 2,149,150 2,156,817 (7,667) Police protection 5,306,800 5,306,799 1 Other 25,200 26,713 (1,513) Communications services 1,200 1,194 6 Maintenance and supplies 6,200 6,117 83 Travel 1,725 1,654 71

Total public safety 7,877,175 7,867,211 9,964 Parks and recreation

Salaries 478,000 468,562 9,438 Benefits 322,000 331,203 (9,203) Maintenance and supplies 16,300 16,510 (210) Service contracts 198,500 198,808 (308) Utilities 265,700 272,422 (6,722) Camp store merchandise 52,000 102,451 (50,451) Other park expense 85,500 85,970 (470)

Total parks and recreation 1,418,000 1,475,926 (57,926) Exploration tower

Salaries 330,550 315,681 14,869 Benefits 222,500 216,665 5,835 Maintenance and supplies 8,300 7,437 863 Service contracts 12,000 11,976 24 Utilities 80,400 79,781 619 Merchandise and supplies 70,500 77,339 (6,839) Exhibit and special events 34,525 14,912 19,613 Office expenses 1,775 1,882 (107) Advertising 56,500 56,523 (23) Promotions 4,200 3,989 211



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Variance Positive

(Negative) Travel 1,600 1,542 58 Other expenses 1,500 1,270 230

Total exploration tower 824,350 788,997 35,353 Fire training facility

Service contracts 79,700 79,729 (29) Utilities 16,225 16,187 38 Insurance 38,000 40,941 (2,941) Maintenance and supplies 43,050 43,107 (57) Other 1,000 - 1,000

Total fire training facility 177,975 179,964 (1,989) Commission

Salaries 111,200 107,544 3,656 Benefits 101,050 96,801 4,249 Office 140,100 140,156 (56) Planning and studies - - - Legal 87,500 92,310 (4,810) Promotions 7,500 1,000 6,500 Education and seminars 1,000 995 5 Travel 21,000 19,411 1,589

Total commission 469,350 458,217 11,133 Executive

Salaries 1,064,250 1,063,817 433 Benefits 339,950 341,168 (1,218) Federal legislative consultant 96,000 96,000 - State legislative consultant 64,000 63,750 250 Legal 320,000 40,264 279,736 Office 190,500 198,439 (7,939) Planning and studies 69,500 69,494 6 Fraud hotline 1,700 2,053 (353) Travel 23,000 21,024 1,976 Education/seminars 10,850 10,839 11

Total executive 2,179,750 1,906,848 272,902

Finance and accounting Salaries 777,300 775,917 1,383

Benefits 332,150 329,262 2,888 Office 62,650 60,012 2,638 Computer support & training 230,700 228,931 1,769 Education and seminars 5,450 5,385 65 Travel 6,500 6,202 298 Accounting and auditing 150,000 150,660 (660)

Total finance and accounting 1,564,750 1,556,369 8,381



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Variance Positive

(Negative) Administrative services

Salaries 1,083,800 1,085,961 (2,161) Benefits 530,100 511,038 19,062 Legal 21,000 28,932 (7,932) Insurance 1,950,400 2,013,410 (63,010) Office 131,750 122,505 9,245 Personnel training & recruiting 121,200 123,733 (2,533) Computer support & training 619,350 551,299 68,051 Education and seminars 4,050 3,710 340 Travel 5,650 5,133 517

Total administrative services 4,467,300 4,445,721 21,579 Engineering and environmental

Salaries 847,200 822,085 25,115 Benefits 367,300 366,458 842 Engineering - general 265,000 425,090 (160,090) Engineering - environment 286,150 272,143 14,007 Office 27,300 25,248 2,052 Education and seminars 11,300 12,631 (1,331) Travel 11,600 12,078 (478)

Total engineering and environmental 1,815,850 1,935,733 (119,883) Business development

Salaries 519,500 519,532 (32) Benefits 181,650 181,574 76 Advertising 283,600 250,424 33,176 Trade development 481,650 476,350 5,300 FTZ development 5,625 5,687 (62) Travel 102,600 86,233 16,367

Total business development 1,574,625 1,519,800 54,825

Tenant development Salaries 207,800 207,126 674

Benefits 69,350 71,409 (2,059) Office 11,300 11,295 5 Land use planning 201,000 201,668 (668) Lease preparation 524,700 585,441 (60,741) Advertising 30,450 30,431 19 Travel 3,850 4,190 (340)

Total tenant development 1,048,450 1,111,560 (63,110) Communications

Salaries 230,800 231,186 (386) Benefits 108,600 108,206 394 Promotions 104,100 87,699 16,401



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For period ended September 30,2016 Budget Actual

Variance Positive (Negative)

Publications 147,000 147,100 (100) Electronic media 64,000 59,409 4,591 Advertising 52,500 48,093 4,408 Office 6,750 6,739 11 Travel 7,500 7,294 206

Total communications 721,250 695,726 25,524

Depreciation 36,975,000 34,555,085 2,419,916 Amortization 1,274,950 1,274,811 139

Total operating expenses 78,372,825 75,328,762 3,044,063 Non-operating expenses

Commissions and fees 257,400 295,368 (37,968) Amortization of bond discounts 226,425 226,421 4 Interest expense 6,976,050 6,976,059 (9) Loss on disposal of capital assets - 626,509 (626,509) Grant administration fee 40,000 40,000 -

Total non-operating expense 7,499,875 8,164,357 (664,482) Total expenses 85,872,700 83,493,119 2,379,581 Income before capital contributions and

special item $ 86,700 $ 3,136,432 $ 3,049,732

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Canaveral Port Authority Schedule of Comparative Revenues, Expenses and Changes in Net Position

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Years ended September 30, 2016 2015 2014 2013 2012

Operating revenues Dockage $ 7,106,444 $ 6,571,994 $ 6,613,071 $ 7,518,459 $ 8,655,205 Wharfage 50,601,459 44,584,996 40,006,862 35,933,607 32,916,999 Other leases 5,588,459 5,069,270 4,951,406 5,744,753 5,465,805 Water 1,365,761 1,268,708 1,280,968 1,625,124 1,784,161 Parking 14,967,052 14,666,522 13,684,515 12,337,901 12,823,140 Line handling 1,048,527 1,037,664 1,124,910 1,272,129 1,566,581 Permits 63,236 85,526 85,031 90,567 105,157 Badging fees 48,777 102,573 61,923 40,185 37,713 Commercial vehicle 633,874 654,018 813,757 898,947 799,538 Miscellaneous 824,894 554,619 519,910 605,018 516,615 Camping 1,530,277 1,444,462 1,298,392 1,189,898 812,690 Recreational parking 762,217 744,002 688,713 601,686 570,272 Fire training 110,403 175,657 159,150 153,512 149,514 Other park revenues 322,005 264,090 226,463 168,536 106,710 Exploration Tower 494,102 433,417 363,188 - - Concessions 10,726 47,685 50,326 43,640 45,392

Total operating revenues 85,478,213 77,705,203 71,928,585 68,223,962 66,355,492 Non-operating revenues

Investment earnings 164,880 193,291 66,985 226,349 331,304 Grant revenue 156,592 73,179 180,716 1,044,042 2,183,352 Gain on sale/ disposal of assets 829,866 107,814 126,384 48,184 40,895

Total revenues $ 86,629,551 $ 78,079,487 $ 72,302,670 $ 69,542,537 $ 68,911,043 Operating expenses

Operations Salaries $ 2,089,601 $ 2,196,696 $ 2,028,852 $ 1,678,861 $ 1,440,113

Benefits 1,070,478 995,430 816,967 567,365 497,870 Utilities 39,865 3,451 4,321 19,303 2,830 Travel 14,176 15,761 15,649 4,912 2,218 Cruise terminal maintenance 323,251 343,243 35,092 28,920 56,150 Promotions 1,548,017 - - - - Maintenance and supplies 132,168 96,789 11,771 8,634 10,532 Service contracts 1,290,477 1,121,111 15,820 7,076 67,034 Other 142,595 829,450 51,290 46,842 44,203

Total operations 6,650,628 5,601,931 2,979,762 2,361,913 2,365,377 Facilities

Salaries 2,318,349 2,164,630 1,629,547 1,452,868 1,456,459 Benefits 1,435,644 1,228,881 1,011,337 947,557 1,119,746 Service contracts 1,126,621 685,126 2,270,884 1,412,394 1,112,468 Utilities 3,219,918 3,380,330 3,340,318 3,104,911 2,715,428 Maintenance and supplies 699,655 838,020 1,044,515 1,108,648 1,055,986 Fleet maintenance 2,622 4,548 46,028 81,698 33,745 Fuel 70,643 150,971 271,558 252,807 - Travel 792 1,551 732 37 96 Other 31,922 47,541 10,742 16,541 30,122

Total facilities 8,906,166 8,501,598 9,625,661 8,377,461 7,524,050 Public Safety

Salaries 266,993 411,472 3,106,616 3,332,249 2,837,622 Benefits 97,716 206,901 1,465,149 1,637,826 1,382,925 Police protection 5,306,799 4,861,060 173,000 - - Guard services - - 6,435 - 393,517 Security - special events - 712 5,004 3,218 2,283 Security badging 3,208 4,368 3,221 3,410 3,893 Fire protection 2,156,817 2,017,754 1,791,183 1,671,179 1,548,171

Canaveral Port Authority Schedule of Comparative Revenues, Expenses and Changes in Net Position (continued)

- 59 -


Travel 1,654 155 3,821 7,077 4,111 Communications services 1,194 5,059 8,023 15,794 28,308 Training - 132 12,316 16,621 7,743 Maintenance and supplies 6,117 6,418 93,746 151,442 143,529 Other 26,713 29,532 59,693 108,674 145,869

Total public safety 7,867,211 7,543,563 6,728,207 6,947,490 6,497,971 Parks and recreation

