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Home My WebLink About2014-10-29 - Finance-Accounting Committee Meeting Agenda PacketYorba Linda Hater District AGENDA YORBA LINDA WATER DISTRICT FINANCE - ACCOUNTING COMMITTEE MEETING Wednesday, October 29, 2014, 4:00 PM 1717 E Miraloma Ave, Placentia CA 92870 1. CALL TO ORDER 2. ROLL CALL COMMITTEE Director Phil Hawkins, Chair Director Michael J. Beverage STAFF Marc Marcantonio, General Manager Delia Lugo, Finance Manager 3. PUBLIC COMMENTS Any individual wishing to address the committee is requested to identify themselves and state the matter on which they wish to comment. If the matter is on this agenda, the committee Chair will recognize the individual for their comment when the item is considered. No action will be taken on matters not listed on this agenda. Comments are limited to matters of public interest and matters within the jurisdiction of the Water District. Comments are limited to five minutes. 4. ACTION CALENDAR This portion of the agenda is for items where staff presentations and committee discussions are needed prior to formal committee action. 4.1. Investment Report for the Period Ending September 30, 2014 Recommendation. That the Committee recommend the Board of Directors receive and file the Investment Report for the Month Ending September 30, 2014. 5. DISCUSSION ITEMS This portion of the agenda is for matters such as technical presentations, drafts of proposed policies, or similar items for which staff is seeking the advice and counsel of the Committee members. This portion of the agenda may also include items for information only. 5.1. Budget to Actual Results for September 2014 5.2. Overhead Rate Analysis Report 5.3. Supplemental Investment Services Provided by Kreisler Long -term Investments and Blaylock Robert Van, LLC 5.4. Refund Received from MWDOC 5.5. Future Agenda Items and Staff Tasks 6. ADJOURNMENT 6.1. The next Finance - Accounting Committee meeting is scheduled to be held Monday, November 24, 2014 at 4:00 p.m. Items Distributed to the Committee Less Than 72 Hours Prior to the Meeting Pursuant to Government Code section 54957.5, non - exempt public records that relate to open session agenda items and are distributed to a majority of the Committee less than seventy -two (72) hours prior to the meeting will be available for public inspection in the lobby of the District's business office located at 1717 E. Miraloma Avenue, Placentia, CA 92870, during regular business hours. When practical, these public records will also be made available on the District's internet website accessible at http: / /www.ylwd.com /. Accommodations for the Disabled Any person may make a request for a disability - related modification or accommodation needed for that person to be able to participate in the public meeting by telephoning the Executive Secretary at 714 - 701 -3020, or writing to Yorba Linda Water District, P.O. Box 309, Yorba Linda, CA 92885 -0309. Requests must specify the nature of the disability and the type of accommodation requested. A telephone number or other contact information should be included so the District staff may discuss appropriate arrangements. Persons requesting a disability - related accommodation should make the request with adequate time before the meeting for the District to provide the requested accommodation. AGENDA REPORT Meeting Date: October 29, 2014 To: Finance - Accounting Committee From: Marc Marcantonio, General Manager Presented By: Delia Lugo, Finance Manager Prepared By: Kelly McCann, Senior Accountant Dept: ITEM NO. 4.1 Finance Subject: Investment Report for the Period Ending September 30, 2014 SUMMARY: Staff is submitting the Investment Reports for the Month Ending September 30, 2014 for the Committee's review. STAFF RECOMMENDATION: That the Committee recommend the Board of Directors receive and file the Investment Report for the Month Ending September 30, 2014. DISCUSSION: The Investment Portfolio Report presents the market value and percent yield for all District investments by institution. The Investment Report Summary includes budget and actual interest and average term portfolio information as well as market value broken out by reserve categories. The total yield for the period ending September 30, 2014 is 0.60 %. The overall increase in the investment balance from the previous month is approximately $1,393,000. A larger balance change includes an increase in COP Revenue Bond - Reserve Fund of $1,874,000 due to the posting of funds to be available for the Debt Service principal and interest payment due on October 1, 2014. The decrease in Water Reserve for Debt Services fund of $588,781 is the direct result of making funds available for Debt Service payment due October 1, 2014. STRATEGIC PLAN: FR 1 -F: Continue to Record and Report the Fairly Stated Financial Activities of the District in a Timely and Transparent Manner to the Board of Directors and Member Agencies ATTACHMENTS: Invst Rpt 09- 14.xlsx Invst Agenda Backup - September 2014.xlsx Description: Backup Material Backup Material Type: Backup Material Backup Material Yorba Linda Water District Investment Portfolio Report September 30, 2014 Market % Date of Percent Value Par of Total Institution Maturity Yield Checking Account: $ 165,387 $ 165,387 Wells Fargo Bank 79,265 79,265 Pershing $ 244,652 $ 244,652 0.81% Total 0.00% Money Market Accounts: $ 54,977 $ 54,977 1,912,718 1,912,718 4.025.707 4.025.707 5,993,402 $ 5,993,402 19.80% Federal Agency Securities Wells Fargo Money Market 0.03% US Bank (Revenue Bonds) 0.03% Bank ofthe West 0.11% Total 0.08% $ 491,540 $ 500,000 Fannie Mae 05/25/18 1.14% 490,720 500,000 Federal Home Loan Bank 06/12/18 1.01% 497,085 500,000 Fannie Mae 06/12/18 0.85% 492,480 500,000 Federal Home Loan Bank 06/13/18 1.11% 492,700 500,000 Federal Home Loan Bank 06/20/18 1.14% 2,109,416 2,124,676 Federal Home Loan Bank 05/24/17 0.88% $ 4,573,941 $ 4,624,676 15.11% Total 05/14/18 0.97°/% Certificates of Deposits $ 245,232 $ 248,000 CIT Bank, Salt Lake 05/22/18 1.21% 245,059 248,000 Discover 05/22/18 1.21% 245,542 248,000 Goldman Sachs Bank 05/22/18 1.21% 245,297 248,000 BealBank 05/23/18 1.01% 246,792 248,000 Wells Fargo 04/27/18 0.90% 244,229 247,000 Barclays Bank 04/30/18 0.70% 245,927 248,000 State Bank of India 05/14/18 1.15% 247,018 249,000 Webster Bank 05/03/18 0.90% 245,220 248,000 American Express Centurion Bank 05/23/18 1.21% 243,248 248,000 GE Capital Bank 05/24/18 1.12% 248,681 249,000 Merrick Bank 05/24/17 0.75% 247,683 248,000 BMW Bank 05/24/17 0.90% 248,923 249,000 Firstbank Puerto Rico 05/24/16 0.75% 246,209 249,000 Oriental Bank & Trust 05/29/18 1.06% 246,281 249,000 Silvergate Bank 05/30/18 1.01% 246,196 249,000 Enterprise Bank & TR Co Lowell 05/30/18 1.01% 246,186 249,000 Safra National Bank 05/31/18 1.01% 245,205 248,000 Townebank Portsmouth 05/31/18 1.01% 246,206 249,000 Mascoma Savings Bank 05/29/18 1.01% $ 4,675,134 $ 4,719,000 15.44% Total 1.01°/% Pooled Investment Accounts: $ 5,392,001 $ 5,392,001 Local Agency Investment Fund 0.25% 3,073 3,073 Ca1TRUST Short Term 0.41% 9,389,439 9,408,812 Ca1TRUST Medium Term 0.75% $ 14,784,514 $ 14,803,886 48.84% 0.57% $ 30,271,643 $ 30,385,616 100% Total Investments 0.60% Per Government Code requirements, the Investment Report is in compliance with the Yorba Linda Water District's Investment Policy, and there are adequate funds available to meet budgeted and actual expenditures for the next six months. 'a Kelly D. McCann, Senior Accountant 9/30/14 Investment Summary Report Below is a chart summarizing the yields as well as terms and maturities for the month of September 2014: Average # of Month Portfolio Days to of 2014 Yield Maturity September 0.60% 385 Below is are charts comparing operating fund interest for current and prior fiscal years. Actual Interest Monthly - September Year -to -Date 9/30/2013 9/30/2014 $ 9,939 $ 13,046 $ 27,002 $ 31,736 Budget 2013/2014 2014/2015 Interest Budget, September YTD $ 21,750 $ 28,000 Interest Budget, Annual $ 87,000 $ 112,000 Interest earned on investments is recorded in the fund that owns the investment. Investment Summary Comparison Between Current and Previous Month The distribution of investments in the portfolio both in dollars and as a percentage of the total portfolio by funds is as follows: August 2014 % Alloc September 2014 % Alloc Fund Description Balance 7/31/2014 Balance 8/31/2014 Water Operating Reserve $ 2,035,776 7.07% $ 2,006,819 6.67% Water Emergency Reserve 1,013,152 3.52% 1,011,245 3.36% Water Capital Project Reserve 16,694,667 57.98% 16,677,713 55.40% Water Reserve for Debt Service 3,320,078 11.53% 2,731,297 9.07% Maintenance Reserve 150,335 0.52% 150,335 0.50% Employee Liability Reserve 200,153 0.70% 200,169 0.66% COP Revenue Bond 2008 - Reserve 2,148,371 7.46% 4,022,134 13.36% Sewer Operating 92,904 0.32% 92,902 0.31% Sewer Emergency Reserve 1,011,092 3.51% 1,010,328 3.36% Sewer Capital Project Reserve 2,127,735 7.39% 2,203,314 7.32% $ 28,794,263 100.00% $ 30,106,256 100.00% Wells Fargo Bank Checking Water Operating (39,240) 104,502 Sewer Operating 123,631 60,885 84,391 165,387 Totals $ 28,878,654 $ 30,271,643 AGENDA REPORT Meeting Date: October 29, 2014 To: Finance - Accounting Committee From: Marc Marcantonio, General Manager Presented By: Delia Lugo, Finance Manager Dept: Prepared By: Kelly McCann, Senior Accountant Subject: Budget to Actual Results for September 