Audits - 1976-1978

(1)

MO,

DIRECTORS

Harlan Seaworth Wellington, Colorado

Albert Ackerman Wellington, Colorado

Stephen Goodwin Wellington, Colorado

Duane Aranci Fort Collins, Colorado

Philip Schnorr Fort Collins, Colorado

OFFICERS

Harlan Seaworth President

Stephen Goodwin Vice President

Ben Dumler . Secretary-Manager

ORDER OF BUSINESS

According to the By-Laws

The order of business of the stockholders meeting shall be as follows: 1. Meeting called to order by the chairman at 1 0: 00 A.M.

2. Appointments of three stockholders of the company as a credentials committee 3. Registration of proxies with credentials committee

4. Report of credentials committee 5. Annual report

6. Nomination of directors

7. Opening of polls for election of directors 8. Old business

9. New business

(A.) Vote on assessment for the year

(2)

PRESIDENT'S REPORT

1975 proved to be another outstanding water year for our Company. The Board of Directors started the season with a 5.0 acre feet per share dividend, then added three dividends during the season, to bring the total to 7.0 acre feet per share.

Most farmers under our system, harvested a good crop, with some exceptions in the Buckeye area, where they were hit very hard by hail in the month of June.

The Company also suffered considerable damage from Boxelder floods, in June of this year. $6,010.07 was spent on the spillway structure, where main ditch crosses the Boxelder Creek, northwest of Wellington, there was a considerable amount of time and money spent, cleaning trash and silt from the ditches and right-of-ways, I estimate the total cost was approximately $10,000.00.

The Boxelder Flood Control Project, which would have prevented this expense, had it been completed, is getting under way.

Contracts for the two upper most dams on the project, have been signed, and some work has been done. It is expected that contracts, on the two lower dams, one on Coal Creek, and one on Indian Creek, will be let during 1976, leaving structure B-2, that will dam the Boxelder and Rawhide Creek, about two miles east of Buckeye, for 1977.

All of the right-of-ways for the three lower dams have not been acquired as yet, but at least two of the site's will have to be dealt with for this coming year.

Probably the most discouraging problem that has faced NORTH POUDRE for many years, is the re-habilitation of several Company reservoirs.

In June of this year, The Board of Directors, contracted with Bruns Inc., of Longmont, for a complete engineering study on safety, and condition of fifteen of the Companies dams and reservoirs. The cost of this study is $51,000.00, but the Board of Directors felt this would be the only way to establish relative priori-ties to upgrade our system.

I am in hopes, by the time of the annual meeting, we will have a detailed report, as to the safety and condition of our storage capacity, and recommendations, as to what will be needed to meet the requirements of the State Engineer's office, and any other regulatory agency that may be involved.

Due to some dam failures in the State, and over the Nation, the State Engineer has been forced to require some very stringent requirements, as to dam safety. I believe, to be against safety is like being against motherhood, (but) this could, and, I believe will be, very expensive for the NORTH POUDRE stockholders.

In July of this year, Larry Cox, our Secretary-Manager, informed the Board of Directors, that he wanted to be replaced, effective at the end of the water season, or as soon as we could find a replacement. After much discussion and searching for a qualified person, the Board hired Mr. Ben Dumler, who reported for work the 25th of August, Ben has a lot of background in construction work, and especially irrigation construction. He spent several years as an employee, and also as part-owner of Pink Wilson Company, a concrete ditch lining company, of Greeley, Colorado.

In September, Susan Frame, our office Secretary, also resigned, which leaves us with a complete change of office personal. Mary Ann Gideon, has been hired to replace Susan.

I want to take this opportunity to thank Larry and Susan, for the orderly way they went about trans-fering their duties, and wish them well in their new endeavors.

I also want to thank Freda Cox, _{for her many years of faithful services, we will certainly miss her when} it comes time to order water.

(3)

RECOMMENDED BUDGET:

$ 7.00 per share for Water assessments

15.50 per share for operation & maintenance work .50 per share for noxious weed control

2.00 per share for loan retirement 2.00 per share for new equipment

8.00 per share for reservoir rehabilitation & Right-of-Way acquisition $35.00

$25.00 per share due April 1, 1976 $10.00 per share due October 1, 1976 Interest = 11/0,/2/0 per month on overdue accounts

MAINTENANCE REPORT

During the year, thirty gates, structures, and weirs were repaired, and five additional new structures completed. Three hundred sixty five loads of concrete riprap, rock, and gravel were hauled to various lo-cations. The repairs on Number 15 Reservoir inlet ditch was completed, and the tunnel in Number 15 dam repaired. Redwood timbers were installed in well-house at Fossil Creek, replacing the old, and the tunnel was remortared. Some dragline work was completed in a few places.

A John Deere backhoe, trailer, and combination dump truck-winch-truck were purchased as a unit for $19,000.00.

(4)

7

MANAGERS COMMENTS

When I began in August, I rode with the ditch-riders over the areas each one served, in order to become better acquainted. I'm impressed with the engineering skills used in designing, and building of the canals and reservoirs. The flexibility to exchange water within our own system is very helpful in refilling our reser-voirs. The leadership and direction this Company had, is of great value. When we total all these things I think we find the NORTH POUDRE IRRIGATION COMPANY is one of the better systems.

Many of the reservoirs in Colorado, were built around the turn of the Century. All other things being equal, they should be about equal strength. Considering those that failed, it also means a number of them are requiring attention. Although some measures seem quite severe, I'm sure the State Engineer's office of Water Resources is meant to be life and property saving.

Many irrigation systems find themselves long on work to be done, and short of funds. This situation is apt to leave one short of temper and planning ability. Our problems are not unique; with proper planning and time, we will overcome them, while continuing to operate the system.

The assessments will not easily decrease dollar-wise, as long as the purchasing power of same is appa-rently declining. Perhaps we will profit by employing more preventive maintenance.

The number of acre feet of water delivered per share must be quite an increase over the original de-sign, and with changes and repairs, we hope to keep pace with delivery demands. Our efforts, of course, are directed in serving you, the stockholders.

4

(5)

ALDEN T. HILL ALDEN V. HILL 1.10SEPH R. COYTE

HILL AND HILL ATTORNEYS AT LAW FORT COLLINS, COLO.

January 20, 1976

P. 0. BOX 421 160 WEST MOUNTAIN AVE.

TELEPHONE 482-3683 80521

RESUME OF LEGAL WORK FOR THE NORTH POUDRE IRRIGATION COMPANY In 1975

During 1975, I attended all twelve regular Board Meetings, the Annual Stockholders' Meeting, and six special meetings as re-quested by the Board.

The State Engineer's Office is regularly inspecting re-servoirs to see that they are properly maintained. Time has been spent as North Poudre works to meet requirements.

The Colorado Division of Wildlife has plans for a minimum stream flow upon the Poudre River. We have followed these efforts as the rights of the agricultural user must be protected.

Cache La Poudre Water Users Association and North Poudre Irrigation Company are parties to a case now in the Colorado Supreme Court against Glacier View Meadows. The case involves a development in the Red Feather Lakes area, and the quantity of water which must be furnished by the developer who will use wells to supply water for homes.

A Wellington Field Muddy Unit Agreement relating to an effort to increase oil production in the North Poudre area was reviewed and additional information obtained.

The action brought against North Poudre by Samuel J. Marcy seeking damages and an injunction remains pending and is set for trial in March of this year.

Time was spent on the Boxelder Flood Control project work-ing with the County and the U.S. Department of Agriculture - Soil Conservation Service.