Salaries 468,562 509,054 467,572 350,563 278,375 Benefits 331,203 314,035 264,247 157,743 118,570 Service contracts 198,808 193,824 190,019 173,589 140,384 Utilities 272,422 294,622 269,443 214,732 222,294 Maintenance and supplies 16,510 12,995 43,263 34,974 25,891 Camp store merchandise 102,451 86,019 90,106 38,216 45,500 Other park expense 85,970 68,631 66,374 74,576 60,167

Total parks and recreation 1,475,926 1,479,180 1,391,024 1,044,393 891,181 Fire training facility

Service contracts 79,729 81,447 70,370 63,189 61,285 Utilities 16,187 31,960 48,179 35,122 26,863 Insurance 40,941 42,493 40,842 37,450 39,905 Maintenance and supplies 43,107 40,291 29,404 41,106 56,966 Other - 470 470 - 940

Total fire training facility 179,964 196,661 189,265 176,867 185,959 Commission

Salaries 107,544 104,772 99,910 74,035 52,580 Benefits 96,801 87,843 89,386 91,691 81,114 Office 140,156 3,736 3,564 3,923 - Planning and studies - - - 45,818 - Legal 92,310 57,575 26,884 - - Promotions 1,000 16,300 2,107 - - Education and seminars 995

Travel 19,411 40,619 17,908 28,368 18,011 Total commission 458,217 310,845 239,759 243,835 151,705

Executive Salaries 1,063,817 712,204 511,540 527,067 557,654

Benefits 341,168 248,335 194,898 242,214 217,170 Federal legislative consultant 96,000 96,647 96,000 96,000 39,083 State legislative consultant 63,750 55,389 50,000 51,021 49,999 Legal 40,264 183,466 435,910 449,026 205,969 Office 198,439 198,336 211,705 174,344 107,996 Planning and studies 69,494 13,386 57,038 162,538 107,411 Travel 21,024 36,694 39,250 30,143 18,748 Community relations consultants - - - - 30,000 Fraud hotline 2,053 2,000 2,333 1,667 8,333 Joint marketing initiative - - - 8,750 - Education and seminars 10,839 8,573 4,172 1,890 1,790

Total executive 1,906,848 1,555,030 1,602,846 1,744,660 1,336,653 Finance and accounting

Salaries 775,917 754,934 704,048 564,278 488,485 Benefits 329,262 303,366 274,541 232,183 199,278 Office 60,012 76,375 60,627 51,458 64,671 Computer support & training 228,931 253,782 220,025 189,098 200,940 Education and seminars 5,385 182 6,768 1,534 1,544 Travel 6,202 4,363 5,171 951 2,591 Accounting and auditing 150,660 137,152 128,510 131,740 86,365

Total finance and accounting 1,556,369 1,530,154 1,399,690 1,171,242 1,043,874


- 60 -


Administrative services Salaries 1,085,961 1,013,275 1,026,658 535,795 468,264

Benefits 511,038 425,124 384,693 252,147 248,486 Insurance 2,013,410 2,439,592 2,784,698 2,672,787 2,276,130 Office 122,505 160,379 162,009 89,276 79,261 Personnel training and recruiting 123,733 29,028 39,681 99,366 43,808 Computer support and training 551,299 450,676 235,685 159,048 137,883 Education and seminars 3,710 5,480 4,007 5,167 2,691 Legal 28,932 48,201 78,843 - - Travel 5,133 7,111 10,483 2,748 2,477

Total administrative services 4,445,721 4,578,866 4,726,757 3,816,334 3,259,000 Engineering and environmental

Salaries 822,085 809,214 843,350 623,465 593,169 Benefits 366,458 309,183 301,126 244,867 242,073 Engineering - general 425,090 349,384 386,865 183,191 231,431 Engineering - planning - - 16,498 49,500 - Engineering - environment 272,143 417,682 405,835 403,946 453,450 Office 25,248 62,635 38,189 70,298 19,233 Education and seminars 12,631 10,391 4,731 5,603 2,278 Travel 12,078 11,445 4,724 4,160 2,808

Total engineering & environmental 1,935,733 1,969,934 2,001,318 1,585,030 1,544,442 Business development

Salaries 519,532 473,610 542,727 276,540 316,073 Benefits 181,574 156,915 194,798 110,391 130,005 Advertising 250,424 285,287 248,518 357,105 270,162 Trade development 476,350 501,474 235,457 249,750 145,444 FTZ development 5,687 4,314 6,776 15,518 6,133 Travel 86,233 95,677 94,776 50,605 48,377

Total business development 1,519,800 1,517,277 1,323,052 1,059,909 916,194 Tenant development

Salaries 207,126 143,239 71,165 65,557 71,020 Benefits 71,409 38,949 17,991 18,259 25,107 Office 11,295 2,934 1,197 2,061 4,285 Land use planning 201,668 20,445 104,078 28,100 6,800 Advertising 30,431 - - - - Lease preparation 585,441 310,896 193,405 180,095 169,465 Travel 4,190 2,925 - - -

Total tenant development 1,111,560 519,388 387,836 294,072 276,677 Communications

Salaries 231,186 227,591 183,290 155,153 136,089 Benefits 108,206 91,005 80,022 57,743 49,891 Publications 147,100 145,672 175,631 188,527 191,348 Electronic media 59,409 86,522 128,758 97,956 80,538 Advertising 48,093 64,977 78,043 145,126 66,567 Promotions 87,699 84,089 1,202,581 178,288 257,577 Office 6,739 4,822 13,419 8,146 6,545 Cove marketplace - - - 4,813 49,551 Travel 7,294 6,003 3,985 7,542 4,561

Total communications 695,726 710,681 1,865,729 843,294 842,667 Exploration tower

Salaries 315,681 276,018 216,319 - - Benefits 216,665 158,467 115,614 - - Merchandise and supplies 77,339 71,034 51,601 - - Utilities 79,781 100,623 54,488 - - Exhibit and special events 14,912 32,804 9,035 - -


- 61 -


Maintenance and supplies 7,437 13,112 130,657 - - Other expenses 1,270 7,654 3,518 - - Office expense 1,882 285 - - - Service contracts 11,976 - 67,407 - - Promotions 3,989 - - - - Advertising 56,523 82,827 96,909 - - Cove marketplace - - 4,040 - - Travel 1,542 2,394 371 - -

Total exploration tower 788,997 745,218 749,959 - - Depreciation 34,555,085 31,506,831 24,666,694 21,932,610 16,935,458 Amortization 1,274,811 1,718,755 1,513,820 1,190,100 1,699,522

Total operating expenses 75,328,762 69,985,912 61,391,379 52,789,210 45,470,730 Non-operating expenses

Commissions and fees 295,368 100,474 432,562 - 2,500 Amortization of bond costs

and discounts 226,421 182,870 167,489 237,015 343,349 Interest expense 6,976,059 5,639,606 3,707,926 3,980,652 3,365,964 Loss on disposal of capital assets 626,509 60,692 2,723,558 - - State grant expense 40,000 - - - - Federal grant expense - - 50,500 53,474 48,472 Grant administration fee - 36,866 69,534 48,300 61,500

Total non-operating expense 8,164,357 6,020,508 7,151,569 4,319,441 3,821,785 Total expenses $ 83,493,119 $ 76,006,420 $ 68,542,948 $ 57,108,651 $ 49,292,515 Total operating revenues $ 85,478,213 $ 77,705,203 $ 71,928,585 $ 68,223,962 $ 66,355,492 Total operating expenses 75,328,762 69,985,912 61,391,379 52,789,210 45,470,730 Net operating income $ 10,149,451 $ 7,719,291 $ 10,537,206 $ 15,434,752 $ 20,884,762 Total non-operating revenues $ 1,151,338 $ 374,284 $ 374,085 $ 1,318,575 $ 2,555,551 Total non-operating expenses 8,164,357 6,020,508 7,151,569 4,319,441 3,821,785 Net non-operating loss $ (7,013,019) $ (5,646,224) $ (6,777,484) $ (3,000,866) $ (1,266,234) Total revenues $ 86,629,551 $ 78,079,487 $ 72,302,670 $ 69,542,537 $ 68,911,043 Total expenses 83,493,119 76,006,420 68,542,948 57,108,651 49,292,515 Net income before capital

contributions and special item 3,136,432 2,073,067 3,759,722 12,433,886 19,618,528 Special Item - (421,690) (693,999) - - Capital contributions 6,634,056 27,832,677 13,184,167 10,005,978 6,407,256 Changes in net position $ 9,770,488 $ 29,484,054 $ 16,249,890 $ 22,439,864 $ 26,025,784

Canaveral Port Authority Schedule of Comparative Operating Revenues by Activity

- 62 -


Cruise ships $ 68,214,524 $ 63,006,688 $ 58,284,973 $ 53,135,894 $ 52,401,125 Cargo ships 6,870,898 5,123,196 4,425,353 5,551,327 5,344,961

Total ship related operating revenue 75,085,422 68,129,884 62,710,326 58,687,221 57,746,086

Land leases 5,588,459 5,069,270 4,951,406 5,744,753 5,465,805 Park operations 2,625,225 2,500,239 2,263,894 2,003,759 1,535,064 Miscellaneous 2,179,107 2,005,810 2,002,959 1,788,229 1,608,537

Total non-ship related operating revenue 10,392,791 9,575,319 9,218,259 9,536,741 8,609,406

Total operating revenue $ 85,478,213 $ 77,705,203 $ 71,928,585 $ 68,223,962 $ 66,355,492

- - #VALUE! -

Canaveral Port Authority Schedule of Construction in Progress and Capital Costs Compared with Budget

(Prior to Transfer of Completed Projects to Capital Assets)