2014 DISCUSSION: ITEM NO. 5.1 Finance Attached are the District's budget to actual summary results for the Water Fund, Sewer Fund and a combined statement for both funds pertaining to the reporting month of September 2014. For the month of September 2014, the District water revenue is 30.34% of annual budget, which is 3.71 % lower than the historical trend for this point in the year. The majority of the Water Fund's individual Supplies and Services expenses are below budget, with the exceptions of Dues & Memberships, Materials, Maintenance, and Vehicle Equipment due to the previous month reported reasons. In addition, Insurance is at 66.10% of annual budget due to annual auto and general liability insurance payment to ACWA/JPIA, Utilizes is at 29.72% of the annual budget due to electricity costs at the Richfield and Miraloma facilities, and Other Expenses are at 53.34% of the annual budget due to adjustments in the prior year invoices for the Highland facility from Southern California Gas. Overall, Sewer Supplies and Services expenses are trending below budget, with the same exceptions noted in the water fund. In addition, Non - Capital Equipment is at 78.86% of annual budget due to the replacement of the camera cable in the camera vehicle. STRATEGIC PLAN: FR 1 -F: Continue to Record and Report the Fairly Stated Financial Activities of the District in a Timely and Transparent Manner to the Board of Directors and Member Agencies ATTACHMENTS: September 2014 consolidated stmt.xlsx Description: Backup Material Type: Backup Material September 2014 Water Stmt.xlsx Backup Material Backup Material September 2014 Sewer Stmt.xlsx Backup Material Backup Material Yorba Linda Water District Summary Financial Report Water & Sewer Funds For Three Months Ending September 30, 2014 Revenue (Operating): Water Revenue (Residential) Water Revenue (Commercial & Fire Det.) Water Revenue (Landscape /Irrigation) Water Revenue (Service Charge) Sewer Charge Revenue Locke Ranch Assessments Other Operating Revenue Total Operating Revenue: Revenue (Non- Operating): Interest Property Tax Other Non - Operating Revenue Total Non - Operating Revenue: Annual YTD Sept YTD YTD YTD Budget Budget Actual Actual Under(Over) % of FY 2016 FY 2016 FY 2016 FY 2016 Budget Budget $17,154,552 $4,288,638 $1,610,372 $5,254,081 $11,900,471 30.63% 2,074,097 518,524 176,131 568,714 1,505,383 27.42% 4,792,995 1,198,249 483,713 1,579,645 3,213,350 32.96% 4,478,000 1,119,500 421,182 1,211,204 3,266,796 27.05% 1,605,292 401,323 133,299 403,358 1,201,934 25.13% 201,000 50,250 221 337 200,663 0.17% 719,777 179,944 76,042 257,003 462,774 35.71% 31,025,713 7,756,428 2,900,960 9,274,342 21,751,371 29.89% 112,000 28,000 13,046 31,735 80,265 28.33% 1,283,642 320,911 41,095 49,121 1,234,521 3.83% 533,525 133,381 9,273 100,204 433,321 18.78% 1,929,167 482,292 63,414 181,060 1,748,107 9.39% Total Revenue 32,964,880 8,238,720 2,964,374 9,466,402 23,499,478 28.69% Expenses (Operating) Variable Water Costs (G.W., Import & Power) 14,928,972 3,732,243 1,460,020 4,693,449 10,235,523 31.44% Salary Related Expenses 8,224,812 2,056,203 617,550 1,860,521 6,364,291 22.62% Supplies & Services 4,389,840 1,097,460 614,773 1,199,292 3,190,548 27.32% Total Operating Expenses 27,543,624 6,885,906 2,692,343 7,753,262 19,790,362 28.15% Expenses (Non- Operating): Interest on Long Term Debt 1,780,793 445,198 150,882 434,464 1,346,329 24.40% Other Expense 72,000 18,000 46,757 38,405 33,595 53.34% Total Non - Operating Expenses: 1,852,793 463,198 197,639 472,869 1,379,924 25.52% Total Expenses 29,396,416 793499104 298899982 892269131 2191709286 27.98% Net Income (Loss) Before Capital Contributions 396689464 8899616 749392 192299271 293299193 34.64% Capital Contributions - - 68,806 69,983 69,983 0.00% Net Income (Loss) Before Depreciation 396689464 8899616 1439198 192999264 292699210 36.61% Depreciation & Amortization 7,337,500 1,834,375 613,485 1,840,117 5,497,383 25.08% Total Net Income (Loss) ($397799036) ($9449769) ($4709287) ($6409863) ($392389173) 14.31% Capital - Direct Labor (20,657) Yorba Linda Water District Water Fund For Three Months Ending September 30, 2014 Annual YTD Sept YTD YTD YTD Budget Budget Actual Actual Under(Over) % of Annual FY 2015 FY 2015 FY 2015 FY 2015 FY Budget Budget Revenue (Operating) Water Revenue (Residential) $17,154,552 $4,288,638 $1,610,372 $5,254,081 $11,900,471 30.63% Water Revenue (Commercial & Fire Det.) 2,074,097 518,524 176,131 568,714 1,505,383 27.42% Water Revenue (Landscape /Irrigation) 4,792,995 1,198,249 483,713 1,579,645 3,213,350 32.96% Water Revenue (Service Charge) 4,478,000 1,119,500 421,182 1,211,204 3,266,796 27.05% Other Operating Revenue 670,003 167,501 74,816 235,554 434,449 35.16% Total Operating Revenue: 29,169,647 7,292,412 2,766,214 8,849,198 20,320,449 30.34% Revenue (Non- Operating) Interest 100,000 25,000 11,830 29,305 70,695 29.31% Property Tax 1,283,642 320,911 41,095 49,121 1,234,521 3.83% Other Non - Operating Revenue 521,600 130,400 11,272 104,199 417,401 19.98% Total Non - Operating Revenue: 1,905,242 476,311 64,197 182,625 1,722,617 9.59% Total Revenue 1,852,793 463,198 197,639 472,869 1,379,924 25.52% 31,074,889 7,768,722 2,830,411 9,031,823 22,043,066 29.06% 28.21% Net Income (Loss) Before Capital Contributions 3,015,880 753,970 66,635 1,117,351 Expenses (Operating): 37.05% Capital Contributions - - 50,805 50,806 Variable Water Costs (G.W., Import & Power) 14,928,972 3,732,243 1,460,020 4,693,449 10,235,523 31.44% Salary Related Expenses 7,363,472 1,840,868 533,477 1,633,384 5,730,088 23.23% Supplies & Services: 25.11% Total Net Income (Loss) ($2,976,620) ($744,155) ($384,232) ($336,561) Communications 273,786 68,447 37,262 67,254 206,532 24.56% Contractual Services 521,451 130,363 65,884 138,102 383,349 26.48% Data Processing 173,752 43,438 21,789 26,913 146,839 15.49% Dues & Memberships 72,321 18,080 331 23,744 48,577 32.83% Fees & Permits 169,437 42,359 38,813 49,560 119,877 29.25% Board Election 69,750 17,438 - - 69,750 0.00% Insurance 291,406 72,852 192,536 192,627 98,779 66.10% Materials 579,369 144,842 63,474 186,804 392,565 32.24% District Activities, Emp Recognition 22,980 5,745 629 1,036 21,944 4.51% Maintenance 394,416 98,604 64,762 175,453 218,963 44.48% Non - Capital Equipment 132,525 33,131 2,578 33,757 98,768 25.47% Office Expense 37,642 9,411 2,641 7,394 30,248 19.64% Professional Services 672,197 168,049 32,571 80,108 592,089 11.92% Training 58,571 14,643 1,362 8,867 49,704 15.14% Travel & Conferences 42,129 10,532 2,554 4,974 37,155 11.81% Uncollectible Accounts 37,200 9,300 (165) (243) 37,443 -0.65% Utilities 83,700 20,925 14,200 24,873 58,827 29.72% Vehicle Equipment 281,139 70,285 31,419 93,547 187,592 33.27% Supplies & Services Sub -Total 3,913,772 978,443 572,640 1,114,770 2,799,002 28.48% Total Operating Expenses 26,206,216 6,551,554 2,566,137 7,441,603 18,764,613 28.40% Expenses (Non- Operating): Interest on Long Term Debt 1,780,793 445,198 150,882 434,464 1,346,329 24.40% Other Expense 72,000 18,000 46,757 38,405 33,595 53.34% Total Non - Operating Expenses: 1,852,793 463,198 197,639 472,869 1,379,924 25.52% Total Expenses 28,059,009 7,014,752 2,763,776 7,914,472 20,144,537 28.21% Net Income (Loss) Before Capital Contributions 3,015,880 753,970 66,635 1,117,351 1,898,529 37.05% Capital Contributions - - 50,805 50,806 50,806 0.00% Net Income (Loss) Before Depreciation 3,015,880 753,970 117,440 1,168,157 1,949,335 38.73% Depreciation & Amortization 5,992,500 1,498,125 501,672 1,504,718 4,487,782 25.11% Total Net Income (Loss) ($2,976,620) ($744,155) ($384,232) ($336,561) ($2,640,059) 11.31% Capital - Direct Labor (20,111) (77,295) Revenue (Operating): Sewer Charge Revenue Locke Ranch Assessments Other Operating Revenue Total Operating Revenue: Revenue (Non- Operating): Interest Other Non - Operating Revenue Total Non - Operating Revenue: Total Revenue Expenses (Operating): Salary Related Expenses Supplies & Services: Communications Contractual Services Data Processing Dues & Memberships Fees & Permits Board Election Insurance Materials District Activities, Emp Recognition Maintenance Non - Capital Equipment Office Expense Professional Services Training Travel & Conferences Uncollectible Accounts Utilities Vehicle Equipment Supplies & Services Sub -Total Total Operating Expenses Expenses (Non- Operating): Interest Expense Other Expense Total Non - Operating Expenses: Total Expenses Yorba Linda Water District Sewer Fund For Three Months Ending September 30, 2014 Annual YTD Sept YTD YTD YTD Budget Budget Actual Actual Under(Over) % of Annual FY 2015 FY 2015 FY 2015 FY 2015 Budget Budget $1,605,292 $401,323 $133,299 $403,358 $1,201,934 25.13% 201,000 50,250 221 337 200,663 0.17% 49,774 12,444 1,226 21,449 28,325 43.09% 1,856,066 464,017 134,746 425,144 1,430,922 22.91% 12,000 3,000 1,216 2,431 9,569 20.26% 11,925 2,981 (1,999) (3,995) 15,920 - 33.50% 23,925 5,981 (783) (1,564) 25,489 - 6.54% 1,879,991 469,998 133,963 423,580 1,456,411 22.53% 861,340 215,335 84,072 227,136 634,204 26.99% 21,108 5,277 1,535 3,792 17,316 17.96% 39,249 9,812 4,273 9,709 29,540 24.74% 13,078 3,270 1,640 2,026 11,052 15.49% 5,744 1,436 25 1,787 3,957 31.11% 16,753 4,188 1,108 1,832 14,921 10.94% 5,250 1,313 - - 5,250 0.00% 21,934 5,484 14,492 14,499 7,435 66.10% 78,756 19,689 1,738 8,923 69,833 11.33% 1,730 433 47 71 1,659 4.10% 112,605 28,151 1,893 3,863 108,742 3.43% 19,475 4,869 8,944 