North Poudre sold the old elementary school site in two parcels to Wellington Federated Church and to the Church of Jesus Christ of Latter-Day Saints. North Poudre had deeded most of the land to old School District No. 34 in 1905. The Deed provided when the property ceased to be used for school purposes, it would revert to North Poudre.

Time has regularly been spent on such matters as preparing agreements; protesting water law filings which may adversely affect the water rights of the North Poudre Irrigation Company; and advising on general legal matters which may affect the Company.

We appreciated the opportunity to work with North Poudre Irrigation Company in 1975.

Respectfully submitted,

HILL and HILL

Alden V. Hill AVH:mcb

(6)

Year 1909 1910 1911 5 Yr. AM. Assmt. Ac. Ft. per share per share $ 5.00 5.00 4.00 Cost Per A4. Ft. 5Yr. Am. PerAc.Ft. Cost Interest $ 22,029.05 26,533.46 21,351.13 1912 5.00 3.09 1.61 21,137.50 1913 6.00 2.87 2.09 26,683.07 1914 7.00 3.44 2.03 35,698.51 1915 7.00 3.09 2.26 2.00 39,715.38 1916 7.00 2.29 3.05 37,843.74 1917 7.00 3.15 2.22 33,341.79 1918 7.00 2.41 2.90 39,510.20 1919 8.00 1.14 7.01 38,383.15 1920 11.00 2.98 3.69 3.77 37,483.88 1921 8.00 3.74 2.13 36,672.49 1922 6.50 1.83 3.55 37,269.08 1923 6.50 4.31 1.50 38,713.11 1924 9.50 4.59 2.07 42,899.56 1925 12.00 2.52 4.76 2.80 42,232.10 1926 5.00 4.63 1.08 40,525.92 1927 8.00 3.92 2.04 41,175.17 1928 8.50 4.59 1.85 37,054.95 1929 8.25 4.43 1.86 33,242.45 1930 8.25 3.09 2.66 1.90 31,879.06 1931 7.50 2.60 2.88 30,510.11 1932 7.00 1.37 5.10 29,314.38 1933 4.50 2.87 1.56 28,702.10 1934 5.00 1.37 3.64 28,773.75 1935 4.25 3.16 1.34 2.90 28,716.25 1936 6.00 2.07 2.89 28,863.61 1937 5.75 1.22 4.77 23,692.80 1938 6.75 3.21 2.10 23,626.89 1939 7.75 2.61 2.99 25,655.98 1940 7.25 .75 9.60 4.47 21,808.42 1941 4.00 2.00 2.00 19,102.96 1942 6.25 3.90 1.60 18,030.56 1943 8.00 4.19 1.90 17,423.15 1944 7.25 3.07 2.35 16,208.69 1945 7.25 2.10 3.45 2.26 14,149.96 1946 7.25 2.00 3.64 12,668.32 1947 9 00 3.30 2.72 11,266.32 1948 13.00 2.16 6.10 11,420.83 1949 12.00 3.00 4.00 8,956.62 1950 12.00 1.80 6.66 4.63 8,735.28 1951 12.00 2.62 4.58 6,457.13 1952 12.00 3.20 3.75 5,077.05 1953 14.40 4.51 3.21 4,366.54 1954 18.60 3.40 5.47 2,860.71 1955 18.00 3.20 5.62 4.53 1,950.61 1956 16.00 3.40 4.71 1,564.16 1957 9.00 6.50 1.39 116.10 1958 15.00 6.00 2.50 1959 14.50 5.80 2.50 1960 14.50 5.30 2.73 2.77 1961 14.50 6.00 2.42 1962 14.50 7.00 2.07 1963 14.50 5.50 2.64 1964 15.00 5.30 2.83 1965 16.00 5.00 3.20 2.63 96.66 1966 16.50 5.00 3.30 172.51 1967 17.00 4.50 3.50 216.81 1968 20.00 6.30 3.17 120.81 1969 20.00 5.50 3.64 1,164.37 1970 20.00 7.00 2.86 3.29 273.78 1971 20.00 8.00 2.50 1972 21.00 5.00 1973 21.00 6.00 1974 22.00 7.00 Principal Indebtedness 1936 - $610,000.00

Total principal indebtedness paid off December 6, 1956

Total Interest Paid 1,191,488.20

(7)

MONTHLY PRECIPITATION RECORD FOR 1975 IN INCHES

Month Wellington Cactus Hill Livermore

January .01 .05 .12 February .17 .17 .40 March .78 .56 1.77 April .94 1.15 .51 May 3.38 4.53 4.17 June 2.06 .85 July 1.26 1.94 August 1.03 .63 September .56 October .76 November .49 December 1.50 .21 .51 TOTALS 11.13 11.90 7.48

ANNUAL PRECIPITATION IN INCHES MEASURED AT 5 STATIONS Year

1936

Wellington 7.93

Cactus Hill Buckeye Hinkley Lake Livermore

1937 11.63 10.63 1938 16.38 12.10 1939 7.20 6.13 6.21 1940 13.00 11.93 11.38 1941 19.77 16.10 18.58 1942 20.45 14.09 16.79 1943 10.73 7.24 Incomplete 1944 11.49 8.88 8.21 1945 16.97 13.93 15.07 1946 16.29 8.94 12.98 1947 17.18 13.80 14.46 1948 8.61 7.06 7.81 1949 15.85 13.23 14.78 1950 13.89 8.08 9.39 1951 21.59 15.83 15.02 1952 11.87 14.01 8.82 1953 12.10 7.79 13.11 8.05 1954 8.30 7.01 7.90 5.72 1955 12.84 13.48 10.20 9.82 1956 15.84 9.44 13.41 13.98 1957 19.48 12.90 16.67 16.86 1958 17.99 15.70 14.21 17.69 1959 14.58 12.61 12.61 15.55 1960 8.84 9.61 7.67 9.10 1961 24.95 19.38 18.51 22.09 1962 13.90 9.76 13.18 11.23 1963 12.10 9.70 11.84 11.57 1964 5.64 4.51 5.21 7.26 1965 16.50 11.55 15.46 15.21 1966 8.21 4.74 8.10 8.45 1967 22.52 18.28 1968 10.26 9.18 8.49 5.65 4.80 1969 15.39 15.80 14.83 14.66 15.82 1970 11.48 14.22 9.61 13.45 13.71 1971 13.27 13.04 10.57 13.45 12.45 1972 13.05 15.02 10.87 9.53 11.22 1973 10.90 15.11 11.10 12.37 14.64 1974 8.84 10.65 9.56 1975 11.13 11.90 7.48

₇

(8)

Erickson, Hunt & Spillman

CERTIFIED PUBLIC ACCOUNTANTS

ACCOUNTANTS' REPORT

The Board of Directors

The North Poudre Irrigation Company Wellington, Colorado

We have examined the balance sheet of the North Poudre Irrigation Company as of December 31, 1975 and December 31, 1974 and the related statements of loss and retained earnings and changes in financial position for the years then ended. Our examination was made in accor-dance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

In our opinion, the accompanying financial statements present fairly the financial position of the North Poudre Irrigation Company as of December 31, 1975 and December 31, 1974 and the results of its operations for the years then ended, in conformity with generally accepted accounting

principles applied on a consistent basis. The supplementary data relating to the periods under review and included in Schedule 1 has been subjected to the same auditing procedures and, in our opinion, is stated fairly in all material respects when considered in conjunction with the basic financial statements taken as a whole.