- 63 -

Actual Budget

Year Ended September 30, 2016 Prior Years Current Year Cumulative

Total Cumulative

Total Road Improvements $ - $ 916,106 $ 916,106 $ 1,481,299 Portwide Parking Lot Improvement 428,986 211,837 640,823 2,345,649 Security Fencing/Lighting - 2,090 2,090 60,000 Maintenance Dredging - - - 168,705 Other Computer Equipment - - - 30,287 CT 6/7 Waterside & Dredging - - - 20,502 Park Upgrades - 163,043 163,043 202,946 Improve Piers, Bldgs, Structures 100,385 220,873 321,258 413,643 Northside Land Improvements 499,552 (426,930) 72,622 1,795,758 NS Land Impr - 20 Acres Paving 3,954,270 670,377 4,624,647 5,151,002 Container Cranes Project - 91,572 91,572 574,662 Marine Terminal Ph2-10 Acre 25,932 5,847,982 5,873,914 7,030,001 Fire Fighting Equipment - 307,993 307,993 333,634 Fire Fighting Equipment-CPA 60,455 14,411 74,866 76,397 Fire Training Equipment - 1,079 1,079 15,000 Utilities and Improvements 43,087 48,462 91,549 184,649 Minor Equipment - 24,295 24,295 50,257 New/Replacement Vehicles - 172,028 172,028 354,774 Welcome Center 850,499 28,493 878,992 1,196,669 CT Furniture/Equipment - 16,189 16,189 405,520 Northside Cargo Backup Area 5,404,591 304,082 5,708,673 9,314,077 Northside Pier Rejuvenation 289,048 12,252 301,300 333,339 Northside Stormwater Improvements 11,490 197,284 208,774 1,465,813 WTB Deepen/Widen/Cutoff 3,479,242 (3,479,242) - - North Cargo Pier 8 1,450,115 126,954 1,577,069 1,581,256 Financial System Upgrade 857 306,626 307,483 460,258 South Side Pier Rejuvenation 35,000 4,353 39,353 43,897 SCP4 East Extension/Widening 274,134 - 274,134 274,134 Portwide Signage 54,486 55,358 109,844 849,156 Cove Roads Phase 2 2,709,191 320,178 3,029,369 4,429,401 Equipment - 60,415 60,415 245,503 Landscape & Rec Improvements - - - 5,281 CT 5 Terminal Upgrades 3,128,031 42,480,415 45,608,446 45,643,620 CT10 Terminal Improvements 478,398 23,213,324 23,691,722 30,569,996 CT10 Waterside Berth Expansion 13,799 - 13,799 13,999 Maritime Center Tenant Improvement 148,232 376,115 524,347 5,219,714 CT# 8 Renovations 29,863 1,709,115 1,738,978 2,453,283 WTB Channel Widen/Inner Reach 2,938,146 448,550 3,386,696 4,464,041 WTB Phase 1 Widen & Deepen 30,800,792 13,236,761 44,037,553 45,036,466 WTB Channel Entrance Phase 2 1,247,779 614,432 1,862,211 4,157,000 WTB-Cargo Area Deepening 195,759 97,464 293,223 8,033,000

Canaveral Port Authority Schedule of Construction in Progress and Capital Costs Compared with Budget

(Prior to Transfer of Completed Projects to Capital Assets) (continued)

- 64 -

MTB Dredging 1,007,787 653,698 1,661,485 1,700,000 CT#6 Cruise Terminal - - - 284 CT6 Retail Build Out 5,800 (5,800) - 152,365 CT6 Gangway Rehab - 4,949 4,949 398,905 North Cargo Pier 5 - 371,431 371,431 371,562 North Cargo Pier 6 - - - 3,485 North Cargo Piers 1&2 - - - 125,850 CPA Int'l Commerce Center Improvement - - - 20,269 PSGP-FY2013 Projects - - - 24,363 PSGP-FY2014 Projects 702,732 1,399,053 2,101,785 2,113,000 Commercial Access & Billing 15,000 - 15,000 867,000 Improved Fender System - 20,636 20,636 310,669 SR 401 Improvements 597,313 332,624 929,937 3,199,749 Tug Piers 147,711 2,464 150,175 1,200,293 CT#1 Cruise Terminal - 164,243 164,243 2,055,689 Rail Connectivity Ph1 (State) 1,646,220 458,757 2,104,977 3,950,000 Cargo Berth & Terminal Phase 2 15,804 434,673 450,477 1,814,000 Cargo Berth & Terminal Phase 3 - 107,837 107,837 186,000 NC Area Tanker/Multipurpose 19,874 (19,874) - 250,000 Land Acquisitions 589,733 2,886 592,619 2,115,006 CT Rental Car Facility 67,738 - 67,738 89,860 Auto Terminal 6,108,923 1,942,246 8,051,169 12,000,000 EUL-USAF 422,872 1,700 424,572 1,125,000 SR524 ILC 145 345,400 345,545 5,001,000 Titusville Logistics Center 9,665 17,593,437 17,603,102 18,010,000 Port Master Plan - 571,473 571,473 865,000 New Cruise Terminal - - - 500,000 Barge Rail/JJ Bridge - - - 500,000 Portwide Wayfinding - 928 928 1,000 TOTALS $ 70,009,436 $ 112,777,097 $ 182,786,533 $ 245,434,937

Canaveral Port Authority Schedule of Expenditures of Federal Awards and State Financial Assistance

For the fiscal year ended September 30, 2016

- 65 -

Federal Agency/ Program Title/ CFDA

Pass-through Entity Number Contract/Grant Number Expenditures

Federal Programs:

Department of Homeland Security Direct Programs

Port Security Grant Program FY2015 Port Security

Grant 97.056

EMW-2015-PU-00183-S01 $ 149,866

FY2014 Port Security Grant 97.056

EMW-2014-PU-00158-S01

1,121,945

Subtotal

1,271,811

Total Expenditures of Federal Awards $1,271,811

See Notes to Schedule of Expenditures of Federal Awards and State Financial Assistance

Canaveral Port Authority Schedule of Expenditures of Federal Awards and State Financial Assistance

For the fiscal year ended September 30, 2016 (continued)

- 66 -

State Agency/ Program Title/ CSFA Pass-through Entity Number Contract/Grant Number Expenditures

State Projects:

Florida Department of Transportation Direct Programs Seaport Grants

North Cargo Development and Crane Refurbishment 55.005 APU24/422533-1-94-01 $ 182,349 State Route 401 Improvements 55.005 AQX94/428367-1-94-01 313,531 Widen West Turning Channel Deepening 55.005 AR955/431203-1-94-01 1,654,021 North Cargo Development - Marine Terminal Phase 1 and

Northside Stormwater System 55.005 ARN50/422533-2-94-01 334,512 Container and Multipurpose Berth - Marine Terminal Phase 2 2,000,000 West Turning Channel - Widening and Deepening

55.005 G0381/431768-1-94-03 55.034 AR956/431203-1-94-02 982,919

Total Florida Department of Transportation $ 5,467,332

Florida Department of Environmental Protection Direct Programs Canaveral Inlet Management Plan 37.003 15BE2 $ 13,863

Total Department of Environmental Protection $ 13,863

Total Expenditures of State Financial Assistance $ 5,481,195

Total Expenditures of Federal and State Financial Assistance $ 6,753,006

See Notes to Schedule of Expenditures of Federal Awards and State Financial Assistance

Canaveral Port Authority Notes to Schedule of Expenditures of Federal Awards and State Financial

Assistance

- 67 -

(1) Basis of Presentation The accompanying Schedules of Expenditures of Federal Awards and State Financial Assistance (the Schedules) presents the activity of all federal awards and state financial assistance of the Authority for the year ended September 30, 2016. The information in the Schedules are presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedules present only a selected portion of the operations of the Authority, they are not intended to and do not present the financial position, changes in net positions, or cash flows of the Authority. The Authority’s reporting entity is defined in Note 1 to the Authority special purpose financial statements.

(2) Summary of Significant Accounting Policies The Schedules are presented using the accrual basis of accounting for expenses, which are described in Note 1 to the Authority’s basic financial statements. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement.

(3) Indirect Cost Recovery The Authority did not recover its indirect costs using the 10% de minimis indirect cost rate provided under Section 200.414 of the Uniform Guidance.

- 68 -


STATISTIC

AL SEC

TION

- 69 -

STATISTICAL SECTION

(unaudited)

- 70 -

CANAVERAL PORT AUTHORITY

Statistical Section Narrative

This section of the Authority’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and supplementary information says about the Authority’s overall financial position. This information has not been audited.

PAGE

A. FINANCIAL TRENDS 71-83

These schedules contain trend information to help the reader understand how the Authority’s financial performance and well-being has changed over time. The Authority engages in business-type activities and presents revenues by major source and distinguishes between operating and non-operating revenues and expenses.

B. REVENUE CAPACITY 84-91 These schedules contain information to help the reader assess the Authority’s most significant revenue sources: cargo and cruise revenue.

C. DEBT CAPACITY 92-94 These schedules present information that assist the reader in analyzing the affordability of the Authority’s current levels of outstanding debt and the Authority’s ability to issue additional debt in the future. Details regarding the Authority’s outstanding debt can be found in the notes to the financial statements.

D. DEMOGRAPHIC AND ECONOMIC INFORMATION 95-97 These schedules offer demographic and economic indicators that are commonly used for financial analysis and that can enhance one’s understanding of the Authority’s

present and ongoing financial status. E. OPERATING INFORMATION 98-104 These schedules contain information about the Authority’s operations and resources to help the reader understand how the Authority’s financial information relates to the services it provides and the activities it performs. Source: Unless otherwise noted, the information in these schedules is derived from the annual financial reports for the relevant year.