15,357 4,118 78.86% 2,833 708 190 548 2,285 19.35% 39,413 9,853 2,395 5,962 33,451 15.13% 6,609 1,652 72 1,493 5,116 22.59% 4,371 1,093 170 352 4,019 8.05% 2,800 700 (12) (24) 2,824 - 0.86% 7,100 1,775 1,140 2,074 5,026 29.21% 77,261 19,315 2,479 12,256 65,005 15.86% 476,066 119,017 42,129 84,520 391,546 17.75% 1,337,406 334,352 126,201 311,656 1,025,750 23.30% 0.00% 0.00% 0.00% 1,337,406 334,352 126,201 311,656 1,025,750 23.30% Net Income (Loss) Before Capital Contributions 542,585 135,646 7,762 111,924 430,661 20.63% Capital Contributions 18,001 19,177 19,177 0.00% Net Income (Loss) Before Depreciation 542,585 135,646 25,763 131,101 449,838 24.16% Depreciation &Amortization 1,345,000 224,167 111,813 335,399 1,009,601 24.94% Total Net Income (Loss) ($802,415) ($88,520) ($86,050) ($204,298) ($598,117) 25.46% Capital - Direct Labor (546) (5,379) AGENDA REPORT Meeting Date: October 29, 2014 To: Finance - Accounting Committee From: Marc Marcantonio, General Manager Presented By: Delia Lugo, Finance Manager Prepared By: Kelly McCann, Senior Accountant Subject: Overhead Rate Analysis Report SUMMARY: Dept: ITEM NO. 5.2 Finance Staff is submitting the Overhead Rate Analysis Report for the Committee's review. DISCUSSION: Overhead is a way of measuring indirect expenses, or those expenditures that are necessary for and contribute to the well -being of our business, but don't contribute directly to profits. Direct expenses are those costs that go directly toward producing water and providing water /sewer services. The attached Overhead Rate Analysis Report presents the percentage calculation of indirect costs versus direct costs. It is based on District's actual costs incurred. The report provides overhead rates on an annual basis for the last 5 years, 3 year overhead rates, and 5 year overhead rates. We are projecting a general overhead rate of 78 %, based on 3 year calculation of indirect expenses of $43,611,400, divided by direct expense of $55,921,581. This rate will be used when charging for repairs and direct labor costs. The variable overhead rate of 33% is based on 3 year overhead rate calculation of indirect expenses of $18,398,236, divided by direct expense of $55,921,581. Since, the variable overhead is used in the capitalization of indirect expenses for capital projects; depreciation and interest expense are excluded in the calculation of this rate. These overhead rates were discussed with our auditors, White, Nelson, Diehl, and Evans. Any funds received within the current fiscal year would be recorded in the appropriate direct expense account(s) equal to the amount incurred in the current fiscal year. The overhead portion of these funds would be recognized as other revenue. STRATEGIC PLAN: FR 1 -F: Continue to Record and Report the Fairly Stated Financial Activities of the District in a Timely and Transparent Manner to the Board of Directors and Member Agencies ATTACHMENTS: Name: Description: Type: Overhead Rate Analysis Report.xlsx Backup Material Backup Material Overhead Rates Fiscal Year 2009 -10 Costs Fiscal Year 2010 -11 Costs Fiscal Year 2011 -12 Costs Fiscal Year 2012 -13 Costs Fiscal Year 2013 -14 Costs Row Labels Sum of 09 -10 Net Change Row Labels Sum of 10 -11 Net Change Row Labels Sum of 11 -12 Net Change Row Labels Sum of 12 -13 Net Change Row Labels Sum of 13 -14 Net Change Direct 15,430,299.40 Direct 15,873,108.02 Direct 17,177,147.52 Direct 18,717,921.72 Direct 20,026,511.79 Indirect 5,476,981.42 1 nd i rect 6,262,155.88 1 nd i rect 5,970,397.09 1 nd i rect 6,415,989.46 Indirect 6,011,849.10 n/a (27,231,670.60) n/a (28,587,626.99) n/a (31,369,456.14) n/a (33,073,751.39) n/a (35,089,773.06) Deprec. & Interest 6,324,389.78 Deprec. & Interest 6,452,363.09 Deprec. & Interest 8,221,911.53 Deprec. & Interest 7,939,840.21 Deprec. & Interest 9,051,412.17 Grand Total WMEEK (0.00) Grand Total (0.00) Grand Total 0.00 Grand Total 0.00 Grand Total (0.00) 2010 2011 2012 2013 2014 Variable Overhead Rate 35.5% Var. Overhead Rate 39.5% Variable Overhead Rate 34.8% Var. Overhead Rate 34.3% Var. Overhead Rate 30.0% (excludes Depreciation & Interest Expense) (excludes Depreciation & Interest Expense) (excludes Depreciation & Interest Expense) (excludes Depreciation & Interest Expense) (excludes Depreciation & Interest Expense) Overhead Rate 76.5% Overhead Rate 80.1% Overhead Rate 82.6% Overhead Rate 76.7% Overhead Rate 75.2% (Depreciation & Interest Expense as Indirect) (Depreciation & Interest Expense as Indirect) (Depreciation & Interest Expense as Indirect) (Depreciation & Interest Expense as Indirect) (Depreciation & Interest Expense as Indirect) 3 Year Overhead Rate (July 2011- June 2014) Variable Overhead Rate 32.9% (excludes Depreciation & Interest Expense) Overhead Rate = 78.0% (Depreciation & Interest Expense as Indirect) 5 Year Overhead Rate (July 2009 - June 2014) Variable Overhead Rate 34.6% (excludes Depreciation & Interest Expense) Overhead Rate = 78.1% (Depreciation & Interest Expense as Indirect) Assumptions & Calculations: A) Overheat rate is a percentage calculation = Indirect costs divided by Direct Costs. B) 3 year Variable Overhead Rate Calculation = 18,398,236 divided by 55,921,581 = 33 %. Depreciation & Interest expense are excluded from this calculation. C) 3 year general Overhead Rate Calculation = 43,611,400 divided by 55,921,581 = 78 %. Depreciation & Interest expense are included as indirect costs D) Sales, Prior Year Expenses, Gain /Loss on Sale of Equipment, Extraordinary Items, and Balance Sheet accounts are considered "n /a ". Therefore, these account balances aren't in the overhead rate calculation. E) Depreciation and Interest expense are considered "Indirect" and fixed costs. F) Department 5010 through 5050 and 6040 are considered "Direct ", except those "Indirect" expenses within these departments (e.g. office expenses, membership, etc...). All the other departments are considered "Indirect" expenses. G) Department 6040 is considered "Direct ", since; it's takes care of the SCADA system which is used in the production of water. Except those "Indirect" expenses within this department. H) Department 5050 is considered "Direct ". It maintains /repairs equipment that is used in the production of water. Except those "Indirect" expenses within this department. Please note vehicle fuel and maintenance costs are identified as "Direct" if it associated with Operations, and "Indirect" if it's for indirect departments. 1) Department 5060 is considered "Indirect ". This department takes care of the facilities and not directly associated with the production of water or sewer services. 1) Depreciation and Interest expense should remain out of the "Variable Overhead Rate" calculation used for CIP capitalization. Interest expense already capitalized thru FASB rules. Confirmed with Auditor (Kassie R.). Meeting Date: Subject: ATTACHMENTS: AGENDA REPORT October 29, 2014 ITEM NO. 5.3 Supplemental Investment Services Provided by Kreisler Long -term Investments and Blaylock Robert Van, LLC Kreisler Long -term Investments.0 Blaylock Robert Van, LLC.pdf Description: Backup Material Backup Material Type: Backup Material Backup Material Page 1 of 16 1. Cover Page Kreisler Long -term Investments 28209 Somerset Ct. Castaic, Ca. 91384 Phone - (661) 476 -5088 Fax - (661) 476 -5087 Website - None This brochure provides information about the qualification and business practices of Kreisler Long -term Investments. If you have any questions about the contents of this brochure, please contact us at (661) 476 -5088, or by email at mkreisler @ca.rr.com. The information in this brochure has not been approved or verified by the United States Securities and Exchange Commission, or by any state securities authority. Additional information about Kreisler Long -term Investments is available on the SEC's website at www.adviserinfo.sec.gov. Date of Report - January 28, 2014 Page 2 of 16 2. Material Changes Annual Update Kreisler Long -term Investments is providing this information as part of our annual updating amendment which contains material changes from our last annual update. This section discusses only material changes since the last annual update. Material Changes since the Last Update This Brochure is dated 01/28/2014. There are no other material changes since the Form ADV Part 2A was last prepared and filed 01/30/2013. Full Brochure Availability The Firm Brochure for Kreisler Long -term Investments is available by contacting Martin Kreisler with the contact information on the cover page of this brochure. Page 3 of 16 3. Table of Contents Item# ... description ..................................... ............................... ...........................page # 1. Cover Page ................................................................................................ ..............................1 2. Material Changes .................................................................................. ............................... 2 AnnualUpdate ................................................................................. ..............................2 Material Changes since the Last Update ..................................... ............................... 2 Full Brochure Availability .............................................................. ............................... 