Fort Collins, Colorado January 14, 1976

(9)

NORTH POUDRE IRRIGATION COMPANY

Balance Sheet December 31, 1975

With comparative figures for 1974 ASSETS Current assets: Cash $ 11,629 $ 15,751 Assessments receivable 9,630 6,116 Accounts receivable 4,215 100 Prepaid insurance 1,309 2,194

Stock in other companies 1,769 1,769

Total current assets 28,552 25,930

Property, plant and equipment:

Land 7,965 400

Right of ways 72,776 72,776

Priorities and water rights 545,100 545,100 Buildings and improvements 24,318 20,793. Radio and office equipment 80,086 80,086

Transportation equipment 20,124 14,124

Machinery and equipment 62,535 49,034

Ditches and reservoirs 4,244,957 4,211,332 5,057,861 4,993,645 Less accumulated depreciation 1,355,903 1,306,883 3,701,958 3,686,762

$3,730,510 $3,712,692

LIABILITIES

Current liabilities:

Current portion long-term debt $ 25,600 15,600

Water purchased 60,000 60,000

Accounts payable 13,400

Withheld and accrued taxes 151 690

Accrued wages 1,494

Prepaid assessments 8,754 4

Contract payable 13,065

Accrued interest payable 1 309 1,438

Total current liabilities 123,773 77.732

Long-term debt (note 1):

Notes payable 899,135 904,735

Less current portion 25,600 15,600

873,535 889,135

Stockholders' equity:

Capital stock $50 par value, authorized

and issued 10,000 shares 500,000 500,000 Paid in capital in excess of par 3,450 3,450 Assessments collected for capital

improvements 791,993 791,993

Retained earnings 1,444,569 1,451,192

2,740,012 2,746,635 Less treasury stock, 24 shares at cost 6,810 810 2,733,202 2,745,825 Contingency (note 4)

$3,730,510 3,712,692

See accompanying notes to financial statements.

(10)

Statement of Loss and Retained Earnings For the year ended December 31, 1975

With comparative figures for 1974

Operating revenue:

1975 1974

Assessments $ 260,621 220,621

Water 425 880

Leases, hunting, fishing, pasture 11,845 11,670

Stock transfer fees 1,150 1,160

Ditch crossing and miscellaneous 2,349 1,918

Total operating revenue 276,390 236,249

Operating expenses:

Operation expense, main canal 16,563 7,959

Operation expense, laterals 13,431 8,760

Operation expense, Fossil Creek Reservoir 3,295 1,785 Water purchased, assessments paid

Labor, main canal

63,245 1 ,568

65,171 6,084

Labor, laterals 27,464 28,060

Materials and supplies 38,259 18,778

Maintenance, equipment 28,164 14,876

Maintenance, building and structures 23,353

Dragline and machine hire 31,771 16,267

Depreciation 49,020 45,981

Salaries and audit 25,356 20,080

Director's per diem 2,684 1,469

General office expense 3,141 4,137

Legal 6,800 5,273

Communications 2,073 1,749

Taxes and insurance 2,323 4,083

Utilities Payroll taxes 4,156 4,943 3,011 4,385 Employee benefits 1.164

Total operating expenses 325,420 281,261

Loss from operations 49,030 45,012

Non-operating income:

Interest income 974 217

Gas and oil dividends (note 3) 9,366

Gain on sale of assets 34,607 4,247

Total non-operating income 44,947 4,464

Non-operating expense: interest 2,540 2 742

Net loss (note 2) 6,623 43,290

Retained earnings beginning of year 1,451,192 1,494,482

Retained earnings end of year $1,444,569 1,451,192

Net loss per share $ .66 4.33

See accompanying notes to financial statements

(11)

Statement of Changes in Financial Position For the year ended December 31, 1975

Sources of working capital: 1975 1974

From operations:

Net loss for the year $(6,623) (43,290)

Charges (credits) to earnings not using working capital:

Gain on sale of assets (34,607) (4,247)

Total from operations 7,790 (1,556)

Proceeds from sale of assets 39,931 4,383

Decrease in working capital (below) 43,419 17,545

$91,140 20,372

Application of working capital:

Decrease in long-term debt $15,600 15,600

Purchase of fixed assets 69,540 4,772

Purchase of treasury stock 6,000

$91,140 20,372

Changes in Components of Working Capital

Increase (decrease) in current assets:

Cash $ (4,122) (17,285)

Assessments receivable 3,514 (896)

Accounts receivable 4,115 100

Prepaid insurance (885) (64)

Net increase in current assets 2,622 (18,145)

Decrease (increase) in current liabilities:

Accounts payable (13,400)

Withheld and accrual taxes 539 469

Accrued wages (1,494)

Current portion long-term debt (10,000)

Prepaid assessments (8,750) (4)

Contract payable (13,065)

Accrued interest payable 129 135

Net decrease (increase) in

current liabilities (46,041 600

Net decrease in working capital $43,419 17,545

(12)

Accounting Policies and Notes to Financial Statements

December 31, 1975

Accounting Policies

a. Property and equipment is recorded at cost. Depreciation is provided in the accounts as follows:

Asset Life Method

Ditches and reservoirs 100 years SL

Machinery and equipment 5-10 years SL

Transportation equipment 4-7 years SL and DB

Radio and office equipment 10 years SL

Buildings and improvements 20 years SL

b. Stock in other companies is recorded at cost.

Notes to Financial Statements 1. Notes payable are as follows:

First National Bank Bureau of Reclaimation

Amount $ 10,000

889,135 $899,135

2. The company is incorporated under the laws of the State of Colorado as a tax exempt organization, therefore, there is no provision for income taxes.

3. The oil and gas dividends are from North Poudre Oil and Gas Royalty Units, a 94 percent owned sub-sidiary of North Poudre Irrigation Company.

4. There is pending Civil Action No. 26104 in the District Court of Larimer County. This is an action against North Poudre Irrigation Company, in which $75,000.00 for damages is sought in the first claim for relief on the basis of trespass and damage to real property. North Poudre has denied any liability. The ultimate outcome will be determined by the Court. The insurance company for North Poudre has taken the position there is no coverage for this type of claim.

(13)

Statement of Cash Receipts and Disbursements For the year ended December 31, 1975

1975 1974

Cash balance January 1 $15,751 33,036

Cash receipts:

Assessments received 265,860 221,037

Leases, hunting, fishing, pasture 11,845 11,670

Stock transfer fees 1,150 1,160

Ditch crossing and miscellaneous 2,349 3,531

Interest income 974 217

Sale of assets 39,931 4,383

Notes payable 10,000

Gas and oil dividends 9,366

Account receivable collected 85

Water 425 880

Total cash received 341,985 242,878

Total cash to be accounted for 357,736 275,914

Cash disbursements:

Ditches and reservoirs:

Maintenance 62,487 77,030

Maintenance of equipment 23,350 14,879

Operation 32,536 19,006

Dragline and machine hire 30,707 16,267

Total for ditches and reservoirs 149,080 127,182

Water purchased, assessments paid 63,245 64,687

Salaries and auditor 25,356 20,180

Director's per diem 2,684 1,923

General office expense 3,141 3,683

Legal 6,650 5,273

Communications 2,073 1,749

Insurance and taxes 1,438 3,161

Employee benefits 1,164 1,478

Utilities 3,522 3,741

Payroll taxes 4,650 3,857

Notes payable 15,600 15,600

Interest 2,669 2,877

Purchase of fixed assets 60,635 4,772

Transfer to North Poudre Trustee account 4,200

Total cash disbursed 346,107 260,163

Cash balance December 31 $11,629 15,751

(14)

Erickson, Hunt & Spillman

CERTIFIED PUBLIC ACCOUNTANTS

ACCOUNTANTS' REPORT

The Board of Directors

North Poudre Oil and Gas Royalty Units Wellington, Colorado

We have examined the balance sheet of North Poudre Oil and Gas Royalty Units as of December 31, 1975 and December 31, 1974 and the related statements of earnings and retained earnings and changes in financial position for the years then ended. Our examination was made in accor-dance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

In our opinion, the accompanying financial statements present fairly the financial position of North Poudre Oil and Gas Royalty Units as of

December 31, 1975 and December 31, 1974 and the results of its operations for the years then ended, in conformity with generally accepted accounting

principles applied on a consistent basis. The supplementary data relating to the periods under review and included in Schedule 1 has been subjected to the same auditing procedures and, in our opinion, is stated fairly in all material respects when considered in conjunction with the basic financial statements taken as a whole.

