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HomeMy WebLinkAbout07/18/1988, Agenda & GARBAGE SERVICE RATE ADJUSTMENTS MLL:CIINU VAIL:: // 10/ 00 Clay Of San LaIS OBISPO I._:1 NUMBER: COUNCIL AGE DA REPORT FROM: David F. Romero prepared by: David Ellio Public Works Director Administra ive nalyst SUBJECT: Garbage service rate adjustments CAO RECOMMENDATION: 1) By resolution increase garbage service rates by 12.6 percent effective July 1, 1988 2) By motion tentatively approve increasing garbage service rates by 6 percent effective July 1, 1989. BACKGROUND: Over the last ten years the city has granted the following garbage service rate increases to San Luis Garbage Company: 19 percent on July 1, 1980 (first increase since 1976) 20 percent on January 1, 1983 10 percent on January 1, 1.984 10 percent on June 1, 1986 10 percent on January 1, 1987 The increases in 1980, 1983 and 1984 kept pace with the rapid inflation of the late 70's and early 801s. The increases in 1986 and 1987 covered a lower rate of overall inflation but extraordinary increases in insurance costs. San Luis Garbage Company has submitted a request for garbage service rate increases in 1988 and 1989. The franchise held by San Luis Garbage Company since March 1987 allows it to request a rate adjustment not oftener than once every two years. It must submit a request by February 28 in one year for two later adjustments: one on July 1 of the same year and one on July 1 of the following year. This current request is based on a report prepared by Gerald W. Peasley, a consultant to San Luis Garbage Company. This report is available in the city clerk's office. Mr. Peasley examined the company's financial records for reasonableness and accuracy and recommended service rates which would 1) provide a fair rate of return on capital investment and 2) provide a fair ratio of operating expense (including income taxes) to operating revenue -- a measure referred to as the company's "operating ratio". Over the last 10 years the council has used these two measures to judge need and size for garbage service rate increases. m � ►�IIIIIh�� ���N city of San Lacs osIspo ONGs COUNCIL AGENDA REPORT Garbage Service Rates page 2 What is a fair rate of return? Current rates allowed by the California Public Utilities Commission range from 11 percent for water companies to 14 percent for electric power companies. In the past the city has found that rates of return for solid waste companies generally fall between the rates for water companies and electric power companies. A rate of return between 11 and 14 percent is fair for San Luis Garbage Company. Its rates of return over the last three years (1985-87) have been 4.6, 7.6 and 15.0 percent. It has requested garbage rate increases which would give it a 14 percent rate of return in 1988 and 1989. What is a fair operating ratio? The California PUC considers an operating ratio of 90 to 95 percent to be acceptable and fair. Lower ratios are advantageous to a company; higher ratios are undesirable. San Luis Garbage Company's operating ratios over the last three years (1985-87) have been 96.9, 94.9 and 90.8 percent. During 1988 and 1989 San Luis Garbage Company will incur ordinary cost increases for most expenses like salaries, fuel, parts and services. Over the same period the company will incur extraordinary cost increases for landfill charges and for depreciation on recently acquired equipment. Faced with steep costs to implement new state environmental regulations for landfills, Cold Canyon Landfill Company requested and received from the County of San Luis Obispo (the ratemaking authority for the landfill) an increase of the general tipping fee at the landfill from $4.25 per ton to $8.50 per ton effective 9/1/87 . Further increases to $12.00 per ton for 1989 and $17.00 per ton for 1990 are expected. Because San Luis Garbage Company must pay these tipping fees each time it dumps a load at the landfill, the effect on its total expenses is significant. The council must now decide what action to take about the apparent need for garbage service rate increases. Staff looked at four alternative adjustments. ALTERNATIVES• 1. Grant no increases. Under this alternative, San Luis Garbage Company's net income would decline sharply in 1988 and become a net loss in 1989 as revenues would fail to keep pace with rising expenses. The rate of return would fall into the negative range while the operating ratio would rise to over 100 percent. °1JJ%IIIIIJDI �I city of san LUIS OBISPO COUNCIL AGENDA REPORT Garbage Service Rates page 3 2. Grant increases of 12.6 percent for 1988 and 6 percent for 1989 . These increases would give the company an 11 percent rate of return and. a 92-93 percent operating ratio, both within acceptable ranges. The company could cover its rising expenses, preserve a fair return to its stockholders and finance some of its necessary ongoing capital investment. (This capital investment is important because it would replace older equipment, increasing efficiency and reducing future repair costs. ) 3 . Grant an increase of 21.2 percent for 1988 and grant no increase for 1989. These adjustments would maintain a 14 percent rate of return, the rate requested by the company, while the operating ratio would remain in the low 90 percent range. The 14 percent rate of return would be the maximum acceptable and would ensure that the company could meet rising landfill costs, provide a good return to its stockholders and pay for its planned capital investment. 4 . Grant other increases to achieve other ends. Lower increases than those recommended or requested might soften the financial impact to ratepayers but would not fairly compensate San Luis Garbage Company for its reasonable and in some areas, unavoidable, cost increases. FISCAL IMPACT• Using financial statements submitted by San Luis Garbage Company, staff calculated the financial impacts upon the company under the first three alternatives. The results are summarized in Table A. The entire 12. 6 percent increase recommended for 1988 can be attributed to the increased tipping fees. In fact, if the tipping fees had not increased, San Luis Garbage Company could have realized an estimated 11.2 percent rate of return for 1988 without any increase in service rates. The most common measure of financial impact on ratepayers is a comparison to service rates in other cities. Table B tabulates the current single family residential garbage service rates among 24 California cities with populations close to San Luis Obispo's. The last similar survey in 1985 showed that San Luis Obispo's rates then were slightly higher than the rates in the cities surveyed. Table B shows that the existing rate of $6.80 in San Luis Obispo falls substantially below the _m-ean and median of current rates for the 24 cities listed. The $7 . 65 rate proposed for 7/1/88 still 1-3 ��� � ►IVlllllill�►��u�►���U City Or San Lacs OBISPO COUNCIL AGENDA REPORT Garbage Service Rates page 4 falls below the mean and median. The $8. 11 rate proposed for 7/1/89 also falls below the mean and median. Rates for comparable single family residential garbage service for other cities and communities in San Luis Obispo County are: Atascadero $ 9.90 Arroyo Grande/Grover City/Pismo Beach 6.00 Cayucos 11.00 Los Osos 11.50 Morro Bay 6.00 Paso Robles 11.00 Mean (arithmetic average) $ 9. 23 Median (middle number) 10.45 So in general the proposed rates for San Luis Obispo are somewhat lower than rates in comparably sized California cities and in other cities and communities in San Luis Obispo County. STAFF RECOMMENDATION: Staff recommends that the council adopt the resolution granting an increase in garbage rates of 12 .6 percent effective July 1, 1988. Staff also recommends that the council by motion tentatively approve an increase in garbage service rates of 6 percent effective July 1, 1989 contingent on the County of San Luis Obispo granting Cold Canyon Landfill Company an increase in tipping fees from $8.50 per ton to $12.00 per ton. If the increase in tipping fees is not granted, no adjustment would be required. Another resolution granting the second increase, if warranted, would be prepared for adoption in Spring 1989. CONCURRENCES: The finance director and representatives from San Luis Garbage Company have reviewed this agenda report and concur with its findings and recommendations. ��� i�i►►lulllllllll����1p����III city of San L"IS OBispo i COUNCIL AGENDA REPORT Garbage Service Rates page 5 OTHER ISSUES• Although the situation is not common here in San Luis Obispo, a few commercial customers compact their refuse mechanically before placing it in dumpsters. This compacted refuse is more difficult and expensive for San Luis Garbage Company to dispose of for two reasons: 1) the compactors on the garbage trucks can't further compact this refuse and voids remain in the truck bins and 2) the compacted refuse is much heavier than an equivalent volume of uncompacted refuse and exacts higher tipping fees, which are based on weight, not volume. San Luis Garbage Company has been charging an unregulated premium of $5. 00 per cubic yard per collection for compacted refuse. This premium has been incorporated into the new rate resolution and raised 12.6 percent to $5.65 per cubic yard per collection. Staff has received conflicting opinions about the desirability of refuse compaction and the equity of the premium charged. This matter needs further study and analysis, and any subsequent findings should be incorporated into the next rate resolution which will take effect July 1, 1989. In the meantime, because refuse compaction is relatively rare, staff recommends that the existing premium stay in effect pending additional study. attach: Table A- - Effects of Garbage Service Rate Increases Table B - Comparison of Monthly Garbage Service Rates Resolution on file in the city clerk's office: Gerald R. Peasley Accountancy Corporation, San Luis Garbage Company Report on Service Rates (Revised) , March 1988 , with Workpapers / - 5 N P F O Pm O m O ^ N I P W P z P N v m •O �• K \ m d 4t N N N N W S N N N u N N . r N i = W . ."• N •O P O .O •O O •KO M M p d W r r , N O ; m p . 0. .4Z.. . r P •O . v •O •O 1 l • N A N. N N N N _ W . N N r . N . v !t X X N , W . •O P P •O M YP1 . A co O cm N < P .- m . P OC W m 4 \ •O . Y1 tl7 •O pO. W OE ' I d N ^ P A Z x . N N . . 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K J J O ll f •OL V1 A �1 O Q Go m Z A X00 m N •O -0 U 2 co fr N N N N 7 Q 7 a z m • N N N < 6 � p W W S y m J v 6 4 W ► N N 2 2 W W W F W Z N 2 2 w Z N O w 4 W W w x z w 0 W f z W W U V N H N H N OE W X 2 N S W S 4 W W Q U R W W K W z X H 2 W W J C V O V Q 4 �• z V 7 N < O O w a a 2 •• > a a It a a o W w m w U W W 6 C K H H W W W U 1-• 6 H WW � p O O O z U K 4 Z N M 1 TABLE B COMPARISON OF MONTHLY GARBAGE SERVICE RATES IN SAN LUIS OBISPO (CURRENT AND PROPOSED RATES) AND CITIES WITH SIMILAR POPULATIONS CITY RATE Arcadia $ 7.86 Belmont 12.55 Burlingame 13.71 Corona 7.69 Culver City 8.00 Davis 13.95 E1 Cerrito 16.80 Eureka 11.00 Lodi 11.50 Los Altos 9.75 Lynwood 8.02 Manhattan Beach 7.77 Milpitas 5.65 Monrovia 8. 10 Montclair 8.39 Monterey 4.75 National City 6.75 Petaluma 11.20 San Bruno 8. 19 San Carlos 12.55 San Gabriel 7.35 SAN LUIS OBISPO (current) 6.80 (28% below mean; 18% below median) SAN LUIS OBISPO (7/1/88) 7. 65 (19% below mean; 8% below median) SAN LUIS OBISPO (7/1/89) 8. 11 (15% below mean; 2% below median) Tustin 6.90 Upland 8.85 Woodland 9.90 MEAN (arithmetic average) $ 9.50 MEDIAN (middle number) 8.29 source: phone survey conducted on 6/1/88 by public works department staff 1-� RESOLUTION NO. (1986 SERIES) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO ADJUSTING RATES FOR SOLID WASTE COLLECTION AND DISPOSAL EFFECTIVE JULY 1, 1988 AND SUPERCEDING RESOLUTION NO. 6091 BE I.T RESOLVED by the Council of the City of San Luis Obispo as follows: SECTION 1. Effective July 1, 1988 the rates for solid waste collection and disposal shall be those listed in the following subsections. These rates shall be applied to all bills for single family residential customers issued on or after August 1, 1988. t A. Residential Customers (Single-family and Multi-unit) - Garbage Cans or Waste Wheeler Containers. The base monthly rate for the weekly collection and disposal of up to one cubic yard of refuse for residential customers from standard garbage cans or from waste wheeler containers provided by the franchisee shall be $7. 65 per residence. Loose rubbish (as defined by Municipal Code Section 8.04.010) must be bundled so that one worker can lift and handle it. A standard garbage can shall have a maximum volume of 35 gallons and a maximum weight of 80 pounds. There shall be an additional charge of $3.95 per month per can or container for collection away from the street curb. There shall be an additional monthly rental fee for a waste wheeler container. B. Multi-unit Residential Customers - Dumpster Containers. Monthly rates for the collection and disposal of refuse for multi-unit residential customers from dumpster containers provided by the franchisee shall be determined from the following schedule: SIZE OF COLLECTIONS PER WEEK CONTAINER (CU YDS) 1 2 3 4 5 6 7 1 $ 36.70 $ 55. 