2 3. Table of Contents ..................................................................................... ............................3 -5 4. Advisory Business ................................................................................... ..............................6 FirmDescription ............................................................................. ............................... 6 PrincipalOwners ............................................................................ ............................... 6 Types of Advisory Services ........................................................... ............................... 6 TailoredRelationships ................................................................... ............................... 7 WrapFee Programs ........................................................................ ............................... 7 ClientAssets ................................................................................... ............................... 7 5. Fees and Compensation ...................................................................... ............................... 7 Description..................................................................................... ............................... 7 FeeBilling ...................................................................................... ............................... 7 OtherFees ...................................................................................... ............................... 8 FeesPaid in Advance .................................................................... ............................... 8 Additional Compensation ............................................................. ............................... 8 6. Performance -Based Fees & Side -by -Side Management .................... ............................... 8 Sharing of Capital Gains or Capital Appreciation ....................... ............................... 8 7. Types of Clients ................................................................................... ............................... 8 Description..................................................................................... ............................... 8 AccountMinimums ........................................................................ ............................... 9 8. Methods of Analysis, Investment Strategies and Risk of Loss ........ ............................... 9 Methodsof Analysis ...................................................................... ............................... 9 Investment Strategies ................................................................... ............................... 9 Riskof Loss .................................................................................... .............................10 9. Disciplinary Information ....................................................................... .............................10 Page 4 of 16 Legaland Disciplinary .................................................................... .............................10 Criminal or Civil Action .................................................................. .............................10 Administrative Proceeding ............................................................ .............................10 Self - Regulatory Proceeding ........................................................... .............................10 10. Other Financial Industry Activities and Affiliations .......................... .............................10 Broker - dealer or Registered Representative ................................ .............................10 Futures Commission Merchant, Commodity Pool Operator, Commodity Trading Adviser or Associated Person ......................................................... .............................10 Material Relationships or Arrangements with Financial Industry ............................11 Recommend or Select Other Investment Advisers ...................... .............................11 11. Code of Ethics, Participation or Interest in Client Transactions and Personal ............ 11 Codeof Ethics ................................................................................ .............................11 Recommend Securities with Material Financial Interest .............. .............................11 Invest in Same Securities Recommended to Clients ................... .............................11 Personal Trading Policies .............................................................. .............................11 12. Brokerage Practices ........................................................................... .............................12 Selecting Brokerage Firms ............................................................ .............................12 Research and Soft Dollars ............................................................. .............................12 Brokerage for Client Referrals ....................................................... .............................13 DirectedBrokerage ......................................................................... .............................13 OrderAggregation .......................................................................... .............................13 13. Review of Accounts ............................................................................ .............................13 PeriodicReviews ............................................................................ .............................13 ReviewTriggers .............................................................................. .............................13 RegularReports .............................................................................. .............................13 14. Client Referrals and Other Compensation ........................................ .............................14 EconomicBenefits ......................................................................... .............................14 ThirdParty Solicitors ..................................................................... .............................14 15. Custody ............................................................................................... .............................14 AccountStatements ....................................................................... .............................14 16. Investment Discretion ......................................................................... .............................14 Discretionary Authority for Trading ............................................... .............................14 Limited Power of Attorney .............................................................. .............................15 Page 5 of 16 17. Voting Client Securities ...................................................................... .............................15 ProxyVoting .................................................................................... .............................15 18. Financial Information .......................................................................... .............................15 Prepaymentof Fees ......................................................................... .............................15 FinancialCondition ......................................................................... .............................15 Bankruptcy....................................................................................... .............................15 19. Requirements for State - Registered Advisers ................................... .............................16 Identify Principal Executive Officers and Management Person ... .............................16 Describe Business Other Than Investment Advice ....................... .............................16 Page 6 of 16 4. Advisory Business 'irm Description We are a unique firm that is able to offer customized services to meet your investment objectives. We began operations in July, 1998. We invest for individuals, businesses and pensions. Principal Owners Martin H. Kreisler is the sole owner of Kreisler Long -term Investments. He was born on August 11, 1944. He holds a Bachelor of Science in Accounting from California State University, Long Beach and a Masters in Business Administration from the University of Southern California. He served as Chief Financial Officer for the California Association of Realtors for 17 years. He then worked with other Investment Advisors prior to starting this firm in 1998. ypes of Advisory Service When you enter into an advisory agreement, we determine your tolerance to risk and your personal goals. Based on your tolerance to risk and your investment objectives, we are able to design a tailored portfolio. We then invest in a combination of no -load mutual funds, fixed income and individual stocks, to diversify your assets. We invest your account over a period of time to average your purchase cost. In addition to investing for you, we review your financial goals to help encourage saving for your future. Your portfolio is adjusted as necessary when your needs change. The core of our investment strategy is with no -load mutual funds. We divide mutual funds into classes of risk to conform to individual risk tolerance. We work with mutual funds that employ a successful upgrading strategy. We also invest in other mutual funds, depending on individual risk tolerance and investment objectives. These mutual funds are monitored and if they underperform other funds in their risk class, they are sold. We are also able to buy different fixed income investments when the yield is attractive for your account. This includes individual bonds and preferred stock. Individual stocks are bought when they are an appropriate risk in your portfolio. The individual stocks provide another customized component of our investment strategy. Investments made by our firm are limited to the above categories. We provide a monthly statement for each of your accounts. The monthly statement is on one page and it is an executive summary of your account. It includes an overview of what you own, categorized by class of risk, and the value of each investment at the end of the month. The statement also reports the gain or loss for the account, month and year to date as well as the percentage gain or loss for both the month and year -to -date. In addition, we provide up to five years of percentage gain /losses, your balance at the beginning of the year as well as any deposits /withdrawals during the year. Page 7 of 16 Along with your monthly statement we send a letter to you. Our letter is also normally on one page so it can be reviewed quickly. Our letter includes discussion about the markets in general, any issues that have impacted performance generally, other topics of interest and a summary of our model account performance compared to the average growth mutual fund and the S &P 500 Index. We do not provide detailed discussion of individual investments in our letter. �ailored Relationships We tailor investments to your tolerance for risk, age, expectation of future earnings and investment goals. Our most conservative portfolios have more fixed income related investment. When we invest for corporations or trade associations we work with your individual investment policies and fiduciary duties of Directors. You may impose restrictions on investing in certain securities or types of securities. Wrap Fee Programs We have no wrap fee programs Client Assets Total assets under management at December 31, 2013 were $ 20,500,000 and this included our personal assets. We have investment discretion in all accounts. 5. Fees and Compensation Description We are compensated for our services with management fees. We charge an annual fee based on the fee schedule below. We apply 1/4 of the fee on a quarterly basis. We provide the fee calculation and the amount of the fee on your statement we prepare at the end of each quarter. The fee that is reported to you is taken from your account by our custodian, Schwab Advisor Services. Fee Billing The following fee schedule is an annual formula. Fees are paid quarterly in advance as described above. 1.50% on the account NAV under $500,000 plus 1.25% on the account NAV between $501,001 and $1,000,000 plus 1.00% on the account NAV for amounts in excess of $1,000,000 Net Asset Value (NAV) includes all cash, money market balances, and the value of all securities and mutual funds held in the account. You may terminate an investment advisory contract in writing, and a refund will be calculated and paid, prorated according to the amount of time remaining in the quarter. Page 8 of 16 The fee schedule is negotiable. Other Fees Our services are only compensated by the management fees described above. We don't receive any other form of compensation. Our custodian, Schwab Advisor Services, charges a transaction fee for some mutual funds, and a short term redemption penalty if other mutual funds are bought and sold in less than 90 days. They also charge a commission for buying and selling individual stocks. There are no charges for being custodian of your account. When we buy mutual funds, there are fees within the mutual funds. All fees within mutual funds are deducted when calculating performance of the mutual funds. When your performance is reported to you, all fees have been deducted. We are only motivated to minimize fees charged by others. ass raid in Advariut: Our quarterly management fees are taken in advance at the beginning of each quarter. You are never charged for management fees beyond the current quarter. Our Management Agreement explains that fees paid in advance will be prorated and refunded if our Advisory Contract is terminated before the end of the quarter. Additional Compensation We only receive management fee compensation. 6. Performance -Based Fees & Side- by -Side Management Sharing of Capital Gains or Capital Appreciation We have NO performance based fees. 7. Types of Clients )escription Our clients include individuals, high net worth individuals, corporations and retirement funds. We currently manage their Brokerage Accounts, Family Trust Accounts, Corporate Accounts, IRA Accounts (including Contributory IRA's, Rollover IRA's, SEP IRA's, Inherited IRA's, SIMPLE IRA's and Roth IRA's), 401k (Personal Choice Retirement Accounts), and Money Purchase Pension and Profit Sharing Retirement Accounts. Page 9 of 16 Account Minimums The minimum balance for a new managed account is $20,000. The minimum is unusually low for professionally managed accounts, but we believe there is a real need for such a minimum in a universe of advisors that generally require much higher minimums. 8. Methods of Analysis, Investment Strategies and Risk of Loss Methods of Analysis Our investment program works with risk and volatility, creating classes for lower and higher risk investments. When we identify your tolerance for risk and volatility, we then are able to invest so your expected results will be based on your investment goals. We report on your monthly statement the classes of risk so you can see how much is invested relative to these risk classes. Investment Strategies Most of our investment is in mutual funds. We are not limited to any particular strategy or corner of the market. We are able to use mutual funds successfully because they are actively managed and diversified to conform to specific investment objectives. We maintain contact with the mutual funds and understand the manager's strategies. Our core strategy includes using mutual funds that employ an upgrading strategy that has been successful for over forty years as recognized by Hulbert Financial Digest. Hulbert ranks mutual fund performance. We also find mutual funds that are managed to reduce risk, or avoid loss, using hedges or cash levels. We find mutual funds that are actively managed and have strong current performance. When we determine that there are stronger investments in the same risk category, we will exchange for other funds that are performing better. We invest in individual bonds and preferred stock as part of our fixed income strategy. We evaluate the risk /reward expectation. Bonds are typically rated by rating agencies like Standard & Poor's. We have found that smaller companies often have bonds that are not afforded high ratings, yet the companies have strong balance sheets or positive cash flow, creating opportunity for us. We often use other Bond Dealers that have agreement with Schwab so the bonds can be purchased and processed through Schwab's TradeAway Service or Schwab's Prime Broker Program. We can get unique investment research from these other Bond Dealers. We also invest in individual stocks. Individual stocks are normally more volatile than mutual funds that invest in a full basket of stocks. We use research that includes Investor's Business Daily to find individual stocks. The individual stocks can provide a boost to your overall performance when the underlying companies surprise with good news or exceed expected earnings. Page 10 of 16 Occasionally we receive shares of a new public offering. We spread these shares to our largest clients as well as clients that are actively depositing to their accounts. We keep only a small fraction of the shares for our personal account that we use as our model account. iisk of Loss It is important to understand that there is risk of loss in any investment strategy. We try to identify where the greatest risk lies, but the stock market has had two bear markets with losses exceeding 20% in the last twelve years. You should be prepared to accept losses once we invest in mutual funds, stocks or even fixed income. We also have to tell you that past performance is no guarantee of future results. Often the best time to invest is when the risk looks the greatest, so anxiety is going to be present in any successful investment strategy. In the final analysis, all of our personal assets are invested in the same investments that we make for you. We are motivated to stay focused and make decisions that we know will impact us together. 