Fort Collins, Colorado January 14, 1976

(15)

NORTH POUDRE OIL AND GAS ROYALTIES

Balance Sheet December 31, 1975

ASSETS

1975 1974

Current asset, cash $8,943 10,376

LIABILITIES

Current liabilities:

Accounts payable $4,215 100

Accrued dividends payable 2,239 2,002

6,454 2,102

Owners' equity:

500,000 units authorized; 498,425 units issued and outstanding (note 1)

Retained earnings 2,489 8,274

$8,943 10,376

(16)

Ilw

NORTH POUDRE OIL & GAS ROYALTY UNITS

Statement of Earnings and Retained Earnings For the year ended December 31, 1975

Operating revenue: Oil royalties Oil and gas leases

Total operating revenue

1975 $3,486 264 1974 3,681 1,686 3,750 5,367 Operating expenses: Audit 110 100 Bank charges 5 —

Total operating expenses 115 100

Earnings from operations 3,635 5,267

Non-operating income: interest 177 242

Net earnings 3,812 5,509

Retained earnings beginning of year 8,274 2,765

Dividends declared 9,969 —

Write-off of old outstanding dividend

checks (note 2) 372

-Retained earnings end of year $2,489 8,274

16

(17)

NORTH POUDRE OIL AND GAS ROYALTY UNITS

Statement of Changes in Financial Position For the year ended December 31, 1975

Sources of working capital: Net earnings

Decrease in working capital (below) Write-off old outstanding dividend checks

1975 $3,812 5,785 372 1974 5,509 $9,969 _5,509

Application of working capital:

Increase in working capital (below) $ — 5,509

Dividends declared 9,969

$9,969 5,509

Changes in Components of Working Capital

Increase (decrease) in cash 5(1,433) 5,609

Increase in current liabilities:

Accounts payable 4,115 100

Accrued dividends payable 237

Net increase in current liabilities 4,352 100

Net increase (decrease) in

working capital $(5,785) 5,509

• See accompanying notes to financial statements.

(18)

Notes to Financial Statements December 31, 1975

1. North Poudre Oil and Gas Royalty Units is a common law trust and is 94 percent owned by The North Poudre Irrigation Company.

2. There are approximately 100 dividend checks amounting to $372 outstanding as of December 31, 1975. They are all small amounts with some dating back to pre 1966. It is assumed that these outstanding checks will never be cashed, therefore, all checks issued and outstanding before December 31, 1973 were written off.

(19)

Statement of Cash Receipts and Disbursements For the year ended December 31, 1975

1975 1974

Cash balance January 1 $10,376 _4,767

Cash receipts:

Oil royalties 3,486 3,681

Oil and gas leases 264 _1,686

Interest received 177 242

Old outstanding dividend checks

written off 372

Deposit from the North Poudre Irrigation

Company 4,200

Total cash received 8,499 5,609

Total cash to be accounted for 18,875 10,376

Cash disbursements:

Dividends paid 9,732

Payment on accounts payable 85

Auditing 110

Bank charges 5

Total cash disbursed 9,932

Cash balance December 31 $ 8,943 10,376

(20)

Recapitulation of Expenditures Assessments and Water Appropriations

for the Years 1965 to 1975 Inclusive

1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 Salaries $ 12,080.00$ 15,187.50 $ 15,351.61 $ 16,966.75 $ 15,637.60 $ 16,053.52 $ 17,133.20 $ 17,790.50 $ 18,493.21 $ 20,180.25 25,191.28 Maintenance 41,481.92 64,646.51 55,766.50 44,619.70 40,256.08 46,402.59 51,908.93 50,815.63 72,578.21 73,258.82 63,318.41 Michigan Ditch 839.55 2,290.15 1,878.80 2,181.40 124.00 1,489.00 Maintenance on Equipment 15,280.20 11,661.53 11,477.85 16,394.62 12,981.91 14,658.26 14,993.44 11,264.22 14,016.68 14,879.82 41,985.72 Ditch Riders 13,336.10 14,969.66 15,052.86 16,398.42 19,237.26 17,832.92 17,231.15 18,100.11 18,492.66 19,005.75 33,446.31 Dragline, Carryall, and Truck Hire 4,607.00 6,155.50 2,426.00 12,211.75 2,544.70 7,136.00 13,147.00 10,336.00 8,576.50 16,266.90 30,706.67

Taxes, County 1,075.92 1,135.56 441.46 883.82 875.52 883.60 903.26 812.92 19.56 26.48 14.14

Taxes, S. S 3,047.88 4,659.21 4,896.38 5,241.04 5,538.70 5,999.41 7,882.63 5,222.48 9,314.07 8,910.09 9,595.86 Telephone & Radio 1,244.75 1,519.65 2,732.62 1,879.24 2,948.23 2,791.70 2,002.06 1,871.84 1,751.48 1,748.53 2,072.58 Attorney's Fees & Court Costs 1,399.95 1,802.30 1,921.98 5,033.38 4,371.87 5,712.22 7,024.75 5,682.82 4,788.36 5,272.96 6,649.71 General Expenses 1,210.42 1,265.14 1,260.86 1,564.49 1,846.98 1,665.18 1,494.09 939.71 2,116.33 3,682.70 3,069.24 Insurance 1,787.50 2,500.63 2,449.00 3,512.10 2,795.00 3,117.00 5,222.90 3,654.00 4,732.00 4,612.90 2,726.05 Directors Per Diam 1,164.40 974.70 1,126.78 1,296.30 1,435.75 1,098.90 1,190.15 1,310.23 1,210.18 1,469.37 2,311.95 Ditch Assessment 61,747.75 62,802.75 62,539.75 63,171.25 63,573.25 61,831.25 62,501.25 62,622.75 63,702.69 64,493.91 63,245.39 Interest 96.66 172.51 216.81 120.97 1,164.37 273.78 2,667.40 2,876.89 Water Tollage 2,988.00 3,729.00 2,583.00 192.92 New Equipment 1,034.05 18,777.50 9,767.54 1,040.30 27,250.00 7,171.35 _19,500.00 Engineering 12,576.42 5,897.90 2,500.00 946.00 683.00 167.60 3,774.00 57,206.57 Weed Control 7,268.52 8,1 36.1 5 11,288.51 9,607.50 9,607.50 9,573.00 8,389.70 8,366.29 8,214.74 3,771.16 3,580.53 Rent, Lights, and Heat 1,336.32 1,026.74 998.14 1,214.90 1,318.79 1,463.67 2,524.49 2,970.61 3,609.65 3,740.65 4,007.33

Building 998.30

Lunch at Annual Meeting 221.07 197.11 281.56 194.01 262.32 278.46 289.38 287.01 403.42 454.16 344.94

Park Creek R/VV 29,758.25 1,450.00 16,673.38 18,746.95 15,600.00

TOTALS $189,841.65 $228,302.89 $194,175.73 $271,374.45 $194,281.43 $244,298.70 $208,795.30 $216,987.07 $238,162.79 265,216.56 368,972.68

Assessments per share 16.00 16.50 17.00 20.00 20.00 20.00 20.00 21.00 21.00 22.00 26.00

(21)

Report On The Audit Of

NORTH POUDRE IRRIGATION COMPAN'. Wellington, Colorado

December 31, 1c)7,

JOSEPH BROUGH AND COMPANY,

INC.