15 $ 65.95 $ 91.85 $115.00 $128.75 $165. 60 1-1/2 43.20 62.45 78.90 103.35 124.50 135.85 190.95 2 49.50 70.00 92.05 114.70 133.95 143.40 217.20 3 60.80 86.40 119.60 152.95 198.95 215.20 288.70 4 73.80 110.40 156.35 212.70 265.40 286.90 358.70 6 100.45 153.30 215.20 318.30 367.25 404.70 478.25 8 128.75 189.85 286.90 424.60 530.25 574.00 647.40 (1) The rates stated above for dumpster containers shall include the monthly container rental fee. 1- g Resolution No. (1988 Series) C. Commercial Customers - Garbage Cans. . Monthly rates for the collection and disposal of refuse for commercial customers from standard garbage cans with a maximum volume of 35 gallons per can and a maximum weight of 80 pounds per can shall be determined from the following schedule: NUMBER COLLECTIONS PER WEEK OF CANS 1 2 3 4 5 6 7 1 $ 7.65 $ 12.80 $ 19. 15 $ 21.30 $ 23.40 $ 25.50 $ 29.20 2 9.50 19. 15 25.50 28.05 30.55 33.15 38.30 3 12.10 23.05 31.90 33.95 36.05 38.28 45.70 4 14.75 26.95 37.05 40.40 43.80 47.10 56. 15 5 17.15 30.70 42. 15 46.65 51.35 56.15 66.20 6 19.80 34.30 47. 10 53.25 59.50 64.95 76.50 7 22.35 38.30 52.40 59.90 67.35 74.10 86.75 8 24.75 42. 15 57.35 65.85 74.30 82.95 96.85 9 27.40 45.85 62.55 72.20 81.90 91.20 107.15 10 29.90 49.77 68.85 79.38 89.90 100.80 117.20 (1) Where more than 10 cans are collected, the additional charge per can per collection shall be $2.65. D. Commercial Customers - Waste Wheeler Containers. Monthly rates for the collection and disposal of refuse for commercial customers from waste wheeler containers provided by the franchisee shall be determined from the following schedule: NUMBER COLLECTIONS PER WEEK OF CONTAINERS 1 2 3 4 5 6 7 1 $ 12.80 $ 19.15 $ 22.85 $ 31.80 $ 39.85 $ 44.55 $ 57.30 2 25.50 38.10 45.65 63.70 79.70 89.05 114.55 3 29.90 43.30 54.65 71.65 86.25 94.20 132.40 4 34.30 48.45 63.70 79.50 92.85 99.25 150.25 5 38.25 54. 10 73.25 92.85 115.35 124. 10 175.05 6 42.10 59.80 82.80 106.05 137.95 148.95 199.80 7 46.65 68.05 95.50 126.85 160.95 173.75 224.00 8 51.30 76.35 108.20 147.45 184.00 198.55 248.25 9 55.85 83 . 15 118.40 165.80 201.70 218.95 298.20 10 60.30 91.25 128.60 184. 10 219.35 239.40 348. 10 11 64 .95 98.85 138.80 202.40 237.00 259.70 398. 15 12 69.45 ' 106.25 148.95 220. 64 254.60 280. 10 448. 15 (1) In addition to the collection rates stated above for waste wheeler containers, there shall be charged a monthly rental fee for each container. o Resolution No. (1988 Series) E. Commercial Customers - Dumpster Containers. Monthly rates for the collection and disposal of refuse for commercial customers from dumpster containers provided by the franchisee shall be determined from the following schedule: SIZE OF COLLECTIONS PER WEER CONTAINER (CU YDS) 1 2 3 4 5 6 7 1 $ 27.55 $ 41.40 $ 49.43 $ 68.85 ' $ 86.25 $ 96.55 $124.20 1-1/2 32.35 46.85 59.15 77.55 93.35 101.90 143.25 2 37.10 52.45 69.00 86.05 100.45 107.55 162.90 3 45.60 64.80 89.70 114.75 149.20 161.36 216.55 4 55.35 82.80 117.25 159.50 199.00 215.20 269.00 6 75.35 114.95 161.35 238.70 275.40 303.50 358.70 8 96.55 142.40 215.20 318.45 397.65 430.45 485.55 (1) The rates stated above for dumpster containers shall include the monthly container rental fee. F. Commercial Customers - Extra Collections. The rate for unscheduled extra collections from commercial customers shall be determined from the following schedule: 1 cubic yard (minimum charge) $ 9.85 2 cubic yards 11.75 3 cubic yards 17.75 , .! z 4 cubic yards 23.60 G. Compacted Refuse in Dumpster Containers. The monthly rate for collection and disposal of compacted refuse from dumpster containers shall be the scheduled rate for uncompacted refuse plus $5.65 per cubic yard per collection. SECTION 2. Upon passage, this resolution shall supercede Resolution No. 6091 (1986 Series) . SECTION 3. The city clerk shall furnish copies of this resolution, as executed, to the finance director, the public works director, and San Luis Garbage Company. ! - lo Resolution No. (1988 Series) On motion of , seconded by , and on the following roll call vote: AYES: NOES: ABSENT: the foregoing resolution was passed and adopted this day of 1988. MAYOR RON DUNIN ATTEST: CITY CLERK PAMELA VOGES APPROVED: C TY ADM ISTRATIVE OFFICER FINANCE DIRECTOORS CITY AT RNEY PUBLIC WORKS DIRECTOR SAN LUIS GARBAGE COMPANY REPORT. ONSERVICE RATES (REVISED) MARCH, 1988 with WORKPAPERS GERALD W. PEASLEY ACCOUNTANCY CORPORATION SAN LUIS` GARBAGE COMPANY REPORT ON SERVICE RATES (REVISED) MARCH#. •1988 � = 13 SAN LUISGARBAGE. COMPANY REPORT_ ON SERVICE RATES (REVISED) MARCHj, 1988 :SAN .LUIS GARBAGE, C014PANY REPORT ON SERVICE .RATES. (REVISED) MARCHy 1988 GERALD W. PEASLEY ACCOUNTANCY CORPORATION 5175 EAST PACIFIC COAST HIGHWAY SUITE 405 POST OFFICE BOX 2409 GERALD W. PEASLf Y, C.P.A. LONG.BEACH.CALIFORNIA 90804 DEL MAR,CA LIFORNIA 92014 MATT A. PEASLEY. C.P.A. (213) 498-2429 (819) 481-9581 CHRISTIAN L.ALOINGER.C.P.A. March 22, 1988 Revised San Luis Garbage Company 970 Monterey Street San Luis Obispo, California 93401 Gentlemen: We have made an analysis of the San Luis Garbage Company operations for the years 1985, 1986, and 1987 and have calculated the service rates necessary to recover the expense of operation and to provide a reasonable return to San Luis Garbage Company over the future years 1988, 1989, and 1990. The scope of our work included a detailed study of the Company's recorded revenues and operating expenses to determine whether revenues were being properly recorded and operating expenses were reasonable and appropriate to the collection and disposal of garbage and refuse. Our tests indicated that the Company is well managed and that the recorded costs are ordinary and necessary for proper operation. Company personnel consists of 36 regular employees, including eight office and executive staff and 28 operating and maintenance people who are being paid at rates that are reasonable for the work performed. Operating expenses have been well controlled over the period studied, with total expenses increasing less than eight percent per year over the past eight