9. Disciplinary Information -egal and Disciplinary Nothing to report Criminal or Civil Action Nothing to report Administrative Proceeding Nothing to report Self - Regulatory Proceeding Nothing to report 10. Other Financial Industry Activities and Affiliations Broker - dealer or Registered Representative Nothing to report and nothing pending Futures Commission Merchant, Commodity Pool Operator, Commodity Trading Adviser or Associated Person Nothing to report and nothing pending Page 11 of 16 Material Relationships or Arrangements with Financial Industry Nothing to report and nothing pending Recommend or Select Other Investment Advisers Nothing to report and nothing pending 11. Code of Ethics, Participation or Interest in Client Transactions and Personal Trading Code of Ethics We maintain a Code of Ethics as part of our Written Compliance Procedures. A copy of this is available to any client or prospective client upon request. Since there is just one Registered Representative with our firm, and we are a Sole Proprietorship, there are no issues of multiple Representatives with different understandings, education levels or ethical conduct. A compliance culture is maintained in our firm. Recommend Securities with Material Financial Interest We do not trade in any securities in which we have a material financial interest. Invest in Same Securities Recommended to Clients We can and do trade in the same securities as we do for our clients. We follow procedures so there is no conflict of interest by buying and selling securities at the same time as we do for our clients. This is accomplished by buying in a master account so everybody is getting exactly the same price. We then allocate to all client and personal accounts receiving the security. When selling, we again sell in the master account so everybody is receiving the same price. We maintain and report monthly our model account actual results and the model is diversified like our average risk tolerance accounts. A copy of this account is also available upon your request. We believe our owning the same securities means that we have a personal financial interest in our investment decisions. This should give you a higher comfort level that we are focused on making wise investment decisions. Personal Trading Policies We are very careful not to trade in such a way as to create personal opportunity over your opportunity. In order to prevent any inequality, we take special care as follows: 1) No front running or insider trading 2) When equities, bonds or mutual funds are purchased, we are treated identically to you. 3) Normally, if an equity is bought or sold, it is done in the master account at Schwab. In this way we are receiving exactly the same Page 12 of 16 terms and risk/reward potential as you. 4) There must be cash available in your account or there was a swap of another security, generating cash. 5) The security being purchased is in conformity with your investment risk tolerance and investment strategy being implemented for you. 12. Brokerage Practices Selecting Brokerage Firms We do not maintain custody of your assets that we manage. Your assets must be maintained in an account at a "qualified custodian ", generally a broker - dealer or bank. We require you to establish accounts with the Schwab Advisor Services, a division of Charles Schwab & Co. Inc. (Schwab), a registered broker - dealer, member SIPC, as the qualified custodian. We are independently owned and operated and are not affiliated with Schwab. Schwab will hold your assets in a brokerage account and buy and sell securities when we instruct them to. You will open your account (s) with Schwab by entering into an account agreement directly with them, although we may assist you in doing so. We have maintained Schwab as our only custodian for all the accounts we manage. Having multiple custodians would require us to maintain additional recordkeeping and data bases, adding cost to manage your accounts. Schwab provides a combination of transaction execution services, and asset custody services without a separate fee for custody. Their services are priced competitively when considering the quality of services and the breadth of available investment products they offer to us. We buy individual fixed income investments - bonds, from bond broker dealers that specialize in this kind of investment. Schwab charges a flat "Trade- Away" fee of $25 for each trade executed in addition to the costs from the other broker - dealer. The bonds are sent your account at Schwab. The same $25 Trade -Away fee is charged if we buy individual stocks from another Broker Dealer. This includes initial public offerings that are not available at Schwab. Research and Soft Dollars Schwab Advisor Services is the custodian for all accounts and they provide services that allow us to work successfully with you. Some of these services you see, such as statements, confirmations, banking functions, and tax reporting documents. Schwab provides so- called soft dollar services that we use in order to manage your accounts. These include software and other technology that provide access to your account data; They facilitate trade execution and allocation of aggregated trade orders for multiple accounts, and assist with back - office functions, record keeping and reporting; They have educational events, including Advisor education on reporting requirements, compliance, legal and business needs. These services should benefit all Page 13 of 16 of your accounts that we manage. Schwab requires that we maintain collectively $10 million in assets at Schwab or they will charge us a quarterly service fee. 3rokerage for Client Referrals Using just one custodian for all our accounts avoids any conflict of interest that we might obtain, such as referrals from a broker - dealer we might select. Directed Brokerage This does not apply with our using one broker dealer. Order Aggregation This was discussed in Item # 11, 'nvest in Same Securities M- nnmmended to Clients. We use a master account to purchase and then allocate to your accounts. If we purchase with a limit order or sell with a stop -loss order, we put the order in for that security across all your accounts. You then get the same execution price in all your accounts. 13. Review of Accounts leriodic Reviews We review investments daily. With Schwab Advisor Services website, we are able to monitor and research any problems or concerns during the trading day. If an investment needs to be sold, or limit orders placed, this is done quickly on the Advisor Trading Platform. Mutual funds will receive the daily closing price, but we are able to set up the trade before the close of trading. Review Triggers We don't have a specific trigger with most of our investments. What we do have is an interest in wanting to know what is happening with our investments and any changes that warrant a sell decision. We think long -term but we monitor daily. Individual stocks are scrutinized so a loss of more than 8% will send up a red flag and a sell decision will be probable. tegular Reports We prepare and send a timely statement every month to you. This statement is an executive summary that reports to you what you need to know in terms of performance gain /loss and what you are invested in at the end of the month. Your investments are reported to you by class of risk, and prepared on one page so you can see your account without spending too much time in detailed transactions. Schwab sends you a detailed monthly statement, and we recommend that you compare ending balances to make sure they are in agreement. Page 14 of 16 14. Client Referrals and Other Compensation : conomic Benefitf We receive an economic benefit from Schwab in the form of the support products and services it makes available to us and other independent investment advisors whose clients maintain their accounts at Schwab. These products and services, how they benefit us, and the related conflicts of interest are described in Item # 12 - .3rokerage Practices. The availability to us of Schwab's products and services is not based on us giving particular investment advice, such as buying particular securities for our clients. Third Party Solicitors We have never compensated anybody directly or indirectly for client referrals. We have no conflict of interest. 15. Custody Account Statements You receive a statement every month from us as well as Schwab. This is discussed under item #13 - Reaular Rennrtr. On your Schwab account application and again on our management agreement, you give us authorization to request that Schwab send withdrawals to your address of record or wire to your bank account. You also give us authorization to have Schwab withdraw from your account our quarterly management fees. As discussed under item # 5 - Fees and compensatior, , we advise you on the statement you receive from us, the amount of the management fee and the calculation. We have no authorization or ability to handle cash or to act as Custodian of your account. Therefore, Schwab has custody of your account and we have only been given the ability to manage the account for you. If for any reason you are not satisfied or want to move or manage your account differently, you have that ability to advise us so we can take you out of our master account and give you full ability to direct your account. 16. Investment Discretion Discretionary Authority for Trading We have investment discretionary authority in all of our accounts. When you sign our management agreement you give us this authority and again on Schwab's account application you give us this authority. We discuss our classes of risk in our management agreement and advise you how your account is being managed as reported to you on your monthly statement. Investment involves risk, and we discuss this with Page 15 of 16 you. If at any point in time the market volatility and the performance of your account is not achieving expected results, you can advise us to sell specific investments or lower the amount of risk that you are exposed to. We make every effort to understand your risk profile and encourage you to advise us if you have questions about your account or your performance. .imitea Power of Attorney As indicated above, your Schwab account application and our management agreement provide this Limited Power of Attorney to trade and manage your account. 