CERTIFIED PUBLIC ACCOUNTANTS

GREELEY,

COLORADO

(22)

NORTH POUDRE IRRIGATION COMPANY Wellington, Colorado

(23)

Table of Contents

Page

Auditors' Opinion 1

Exhibit A - Balance Sheets

December 31, 1976 and 1975 2-3

Exhibit B - Statement of Changes in Financial Position

For The Year Ended December 31, 1976 and 1975 4

Exhibit C - Operating Statement

For The Years Ended December 31, 1976 and 1975 5

(24)

I

0 I

JOSEPH BROUGH AND COMPANY,

CERTIFIED PUBLIC ACCOUNTANTS

INC.

Edward M. Boggess Members

James A. Brock Colorado Society

Joseph W. Brough, Jr. Of Certified

Dean J. Dillow Public Accountants

Robert W. Kinnison

January 12, 1977

Board of Directors

North Poudre Irrigation Company Wellington, Colorado

We have examined the balance sheet of the North Poudre Irrigation Company as of December 31, 1976 and the related statements of operations and changes in financial position for the year then ended. Our examina-tion was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

In our opinion, the accompanying financial statements present fairly the financial position of the North Poudre Irrigation Company as of December 31, 1976 and the results of its operations for the year then ended, in conformity with generally accepted accounting principles applied on a consistent basis.

a../

Joseph Brough and Company, Inc. Certified Public Accountants

(25)

-1-NORTH POUDRE IRRIGATION COMPANY Wellington, Colorado Balance Sheets December 31, 1976 and 1975 1976 1975 ASSETS Current Assets 34,035 14,335 11,629 9,630 Cash on Hand and in the Bank

Assessments Receivable (Note 2)

Other Accounts Receivable (Note 2) 3,222 4,215

Mortgage Receivable (Note 2) 10,000

Prepaid Insurance 1,309

Total Current Assets 61,592 26,783

Property Assets (Note 1)

Land 8,100 7,965

Right of Ways and Easements 72,776 72,776

Boxelder Easement 11,526

Priorities and Water Rights 545,100 545,100

Ditches and Reservoirs 4,244,957 4,244,957

Buildings and Improvements 17,016 24,318

Radio and Office Equipment 80,086 80,086

Machinery and Equipment 130,635 62,535

Transportation Equipment 27,514 20,124

Total 5,137,710 5,057,861

Less: Accumulated Depreciation 1,385,703 1,355,903

Total Property Assets 3,752,007 3,701,958

Investments

Stock of Other Companies (Note 1 ) 1,769 1,769

Total Assets 3.815,368 3,730.510

Exhibit A 2

(26)

LIABILITIES

Current Liabilities

Trade Accounts Payable

Accounts Payable - Water Purchase Current Portion of Long-Term Debt

Accrued Payroll Taxes Accrued Wages

Accrued Interest Prepaid Assessments Contract Payable

Total Current Liabilities Long-Term Debt (Note 3)

Notes Payable

Less: Current Portion Reflected Above Total Long-Term Debt

Total Liabilities

STOCKHOLDERS' EQUITY Paid in Capital

Common Stock (10,000 Shares Authorized at 150 Par Value 10,000 Shares Issued, 9,978 Shares Outstanding 1976, 9,976 Shares Outstanding 1975)

Additional Paid in Capital Total Paid in Capital Retained Earnings

Beginning Balance (Note 4)

Net Profit (Loss) for the Period Ending Balance

Total Paid in Capital and Retained Earnings Less: Treasury Shares @ Cost

(22 - 1976; 24 - 1975) Total Stockholders' Equity

Total Liabilities and Stockholders' Equity

Equity Per Share

1976 14,438 60,000 30,500 3,311 3,433 1975 13,400 60,000 25,600 151 1,494 1,309 8,754 13,065 111,682 123,773 971,245 899,135 ( 30,500) ( 25,600) 940,745 873,535 1,052,427 997,308 500,000 3,450 503,450 2,235,991 24,310 2,260,301 2,763,751 810 2,762,941 3.815.368 276.90 500,000 3,450 503,450 2,243,185 ( 6,623) 2,236,562 2,740,012 6,810 2,733,202 3,730,510 273.98 Exhibit A 3

(27)

Statement of Changes in Financial Position For The Years Ended December 31, 1976 and 1975

1975 Resources Provided By:

1976

Net Profit (Loss) for the Period 24,310 ( 6,623)

Add: Items not Requiring Resources

Depreciation 58,428 49.020

Total Resources Provided by Operations 82,738 42,397

Increase in Long-Term Equipment Notes _82,810

Treasury Shares Traded for Boxelder Easement _6,000

Book Value of Assets Sold and Traded 10,4E9 5,324

Decrease in Working Capital _43,419

Total Resources Provided _182,017 91,140

Resources Apolied To:

Purchase of Additional Property Assets _118,945 _69,540

Payment on Long-Term Debt _15,600 _15,600

Purchase Treasury Stock _6,000

Prior Period Correction to Retained Earnings (Note 4) 572

Increase in Working Capital (Below) 4E,900

Total Resources Applied 182,017 91.140

STATEMENT OF CHANGES IN WORKING CAPITAL

Current Assets 1976 Increase 1975 (Decrease) Cash _34,035 _11,629 _22,406 Accounts Receivable _17,557 _13,845 _3,712 Mortgage Receivable _10,000 _10,000 Prepaid Insurance _1,309 _{( 1,309)}

Current Liabilities

Trade Acc;Jnts Payable _14,438 _13,400 _{( 1,038)}

Accounts Tayable - Water _60,000 _60,000

Current Portion of Debt _30,500 _25,600 _{( 4,900)}

Accrued Expenses _6,744 _2,954

( 3,790)

Prepaid Assessments _8,754 _8,754

Contract Payable _13,065 _13,065

Total Current Liabilities _111,682 _123,773

Working Caoital Deficient ₍ _{50 090)}₍ _96,990)

Net Increase In Working Capital _46.900

Exhibit B

(28)

OPeratina Statement

For The Years Ended December 31, 1976 and 1975

1975 Operating Revenue 1976 350,715 1,140 15,718 1,040 1,466 16,029 260,621 425 11,845 1,150 2,349 Assessment Water Sales

Leases, Hunting, Pasture, Etc. Stock Transfer Fees

Easements and Miscellaneous Disaster Aid - Flood Damage

Total Operating Revenue 386,108 276,390

Operating Expense

Repairs and Maintenance - Buildings 2,477 3,295

Repairs and Maintenance - Ditches and Canals 26,941 29,994

Repairs and Maintenance - Equipment 17,422 52,923

Machine Hire 7 ,521 31,771

Gas and Oil 14,788 13,500

Weed Control 7 ,301

-Water Purchased and Assessments 64,616 63,245

Engineering Fees 38,339

-Salaries and Wages 70,015 34,450

Payroll Taxes 4,917 4,943

Insurance

Ditch Riders Expense

5,433 6,275

2,323

-Office Expense 4 ,223 3,141

Office Salaries and Wages 25,820 19,938

Directors Fees and Expense Utilities and Telephone

5,868 4,158

2,684 6,229 Mileage

Legal and Accounting

5 ,063 7,124

-6,800

Employee Benefits 1,575 1,164

Disaster Expense - Flood Damage (Note 5) 5,660

-Depreciation 58,428 49,020

Total Operating Expense (Note 7) 383,964 325,420

Profit (Loss) from Operations 2,144 ( 49,030)

Other Income

Gain from Sale of Assets 27,087 34,607

Interest Income 341 974

Gas and Oil Dividends - 9,366

Total Other Income 27,428 44,947

Other Expense

Net Profit (Loss) from Operations 24,310 ( 6,623)

Earnings (Loss) Per Share $2.44 ($.66)

Exhibit C 5

(29)

Note 1 - Significant Accounting Policy:

A) Property Assets are recorded at cost. Depreciation is provided in the accounts as follows:

B)

C)

Ditches and Reservoirs Buildings and Improvements Radio and Office Equipment Machinery and Equipment Transportation Equipment 100 years 20 years 10 years 10 years 4-5 years Stock in other companies is recorded at cost.