years. The largest components of operational expenses that increased in excess of eight percent annually are as follows: insurance at 14.948, landfill at 21.178, and City Franchise Tax at 19.768. All other costs increased at an average annual rate of 5.458. Estimated operating expenses shown in this report exclude charitable contributions and interest expense. Depreciation expense has been recomputed using the expected useful life of the equipment on a straight-line basis, rather than the recorded accelerated method. A comparison of the Company's estimated expenses used for rate making, with the Company's recorded expenses, for the years 1983 through 1986 (the most recent complete year at the time of this study) show that the Company's estimated rate making expenses exceed the recorded expenses by an average $13,899 annually or a difference of less than one percent (.00898) . San Luis Garbage Com, y March 22, 1988 (Revised) Estimated results of operations, at present rates, for the years 1988, 1989, and 1990, are shown in Table 1. These estimates include increases to support a five percent annual price level increase. Estimated results of operations at present rates indicate that San Luis Garbage Company will earn less than a fair return in 1988 and will sustain a loss at present rates for the years 1989 and 1990. The major reasons for the increase of approximately $820,000 in operating costs over the next three year period, 1988, 1989, and 1990, are an expected increase of approximately $456,000 in landfill "tipping" costs, principally due to environmental requirements at the landfill operation, approximately $295,000 due to an expected 58 consumer price level increase (inflation) , and approximately $64,000 for additional employees to service the new customers adding to the system. In order to alleviate the deficiency in return and the estimated loss, we recommend that rates be increased enough to recover expenses of operation and to provide a reasonable return to the Company. In Table 2 we have estimated the expenses of operation in each test year and have allowed for a return of 14% on the rate base (unrecovered capital investment necessary to operate the business) . The return on investment should be commensurate with the risk taken by the Company, and in our opinion should be about 148 for San Luis Garbage Company. Currently, the California Public Utilities Commission is allowing, after income taxes, returns of around 118 on the more stable equities of water companies and approximately 138 on equities of electric power companies. A second measure of operating results, used by the California Public Utilities Commission for trucking companies, is the operating ratio. In this test the ratio of expenses to revenue will vary between 908 and 95% depending on the stability of the revenue source. The operating ratio of San Luis Garbage Company at proposed rates will average approximately 918 for the test years, which is in the normal range. we made a comparison of the percentage of sales retained as net income from operations for three major solid waste companies including the most recent three years of operations by Waste Management, Inc., Browning-Ferris Industries, and Western Waste Industries. The. results shot that the three companys averaged 10.58 per year for net income from operations as a percent of sales over the three year period, with the low being 7.98 and the high being 13.58. As described in the commentary above, Table 3 shows results of three tests of a reasonable return on rate base, operating ratio, and net income from operations as a percentage of sales. -2- I`I San Luis Garbage Coa_ .iy March 22, 1988 (Revised) It is our recommendation, based upon our study of the operations of San Luis Garbage Company and upon the three tests we have applied, that service rates be increased for all services, 108 in 1988, an additional 138 in 1989, and an additional 138 in 1990. This will increase the basic residential service rate, from the present $6.80 per month, to $7.50 in 19881 $8.50 in 1989, and $9.60 in 1990. If the rates are increased annually, all users will be paying the proper rate for the period in which the service is rendered, but may be disturbed by the rates being increased that often. Alternatively, rates could be increased once by 23.48 bringing the basic residential monthly rate to $8.40 to cover the three year test period. Based upon the City's past reluctance, in certain instances, to institute the previously negotiated rate increases, the Company should attempt to have rates increased once to cover the three year period. This will prevent unrecoverable revenue losses to the Company from this regulatory lag. The suggested increases are rounded to the closest one percent and the rates are rounded to the closest five cents in the accompanying rate schedules. The complete set of proposed rates are shown on pages 5 through 16 in Tables 4 through 7. If you have any questions regarding the amounts or calculations in this report, please call us for the additional information. Yours truly, GERALD W. PEASLEY ACCOUNTANCY CORPORATION Gerald W. Peasley Certified Public Accountant GWP:kh -3- San Luis Garbage Compa March 22, 1988 (Revised) Table 1: Estimated results of operations, at present rates, for the years: Estimated 1988 1989 1990 Revenues $ 2,373,300 $2,404,170 $ 2,435,550 Operating expenses 2,232450 2,507,290 2,812,550 Operating income (loss) 140,950 (103,120) (377,000) Income taxes 46,220 600 800 Net income (loss) $ 94.730 $ (103.720) $ (377.800) Table 2: Estimated results of operations at proposed rates, assuming annual rate increases, for the years: 1988 1989 1990 Revenues $ 2,619,670 $ 2,959,650 $ 3423,800 Operating expenses 2,236,970 2,517,710 2,829,200 Operating income 382,700 441,940 494,600 Income taxes 154,210 177,390 198,520 Net income $ 228.490 $ 2Z 64J.50 $ 296.080 Table 3: Test of operating results at proposed rates, years: 1988 1989 1990 Net income S 228,490 $ 264,550 $ 296,080 Average rate base 1,632,050 1,889,650 2,114,880 Return on rate base 14.08 14.08 14.08 Operating ratio 91.38 91.18 91.18 Net income from operations as a percent of sales 8.78 8.98 8.98 -4- San Luis Garbage Comp: March 22, 1988 (Revised) Table 4: PROPOSED SERVICE RATES, WITHIN CITY LIMITS (Assuming Annual Increases of 108 in 1988, 138 in 1989, and 138 in 1990) : 1988 I. RESIDENTIAL SERVICE One time a week service - standard container - 32 gallon or less - 80 pound weight limit. one yard trash per week on the curb - - - - - - - - - - - - - - - - - - - - $ 7.50 per month One can in the yard plus one yard trash per week on the curb- - - - - - - - - - - - - - - - 11.35 per month Each additional can in yard - - - - - - - - - - - - 3.85 II. MULTIPLE UNIT CONTAINERS NUMBER PICK-UPS PER WEER CU. YDS. 1 2 3 4 5 6 7 1 $ 35.85 $ 53.90 $ 64.40 $ 89.70 $112.35 $125.80 $161.75 1-1/2 42.20 61.00 77.05 101.00 121.60 132.70 186.55 2 48.35 68.35 89.95 112.05 130.85 162.10 212.20 3 59.40 84.45 116.80 149.45 194.35 210.20 282.05 4 72.10 107.85 152.75 207.80 259.25 280.30 350.40 6 98.10 149.75 210.20 310.95 358.75 395.35 467.25 8 125.80 185.45 280.30 414.80 518.00 560.75 632.45 III. COMMERCIAL CONTAINERS OBER PICK-UPS PER WEEK CU. YDS. 1 2 3 4 5 6 7 1 $ 27.00 $ 40.35 $ 48.30 $ 67.45 $ 84.35 $ 94.35 $121.35 1-1/2 31.70 45.85 57.85 75.80 91.35 99.75 140.25 2 36.40 51.30 67.45 84.25 98.30 121.90 159.10 3 44.55 63.30 87.60 112.30 146.05 157.70 211.55 4 54.30 80.85 114.55 156.15 194.85 216.80 262.80 6 73.60 112.40 157.70 233.65 269.50 296.55 350.40 8 94.40 139.15 210.20 311.70 389.20 420.55 474.45 San Luis Garbage Compa March 22, 1988 (Revisec-) Table 4: PROPOSED SERVICE RATES, WITHIN CITY LIMITS: (1988 Con't) IV. WASTE WHEELERS NUMBER PICK-UPS PER WEEK 1 2 3 4 5 6 7 1 $ 12.55 $ 18.70 $ 22.40 $ 31.20 $ 39.05 $ 43.60 $ 56.10 2 24.95 37.35 44.65 62.30 78.00 87.20 112.20 3 29.25 42.40 53.45 70.05 84.50 99.95 129.65 4 33.65 47.40 62.30 77.90 90.85 112.65 147.05 5 37.40 53.00 71.70 90.85 112.95 129.25 171.25 6 41.20 58.50 81.00 103.85 134.95 145.75 194.45 7 45.75 66.60 93.40 124.15 157.50 170.05 219.20 8 50.15 74.75 105.90 144.40 180.15 194.30 242.95 9 54.60 81.40 115.90 162.25 197.40 214.30 263.20 10 59.05 89.40 125.85 180.20 214.65 234.25 283.45 11 63.60 96.70 135.75 198.05 231.95 254.20 303.65 12 68.00 103.95 145.75 216.00 249.15 274.10 323.90 V. COMMERCIAL CANS NUMBER PICK-UPS PER WEEK CU. YDS. 1 2 3 4 5 6 7 1 $ 7.50 $ 12.50 $ 18.70 $ 20.80 $ 22.90 $ 24.90 $ 28.55 2 9.30 18.70 24.90 27.40 29.85 32.40 37.40 3 11.85 22.50 31.20 33.15 35.20 37.40 44.65 4 14.40 26.35 36.20 39.50 42.80 46.05 54.85 5 16.80 30.00 41.20 45.60 50.15 54.85 64.70 6 19.35 33.50 46.05 52.05 58.15 63.45 74.75 7 21.85 37.40 51.20 58.50 65.80 72.40 84.75 8 24.20 41.20 56.05 64.35 72.60 81.00 94.60 9 26.80 44.75 61.10 70.50 80.05 89.10 104.65 10 29.20 48.60 67.25 77.55 87.85 98.45 114.50 For 35 gallon cans in excess of 10 cans, the charge is $2.60 per can per collection. -6- San Luis Garbage Compa March 22., 1988 (Revised) Table 4: PROPOSED SERVICE RATES; WITHIN CITY LIMITS: (1988 Cd-li i) VI. COMMERCIAL_EXTRA. PIM--IIP.: 1 yd 1minimum $ 8.80 2y 10.45' 3 yd 15.65' 4. yd 20.90 i -7- l �f 1'— Ll San Luis Garbage Comp __ March 22, 1988 (Revised) Table 5: PROPOSED SERVICE RATES, WITHIN CITY LIMITS: 1989 I. RESIDENTIAL SERVICE One time a week service - standard container - 32 gallon or less - 80 pound weight limit. one yard trash per week on the curb - - - - - - - - - - - - - - - - - - - - $ 8.50 per month One can in the yard plus one yard trash per week on the curb- - - - - - - - - - - - - - - - 12.85 per month Each additional can in yard - - - - - - - - - - - - 4.35 II. MULTIPLE UNIT CONTAINERS NUMBER PICK-UPS PER WEER CU. YDS. 1 2 3 4 5 6 7 1 $ 40.50 $ 60.90 $ 72.80 $101.35 $126•.95 $142.15 $182.80 1-1/2 47.65 68.90 87.05 114.10 137.40 149.95 210.80 2 54.65 77.25 101.60 126.60 147.85 183.15 239.75 3 67.10 95.40 132.00 168.85 219.65 237.55 318.70 4 81.50 121.90 172.60 234.80 293.00 316.70 395.95 6 110.90 169.25 237.55 351.40 405.40 446.75 527.95 8 142.15 209.55 316.70 468.75 585.35 633.60 714.65 III. COMMERCIAL CONTAINERS NUMBER PICK-UPS PER WEEK CU. YDS. 1 2 3 4 5 6 7 1 $ 30.50 $ 45.60 $ 54.55 ' $ 76.20 $ 95.35 $106.60 $137.10 1-1/2 35.80 51.85 65.40 85.65 103.25 112.75 158.50 2 41.15 58.00 76.20 95.20 111.05 137.70 179.80 3 50.35 71.55 99.00 126.90 165.00 178.20 239.05 4 61.35 91.35 129.45 176.45 220.20 245.00 296.95 6 83..15 127.05 178.20 264.00 304.55 335.10 395.95 8 106.65 157.25 237.55 352.20 439.75 475.20 536.10 -8- l- 2 3 San Luis Garbage Compi March 22, 1988 (Revised) Table 5: PROPOSED SERVICE RATES, WITHIN CITY LIMITS: (1989 Con't) IV. WASTE WHEELERS NUMBER PICK-UPS PER WEER 1 2 3 4 5 6 7 1 $ 14.15 $ 21.15 $ 25.30 $ 35.25 $ 44.15 $ 49.30 $ 63.40 2 28.20 42.20 50.45 70.40 88.15 98.50 126.80 3 33.05 47.90 60.40 79.20 95.45 112.95 146.50 4 38.05 53.55 70.40 88.00 102.65 127.30 166.20 5 42.25 59.90 81.05 102.65 127.65 146.05 193.55 6 46.55 66.15 91.55 117.35 152.50 164.70 219.70 7 51.70 75.25 105.55 140.25 178.00 192.15 247.65 8 56.70 84.45 119.65 163.15 203.55 219.60 274.50 9 61.70 92.00 130.95 183.35 223.05 242.15 297.40 10 66.75 101.00 142.20 203.60 242.55 264.70 320.30 11 71.85 109.25 153.40 223.80 262.10 287.25 343.15 12 76.80 117.45 164.70 244.05 281.55 309.75 366.00 V. COMMERCIAL CANS NUMBER PICK-UPS PER WEEK CU. YDS. 1 2 3 4 5 6 7 1 $ 8.45 $ 14.10 $ 21.15 $ 23.50 $ 25.85 $ 28.15 $ 32.25 2 10.50 21.15 28.15 30.95 33.75 36.60 42.25 3 13.35 25.40 35.25 37.50 39.80 42.25 50.45 4 16.30 29.75 40.90 44.60 48.35 52.00 61.95 5 18.95 . 33.85 46.55 51.50 56.70 61.95 73.10 6 21.90 37.85 52.00 58.80 65.70 71.70 84.45 7 24.65 42.25 57.85 66.15 74.35 81.80 95.75 8 27.35 46.55 63.35 72.70 82.05 91.55 106.90 9 30.25 50.60 69.05 79.70 90.45 100.70 118.25 10 33.00 54.95 76.00 87.65 99.25 111.25 129.40 For 35 gallon cans in excess of 10 cans, the charge is $2.95 per can per collection. -9- l I � � y San Luis Garbage Compa Match 22, 1988 (Revised) Table 5- PROPOSED SERVICE RATES, WITHIR CITY LIMITS: (1989- Con't) VI. COMMERCIAL .EXTRA PICK- UTP-1 yd minimum S 9.95 2 yd 11.80 4 yd 17:70 4yd 23.60 =10- San Luis Garbage Comps March 22, 1988 (Revised) Table 6: PROPOSED SERVICE RATES, WITHIN CITY LIMITS: 1990 I. RESIDENTIAL SERVICE One time a week service - standard container_- 32 gallon or less - 80 pound weight limit. one yard trash per week on the curb - - - - - - - - - - - - - - - - - - - - $ 9.60 per month One can in the yard plus one yard trash per week on the curb- - - - - - - - - - - - - - - - 14.50 per month Each additional can in yard - - - - - - - - - - - - 4.90 II. MULTIPLE UNIT CONTAINERS NUMBER PICK-UPS PER WEER CU. YDS. 1 2 3 4 5 6 7 1 $ 45.80 $ 68.80 $ 82.25 $114.55 $143.50 $160.60 $206.55 1-1/2 53.85 77.90 98.40 128.95 155.30 169.45 238.20 2 61.75 87.30 114.85 143.05 167.10 207.00 270.95 3 75.85 107.80 149.15 190.80 