Schedule A-1


Net Position (in thousands)

Fiscal Years ended September 30, 2007 through 2016

Net Investment Restricted

Fiscal in Capital for Debt Unrestricted Total

Year Assets Service

2007 * 155,572$ 6,016$ 30,453$ 192,041$

2008 * 156,102 6,016 32,909 195,027

2009 167,915 6,016 29,292 203,223

2010 170,233 6,016 35,116 211,365

2011 186,803 6,016 40,760 233,579

2012 232,306 4,566 22,732 259,604

2013 ** 265,049 4,566 11,534 281,149

2014 ** 245,995 4,566 46,838 297,399

2015 *** 301,897 1,825 23,161 326,883

2016 305,846 1,825 28,982 336,653

* Balances have been reclassified to conform to September 30, 2009 financial presentation.

** Balances have been restated as of September 30, 2014 and 2013 due to implementing

GASB 68

***Balances have been reclassified to conform to September 30, 2016 financial presentation.

- 71 -

Schedule A-2


Operating Revenues by Source


Foreign

Fiscal Line- Trade

Year Dockage Wharfage Leases Water Parking handling Zone

2007 6,049,562$ 23,762,323$ 4,113,670$ 1,272,840$ 9,014,333$ 1,365,856$ 17,155$

2008 5,146,752 22,013,965 ** 5,234,516 1,202,840 9,343,286 1,190,739 34,453

2009 5,179,737 18,564,588 ** 4,961,324 1,198,144 9,871,355 1,141,142 29,968

2010 6,124,205 21,026,079 5,325,455 1,348,997 9,580,489 1,089,165 17,500

2011 7,798,486 27,701,101 5,315,084 1,349,609 9,962,760 1,330,848 13,500

2012 8,655,205 32,916,999 5,465,805 1,784,161 12,823,140 1,566,581 17,042

2013 7,518,459 35,933,607 5,744,753 1,625,124 12,337,901 1,272,129 10,000

2014 6,613,071 40,006,862 4,951,406 1,280,968 13,684,515 1,124,910 10,000

2015 6,571,994 44,584,996 5,069,270 1,268,708 14,666,522 1,037,664 10,750

2016 7,106,444 50,601,459 5,588,459 1,365,761 14,967,052 1,048,527 8,125

* These items have been reclassified to conform to the September 30, 2009 financial statement presentation.

** These items have been reclassified to conform to the September 30, 2010 financial statement presentation.

*** These items have been reclassified to conform to the September 30, 2015 financial statement presentation.

- 72 -

Schedule A-2 (cont'd)


Operating Revenues by Source


Camping and Fire

Fiscal Recreational Exploration Training Commercial

Year Parking Tower Facility Vehicle Miscellaneous Total

2007 1,291,583$ * -$ 124,899$ -$ 559,560$ 47,571,781$

2008 1,309,645 * - 132,865 - 496,658 * 46,105,719 **

2009 1,606,984 - 130,163 - 481,029 43,164,434 **

2010 1,539,766 - 107,505 - 861,397 47,020,558

2011 1,542,226 - 106,176 158 *** 952,544 *** 56,072,492

2012 1,535,064 - 149,514 799,538 *** 642,443 *** 66,355,492

2013 2,003,760 - 153,512 898,947 *** 725,770 *** 68,223,962

2014 2,263,894 363,188 159,150 813,757 *** 656,864 *** 71,928,585

2015 2,500,239 433,417 175,657 654,018 731,968 77,705,203

2016 2,625,225 494,102 110,403 633,874 928,782 85,478,213

- 73 -

Schedule A-3


Operating Revenues by Activity


Fiscal Park

Year Cruise Ships Cargo Ships Operations

2007 36,348,454$ 5,151,315$ 1,291,583$ *

2008 34,969,584 ** 3,948,920 1,309,645 *

2009 32,037,675 ** 3,936,169 1,606,984

2010 34,488,305 4,686,092 1,539,766

2011 42,270,635 5,872,169 1,542,226

2012 52,401,125 5,344,961 1,535,064

2013 53,135,894 5,551,327 2,003,759

2014 58,284,973 4,425,353 2,263,894

2015 63,006,688 5,123,196 2,500,239

2016 68,214,524 6,870,898 2,625,225


** These items have been reclassified to conform to the September 30, 2010 financial statement presentation.

- 74 -



Operating Revenues by Activity


Fiscal Foreign

Year Land Leases Trade Zone Other Total

2007 4,113,670$ 17,155$ 649,604$ * 47,571,781$

2008 5,234,516 34,453 608,601 * 46,105,719 **

2009 4,961,324 29,968 592,314 43,164,434 **

2010 5,325,455 17,500 963,440 47,020,558

2011 5,315,084 13,500 1,058,878 56,072,492

2012 5,465,805 17,042 1,591,495 66,355,492

2013 5,744,753 10,000 1,778,229 68,223,962

2014 4,951,406 10,000 1,992,959 71,928,585

2015 5,069,270 10,750 1,995,060 77,705,203

2016 5,588,459 8,125 2,170,982 85,478,213

- 75 -

Schedule A-4


Non-Operating Revenues


Fiscal Interest Grant

Year Earnings Revenue Other Total

2007 1,961,062$ 61,698$ -$ 2,022,760$

2008 650,194 * 384,047 38,554 1,072,795 *

2009 410,363 271,809 42 682,214

2010 427,989 1,327,866 39,122 1,794,977

2011 264,570 2,146,632 205,761 2,616,963

2012 331,304 2,183,352 40,895 2,555,551

2013 226,349 1,044,042 48,184 1,318,575

2014 66,985 180,716 126,384 374,085

2015 193,291 73,179 107,814 374,284

2016 164,880 156,592 829,866 1,151,338


- 76 -

- 77 -

Schedule A-5


Total Revenue by Activity - FY2016

Cruise Ships79%

Cargo Ships8%

Land Leases6%

Other Operating3%

Park Operations3%

Other Non-Operating1%

$86,629,551

Schedule A-6

Ex-

Fiscal Public Parks & ploration Fire

Year Operations Facilities Safety Recreation Tower Training Commission Executive

2007 9,314,809$ -$ 6,553,510$ 925,753$ -$ 195,585$ 122,928$ *** 1,302,362$ ***

2008 * 10,148,744 - 7,221,901 1,177,051 - 189,165 163,155 *** 1,098,373 ***

2009 ** 9,333,672 - 6,779,382 1,226,187 - 174,658 129,910 *** 1,124,743 ***

2010 8,731,013 - 7,030,095 969,248 - 164,207 138,096 *** 1,157,410 ***

2011 1,910,600 **** 7,435,823 **** 7,551,547 860,105 - 173,241 154,826 *** 1,156,616 ***

2012 2,365,377 **** 7,524,050 **** 6,497,971 891,181 - 185,959 151,705 *** 1,336,653 ***

2013 2,361,913 **** 8,377,461 **** 6,947,490 1,044,393 - 176,867 243,835 1,744,660

2014 2,979,762 **** 9,625,661 **** 6,728,207 **** 1,391,024 749,959 189,265 239,759 **** 1,602,846 ****

2015 5,601,931 8,501,598 7,543,563 1,479,180 745,218 196,661 310,845 1,555,030

2016 6,650,628 8,906,166 7,867,211 1,475,926 788,997 179,964 458,217 1,906,848

* FY2008 expenses have been reclassified to conform to the September 30, 2009 financial statement presentation.

** FY2009 expenses have been reclassified to conform to the September 30, 2010 financial statement presentation.

*** FY2006-2012 expenses have been reclassified to conform to the September 30, 2013 financial statement presentation.

**** FY2011-2014 expenses have been reclassified to conform to the September 30, 2015 financial statement presentation.


Operating Expenses


- 78 -



Operating Expenses


Admini- Engineering Business Tenant

Fiscal Finance & strative & Environ- Develop- Develop- Comm-

Year Accounting Services mental ment ment unications Depreciation Amortization Total

2007 4,160,274$ -$ 1,362,156$ 823,939$ 460,669$ 572,227$ 9,772,259$ 137,843$ 35,704,314$

2008 * 846,443 3,293,793 2,352,466 934,804 489,910 592,642 12,436,688 1,076,006 42,021,141

2009 ** 910,855 2,942,404 1,659,732 805,548 344,705 582,543 12,733,871 1,227,743 39,975,953

2010 847,530 2,855,999 1,518,036 713,148 246,852 624,356 13,557,270 1,227,075 39,780,335

2011 **** 1,003,355 3,083,240 2,520,538 878,375 182,564 789,038 14,709,184 1,302,388 43,711,440

2012 **** 1,043,874 3,259,000 1,544,442 916,194 276,677 842,667 16,935,458 1,699,522 45,470,730

2013 **** 1,171,242 3,816,334 1,585,030 1,059,909 294,072 843,294 21,932,610 1,190,100 52,789,210

2014 **** 1,399,690 4,726,757 2,001,318 1,323,052 387,836 1,865,729 24,666,694 1,513,820 61,391,379

2015 1,530,154 4,578,866 1,969,934 1,517,277 519,388 710,681 31,506,831 1,718,755 69,985,912

2016 1,556,369 4,445,721 1,935,733 1,519,800 1,111,560 695,726 34,555,085 1,274,811 75,328,762

* FY2008 expenses have been reclassified to conform to the September 30, 2009 financial statement presentation.