Life Method SL SL SL SL SL

The company is incorporated under the laws of the State of

Colorado as a tax exempt corporation, therefore there is no pro-vision for income taxes.

Note 2 - Assessments, Accounts and Mortgages Receivable: Assessments Receivable are as follows:

1975 Assessments 1976 Assessments

Total

Other Accounts Receivable are as follows: Larimer County Commissioner Reimbursement

for Boxelder Flood Control North Poudre Trustee Account

Mortgage Receivable as follows:

J. Whittaker (Sale of School Building)

$ 196 14 138 $14,334 $ 3,207 15 $ 3.222 $10.000 Mortgage due 4/20/77 @ 10%

Note 3 - Lona-Term Debt Detail:

interest

Equiment Installment Notes

Annual

Balance Rate Payment Security

First Nat'l.Bank of Ft.Collins 920 Cat Loader

Lease-Purchase Agreement 100,402 _5i% 14,343 Liebher Excavator

First Nat'l.Bank of Ft.Collins 1976 IHC Truck

Lease-Purchase Agreement 17,403 5-7% 3,481 2-14' Dump Bodies

Less: Deferred Interest ( 20,095)

Totals 97,710 17,824

Other Lona-Term Note

Bureau of Reclamation 873,535 Var. 15,600 Dams and Reservoirs

Total Long-Term Debt 971.245 33.424

(30)

NORTH POUDRE IRRIGATION COMPANY Wellinaton, Colorado

Note 4 - Prior Period Correction:

Retained Earning for prior periods was adjusted for Assessment charged against North Poudre Irrigation Company Treasury Stock ($572.00). Treasury Shares held by the company are not subject

to assessment.

Note 5 - Disaster Expense Flood Damaae:

The amount shown does not include company labor or equipment time. Those amounts are included in their respective catagories.

Note 6 - Continaent Liability:

There is pending Civil Action No 26104 in the District Court of Larimer County. This action is against North Poudre Irrigation Company, in which $75,000.00 for damages is sought. North Poudre has denied any liability. The insurance company for North Poudre Irrigation Company has taken the position there is no coverage for this type of claim.

Note 7 - Operatina Expenses:

Due to changes in bookkeeping personnel and auditing firm during 1976 some expense catagories may not be comparable individually, but as a total are comparable and consistent.

(31)

(32)

JOSEPH

BROUGH AND COMPANY,

INC.

CERTIFIED PUBLIC ACCOUNTANTS

GREELEY,

COLORADO

(33)

NORTH POUDRE IRRIGAHON COMPANY Wellington, Colorado

FINANCIAL STATEMENTS (Unaudited)

(34)

Table of Contents

Disclaimer

Exhibit A - Balance Sheet (Unaudited) June 30, 1977

Exhibit B - Statement of Changes in Financial Position (Unaudited) For The Six Months Ended June 30, 1977

Exhibit C - Statement of Operations (Unaudited) For The Six Months Ended June 30, 1977

Page

1

2-3

4

5

(35)

JOSEPH BROUGH AND COMPANY,

INC.

CERTIFIED PUBLIC ACCOUNTANTS

Edward M. Boggess James A. Brock Joseph W. Brough, Jr. Dean J. Dillow Robert W. Kinnison Board of Directors

North Poudre Irrigation Company Wellington, Colorado Members Colorado Society Of Certified Public Accountants August 1, 1977

The accompanying Balance Sheet of North Poudre Irrigation Company at June 30, 1977 and the related Statements of Operations and Changes in Financial Position for the six months then ended were not audited by us and we therefore express no opinion on them.

/77

Joseph Brough and Company, Inc. Certified Public Accountants

(36)

-1-NORTH POUDRE IRRIGATION COMPANY Wellington, Colorado

Balance Sheet (Unaudited) June 30, 1977

ASSETS

Current Assets

Cash in the Bank 45,376.04

1977 Assessments Receivable 111,115.21

Prior Period Assessments Receivable 1,098.51

Other Accounts Receivable 15.00

Total Current Assets 157,604.76

Land 8,100.00

Right of Way and Easements 86,342.84

Ditches and Reservoirs 4,244,956.89

Priorities and Water Rights 545,100.00

Stonewall Project 93,823.00

Buildings and Improvements 17,015.92

Radio's and Office Equipment 80,241.72

Machinery and Equipment 158,149.04

Total 5,233,729.41

Less: Accumulated Depreciation (1,414,702.75)

Total Property Assets 3,819,026.66

Investments

Stock in Other Ditch Companies 1,769.00

Total Assets 3,978,400.4Z

Notes to financial statements are an integral part of these statements.

Exhibit A 2

(37)

I

LIABILITIES Current Liabilities

Current Portion of Long-Term Debt Payroll Taxes Payable

Total Current Liabilities

11,671.19 30,500.00 3,201-70 45,372.89 Long-Term Liabilities (Note 2)

Note Payable - Bureau of Reclamation _857,934.65

Notes Payable - Equipment _83,106.86

Total _941,041.51

Less: Current Portion Reflected Above ( 30,500.00)

Total Long-Term Liabilities _910,541.51

Total Liabilities _955,914.40

STOCKHOLDEPS' EQUITY Paid in Capital

Common Stock (10,000 Shares Authorized @ $50 Par Value _,

500,000.00 10,000 Shares Issued, 9,978 Shares Outstanding)

Additional Paid in Capital _3,450.00

Total Paid in Capital _503,450.00

Retained Earnings

Beginning Balance, January 1, 1977 _2,260,300.57

Add: Net Profit for the Period (Exhibit C) _259,545.45

Ending Balance _2,519,846.02

Total _3,023,296.02

Less: Treasury Shares @ Cost (22 Shares) _810.00

Total Stockholders' Equity _3,022,486.02

Total Liabilities and Stockholders' Equity _3,978,400.42

I

Exhibit A

(38)

Statement of Changes in Financial Position (Unaudited) For The Six Months Ended June 30, 1977

Financial Resources Provided By Net Profit for the Period

Add: Depreciation not Requiring Resources Total Resources Provided by Operations

259,545.45 29,000.00 288,545.45

Total Resources Provided 288,545.45

Financial Resources Applied To

Acquisition of Additional Property Assets 96,019.83

Payment of Long—Term Debt 30,203.14

Net Increase in Working Capital 162,322.48

Total Resources Applied 288,545.45

Exhibit B 4

(39)

Statement of Operations (Unaudited) For The Six Months Ended June 30. 1977 Income