248.20 268.40 360.15 4 92.05 137.70 195.05 265.35 331.05 357.90 447.45 6 125.30 191.25 268.40 397.10 458.10 504.80 596.60 8 160.60 236.80 357.90 529.65 661.40 716.00 807.55 III. COMMERCIAL CONTAINERS NUMBER PICK-UPS PER WEEK CU. YDS. 1 2 3 4 5 6 7 1 $ 34.50 $ 51.55 $ 61.65 $ 86.10 $107.75 $120.45 $154.95 1-1/2 40.45 58.55 73.90 96.80 116.65 127.40 179.10 2 46.50 65.50 86.10 107.60 125.50 155.65 203.15 3 56.90 80.85 111.90 143.40 186.45 201.35 270.10 4 69.30 103.25 146.30 199.40 248.80 276.85 335.55 1 6 94.00 143.55 201.35 298.35 344.10 378.70 447.45 8 120.50 177.70 268.40 398.00 496.95 536.95 605.80 -11- I- San Luis Garbage Coml March 22, 1988 (Revised) Table 6: PROPOSED SERVICE RATES, WITHIN CITY LIMITS: (1990 Con't) IV. WASTE WHEELERS NUMBER PICK-UPS PER WEEK 1 2 3 4 5 6 7 1 $ 16.00 $ 23.90 $ 28.60 $ 39.80 $ 49.85 $ 55.70 $ 71.65 2 31.90 47.70 57.05 79.55 99.60 111.30 143.25 3 37.35 54.15 68.25 89.45 107.85 127.60 165.55 4 43.00 60.55 79.55 99.45 116.00 143.85 187.80 5 47.75 67.70 91.60 116.00 144.25 165.05 218.70 6 52.60 74.70 103.45 132.60 172.35 186.10 248.25 7 58.45 85.05 119.25 158.50 201.15 217.15 279.85 8 64.05 95.45 135.20 184.35 230.00 248.10 310.20 9 69.75 103.95 147.95 207.20 252.05 273.60 336.05 10 75.45 114.10 160.70 230.05 274.10 299.10 361.95 11 81.20 123.45 173.35 252.90 296.15 324.60 387.75 12 86.80 132.75 186.10 275.80 318.15 350.00 413.60 V. COMMERfCIAL CANS NUMBER PICK-UPS PER WEEK CU. YDS. 1 - 2 3 4 5 6 7 1 $ 9.55 $ 15.95 $ 23.90 $ 26.55 $ 29.20 $ 31.80 $ 36.45 2 11.85 23.90 31.80 34.95 38.15 41.35 47.75 3 15.10 28.70 39.80 42.35 44.95 47.75 57.05 4 18.40 33.65 46.20 50.40 54.65 58.80 70.00 5 21.40 38.30 52.60 58.20 64.05 70.00 82.60 6 24.70 42.75 58.80 66.45 74.25 81.05 95.45 7 27.90 47.75 65.40 74.70 84.00 92.40 108.20 8 30.90 52.60 71.55 82.15 92.70 103.45 120.80 9 34.20 57.15 78.00 90.05 102.20 113.75 133.65 10 37.30 62.10 85.90 99.00 112.15 125.70 146.20 Fbr 35 gallon cans in excess of 10 cans, the charge is $3.35 per can per collection. -12- I San .Leis Garbage Comp,_, March 22, 1988 (Revised) Table 6: IMPOSEb -SERVICE. RATES; WITHIN CITY LIIKITg: (1989 Cont) VI. COMMERCIAL_EXTRA-PICK-W: 1 yd minimum $ 11.25 2 .yd 13.35 3 yd 20.00 4 yd 26.65 -13-- c San Luis Garbage Comp, March 22, 1988 (Revised) Table 7: PROPOSED SERVICE RATES, WITHIN CITY LIMITS (Assuming a One Time Only Increase of 23.48 for the Three Year Period 1988, 1989, and 1990) : 1988 I. RESIDENTIAL SERVICE One time a week service - standard container - 32 gallon or less - 80 pound weight limit. e ca^ ::- one yard trash per week on the curb - - - - - - - - - - - - - - - - - - - - $ 8.40 per month One can in the yard plus one yard trash per week on the curb- - - - - - - - - - - - - - 12.70 per month Each additional can in yard - - - - - - - - - - - - 4.30 II. MULTIPLE UNIT CONTAINERS NUMBER PICK-UPS PER WEEK CU. YDS. 1 2 3 4 5 6 7 1 $ 40.25 $ 60.45 $ 72.25 $100.65 $126.05 $141.10 $181.45 1-1/2 47.30 68.45 86.45 113.30 136.40 148.90 209.30 2 54.25 76.70 100.90 125.70 146.80 181.85 238.05 3 66.65 94.70 131.05 167.65 218.05 235.80 316.40 4 80.90 121.00 171.35 233.10 290.85 314.40 393.10 6 110.05 168.00 235.80 348.85 402.45 443.50 524.15 8 141.10 208.05 314.40 465.35 581.10 629.05 709.50 III. COMMERCIAL CONTAINERS NUMBER PICK-UPS PER WEEK CII. YDS. 1 2 3 4 5 6 7 1 $ 30.30 $ 45.30 $ 54.15 $ 75.65 $ 94.65 $105.80 $136.10 1-1/2 35.55 51.45 64.90 85.00 102.50 111.90 157.35 2 40.85 57.55 75.65 94.50 110.25 136.75 178.50 3 50.00 71.00 98.30 126.00 163.80 176.90 237.30 4 60.90 90.70 128.50 175.15 218.60 243.20 294.80 6 82.55 126.10 176.90 262.10 302.35 332.70 393.10 8 105.90 156.10 235.80 349.65 436.60 471.75 532.20 -14- /_2 / San .Lids Garbage Comps_;._ , March 22, 1988 (Revised) Table 7.: PROPOSED SERVICE RATES, WITHIN CITY LIMITS: (1988 Cont) VI. COMMERCIAL EXTRA PICK-UP: 1 yd minimum $ ;9.85 2. yd1 .7 0: 3 yd . 17.60 4 yd 23.45 -16- 1-31 16 1-31 San Luis Garbage Comp March 22, 1988 (Revised) Table 7: PROPOSED SERVICE RATES, WITHIN CITY LIMITS: (1988 Con't) VI. 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Total Current Liabilities LONG-TERM LIABILITIES Real estate loans payable after one P Y year (Note 2) ,;.'>; $ $�S3q Equipment loans payable after one year (Note 2) 'C 7/" 3332-178 3#l:;2t'2- STOCKHOLDERS' EQUITY Common stock - 3,000 shares authorized and outstanding 30,000 Accumulated excess revenues over expenses: Balance - January 1, 1987y}.}�ggs Current year's 'excess of revenue ��c'� o- 0��. �;•- � � ` � •- over expenses 40-1-fto ;+9 6 2a TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY S /�r152T384 See Accountants' Report. The accompanying notes are an integral part of the financial statements. EXHIBIT "B" SAN LUIS GARBAGE COMPANY STATEMENT OF REVENUE AND EXPENSES MODIFIED CASH BASIS FOR THE YEAR ENDED DECEMBER 31, 198,8 7 REVENUE Garbage service' Hauling uazahau"" 19-}67 Equipment rentals / ~"' H-38s Labor and repairs - South County Sanitary Service Interest Dividends 4;291 S.O.R.T. r.7 32;340' . 34-;671 . . Miscellaneous /��- -2,92 Sale of equipment ,80 EXPENSES Officers salaries /vi'` 133x960 Labor C / 6'5$;$6$- Gas and oil ^?!� g@-g•n Repairs Truck licenses ,Payroll taxe�r�•ffar.C::.�E-ist /-,,9 �r/ / X90 Other taxes '` ' �� Insurance -04 Equipment rentals , Landfill charges �,c�, >,r .-... T, Rent Utilities ?„ 9, Telephone ,,:=' :' 29,909 �� i Interest ��/.• 5 Operating supplies Office supplies and expenses 43.30 -14-,gg-r Computer services1ev 98'"8. Legal and accounting N; 1;r4 Public relations and promotion ap0a lip Depreciation /Oaec1^dG" 19#-,1h-2 Travel 7G4 i 90 Dues and subscriptions , Laundry 191 r. Outside services ! ole .. e.•i'fi{; $90 ok,i/ .: ,0 J. Other expenses -ter, EXCESS REVENUE OVER EXPENSES BEFORE TAXES �v G INCOME TAXES Federal income tax {*e*q=F) .0, _ State franchise tax EXCESS REVENUE OVER EXPENSES 5r See Accountants' Report. The accompanying notes are an integral part of the financial statements. �- 43 EXHIBIT "C" SAN LUIS GARBAGE COMPANY STATEMENT OF CHANGES IN WORKING CAPITAL MODIFIED CASH BASIS FOR THE YEAR ENDED DECEMBER 31, 198$7 WORKING CAPITAL - MODIFIED CASH BASIS - WAS PROVIDED BY: Operations: Ar i•F 7 Excess of revenues over expenses $ Add back depreciation - No effect on 14f4R7 working capital 244r1442 Total Working Capital Provided WORKING CAPITAL - MODIFIED CASH BASIS - WAS APPLIED TO: ;K&7roc`ase of equipment ^e-Y 2 29};M a in employee loans 1,861 Reduction in long-term debt BASE IN WORKING CAPITAL - MODIFIED CASH BASIS9$iy WORKING CAPITAL - MODIFIED CASH BASIS BALANCE AT JANUARY 1, 1980 _a6; n r. ,- WORKING CAPITAL - MODIFIED CASH BASIS BALANCE AT DECEMBER 31, 198 !' ego' See Accountants' Report. The accompanying notes are an integral part of the financial statements. 