** FY2009 expenses have been reclassified to conform to the September 30, 2010 financial statement presentation.

*** FY2006-2012 expenses have been reclassified to conform to the September 30, 2013 financial statement presentation.

**** FY2011-2014 expenses have been reclassified to conform to the September 30, 2015 financial statement presentation.

- 79 -

Schedule A-7


Non-Operating Expenses


Loss on

Fiscal Interest & Commissions Capital Asset

Year Amortization & Fees Disposals Other Total

2007 2,907,200$ 500$ 65,192$ 84,843$ 3,057,735$

2008 ** 2,890,928 1,500 4,559 554,137 * 3,451,124

2009 2,742,600 1,000 21,888 181,580 2,947,068

2010 2,613,926 3,000 - 357,709 2,974,635

2011 3,196,955 2,500 - 289,048 3,488,503

2012 3,709,313 2,500 - 109,972 3,821,785

2013 4,217,667 - - 101,774 4,319,441

2014 3,875,415 432,562 2,723,558 120,034 7,151,569

2015 5,822,476 100,474 60,692 36,866 6,020,508

2016 7,202,480 295,368 626,509 40,000 8,164,357

* Includes $517,137 in casualty loss from a tropical storm.

** FY2008 expenses have been reclassified to conform to the September 30, 2009 financial statement

presentation.

- 80 -

Schedule A-8

Net

Net Non-Operating Income before

Fiscal Operating Revenue or Contributions Special Capital Change in

Year Income (Expense) & Special Items Item Contributions Net Position

2007 11,867,467$ (1,034,975)$ 10,832,492$ -$ 1,609,053$ 12,441,545$

2008 4,084,578 (2,378,329) 1,706,249 - 1,279,271 2,985,520

2009 3,188,481 (2,264,854) 923,627 - 7,272,236 8,195,863

2010 7,240,223 (1,179,658) 6,060,565 - 2,081,489 8,142,054

2011 12,361,052 * (871,540) 11,489,512 * - 10,724,264 22,213,776 *

2012 20,884,762 (1,266,234) 19,618,528 - 6,407,256 26,025,784

2013 15,434,752 (3,000,866) 12,433,886 - 10,005,978 22,439,864

2014 10,537,206 ** (6,777,484) 3,759,722 ** (693,999) 13,184,167 16,249,890 **

2015 7,719,291 (5,646,224) 2,073,067 (421,690) 27,832,677 29,484,054

2016 10,149,451 (7,013,019) 3,136,432 - 6,634,056 9,770,488

* FY 2011 income has been reclassified to conform to the September 30, 2012 financial statement presentation.

** FY 2014 income has been reclassified to conform to the September 30, 2015 financial statement presentation.


Changes in Net Position


- 81 -

Depreciation/Amortization43%

Exploration Tower1%

Tenant Development1%

Communications1%

Commission1%

Business Development2%

Parks & Recreation2%

Finance & Accounting2%

Executive2%

Engineering &Environmental2%

Administrative Services5%

Operations8%

Public Safety9%

Non-Operating10%

Facilities11%

- 82 -

$83,493,119


Total Expenses - FY2016

Schedule A-9

- 83 -


Operating Revenues & Expenses FY1996 - FY2016

Schedule A-10

Mill

ions

of D

olla

rs

Fiscal Years

0

20

40

60

80

100

20162011200620011996

0

20000000

40000000

60000000

80000000

100000000

'2016''2011''2006''2001''1996'

0

20000000

40000000

60000000

80000000

100000000

'2016''2011''2006''2001''1996'

OPERATING REVENUES OPERATING EXPENSES

Schedule B-1

Commodity 2007 2008 2009 2010 2011

Petroleum 1,296,561$ 1,033,953$ 1,187,035$ 1,823,733$ 2,628,105$

Cement*** 912,321 64,922 20,000 60,000 40,000

Newsprint 302,014 191,926 170,013 145,061 -

Scrap Metal - - - 13,841 ** 20,671

Salt 313,311 357,481 369,065 388,900 421,546

Pumice 30,973 - 13,823 - -

Lumber 523,960 277,060 90,569 33,473 23,418

Concentrate 125,504 89,105 103,549 105,044 161,650

Single Strength Juice 76,193 117,601 195,985 108,655 122,630

Fresh Citrus/Produce 182,759 216,511 239,381 80,894 41,335

Bananas - - - - -

General Misc.* 259,871 677,448 412,478 856,304 1,397,355

Automobiles/Trucks 313,707 379,940 224,890 235,968 214,324

Bulk Fertilizer - - - 16,034 ** 82,874

Limestone/Aggregate 323,435 268,474 582,620 388,535 314,572

Granite/Rock 287,533 105,520 243,363 211,784 224,285

Slag/Sand 203,173 168,979 83,398 217,866 179,404

Totals 5,151,315$ 3,948,920$ 3,936,169$ 4,686,092$ 5,872,169$

* Included in FY2010 $536,652, FY2011 $740,815, FY2012 $496,002, FY2013 $479,268,

FY14 $469,290 in revenue on northside and southside cargo contracts from required

minimum guarantees.

** FY2010 balances have been reclassified to appropriate commoditites out of the General

Miscellaneous category.

*** FY2009-2016 Revenue is from a contract with required shortage minimum guarantee.


Cargo Revenue


- 84 -

Schedule B-1 (cont'd)


Cargo Revenue


Commodity 2012 2013 2014 2015 2016

Petroleum 2,587,916$ 2,427,711$ 2,017,413$ 2,581,687$ 3,261,288$

Cement*** 40,000 35,000 73,153 162,868 198,832

Newsprint - - 22,330 - 123,857

Scrap Metal/Steel - - - 129,612 5,930

Salt 417,027 463,705 332,004 269,032 371,229

Pumice - - - - -

Lumber 15,360 36,934 29,759 38,958 131,123

Concentrate 139,218 138,119 108,709 108,458 102,878


Fresh Citrus/Produce 544 532 - - -

Bananas - 3,515 - - -

General Misc.* 1,301,413 1,187,739 715,900 385,549 765,082


Bulk Fertilizer 98,205 175,307 106,130 129,218 164,544


Granite/Rock 119,657 320,386 275,022 344,450 455,887

Slag/Sand 187,841 275,360 184,741 501,450 700,496

Totals 5,344,961$ 5,551,327$ 4,425,353$ 5,123,196$ 6,870,898$

* Included in FY2010 $536,652, FY2011 $740,815, FY2012 $496,002 FY2013 $479,268

FY14 $469,290 in revenue on northside and southside cargo contracts from required

minimum guarantees.

** FY2010 balances have been reclassified to appropriate commoditites out of the General


*** FY2009-2016 Revenue is from a contract with required shortage minimum guarantee.

- 85 -

- 86 -


Cargo Revenue FY2007 - FY2016

Schedule B-2

Fiscal Years

Mill

ions

of D

olla

rs0

1000000

2000000

3000000

4000000

5000000

6000000

7000000

8000000Bulk Fertilizer

Scrap Metal

Other

Granite/Aggregate

Limestone

Automobiles/Trucks

Concentrate/Juice

Slag/Sand

Fresh Citrus/Produce

Lumber

Salt

Newsprint

Cement

Petroleum

2016201520142013201220112010200920082007

0

1

2

3

4

5

6

7

8

2015 201620142013201220112010200920082007

Cement

Other*

Newsprint

Fresh Citrus/Produce

Automobiles/Trucks

Limestone/Aggregate

Slag/Sand

Salt

Petroleum

Concentrate/Juice

Lumber

Granite/Rockupdate this chart above with new data and then braek apart just the bar graphs and overlay on to chart on page.... apply bevel already set up as graphic style... expand to fill width...slant 179 to straigthen bars after extruded .... watch for RED color and replace as needed.

Scrap Metal

Bulk Fertilizer

- 87 -

$6,870,898


Cargo Revenue - FY2016

Schedule B-3

Petroleum 47%Lumber2%Bulk Fertilizer 2%Newsprint 2%Concentrate/Juice 2%Automobiles/Trucks3%Cement 3%Salt 5%Limestone/Aggregate 6%Granite/Rock 7%Slag/Sand 10%Other 11%

Schedule B-4


Revenue Passengers


Fiscal Greater Than

Year One Day Cruises One Day Cruises Total

2007 1,557,506 2,718,416 4,275,922

2008 1,089,456 2,484,504 3,573,960

2009 782,336 2,468,439 3,250,775

2010 80,200 2,722,751 2,802,951

2011 44,469 3,100,199 3,144,668

2012 243,227 3,761,056 4,004,283

2013 269,408 3,717,586 3,986,994

2014 303,652 3,863,606 4,167,258

2015 308,441 3,860,225 4,168,666

2016 297,169 3,951,127 4,248,296

- 88 -

- 89 -


Revenue Passengers FY2007 - FY2016

Schedule B-5

Thou

sand

s of

Rev

enue

Pas

seng

ers

One Day Cruises Longer Cruises

Fiscal Years

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

4000000

4500000

5000000

'2016''2015''2014''2013''2012''2011''2010''2009''2008''2007'

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2016201520142013201220112010200920082007

Schedule B-6

FY 2007 FY 2007 Percentage of

Customer Revenue Rank Total Revenue

Carnival Cruise Lines 7,969,384$ * 1 16.1%

Quay Cruise Lines 6,099,345 * 2 12.3%

Florida Transportation 5,700,485 * 3 11.5%

Sterling Cruise Lines 5,364,185 4 10.8%

Ambassador Services, Inc 1,948,023 5 3.9%

Coastal Fuels Marketing & Refining 1,234,890 6 2.6%

Eller Maritime Services, LLC 1,194,292 7 2.4%

Fillette Green & Company 1,129,149 8 2.3%

Mid Florida Freezers 911,926 9 1.8%

Oceans Casino Cruises 910,872 10 1.8%

Totals 32,462,551$ 65.5%

* These amounts differ from those in the notes to the financial statements due to the

inclusion of parking lot revenue.

This report is generated by the Finance Department.