1977 Assessments 9,978 Shares @ $45/Share Fossil Creek Assessments

Buckeye Charges Water Sales

Recreational and Pasture Leases Stock lransfer Fees

449,010.00 596.00 469.12 4,230.00 12,950.00 650.00

Machine Work and Miscellaneous 8,663.86

Interest Income 2,780.13

Total Income 479,349.11

oDerating Expense

Building - Repair and Maintenance 3,303.76

Ditches and Canals - Repairs and Maintenance 38,893.18

Equipment - Repairs and Maintenance 6,311.98

Machine Hire 221.62

Gas and Oil 5,575.31

Weed Control 4,009.46

Water Company Assessments 3,758.31

Engineering Fees 33,676.83

Salaries and Wages 31,723.68

Manager and Office Salaries 11,226.48

Payroll Taxes 2,952.76

Insurance 6,938.00

Office Expense 4,948.89

Directors Fees and Expense 2,974.92

Utilities and Telephone 3,447.55

Employee - Perdiem 4,071.09

Legal and Accounting 14,932.33

Employee Benefits 1,749.87

Vehicle Taxes and Licenses 1,820.58

Interest 8,267.06

Depreciation 29,000.00

Total Operating Expense 219,803.66

Net Profit 259,545.45

Exhibit C 5

(40)

Notes to the Financial Statements June 30, 1977

Note 1 - Significant Accounting Policy

A) Property Assets are recorded at cost. Depreciation is being taken by the straight-line method over useful lives of 4 to 100 years. B)

C)

Stock in Other Companies is recorded at cost.

The company is incorporated under the laws of the State of Colorado as a tax exempt corporation. Therefore there is no provision for income taxes.

Note 2 - Notes Payable Detail

Annual

Equipment Notes Balance Rate Payment

First National Bank of Fort

Collins 86,058.78 q% 14,343.13 920 Cat Loader

Lease Purchase Agreement Liebher Excavation

First National Bank Fort Collins 13,922.08 5% 3,480.52 1976 IHC Truck

Lease Purchase Agreement 2-14' Dump Bodies

Total 99,980.86 17,823.65

Less: Deferred Interest ( 16,874.00)

Total 83,106.86

Other Notes

Bureau of Reclamation 857,934.65 Var.

l5aa,aa

Dams & Reservoirs

(41)

(42)

JOSEPH BROUGH AND COMPANY,

INC.

CERTIFIED PUBLIC ACCOUNTANTS

GREELEY,

COLORADO

(43)

NORTH POUDRE IRRIGATIO11 COMPAIIY Wellington, Colorado

(44)

Table of Contents

Page

Auditors' Opinion 1

December 31, 1977 and 1976 2-3

Exhibit B - Statement of Changes in Financial Position

Exhibit C - Operating Statement

For lhe Years Ended December 31, 1977 and 1976 5

(45)

JOSEPH

BROUGH AND COMPANY,

INC.

CERTIFIED PUBLIC ACCOUNTANTS

Edward M. Boggess Members

James A. Brock Colorado Society

Joseph W. Brough, Jr. Of Certified

Dean J. Dillow Public Accountants

Robert W. Kinnison

January 16, 1978

Board of Directors

We have examined the balance sheet of the North Poudre Irrigation Company as of December 31, 1977 and 1976 and the related statements of operations and changes in financial position for the years then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting re-cords and such other auditing procedures as we considered necessary in the circumstances.

In our opinion, the accompanying financial statements present fairly the financial position of the North Poudre Irrigation Company as of December 31, 1977 and 1976 and the results of its operations for the

years then ended, in conformity with generally accepted accounting principles applied on a consistent basis.

Pespectfully submitted,

z

66z7

a/14/4.10e7

oseph Brough and Company, Inc. Certified Public ACcountants

(46)

NORTH POUDRE IRRIGATION COMPANY Wellinoton, Colorado Balance Sheets December 31, 1977 and 1976 ASSETS Current Assets 1977 1976 64,835 10,917 34,035 1E1,335 3,222 10,000 Cash on Hand and in the Bank

Assessments Receivable Other Accounts Receivable Mortgage Receivable

Total Current Assets _75,752 _61,592

Land _39,600 _8,100

Priorities, Water Rights and Easements 633,002 629,402

Machinery and Equipment _130,635 _130,635

Transportation Equipment _27.514 _27.514

Total _5,301,512 _5,137,710

Less: Accumulated Depreciation 1,448,704 1.385.703

Investments

2,094 1,769

Stock of Other Companies (Note 1)

Total Assets _{3,930,654 3.815 368}

Exhibit A 2

(47)

LIABILITIES Current Liabilities 1977 1976 6,389 60,000 14,438 60,000 Trade Accounts Payable

Accounts Payable - Water Purchase

Current Portion of Long-Term Debt _30,500 _30,500

Accrued Payroll Taxes and Withholdings _2,648 _3,311

Accrued Wages _3,742

3,433

Total Current Liabilities _103,279 _111,682

Long -Term Debt (Note 2)

952,292 971,245

otes Payable

Less: Current Portion Reflected Above ₍ _30,500) ₍ _30,500)

Total Long-Term Debt _921,792 _940,745

Total Liabilities _1,025,071 _1,052,427

Common Stock (10,000 Shares Authorized at $50 Par Value

10,000 Shares Issued, 9,978 Shares Outstanding) _500,000 _500,000

Additional Paid in Capital _3,450

3,450

Total Paid in Capital _503,450

503,450 Retained Earnings

Beginning Balance _2,260,301

2,235,991 Revenue in Excess of Expenditures for the Period 142,642 24,310

Ending Balance _2,402,943

2,260,301 Total Paid in Capital and Retained Earnings 2,906,393 2,763,751

Less: Treasury Shares, 22 Shares @ Cost ₈₁₀ ₈₁₀

Total Stockholders' Eauity _2,905,583

2,762,941

Total Liabilities and Stockholders' Equity _3,930,654 _3.815,368

Eauity Per Share _393.93

276.90

Exhibit A 3

(48)

NORTH POUDRE IRRIGATIO14 COMPAI1Y Wellington. Colorado

Statement of Changes in Financial Position For The Years Ended December 31, 1977 and 1976

1976 Resources Provided By 1977 142,642 63,001 24,310 58,428 Revenues in Excess of Expenditures for the Period

Add Back: Items not Requiring Resources Depreciation

Increase in Notes Payable 11,250 82,810

Treasury Shares Traded 9,000

Book Value of Equipment Sold and Traded 10,469

Total Resources Provided 216,893 185,017

Resources Amlied To

Purchase of Additional Fixed Assets:

Stonewall Project 125,014

Marcy Lan -#5 and Inlet 9,026

Stephenson Land - Clarks Lake 14,974

Johnson Land - #3 7,500

Office Equipment and Furniture 3,688

Machinery 107,419

Boxelder Easements 3,600 11,526

Payment of Long-Term Debt 30,203 15,600

Purchase of Treasury Shares 3,000

Purchase of North Poudre Oil and Gas Royalty Units 325

Prior Period Correction to Retained Earnings 572

Increase in Working Capital 22,563 46,900

Total Resources Applied 216,893 185.017

Sae accompanying notes to financial statements.