1- y� SAN LUIS GARBAGE COMPANY NOTES TO FINANCIAL STATEMENTS AT DECEMBER 31, 1986 1. SIGNIFICANT ,ACCOUNTING POLICIES Property, plant and equipment are valued at cost. Depreciation is provided over the estimated lives of the individual assets on both the straight-line and declining balance method. Fk4em 1 nc e t x is-feou edlto zero.becaulfe of-3nvestmev[ S.re�i,e�'' Carry er f ch credits to AAI amounts to $30,363. 2. LOANS PAYABLE Monthly Due in Due after Final Payment Total One Year One Year Maturity Alice Randall - R.E.-10% �r-ToqvT50 interest, payable $573 $ 573 =:M $ $ Apr.1989 Equipment Loans: Bank of America - at current interest rate ` Bank of America 19450 zr-,,do $ 8,., 88 June 1988 Bank of America 12250 a 90 15,000 N,569 Oct. 1989 Bank of America 1,4209; Q0 17,040 3z 1r69� Nov. 1989 //4�,�44�2�@fl t000 Bank of America 39000 b 36,000 Jan. 1991 Bank of America - 4 �� „p� If,-,/Se. lease purchase loans 3,544 4.2yJ_%28 146-,-B" June 1991 Mid-State Bank at current interest rate 689 47-54r2 4T-S1rE Mid-State Bank 550/`92 8,9 67-699 t,*74 M,az,_P_*8 Mid-State Bank 500J�,'P*,-±" 4 eft 5--M ;T / dp, wo/Tqr Totals $1�4r6fr9 S FUTURE MATURITIES 198FJ ,6rZ'V7 $V. 4,262 19WID 37,720� 19"p �f9(,iv 199291- y�%+j� Total / 1333,178 See Accountants' Report. SAN LUIS GARBAGE COMPANY FINANCIAL STATEMENTS AT DECEMBER 319 1986 March 13, 1987 San Luis Garbage Company 970 Monterey Street San Luis Obispo, CA 93401 We have compiled the accompanying statement of assets and liabilities-modified cash basis of San Luis Garbage Company as of December 31, 1986, and the related statements of revenue and expenses-modified cash basis and changes in working capital- modified cash basis for the year then ended, in accordance with standards established by the American Institute of Certified Public Accountants. A compilation is limited to presenting in the form of financial .statements information that is the representation of management. We have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or any other form of assurance on them. We are not independent with respect to San Luis Garbage Company. b� I IAT , E+& 0 N CPAs, INCORPORATED RAK:sr I I EXHIBIT "A" SAN LUIS GARBAGE COMPANY STATEMENT OF ASSETS AND LIABILITIES MODIFIED CASH BASIS AT DECEMBER 31, 1986 ASSETS CURRENT ASSETS Cash $ 234,162 Accounts receivable 70000 Insurance deposit 4,500 Investments at cost (Market $57,800) 55,760 Cash value of officers life insurance 41,776 Total Current Assets 3929442 Accumulated Book Cost Depreciation Value PROPERTY, PLANT AND EQUIPMENT (Note 1) Building and improvements $ 118,057 $ 108,347 $ 9,710 Trucks 1,5879518 1,0629433 525,085 Containers 4069005 250,731 155,274 Other equipment 95,368 73,631 21,737 $2.206.948 $1.495.142 711,806 Land - At cost 1299561 841,367 OTHER ASSETS Advances to employees and stockholders 18,575 TOTAL ASSETS $1.252.384 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES State Franchise tax payable 915 Real estate loans payable in one year (Note 2) $ 5,732 Equipment loans payable in one year (Note 2) 174,669 Life insurance loans 19,236 Total Current Liabilities 200,552 LONG-TERM LIABILITIES Real estate loans payable after one year (Note 2) $ 8,034 Equipment loans payable after one year (Note 2) 333,178 341,212 STOCKHOLDERS' EQUITY Common stock - 3,000 shares authorized and outstanding 30,000 Accumulated excess revenues over expenses: Balance - January 1, 1986 $613,208 Current year's excess of revenue over expenses 67,412 680,620 710,620 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 51.252.384 See Accountants' Report. The accompanying notes are an integral part of the financial statements. EXHIBIT "B" SAN LUIS GARBAGE COMPANY STATEMENT OF REVENUE At.'D EXPENSES MODIFIED CASH BASIS FOR THE YEAR ENDED DECEMBER 31, 1986 REVENUE Garbage service $1,910,618 Hauling 299478 Warehousing 10,707 Equipment rentals 13,385 Labor and repairs - South County Sanitary Service 39940 Interest 169675 Dividends 4,291 S.O.R.T• 32,340 Compensation insurance dividend 349671 Miscellaneous 2,928 Sale of equipment 9,000 $2,068,033 EXPENSES Officers salaries 135,000 Labor 658,868 Gas and oil 80,671 Repairs 73,127 Truck licenses 26,685 Payroll taxes 619690 Other taxes 61,747 Insurance 3049330 Equipment rentals 10,940 Landfill charges 1369231 Rent 7,652 Utilities 99950 Telephone 20,909 Interest 60,845 Operating supplies 33,303 Office supplies and expenses 14,087 Computer services 309089 Legal and accounting 17,467 Public relations and promotion 11,663 Depreciation 2049142 Travel 79490 Dues and subscriptions 8,239 Laundry 91197 Outside services 39356 Contributions and donations 200 Other expenses 6,019 1,993,897 EXCESS REVENUE OVER EXPENSES BEFORE TARES 74,136 INCOME TAXES Federal income tax (Note 1) - State franchise tax 6,7214 6,724 EXCESS REVENUE OVER EXPENSES S 67.412 See Accountants' Report. The accompanying notes are an integral part of the financial statements. /, yc EXHIBIT "C" SAA' LUIS GARBAGE COMPANY STATEMENT OF CHANGES IN WORKING CAPITAL MODIFIED CASH BASIS FOR THE YEAR ENDED DECEMBER 31, 1986 WORKING CAPITAL - MODIFIED CASH BASIS - WAS PROVIDED BY: Operations: Excess of revenues over expenses $ 67,412 Add back depreciation - No effect on working capital 204,142 Total Working Capital Provided 2719554 WORKING CAPITAL - MODIFIED CASH BASIS - WAS APPLIED TO: Purchase of equipment 2919981 Increase in employee loans 1,561 Reduction in long-term debt 2,314 2959856 DECREASE IN WORKING CAPITAL - MODIFIED CASH BASIS (24,302) WORKING CAPITAL - MODIFIED CASH BASIS BALANCE AT JANUARY 1, 1986 2169192 WORKING CAPITAL - MODIFIED CASE BASIS BALANCE AT DECEMBER 31, 1986 X191.890 See Accountants' Report. The accompanying notes are an integral part of the financial statements. SAN LUIS GARBAGE COMPANY NOTES TO FINANCIAL STATEMENTS AT DECEMBER 31, 1986 1. SIGNIFICANT ACCOUNTING POLICIES Property, plant and equipment are valued at cost. Depreciation is provided over the estimated lives of the individual assets on both the straight-line and declining balance method. Federal income tax is reduced to zero because of investment tax credits. Carryover of such credits to 1987 amounts to $309363. 