Ten Largest Revenue Generating Customers

Fiscal Years ended September 30, 2007 and 2016

- 90 -

Schedule B-6 (cont'd)

FY 2016 FY 2016 Percentage of

Customer Revenue Rank Total Revenue

Carnival Cruise Lines 21,728,502$ * 1 25.1%

Magical Cruise Company 21,291,875 * 2 24.6%

MLSBC Cruise Ltd. 19,659,684 * 3 22.7%

Norwegian Cruise Line 2,764,674 * 4 3.2%

Victory Casino Cruise 2,304,531 5 2.7%

Seaport Canaveral 1,973,493 6 2.3%

Ambassador Services, Inc & LLC 1,933,688 7 2.1%

Moran Gulf Shipping 715,779 8 0.8%

Martin Marietta 656,536 9 0.8%

TransMontaigne Terminals LLC 556,085 10 0.6%

Totals 73,584,847$ 84.9%

* These amounts differ from those in the notes to the financial statements due to the

inclusion of parking lot revenue.

This report is generated by the Finance Department.


Ten Largest Revenue Generating Customers

Fiscal Years ended September 30, 2007 and 2016

- 91 -

Schedule C-1


Revenue Bond Coverage


Net Revenue

Fiscal Gross Revenue Total Expenses Available

Year (1) (2) for Debt Service

2007 49,532,843$ 25,795,555$ 23,737,288$

2008 46,757,126 * 29,027,084 * 17,730,042

2009 44,132,230 26,015,339 18,116,891

2010 47,588,935 24,998,990 22,589,945

2011 56,337,062 27,702,248 28,634,814

2012 66,686,796 26,838,250 39,848,546

2013 68,450,311 29,666,500 38,783,811

2014 71,995,570 35,643,427 ** 36,352,143

2015 77,898,494 36,860,800 41,037,694

2016 85,643,093 39,794,234 45,848,859

(1) Gross revenue includes operating revenues, investment earnings, adding back bad debt per bond covenant.

(2) Expenses do not include non-cash outlays such as depreciation, amortization, bad debt expense, loss on

equipment disposals, interest or any grant related expenses.

* These items have been reclassified to conform to the FY09 financial statement presentation.

** These items have been reclassified to conform to the FY15 financial statement presentation.

- 92 -

Schedule C-1 (cont'd)


Revenue Bond Coverage


Fiscal Coverage

Year Principal Interest Total (3)

2007 3,235,000$ 2,634,614$ 5,869,614$ 4.69

2008 3,575,000 2,437,154 6,012,154 2.95

2009 4,585,000 3,722,974 8,307,974 2.18

2010 4,610,000 3,695,413 8,305,413 2.72

2011 8,106,324 4,119,687 12,226,011 2.34

2012 7,679,461 4,611,109 12,290,570 3.24

2013 7,298,426 4,033,486 11,331,912 3.42

2014 8,295,063 3,779,364 12,074,427 3.01

2015 12,346,205 6,834,674 19,180,879 2.14

2016 13,064,689 6,350,480 19,415,169 2.36

(3) Required coverage is 1.25

Debt Service Requirements

- 93 -

Schedule C-2

Ratio of Total Debt

Fiscal Revenue Capital Notes Total Debt to Ship Per

Year Bonds Leases Payable Debt Revenue Passenger

(1) (2)

2007 59,099,768$ * 35,649$ 1,000,000$ 60,135,417$ 145% 14$

2008 87,733,284 * - 911,739 88,645,023 228% 25

2009 83,358,532 * - 831,022 84,189,554 234% 26

2010 78,960,608 * - 745,328 79,705,936 203% 28

2011 113,068,377 * - 654,348 113,722,725 236% 36

2012 104,807,323 * - 557,757 105,365,080 182% 26

2013 98,573,438 ** - 455,209 99,028,647 169% 25

2014 209,610,409 *** - 346,335 209,956,744 335% 50

2015 197,369,979 *** - 230,745 197,600,724 290% 47

2016 246,426,583 *** - 108,027 246,534,610 328% 58

(1) Ship Revenue (Cruise and Cargo) used to find Ratio to Debt can be found in Schedule A-3.

(2 ) To find Total Debt per Passenger Schedule B-4 was used.

* Revenue bonds payable net of unamortized discounts, premiums, and loss on refunding.

** FY2013 has been restated due to implementation of GASB 65 which requires deferred loss on refunding to be shown as an asset,

deferred outflow of resources, instead of netted against revenue bonds to conform to the FY2014 financial statement presentation.

*** Revenue bonds payable net of unamortized discounts and premiums.


Ratios of Outstanding Debt By Type


- 94 -

Schedule D-1


Demographic Statistics for Brevard County

(Estimates)


Personal Per Capita

Fiscal Income Personal Unemployment

Year Population (in thousands) Income Rate

(1) (2) (2) (1)

2007 552,109 19,748,200$ 36,590$ 4.6%

2008 556,213 20,440,080 37,686 7.3

2009 555,657 19,521,711 36,011 11.3

2010 543,376 19,945,159 36,675 11.9

2011 543,566 * 20,670,931 38,028 11.6

2012 547,307 * 21,766,214 39,770 9.1

2013 548,424 21,713,658 39,420 7.2

2014 558,489 21,829,233 ** 39,198 ** 6.4

2015 561,714 23,013,606 ** 40,511 ** 5.6

2016 568,088 N/A N/A 5.2

(1) Florida Research and Economic Database of Labor Market Information.

(2) U.S. Bureau of Economic Analysis

N/A- information not available for this year.

* Revised numbers for FY2013 presentation.

** Revised numbers for FY2016 presentation.

- 95 -

Schedule D-2

Number of Percentage Number of Percentage

Employer Employees of Total Rank Employees of Total Rank

Brevard County School Board 8,560 3.50% 1 8,213 3.24% 2

Health First, Inc. 7,790 3.18% 2 6,000 2.37% 4

Harris Corporation 5,845 2.39% 3 5,600 2.21% 5

Brevard County Government 2,360 0.96% 4 2,500 0.99% 8

U.S. Department of Defense 2,285 0.93% 5 - - -

NASA 2,005 0.82% 6 0 0.00% -

Northrop Grumman Corporation 1,915 0.78% 7 - - -

Wuesthoff Health System 1,785 0.73% 8 2,400 0.95% 10

Rockwell Collins 1,610 0.66% 9 - - -

Brevard County Sheriff's Office 1,280 0.52% 10 - - -

United Space Alliance - - - 6,300 2.49% 3

Space Gateway Support - - - 3,000 1.18% 6

Publix Supermarket - - - 2,850 1.12% 7

Holmes Regional Medical Center - - - 2,450 0.97% 9

Patrick Air Force Base - - - 16,280 6.43% 1

Total 35,435 14.47% 55,593 21.95%

Total County Employment 244,751 253,234

Source: Florida Research and Economic Database & Economic Development of Florida's Space Coast,

and Brevard County.


Principal Employers

Brevard County 2016 and 2007

2016 2007

- 96 -

Titusville

Cocoa

Kennedy Space Center

SR 405

SR 4

07

SR 3

SR 528

SR 520

Rockledge

Cocoa Beach

Port Canaveral

Cape Canaveral

SR A

1A

34,461Voters

36,487 Voters

32,824 Voters

36,705 Voters

31,203 Voters

Canaveral Port AuthorityApproved Commissioner Districts and Registered Voters, January 2017

- 97 -

Schedule D-3

Schedule E-1

Parks and

Fiscal Operations Recreation & Public

Year Administration & Facilities Exploration Safety TotalTower

2007* 41.0 109.0 ** 18.5 38.0 206.5

2008 39.0 110.0 ** 16.5 27.0 192.5

2009 36.0 93.0 ** 19.5 32.0 180.5

2010 39.0 93.0 ** 9.0 40.5 181.5

2011 35.0 100.0 ** 7.0 66.5 208.5

2012 36.0 78.5 ** 10.0 66.5 191.0

2013 41.0 83.5 ** 14.5 66.5 205.5

2014 57.0 93.0 ** 24.0 50.0 224.0

2015 58.0 94.0 ** 23.5 8.0 183.5

2016 55.0 125.0 26.0 5.0 211.0

Source: Full time equivalent employees per the adopted budget.

* FY2007 corrected for full time equivalents in Operations.

** Balances have been reclassified to remove Parks and Recreation,

& Exploration Tower.


Employee Positions by Function- Full Time Equivalent


- 98 -

Schedule E-2

- 99 -

COUNTRY COMMODITYArgentina Petroleum, Juice Concentrate

The Bahamas Petroleum, Limestone, Salt, General

Brazil Petroleum, Salt

Canada Petroleum, Granite, Newsprint

Chile Fertilizer, General

England Petroleum

Estonia Petroleum

Germany Fertilizer, Lumber, Paper Products

India Petroleum

Jamaica Petroleum

Japan Petroleum, Slag

Mexico Cars/Truck

The Netherlands Petroleum, Salt

Nigeria Petroleum

Norway Petroleum

Korea Petroleum

Portugal Petroleum

Russia Petroleum

South Africa Petroleum, General

COUNTRY COMMODITYArgentina Juice Concentrate

Ascension Island Cars/Trucks, General

The Bahamas Slag, General, Salt

Canada Petroleum

Colombia Cars/Trucks

Costa Rica Cars/Trucks, General

Dominican Republic Cars/Trucks, General

Guatemala Cars/Trucks

Honduras Cars/Trucks

Mexico Cars/Trucks

The Netherlands Concentrate, Single-Strength Juice

Panama Cars/Trucks, General

Paraguay Cars/Trucks

U.S.A. Petroleum, Slag, General, Cars/Trucks

IMPORTS

EXPORTS

Spain Petroleum, Slag, Drywall

Sweden Lumber, Paper Products

U.S.A. Petroleum, Lumber, Newsprint, Paper Products, Salt, Steel, General

Venezuela Petroleum

Port Canaveral World Trading Partners

Schedule E-3

Commodity 2007 2008 2009 2010 2011

Petroleum 1,251,171 920,585 990,594 1,892,632 3,399,958

Cement 536,471 34,667 33,898 32,787 -

Newsprint 105,689 71,381 56,377 42,404 -

Scrap Metal - - - 7,498 * 9,985

Salt 192,000 204,100 210,900 192,050 227,708

Pumice 28,687 - 8,818 - -

Lumber 211,805 113,601 30,733 9,297 7,533

Concentrate 50,739 39,427 46,448 37,539 50,972


Fresh Citrus/Produce 59,564 67,035 78,672 16,261 10,159

Bananas - - - - -

General Miscellaneous 28,146 57,719 10,075 5,261 14,477


Bulk Fertilizer - - - 9,320 * 55,914


Granite/Rock 306,769 147,170 292,004 185,263 193,607

Slag/Sand 266,237 232,122 137,169 296,064 235,856

Totals 3,572,206 2,395,779 2,626,795 3,218,144 4,547,724

* FY2010 balances have been reclassified to appropriate commodities out of the General