17. Voting Client Securities 'roxy Voting We do not hold any authority to vote your securities. You hold this authority as you instruct on your Schwab Account Application. You will therefore receive your proxies and other solicitations directly from Schwab or a Transfer Agent. You may call us with any questions when you receive these in the mail. 18. Financial Information Prepayment of Fees As discussed under item # 5 - Fees and Compensation, management fees are only billed in advance, on a quarterly basis. Financial Condition This Form ADV Part II is filed electronically as part of our annual update on the Investment Advisor Registration Depository (IARD). This is also sent electronically to the California Department of Corporations where we mail our Balance Sheet, Trial Balance, Bank Statement and Reconciliation, Capital Computation Worksheet, Minimum Financial Requirements Worksheet and Net Capital reported, all as of December 31st (our fiscal year end. This annual update report is due within 90 days of our year end. Bankruptcy We have never had a bankruptcy. Page 16 of 16 19. Requirements for State- Registered Advisers Identify Principal Executive Officers and Management Person Martin H. Kreisler is the Sole Proprietor of Kreisler Long -term Investments. His background information is reported in item # 4 - Principal Owners. Describe Business Other Than Investment Advice Investment Advisor is our only business Blaylock IR Rf 1v& Robert van, J LC Mcni er: FINRA. MSRB. SIPC Strictly Private & Confidential W Yoirba Linda Mater District Introduction to Blaylock Robert Van, LLC Taxable Fixed Income Services October - 2014 This document is confidential and has been prepared for informational purposes only. This document is not to be construed as a recommendation, an offer to sell or a solicitation of an offer to buy any securities. Any dissemination, distribution or reproduction of this document is strictly prohibited without the consent of Blaylock & Company. The information herein is obtained from sources deemed reliable, but its accuracy and completeness cannot be guaranteed, and is subject to change without notice. National Presence Blaylock Robert Van, LLC ("BRV'), is a minority -owned investment banking and financial services company. BRV is one of the most recognizable and innovative investment banks in the United States providing financial advisory services supported by a multi -fixed income product and equity sales trading platform. BRV also offers an investment portal which provides a seamless solution to investing in leading institutional money market funds and a web -based equity research platform designed to specifically address the needs of fundamental portfolio management and analysis. -- - - - - - - - - - - - - - - - , Oakland • 16 Professionals • SPI Strategies • Sales & Trading • Research • Public Finance Beverly Hills ' • 2 Professional • Public Finance ----------- - - - - -- Blaylock IR R*lo& Robert van, I.LC Mcni er: FINRA. MSRB. SIPC --------------------- Chicago Dallas ' • 2 Professionals • Investment Banking • Sales & Trading ork ----------- York Professionals restment Banking iblic Finance Iles & Trading )erations BRV Service and Product Focus _ cu L _ cu rn m �s rn ui m L cu �s CL cu U 0 U C W x w i>' N D a m R _ LL a Blaylock IR R*lo& Robert van, J LC m E 0 U C a) X LL Mcniber: FINRA. MSRB. SIPC Unsecured and Secured c=> Debt Issuance Sales & Trading 00E* • Taxable Debt • Tax - exempt Debt • Governments • Agencies • Municipals • Corporates • ABS • Common, Preferred and Convertible Stock Equity Issuance and Stock Buyback 00 IPOs and Follow -Ons • Buyback Rotations • Structured Buyback Funding Financial Advisory, Structuring & Capital Raising Research and Asset Management • ELROI — Quantitative Research SPI Strategies, Inc. • Caribbean financial Advisory/Structuring • CNI MMkt Portal • Financial advisory • Investment banking Municipal Bond 00 Senior manager Investment Banking Co- manager • Sales and trading Municipal Sales, Trading Underwriting and Underwriting Remarketing • Competitive bidding 2 2013 Highlights Blaylock IR R*lo& Robert van, J LC Mcniber: FINRA. MSRB. SIPC UNDERWRITING ■ 50 Fixed income transactions ($157bn +) Joint Book- Runner: Southern California Edison $500 million, 10 -year note ■ 85 Municipal transactions ($51bn +) ■13 Share repurchase rotations RESEARCH ■ ConvergEx Group/ Jaywalk Independent Research Provider Performance Award 1St quarter 2014 — best overall stock selection 4t" quarter 2013 — best bearish stock selection 2nd quarter 2014 — best overall calls 3 Adding Value in the Capital Markets The Blaylock Robert Van team approaches each capital markets transaction as an opportunity to deliver quality execution and distribution for our corporate clients Blaylock IR Rf Iv& Robert van, I.LC IvIcniber: FINRA. MSRB. SIPC BRV strives to meet and exceed client's objectives in raising debt capital. Unique two - pronged distribution strategy: • A "Minnows" strategy targeting second and third tier investors who are typically under serviced by larger banks and brokerages. • Tier 1 strategy targeting pension funds, investment managers, insurance companies and other large investors who have mandates to diversify their fees paid to minority, women, and disabled veteran -owned firms. BVR's strategy and resources creates added value to transactions regardless of level of participation - Lead, Co- Manager or Selling Group Member. • Experienced sales force and capital markets team: Broad transactional experience in a variety of markets and conditions. Strong relationships with both issuers and investors. Clearing, settlement, billing and delivery systems, capabilities and experience. 4 Fixed Income Transactions $1 billion 3.250% Syr 5.125% 10yr $200 million FRN 2yr $1 billion 6.375% PERP NC5 $870 million 4.80% 30yr $25 million 1.35% Syr $2.1 billion FRN Syr 1.40% Syr $500 million 3.40% 10.5yr 4.30% 30yr $500 million 3.125% 10yr 4.35% 50yr $3.6 billion 1.875% Syr 3.00% 5yr Blaylock Beal Van Co- Manager Jul 2014 # M tLft MQrganStanley 1 � V TARGET Blaylock Beal Van Co- Manager June 2014 Blaylock Beal Van Co- Manager June 2014 Blaylock Beal Van Sole Lead June 2014 Blaylock Beal Van Co- Manager June 2014 3.75% Tyr 4.25% 10yr ally FRN 5yr 1.15% Syr . yeriz 3.40% 10yr AMr.RIC AN WATER sync ny Blaylock Beal Van Co -Mana Manager g September 2014 Blaylock Beal Van Co- Manager September 2014 Blaylock Beal Van Co-Manager g September 2014 Blaylock Beal Van Structurin A en 9 9 Se tember 2014 Blaylock Beal Van Sole Lead September 2014 Blaylock Beal Van Co -Mana er 9 Se tember 2014 Blaylock Beal Van Co-Ma er 9 Au ust 2014 Blaylock Beal Van Co-Manager 9 August 2014 Blaylock Beal Van Co- Manager Au ust 2014 $750 million 4.00% 10yr TM c {i $3 billion FRN 5yr 2.375% Syr n MOrganStanley $1.25 billion 2.125% 5yr (t)TOYOTA $700 million 6.00% PERP NC5 0 $2 billion 2.30% 5yr 3.50% 10yr G) $850 million 6.30% PERP NC5 W JPMorgan $25 million 0.5% 2yr R HBAS $3.3 billion FRN Syr 1- 1.35% Syr veFj Z2P $2 billion 4.80% 30yr 4C:- at&t Blaylock Beal Van Co- Manager Jul 2014 Blaylock Beal Van Co- Manager JuIV 2014 Blaylock Beal Van Co- Manager Jul 2014 Blaylock Beal Van Co- Manager July 2014 TARGET Blaylock Beal Van Co- Manager June 2014 Blaylock Beal Van Co- Manager June 2014 Blaylock Beal Van Sole Lead June 2014 Blaylock Beal Van Co- Manager June 2014 Blaylock Beal Van Co- Manager June 2014 $2.5 million $2 billion $2 billion $2.5 billion $350 million $1.25 billion $750 million $1 billion $500 million 5.00% PERP NC5 0.875% Syr FRN Syr 1.25% Syr 3.50% 10yr 2.20% 5yr FRN Syr FRN 4yr 6.625% PERP NC5 FRN 5yr 1.15% Syr FRN Syr 3.40% 10yr +0 7I J Mor an 1.85% 5yr 4.125% 30yr R i ,vp ® 3.45% 10yr � � ++a..a rarwquarnr B N Y � LON tt � I ti + _ -OJ Morgan Morgan nley Blaylock Beal Van Blaylock Beal Van Blaylock Beal Van Blaylock Beal Van Blaylock Beal Van Blaylock Beal Van Blaylock Beal Van Blaylock Beal Van Blaylock Beal Van Co- Manager Co- Manager Co- Manager Co- Manager Co- Manager Co- Manager Co- Manager Co- Manager Co- Manager June 2014 May 2014 May 2014 May 2014 Ma 2014 May 2014 Aril 2014 Aril 2014 Aril 2014 $1.5 billion $2.15 billion $350 million $250 million $3 billion $1.75 billion $1 billion $2 billion $900 million 2.45% 5yr FRN 5yr 3.50% 10yr 4.45% 30yr 3.375% 10yr FRN 5yr 6.125% PERP NC10 FRN Syr 3.75% 10yr 3.75% 10yr 2.125% 5yr 4.50% 30yr 2.375% 5yr 1.35% Syr 4.75% 30yr F ��, #, �- WAmeren soatliarn ' ' �`"��' -PJPMOrgan C Li " � MISSOUB! Calaomie � �l 6aa Company I Blaylock Beal Van Blaylock Beal Van Blaylock Beal Van Blaylock Beal Van Blaylock Beal Van Blaylock Beal Van Blaylock Beal Van Blaylock Beal Van Blaylock Beal Van Co- Manager Co- Manager Co- Manager Co- Manager Co- Manager Selling Group Co- Manager Co- Manager Co- Manager April 2014 Aril 2014 Aril 2014 March 2014 March 2014 March 2014 March 2014 March 2014 Februar 2014 Blaylock IR Rf 1v& Robert van, I.LC Mcni er: FINRA. MSRB. SIPC Taxable Fixed Income Value is also added through opportunistic trading, as mis- pricings, market dislocations, supply - demand imbalances and other special situations present themselves. With the blending of the Robert Van Securities and Blaylock platforms, we have been able to build upon two powerful institutions on a going forward basis. We are committed to supporting a wide range of new issue and secondary fixed income products, including multiple classes of both Corporate Bonds as well as Preferred Stocks. We have been able to leverage our combined distribution and marketing networks to fit the needs of many sizable, frequent Issuers. This is the foundation which allowed us to Lead or Co- manage 58 fixed - income transactions for 2013, raising approximately $91 Billion for our clients. In addition, $91 billion in 58 fixed income issues; 35 municipal issues raising $16 billion and $10 billion in 15 equity issues. Performance is the centerpiece of our mission statement. We strive to maximize value added and exceed client goals utilizing accountability, trading efficiency and teamwork. We recognize that the success of our firm is based on our ability to deliver consistent quality execution to our clients. Our commitment in every client relationship is to elevate our level of responsiveness and understanding to fulfill each specific client's unique needs and objectives. Blaylock IR R*lo& Robert van, I.LC Mcniber: FINRA. MSRB. SIPC 0 Committed To Adding Value ■ BRV is committed to supporting a wide range of new issue and secondary fixed income products including multiple classes of both Corporate Bonds as well as Preferred Stocks ■ By blending the platforms of RVS and Blaylock, we leverage our combined distribution and marketing networks to fit the needs of many sizeable, frequent Issuers ■ Performance is the centerpiece of our mission statement. We strive to maximize value added and exceed client goals utilizing accountability, trading efficiency and teamwork Blaylock IR R*lo& Robert van, I.LC Mcniber: FINRA. MSRB. SIPC 7 Taxable Fixed Income The Fixed Income unit of Blaylock Robert Van, LLC. is known for its integrity, quality of execution and commitment to providing value -added trading services to clients and customers. Our focus on the competitive, cost effective trading of U.S. Treasury bills, notes and bonds, as well as Agency securities, has led to our prominent inclusion as a principal underwriter, selling group member or placement agent for: ■ Fannie Mae (FNMA) ■ Freddie Mac (FHLMC) ■ Federal Home Loan Bank ( FHLB) We established ourselves early on as a creative and sophisticated fixed income underwriter of agency debt. Our ability to position, trade and swap these instruments with a large number of end user and primary dealer customers has become our strong suit in this highly competitive, price sensitive, execution driven marketplace. Blaylock IR R*lo& Robert van, I.LC Mcniber: FINRA. MSRB. SIPC 0 $3,500,000,000 0.50% 5/13/2016 Freddie 20 We make holm pomkla- Freddie Mac Fixed Rate Notes Blaylock Robert Van Co- Manager $4,000,000,000 0.50% 9/28/2015 PLI FannieMae. Fannie Mae Fixed Rate Notes Blaylock Robert Van Co- Manager August 2012 Recent GSE Participation $6,000,000,000 0.50% 3/30/2016 FannieMae. Fannie Mae Fixed Rate Notes Blaylock Robert Van Co- Manager February 2013 $3,500,000,000 1.25% 8/01/2019 PR Freddie iO Mac We make home possible Freddie Mac Fixed Rate Notes Blaylock Robert Van Co- Manager Julv 2012 Blaylock IR Rf Iv& Robert van, ILC Mcni er: FINRA. MSRB. SIPC $50,000,000 1.17% 12/28/2018 � F�raeddie M make home possible- Freddie Mac Fixed Rate Notes Blaylock Robert Van Co- Manager $5,000,000,000 0.50% 7/02/2015 FannieMae. Fannie Mae Fixed Rate Notes Blaylock Robert Van Co- Manager May 2012 0 $50,000,000 1.17% 12/14/2018 PLI FannieMae. Fannie Mae Fixed Rate Notes Blaylock Robert Van Co- Manager December 2012 $3,000,000,000 1.00% 6/29/2017 2O MFreddie aac We make home passible- Freddie Mac Fixed Rate Notes Blaylock Robert Van Co- Manager nnax )m,) $4,000,000,000 0.375% 12/21/2015 10 FannieMae. Fannie Mae Fixed Rate Notes Blaylock Robert Van Co- Manager $3,000,000,000 1.25% 5/12/2017 FMreddie M make home possible- Freddie Mac Fixed Rate Notes Blaylock Robert Van Co- Manager March 2012 1 $4,000,000,000 1.25% 10/02/2019 PR � F�raeddie M make Dome posaibla- Freddie Mac Fixed Rate Notes Blaylock Robert Van Co- Manager $25,000,000 1.35% 1/30/2017 FannieMae. Fannie Mae Blaylock Robert Van Underwriter January 2012 Recent Public Transactions - Lead Managed Successes May 2011 $500,000,000 SOUTHERN CALIFORNIA EDISON An EDISON INTERNATIONAVV Company Southern California Edison First Mortgage Bond 3.875% 10yr Joint Book- Runners Blaylock Robert Van, LLC Credit Suisse RBS Guzman Bank of New York November 2010 $100,000,000 `p��foRNf9 o 9��R SEitv-\G�� California Water Service Co. First Mortgage Bond 5.50% 30yr Joint Book- Runners Robert W. Baird & Co. Blaylock Robert Van, LLC Blaylock IR 10 Blaylock Robert van, LLC Mcniber: FINRA. MSRB. SIPC March 2010 $250,000,000 Pacific Gas & Electric Senior Unsecured Note 5.80% 30yr Joint Book- Runners Barclays Morgan Stanley Blaylock Robert Van, LLC Samuel A. Ramirez Recent Public Finance Experience $436,220,000 Revenue Bonds csu Trustees of the California State University Co- Manager August 2012 $142,930,000 GO Bonds ` �F,SE RV cc K 9 w~ 6XI�01DH Cn�� Forest Preserve District of Cook County, IL Co- Manager $555,000,000 GO Bonds 4 � c �2 State of Connecticut Co- Manager April 2012 Blaylock IR R*ladc Robert van, J LC $728,895,000 Revenue Refunding Bonds AMT and Non -AMT r City of Chicago - O'Hare International Airport Co-Manager August 2012 $65,810,000 Excise Tax Bonds &0*1 City of Phoenix, AZ Co- Manager June 2012 Mcni er: FINRA. MSRB. SIPC $1,343,805,000 GO Bonds �EpL 4F f, 'a Ei V' RI State of California Co- Manager $537,210,000 Sales Surtax Revenue Bonds M 1M ®MAM / Miami -Dade County, FL Co- Manager $224,875,000 School District Bonds Fri Dormitory Authority FV State of New York DASNY, NY Co- Manager $503,720,000 AMT and Non -AMT Revenue Bonds �1 City of Houston Airport 11 $212,545,000 Pension Obligation Bonds / 0J 6. City of Oakland, CA Co- Manager July 2012 $75,915,000 Refunding Certificates of Participation � +{* #iii ■ r 141# UPS ** County of Alameda, CA Co- Manager $326,205,000 Water Revenue Bonds � aF WA7� �} A �9�OF C,p -L1F California Department of Water Resources Co- Manager January 2012 $316,790,000 Revolving Fund Revenue Bonds New York EFC, NY Co- Manager July 2012 $309,855,000 Airport Refunding Revenue Bonds AMT and Non -AMT BR;�; ,'ARD x.- - COUNTY Broward County, FL Co- Manager May 2012 $829,835,000 SUNY Revenue Bonds F1� F, Dormitory Authority I State of Now York DASNY Co- Manager January 2012 $1,814,925,000 PIT Bonds ❑ri Dormitory Authority K' State of New York DASNY, NY Co- Manager $496,145,000 Revolving Fund Revenue Bonds New York EFC, NY Co- Manager May 2012 $4,430,000 General Obligation Warrants WILCOX COUNTY Wilcox County Sole Manager January 2012 Select Biographies Eric V. Standifer Founder of Robert Van Securities, Inc. in 1991, Mr. Standifer has over 21 years of experience in trading and managing various products and services in the brokerage business. Prior to forming Robert Van Securities, CEO &President Inc., he worked as a broker for Merrill Lynch and Sutro & Co. from 1981 to 1991. Mr. Standifer is a Certified Public Accountant, a General Securities Principal, Registered Municipal Principal, Registered Options Principal, Registered Representative, and licensed Life Agent. He holds a B.S. in Accounting from Manhattan College. ' Mr. O'Brien has over 24 years of experience in the sales, trading execution, and clearing of domestic equity Timothy O'Brien and taxable fixed income products. Prior to joining Robert Van Securities in 1992, he was an assistant vice Executive Vice President president for Sutro & Company and Dean Witter Reynolds, where he worked on BIS (Branch Institutional Sales and Trading Sales) teams. Tim is a graduate of the University of California, Berkeley, with a B.S. in Social Science/ Education. Ed Tollefsen Mr. Tollefsen has over 23 years of experience in taxable fixed income markets. His career began in 1980 as a money market trader at Seafirst National Bank where he advanced into a proprietary trading position in U.S. Senior Vice Present Treasuries, futures, and federal agencies. He has also performed Treasury bill / future trading for Crocker Sales and Trading National Bank's primary dealer. For fourteen years Mr. Tollefsen worked as a fixed income trader, strategist and in -house economist for Sutro & Co. in San Francisco, CA. A graduate of the University of Washington, Mr. Tollefsen holds a Bachelor degree in Economics. Mr. Jones has over 30 years of experience in taxable fixed income markets and alternative investments. Alan R. Jones During the first 18 years, he worked with the sales and trading divisions at Salomon Brothers and Morgan Senior Vice Present Stanley in both New York and San Francisco. He then founded a venture capital company which specialized in advising and investing in early stage companies across various industries. More recently, he has held senior Sales and Trading level positions at Utendahl Capital Partners and Aladdin Capital. Mr. Jones is a graduate of the Phillips Exeter Academy. He earned his BA from Dartmouth College and his MBA from the Wharton School at the University of Pennsylvania. Blaylock IR R*lo& Robert van, J LC Mcniber: FINRA. MSRB. SIPC 12