2. LOANS PAYABLE Monthly Due in Due after Final Payment Total One Year One Year Maturity Alice Randall - R.E.-lOZ interest, payable $573 . $ 573 13,766 $ 5,732 1--A,034 Apr.1989 Equipment Loans: Bank of America - at current interest rate - 3 loans $29834 $ 139834 $ 139834 Bank of America 1,450 26,100 17,400 $ 8,700 June 1988 Bank of America 1,250 42,500 152000 279500 Oct. 1989 Bank of America 1,420 499500 179040 32,460 Nov. 1989 Bank of America 3,000 147,000 369000 111,000 Jan. 1991 Bank of America - 4 lease purchase loans 3,544 1912374 42,528 148,846 June 1991 Engs Equipment Co. at 12% 1,747 15,725 159725 Mid-State Bank at current interest rate 689 42542 49542 Mid-State Bank 550 8,074 61600 1,474 Mar. 1988 Mid-State Bank 500 9,198 6,000 3,198 July 1988 Totals $507,847 $174.669 5333.178 FUTURE MATURITIES 1988 $123,940 _ 1989 106,448 1990 782528 1991 24,262 Total $333.178 See Accountants' Report. 1-51 SAN LUIS GARBAGE COMPANY FINANCIAL STATEMENTS AT.'DECEMBER 319 L985 S i February 20, 1986 San Luis Garbage Company 970 Monterey Street San Luis Obispo, CA 93401 We have compiled the accompanying statement of assets and liabilities-modified cash basis of San Luis Garbage Company as of December 31, 1985, and the related statements of revenue and expenses-modified cash basis and changes in working capital- modified cash basis for the year then ended, in accordance with standards established by the American Institute of Certified Public Accountants. A compilation is limited to presenting in the form of financial statements information that is the representation of management. We have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or any other form of assurance on them. We are not independent with respect to San Luis Garbage Company. KNIGHT TOWLE SAGE 6 JOHNSON CPAs, INCORPORATED RAK:sr 1-s3 EXHIBIT "A" SAN LUIS GARBAGE COMPANY STATEMENT OF ASSETS AND LIABILITIES MODIFIED CASH BASIS AT DECEMBER 31, 1985 ASSETS CURRENT ASSETS Cash 299,962 Prepaid State Franchise tax 5,809 Insurance deposit 49500 Investments at cost (Market $51,000) 55,760 Cash value of officers life insurance 44,569 Total Current Assets 410,600 Accumulated Book Cost Depreciation Value PROPERTY, PLANT AND EQUIPMENT (Note 1) Building and improvements $ 118,057 $ 1049363 $ 139694 Trucks 19412,273 9559030 457,243 Containers 3689460 233,825 134,635 Other equipment 84,813 66,418 18,395 X1.983.603 $1.359.636 6239967 Land - At cost 129,561 7539528 OTHER ASSETS Advances to employees and stockholders 17,014 TOTAL ASSETS 51.181.142 LIABILITIES ANS STOCKHOLDERS' EQUITY CURRENT LIABILITIES Real estate loans payable in one year (Note 2) $ 5,516 Equipment loans payable in one year (Note 2) 1599656 Life insurance loans 19,236 Loan payable to Mission Country Disposal (Note 2) 10,000 Total Current Liabilities 194,408 LONG-TERM LIABILITIES Real estate loans payable after one year (Note 2) $ 13,461 Equipment loans payable after one year (Note 2) 330,065 343,526 STOCKHOLDERS'. EQUITY Common stock - 3,000 shares authorized and outstanding 30,000 Accumulated excess revenues over expenses: Balance - January 1, 1985 $606,130 Current year's excess of revenue over expenses 7,078 613,208 643,208 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 51.181.142 Unaudited - See Accountants' Compilation Report. The accompanying notes are an integral part of the financial statements. EXHIBIT "B" SAN LUIS GARBAGE COMPANY STATEMENT OF REVENUE AND EXPENSES MODIFIED CASH BASIS FOR THE YEAR ENDED DECEMBER 31, 1985 REVENUE Garbage service $1,7629143 Hauling 31,705 Warehousing 629847 Equipment rentals 239131 Labor and repairs - South County Sanitary Service 139799 Interest 229806 Dividends 31272 S.O.R.T. 329475 Miscellaneous 5,500 $1,957,678 EXPENSES Officers salaries 1289000 Labor 621,276 Gas and oil 96,780 Repairs 80,862 Truck licenses 249502 Payroll taxes 58,687 Other taxes 700623 Insurance 3079262 Equipment rentals 149127 Landfill charges 1279998 Rent 5,144 Utilities 9,290 Telephone 189552 Interest 499285 Operating supplies 199804 Office supplies and expenses 149304 Computer services 43,841 Legal and accounting 11,087 Public relations and promotion 11,163 Depreciation 197,480 Travel 119011 Dues and subscriptions 8.688 Laundry 8,787 Outside services 39544 Contributions and donations 4,420 Other expenses 2,292 1,9489809 EXCESS REVENUE OVER EXPENSES BEFORE TAXES 8,869 INCOME TAXES Federal income tax (Note 1) - State franchise tax 1,791 1,791 EXCESS REVENUE OVER EXPENSES $ 7.078 Unaudited - See Accountants' Compilation Report. The accompanying notes are an integral part of the financial statements. I-s � EXHIBIT "C" SAN LUIS GARBAGE COMPANY STATEMENT OF CHANGES IN WORKING CAPITAL MODIFIED CASH BASIS FOR THE YEAR ENDED DECEMBER 31, 1985 WORKING CAPITAL - MODIFIED CASH BASIS - WAS PROVIDED BY: Operations: Excess of revenues over expenses $ 79078 Add back depreciation - No effect on working capital 1979480 $2049558 Increase in long term debt 66,040 Total Working Capital Provided 2709598 WORKING CAPITAL - MODIFIED CASH BASIS - WAS APPLIED TO: Purchase of equipment 3119188 Increase in employee loans 1,471 3129659 DECREASE IN WORKING CAPITAL - MODIFIED CASH BASIS (42,061) WORKING CAPITAL - MODIFIED CASH BASIS BALANCE AT JANUARY 1, 1985 258,253 WORKING CAPITAL - MODIFIED CASH BASIS BALANCE AT DECEMBER 31, 1985 12lbLL92 Unaudited - See Accountants' Compilation Report. The accompanying notes are an integral part of the financial statements. I �J � SAN LUIS GARBAGE COMPANY NOTES TO FINANCIAL STATEMENTS AT DECEMBER 31, 1985 1. SIGNIFICANT ACCOUNTING POLICIES Property, plant and equipment are valued at cost. Depreciation is provided over the estimated lives of the individual assets on both the straight-line and declining balance method. Federal income tax is reduced to zero because of investment tax credits. Carryover of such credits to 1986 amounts to $48,743 2. LOANS PAYABLE Due in Due after Total One Year One Year Alice Randall - R.E. - 10% interest payable $573/per month 18,977 16 13 461 Equipment loans: Bank of America - 7 loans at current interest rate - payable at $10,182/per month $4139193 1229184 2919009 Mid-State Bank - 3 loans at llhZ interest - Payable $1,376/per month 39,836 169512 23,324 Engs Motor Transport - 8.2% interest payable $1,747 per month 369692 209960 159732 $489,721 159.656 0 065 Loan from Mission Country Disposal under common ownership 510.000 Unaudited - See Accountants' Compilation Report. 1-si