Cargo Tonnage

(in short tons)


- 100 -

Schedule E-3 (cont'd)


Cargo Tonnage

(in short tons)


Commodity 2012 2013 2014 2015 2016

Petroleum 2,949,703 2,556,890 2,280,510 2,817,361 3,845,853

Cement - - - - -

Newsprint - - 4,907 - 21,428

Scrap Metal - - - 27,528 -

Salt 219,311 241,910 192,125 224,272 220,329

Pumice - - - - -

Lumber 4,477 11,758 9,383 15,151 29,410

Concentrate 34,871 37,159 29,693 25,163 25,125


Fresh Citrus/Produce 279 258 - - -

Bananas - 230 - - -

General Miscellaneous 15,196 8,093 6,777 10,162 20,259


Bulk Fertilizer 52,378 86,613 48,122 67,100 81,411


Granite/Rock 102,016 291,367 234,786 281,395 318,261

Slag/Sand 243,835 306,637 176,236 397,903 595,697

Totals 3,904,986 3,874,266 3,362,282 4,148,243 5,497,028

- 101 -

Schedule E-4

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Cruise

Multi Day Cruises 539 482 495 524 590 705 682 698 679 668

Gaming Vessels 1,379 1,064 1,088 94 115 658 722 721 702 720

Public Safety

Arrests* - - - - - 23 32 24 - -

Uniform Traffic Citations* - - - - - 80 252 199 - -

Parking Citations* - - - - - 76 74 5 - -

Fire Calls 62 83 75 75 79 70 61 241 231 262

Non-Fire Response Calls 1,963 1,926 1,844 1,964 2,204 2,315 2,497 2,225 2,256 2,512

County Sheriff's Office.

Source: Cruise information comes from the Finance Department, Public Safety information comes from the Public

Safety Department and Fire Department


Operating Indicators by Function


*The Port Police were disbanded as of Sept. 30th, 2014. The Authority now contracts with the Brevard

- 102 -

Schedule E-5

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

General

Cruise Terminals 6 6 6 6 6 7 7 7 7 7

Cargo Terminals 11 11 11 11 11 11 10 10 11 11

Warehouse Storage

-sq ft (in thousands) 70.8 70.8 70.8 106.5 106.5 106.5 106.5 317 317 567

Developed Land 535 535 535 535 535 535 603 643 715 715

Public Boat Docks 9 9 9 9 9 9 9 10 10 10

Public Safety

Security Building 1 1 1 1 1 1 1 1 1 1

Interagency Maritime

Operations Center 0 0 0 0 1 1 1 1 1 1

Patrol Vehicles 0 0 3 12 12 19 21 21 0 0 *

Sargeant Vehicles 0 0 0 3 3 3 4 4 0 0 *

Chief/Lieutenant Vehicles 0 0 1 1 3 3 3 3 0 0 *

Patrol Boats 2 4 4 4 4 4 5 5 0 0 *

Mobile Command Center 1 1 1 1 1 1 1 1 1 1

Fire Station 1 1 1 1 1 1 2 2 2 2

Fire/Rescue Vehicles 5 5 5 5 5 5 6 6 6 6

Source: Gerenal information section comes from the Engineering and Tenant & Property Development department.

Public safety section is supplied by the Public Safety Department and Fire Department.

* The Port Police were disbanded as of Sept. 30th, 2014. Assets were transferred to the Sherriff's office.


Capital Assets by Function


- 103 -

Schedule E-6


Capital Improvements


Fiscal

Year Total

2007 19,994,276$

2008 11,901,462

2009 27,308,361

2010 23,897,711

2011 35,227,062

2012 93,531,719

2013 54,273,091 *

2014 124,336,508

2015 101,881,393

2016 112,777,097

* Corrected to conform with FY2013 Financial Statements

- 104 -

CO

MPLIA

NC

E SECTIO

N

- 105 -

Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit

of Financial Statements Performed in Accordance With Governmental Auditing Standards



We have audited, in accordance with the 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, the financial statements of the Canaveral Port Authority (the Authority), as of and for the year ended September 30, 2016, and the related notes to the financial statements, which collectively comprise the Authority’s basic financial statements, and have issued our report thereon dated March 17, 2017.

Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Authority's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Authority’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Authority’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

- 106 -

Compliance and Other Matters As part of obtaining reasonable assurance about whether the Authority’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of This Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.


- 107 -

Report on Compliance For the Major Federal Program and State Project; Report on Internal Control Over Compliance;

and Required by the Uniform Guidance and Chapter 10.550, Rules of the Florida Auditor General



Report on Compliance for Each Major Federal Program and State Project We have audited the Canaveral Port Authority’s (the Authority) compliance with the types of compliance requirements described in the OMB Compliance Supplement and the Department of Financial Services’ State Projects Compliance Supplement that could have a direct and material effect on the Authority’s major federal program and state project for the year ended September 30, 2016. The Authority’s major federal program and state project are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.

Management’s Responsibility Management is responsible for compliance with the federal and state statutes, regulations, and the terms and conditions of its federal awards and state financial assistance applicable to its federal programs and state projects.

Auditor’s Responsibility Our responsibility is to express an opinion on compliance for the Authority’s major federal program and state project based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; the audit requirements of Title 2 U.S. CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), and Chapter 10.550, Rules of the Florida Auditor General. Those standards, the Uniform Guidance, and Chapter 10.550 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program or state project occurred. An audit includes examining, on a test basis, evidence about the Authority’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for the major federal program and state project. However, our audit does not provide a legal determination of the Authority’s compliance.

- 108 -

Opinion on the Major Federal Program and State Project In our opinion, the Authority complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its major federal program and state project for the year ended September 30, 2016.

Report on Internal Control Over Compliance Management of the Authority is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the Authority’s internal control over compliance with the types of requirements that could have a direct and material effect on the major federal program and state project to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for the major federal program and state project and to test and report on internal control over compliance in accordance with the Uniform Guidance and Chapter 10.550, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Authority’s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program or state project on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program or state project will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program or state project that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance and Chapter 10.550. Accordingly, this report is not suitable for any other purpose.


Canaveral Port Authority, Florida

Schedule of Findings and Questioned Costs For the Year Ended September 30, 2016

- 109 -

I - Summary of Independent Auditor's Results

Financial Statements

Type of auditor's report issued:

Internal control over financial reporting:Material weakness(es) identified? Yes X NoSignificant deficiency(ies) identified? Yes X None Reported

Noncompliance material to financial statements noted? Yes X No

Federal Awards

Internal control over major programs:Material weakness(es) identified? Yes X NoSignificant deficiency(ies) identified? Yes X None Reported

Type of auditor's report issued on compliance formajor programs:Any audit findings disclosed that are requiredto be reported in accordance with Section 2 CFR200.516(a)? Yes X No

Identification of major programs:

CFDA Number(s)

97.056

Dollar threshold used to distinguish between type A and type B programs:

Auditee qualified as low-risk auditee? X Yes No

$750,000

Unmodified

Unmodified

Name of Federal Program

Port Security Grant Program


Schedule of Findings and Questioned Costs (Continued) For the Year Ended September 30, 2016

- 110 -

I - Summary of Independent Auditor's Results (Continued)

State Financial Assistance

Internal control over major state projects:Material weakness(es) identified? Yes X NoSignificant deficiency(ies) identified? Yes X None Reported

Type of auditor's report issued on compliance formajor projects:Any audit findings disclosed that are requiredto be reported in accordance with state projectspursuant to Chapter 10.550, Rules of the Auditor General Yes X No

Identification of major projects:

CSFA Number(s)55.005

Dollar threshold used to distinguish between type A and type B projects:

Seaport Grants

$300,000

Unmodified

Name of State Project


Schedule of Findings and Questioned Costs (Continued) For the Year Ended September 30, 2016

- 111 -

II – Financial Statement Findings

A. Internal Control Over Financial Reporting

No Matters to Report.

