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LA PORTE AREA WATER AUTHORITY <br /> MANAGEMENT'S DISCUSSION AND ANALYSIS <br /> YEAR ENDED SEPTEMBER 30, 2010 <br /> As management of the La Porte Area Water Authority (the "Authority "), we offer readers of the <br /> Authority's financial statements this narrative overview and analysis of the financial activities of the <br /> Authority for the fiscal year ended September 30, 2010. <br /> FINANCIAL HIGHLIGHTS <br /> • The assets of the La Porte Area Water Authority exceeded its liabilities at the close of <br /> the most recent fiscal year by $6,624,684 (net assets). Of this amount, $1,956,053, <br /> unrestricted net assets, may be used to meet the government's ongoing obligations to <br /> citizens and creditors in accordance with the Authority's fund designation and fund <br /> policies. <br /> • The government's total net assets increased by $217,188. <br /> • The Authority's total bonded debt decreased by $520,000 during the current fiscal <br /> year. <br /> OVERVIEW OF THE FINANCIAL STATEMENTS <br /> This discussion and analysis is intended to serve as an introduction of the Authority's basic financial <br /> statements. The La Porte Area Water Authority is considered a component unit of the City of La Porte, <br /> Texas since the Authority provides approximately 86% of its services for the exclusive benefit of the <br /> City of La Porte. The Authority's basic financial statements are comprised of the fund financial <br /> statements and notes to the financial statements. This report also contains other supplementary <br /> information in addition to the basic financial statements themselves. <br /> Fund Financial Statements. The operations of the Authority are recorded in a proprietary (Enterprise) <br /> Fund. A fund is a grouping of related accounts that is used to maintain control over resources that have <br /> been segregated for specific activities or objectives. The Authority, like other state and local <br /> governments, uses fund accounting to ensure and demonstrate compliance with fmance - related legal <br /> requirements. <br /> The statement of net assets presents information on all the Authority's assets and liabilities, with the <br /> difference between the two reported as net assets. Over time, increases or decreases in net assets may <br /> serve as a useful indicator of whether the financial position of the Authority is improving or <br /> deteriorating. <br /> 3 <br />