B. Compliance and Other Matters


III – Federal Awards Findings and Questioned Costs

A. Internal Control Over Compliance


B. Compliance


IV – State Financial Assistance Findings and Questioned Costs

A. Internal Control Over Compliance


B. Compliance


OTH

ER IN

FOR

MA

TION

Canaveral Port Authority Appendix B - Schedule of Insurance in Force

For the Year Ended September 30, 2016

- 112 -

Property Coverage

Total insured values

$397,275,290 Limit on buildings, contents, EDP, signs, Boats

$311,944,277

Primary Flood insurance policies 101 George J King Blvd.; Office Building/Lunch Hall

$500,000 111 George J King Blvd; Bank

$500,000

180 Christopher Columbus Drive; Baggage Building

$500,000 180 Christopher Columbus Drive; Cruise Terminal #2

$500,000

180 Christopher Columbus Drive; Metal office

$57,200 200 Christopher Columbus Drive; Electrical Switchgear Bldg

$100,000

220 Christopher Columbus Drive; Restrooms

$500,000 220 Christopher Columbus Drive; Baggage Building

$200,000

220 Christopher Columbus Drive; Cruise Terminal #3

$500,000 397 Challenger Road; Warehouse

$350,000

399 Challenger Road; Warehouse

$400,000 405 Atlantis Road; Office Building

$150,000

445 Challenger Road; Administration Building

$500,000 620 Magellan Blvd; Office Building

$500,000

665 Glen Cheek Drive; Office Premises/Public Restroom

$45,100 670 Dave Nisbit Drive; Welcome Center

$500,000

9001 Marlin Street; Modular Office

$100,000 9001 Marlin Street; Warehouse

$500,000

9005 Charles M Rowland Drive; Cruise Terminal #10

$500,000 9012 Pompano Street; Security Office

$450,000

9015 Pompano Street; Maintenance Building West

$400,000 9015 Pompano Street; Metal Office

$50,000

9020 Pompano Street; Maintenance Building East

$200,000 9050 Discovery Road; Cruise Terminal #1

$400,000


$500,000 9241 Charles M Rowland Drive; Cruise Terminal #6

$500,000


$500,000

Canaveral Port Authority Appendix B - Schedule of Insurance in Force (continued)

For the Year Ended September 30, 2016

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Comprehensive General Liability

Comprehensive per occurrence/bodily injury and property damage

$1,000,000

Automobile Liability and Physical Damage Bodily Injury and Property Damage

$1,000,000 Auto Medical Payments, any one accident or loss

$5,000

Personal Injury Protection

Statutory Hired Auto Liability

$1,000,000

Umbrella Liability Per occurrence/aggregate

$50,000,000

Public Officials Liability, Claims Made Policy, includes D&O and EPLI Each claim and aggregate, including claims expense

$10,000,000

Comprehensive Crime insurance Employee Theft, per loss/aggregate

$500,000 Forgery or alteration

$500,000

Computer fraud

$500,000

Florida Storage Tank Each incident/Aggregate

$2,000,000

Fiduciary Liability, Claims Made Policy Aggregate

$1,000,000

Privacy & Network Protection Policy Privacy Liability, Network Security per occurrence/aggregate

$1,000,000

Kidnap & Ransom Kidnap, Ransom, & Extortion - Each insured event/aggregate

$1,000,000 Threat – each insured event

$75,000

Death & Dismemberment – each insured person

$250,000 Death & Dismemberment – each insured event/aggregate

$1,250,000

Terrorism-Wrap-Property Combined single limit per occurrence/aggregate

$150,000,000

Workers’ Compensation, Employers Liability Bodily injury by accident/each accident

$1,000,000 Bodily injury by disease/each employee

$1,000,000

Bodily injury by disease/aggregate

$1,000,000

Canaveral Port Authority445 Challenger Rd, Suite 301Cape Canaveral, FL 32920 USA 1-888-767-8226 TEL: 321-783-7831FAX: 321-784-6223www.portcanaveral.com

NO

RTH

ATL

AN

TIC

AV

E.

ATLANTIS RD.

MIDDLE TURNING

BASIN

CABINS

44 feet MLW

AVOCET LAGOON

RODNEY S. KETCHAMPARK

PAR

KIN

G

PARKING

PARKINGGARAGE

AUTOPORT INC.

AUTO PROCESSING

PHASE II

PAR

KIN

GG

AR

AG

E

PARKING

BOAT RAMPS

PORT CANAVERAL2016 DEVELOPMENT MAP

RET

AIL

PORTENTRANCE

SOUTH

PORTENTRANCE

NORTH

WEST TURNING

BASIN

BANANA RIVER

43 feet MLW 40 feet /12.2 meters MLW, planned to 43 feet MLW

CAPECANAVERALAIR FORCE STATION

CANAVERAL PORT AUTHORITY (CPA) MARITIME CENTER

U.S. CUSTOMS & BORDER

PROTECTION (CBP)

PARRISH MEDICAL

CITY OF CAPE CANAVERAL

TRIDENTBASIN

ATLANTICOCEANOFFICE,

HOTEL AND CONFERENCE

CENTER

S.R. 528 BEACHLINETO COCOA/ORLANDO

GLEN CHEEK DR.

MULLET ROAD

SCALLOP DR. BLUEWATER DR.

FLO

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CO

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RD

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DIS

CO

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D.

MA

RLI

N S

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POM

PAN

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T.

WAREHOUSE RD.

SPRINT RD

.

HERCULES RD.

HER

RIN

G S

T.

BA

SIN

RD

.

MARINA DISTRICT

FUTURE CRUISE EXPANSION

COMMERCIAL PARK

CT10

CT5

CT8

THE COVE/RESTAURANT/RETAIL AREA

NCB3NCB4

WHSE. NC

B2

NC

B1

SCB4

TB1 SCB3

SCB2

SCB1

GUARDGATE

CAMPGROUND & CABINS

CT2 CT3

HANSON SLAG

CEMEX

MORTONSALT

CPACARGOYARD

SEAPORTCANAVERAL

FUEL TERMINAL

RO/RO RAMP

COASTGUARD

INTER-AGENCYMARITIME

OPERATIONSCENTER

FIRESTATION

OPERATIONSFACILITY

SPACEXFACILITY

MARINETERMINAL

CARGOTERMINAL

GT USAPHASE II

GT USAPHASE I

CT6 PARKINGGARAGE

CT5 PARKINGGARAGE

TO LOCK/BARGE CANAL/ INTRACOASTAL WATERWAY

DISNEYCRUISE

LINEPA

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PKG

SR 4

01

SR 401

POSEIDON WHARF

CT2 PARKING

PA

RK

ING

PA

RK

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BO

AR

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CHES

& F

ISH

ING

CT3 PARKING

JETTY PARK

GEORGE J. KING BLVD.

YEAR-ROUND LIFEGUARDS

PAVILION

BOAT RAMPS

REGISTRATION

CONCESSIONS,BAIT & SNACK BAR

BEACH CONCESSIONS& RENTALS

NAVALORDNANCETEST UNIT

(NOTU)

KENNEDYSPACE

CENTER

MILITARYPROPERTY

MALCOLM E. McLOUTHFISHING PIER

SDDC 832ND

CAPE CANAVERAL DETACHMENT

PASS & I.D.

ARMYTRANSPORTATION

WHARF

SUBMARINEWHARF

BEACH

ES/HO

TELS

FIRE STATION,PORT CANAVERAL

MARITIME ACADEMY& TOWER

SOUTHINTERMODAL

GATE

FUTURE CRUISE TERMINAL

PORT BADGING

ASI WAREHOUSESAND STORAGE

YARDS

HERRING ST.CONTINENTAL

CEMENT

BULKCONVEYOR

MARTIN MARIETTAMATERIALS

AGGREGATE TERMINAL

CPA PROCUREMENT & MAINTENANCE

CENTERS

CARGO RD.

PAY

NE

WA

YMAGELLAN RD.

SNAPPER RD.

GR

OU

PER

RD

.

DOLPHIN RD.

SNOOK RD.

46 feet MLW

JETTY PARK DR.

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(ASTRO

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CHALLENGER RD.

CONTAINER RD.GT USA GATE

NC

B8

NCB5

NCB6

CHRISTOPHER COLUMBUS DR.

Berth Draft Limits Depth in Feet Depth in Meters

SOUTH CARGO BERTHS

1 34 10.32 40 12.23 39 11.84 40 12.2

TANKER BERTHS

1 39 11.8

NORTH CARGO BERTHS

1 40 12.22 40 12.23 32 9.74 34 10.35 40 12.2

6 40 12.2

8 35 10.6

CRUISE TERMINALS

1 3810.011.5

2 3310.03 33

5 35 10.66 35 10.68 35 10.610 35 10.6

TRANSMONTAIGNE FUEL TERMINAL

CITY OF CAPE CANAVERAL

Atlanta, GA(436 miles/703 km)

Birmingham, AL(507 miles/817 km)

Charleston, SC(310 miles/499 km)

Charlotte, NC(471 miles/757 km)

Freeport, The Bahamas(171 miles/275 km)

Jacksonville, FL(140 miles/226 km)

Knoxville, TN(560 miles/901 km)

Miami, FL(183 miles/295 km)

Nassau, The Bahamas(314 miles/505 km)

Orlando, FL(31 miles/50 km)

Raleigh, NC(522 miles/840 km)

Richmond, VA(653 miles/1053 km)

Savannah, GA(254 miles/410 km)

Tampa, FL(123 miles/198 km)

Gulf of Mexico

AtlanticOcean

Distances to key markets from the Port FL

OR

ID

A

Port CanaveralLatitude: 28° 24’ 46” NorthLongitude: 80° 3’ 49” West

CT6

CRANES

CT1

EXPLORATIONTOWER

COVE DISTRICT

CT1

CT2

CT3

= SOUTH SIDE OF PORT

B SIDE CRUISE TERMINALS— Royal Caribbean International

— Victory Casino Cruises

— Port-of-Calls

= GATECT = CRUISE TERMINALNCB = NORTH CARGO BERTHSCB = SOUTH CARGO BERTHTB = TANKER BERTH

= NORTH SIDE OF PORT

A SIDE CRUISE TERMINALS

CT5 — Carnival Cruise Lines CT6 — Carnival Cruise Lines

CT8 — Disney Cruise Line

CT10 — Carnival Cruise Lines Royal Caribbean International

CARGO TERMINALS

CONTROLLED ACCESS ROADS

FUEL STORAGE

FUTURE PROJECTS

MARINA DISTRICT

PARKS

THE COVE/RESTAURANTS/RETAIL AREA

UNDER CONSTRUCTION

Legend

= COMMERCIAL FISHING

SCRAP

BULKCONVEYOR

PARKINGGARAGE

NORTHINTERMODAL

GATE

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