Exhibit B 4

(49)

N3R-TH POUDRE IRRIGATIOlv COMPAIIY Wellinaton, Colorado

Operatina Statement

1976 Operatina Revenue 1977 449,606 36,057 14,425 2,580 1,674 800 430 350,715 1,140 15,718 1,040 1,466 Assessment Water Sales

Leases, Hunting, Pasture, Etc. Stock Iransfer Fees

Easements and Miscellenaous Buckeye Reimbursement

Grable Reimbursement

Disaster Aid - Flood Damage 7,500 16,029

Total Operatina Revenue 513,072 386,108

Operatina Expense

Machine Hire 353 7,521

Gas and Oil 10,237 14,788

Weed Control 5,135 7,301

Water Purchased and Assessments 65,138 64,616

Engineering Fees 7,920 38,339

Salaries and Wages 98,799 95,835

Insurance 7,041 5,433

Ditch Riders Expense 5,817 6,275

Office Expense and Other 6,022 4,223

Appraisal Fees Marcy Land 1,568

-Legal Fees Marcy Suit 6,166

Directors Fees and Expense 5,883 5,868

Utilities and Telephone 5,380_ 4,158

Mileage 7,764 - 5,063

Legal, Accounting and Other Professional Fees 8,612 7,124

Disaster Expense - 5,660

Total Operatina Expense 378,716 383,964

Marcan on Operations 134,356 2,144

Other Income

Gain from Sale of Assets 27,087

Interest Income 2,504 341

Dividend Income 14,049

Other Expense

Revenue in Excess of Expenditures 142.642 24.310

Exhibit C 5

(50)

NORTH POUDRE IRRIGAHOiv COMPAilY Wellinaton, Colorado

- Significant Accountina Policy:

A) Property Assets are recorded at cost. Depreciation is provided in the accounts as follows:

Life Method

Ditches and Reservoirs 100 years SL

Buildings and Improvements 20 years SL

Radio and Office Equipment 10 years SL

Machinery and Equipment 10 years SL

'Iransportation Equipment 4-5 years SL

B) Stock in other companies is recorded at cost.

C) The company is incorporated under the laws of the State of Colorado as a tax exempt corporation, therefore there is no

provision for income taxes. Note 2 - Long-lerm Debt Detail:

Annual Equioment Installment Notes

Balance Rate Payment Security

First Nat'l.Bank fo Ft.Collins _{920 Cat Loader}

Lease-Purchase Agreement 86,059 5-,22-% 14,343 Liebher Excavator

First Nat'l.Bank of Ft.Collins 1976 IHC Truck

Lease-Purchase Agreement 13,922 5% 3,481 2-14' Dump Bodies

Less: Deferred Interest ( 16,874)

Totals 83,107 17,824

Other Long -Term Note

I. Stephenson 11,250 8% 2,434 Land

Bureau of Reclamation 857,935 Var. 15.600 Dams and Reservoirs

Totals 869,185 18,034

Total Lona-Term Debt 952,292 35,858

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BROCK WATKINS &

SCHOMMER

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Report

On The Audit Of

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Table of Contents

Page

Auditors' Opinion ₁

December 31, 1978 and 1977 2-3

Exhibit B - Statement of Operations

For The Years Ended December 31, 1978 and 1977 4 Exhibit C - Statement of Changes in Financial Position

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BROCK WATKINS & SCHOMMER

CERTIFIED PUBLIC ACCOUNTANTS

1220 11TH AVENUE, SUITE 200 GREELEY, CO 80631

January 10, 1979

Board of Directors

JAMES A. BROCK LEE WATKINS DAN SCHOMMER

We have examined the balance sheet of the North Poudre

Irrigation Company as of December 31, 1978 and 1977 and the related statements of operations and changes in financial position for the years then ended. Our examination was made in accordance with

generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

In our opinion, the accompanying financial statements present fairly the financial position of the North Poudre Irrigation Company as of December 31, 1978 and 1977 and the results of its operations and changes in financial position for the years then ended, in conformity with generally accepted account principles applied on a consistent basis.

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Brock, Watkins and Schommer Certified Public Accountants

MEMBERS OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS

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NORTH POUDRE IRRIGATION COMPANY Wellington, Colorado Balance Sheets December 31, 1978 and 1977 ASSETS Current Assets 1978 1977 130,682 11,653 290 7,250 64,835 10,917 Cash on Hand and in the Bank

Assessments Receivable Other Accounts Receivable Note 'Receivable (Note 2)

Land 90,690 39,600

Priorities, Water Rights and Easements 639,154 633,002

Machinery and Equipment 130,635 130,635

Transportation Equipment 29,080 27,514

Total 5,360,320 5,301,512

Less: Accumulated Depreciation 1,501,153 1,448,704

Investments

2,704 2,094

Stock of Other Companies (Note 1)

Total Assets 4,011,746 3,930,654

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

Exhibit A 2

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LIABILITIES

Current Liabilities

1978 1977

12,510 6,389

Accounts Payable - Water Purchase 60,000 60,000

Current Portion of Long-Term Debt 45,500 30,500

Accrued Payroll Taxes and Withholdings 3,603 2,648

Accrued Wages 3,244 3,742

Total Current Liabilities 124,857 103,279

Long-Term Debt (Note 3)

Notes Payable 961,284 952,292

Less: Current Portion Reflected Above ( 45,500) ( 30,500)

Total Long-Term Debt 915,784 921,792

Total Liabilities 1,040,641 1,025,071

Common Stock, $50 Par Value, 10,000 Shares Authorized, 10,000 Shares Issued, 9,978

Shares Outstanding 500,000 500,000

Additional Paid in Capital 3,450 3,450

Total Paid in Capital 503,450 503,450

Retained Earnings Beginning Balance

Revenues in Excess of Expenditures for the Period 2,402,943 65,522 2,260,301 142,642 Ending Balance 2,468,465 2,402,943

Total Paid in Capital and

Retained Earnings 2,971,915 2,906,393

Less: Treasury Shares, 22 Shares @ Cost 810 810

Total Stockholders' Equity 2,971,105 2,905,583

Total Liabilities and Stockholders'

Equity 4,011,746 3,930,654

Equity Per Share 297.77 291.20

Exhibit A 3

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Statement of Operations

1977 Operating Revenue

1978

Assessment 449,606 449,606

Water Sales 1,125 36,057

Leases - Hunting, Pasture, Etc. 25,353 14,425

Stock Transfer Fees 4,890 2,580

Easements and Miscellaneous 4,479 1,674

Buckeye Reimbursement 1,787 800

Grable Reimbursement 400 430

Disaster Aid 7,500

Total Operating Revenue 487,640 513,072

Operating Expense

Repairs and Maintenance - #3 Reservoir 41,743

Boxelder Flood Control 6,175

Machine Hire 289 353

Gas and Oil 11,917 10,237

Weed Control 4,512 5,135

Water Purchased and Assessments 66,607 65,138

Engineering Fees 8,567 7,920

Salaries and Wages 114,513 98,799

Insurance 8,918 7,041

Ditch Riders Expense 5,195 5,817

Office and Other Expense 8,372 6,022

Legal and Other Fees - Marcy Suit 7,734

Directors Fees and Expense 6,475 5,883

Utilities and Telephone 5,350 5,380

Mileage 6,622 7,764

Legal and Accounting 14,661 8,612

Total Operating Expense 457,946 378,716

Margin on Operations 29,694 134,356

Other Income

Gain from Sale of Assets 27,660

Interest Income 6,782 2,504

Dividend Income (Oil and Gas Units) 9,547 14,049

Other Expense

Revenues in Excess of Expenditures 65.522 142,642

The accompanying notes are an integral part of the financial statements. Exhibit B

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1977 Wellington, Colorado

Postion Statement of Changes in Financial

FINANCIAL RESOURCES WERE PROVIDED BY

1978

Revenues in Excess of Expenditures 65,522 142,642

Add Back Items not Requiring Resources

Notes Payable for Equipment and Land 40,400 11,250

Book Value of Assets Sold 793

Total Resources Provided 170,475 216,893

FINANCIAL RESOURCES WERE APPLIED TO

Purchase of Additional Property Assets

Neilson Land and Easements (Boxelder) 30,400

-Land #5 Reservoir 26,742 9,026 Vehicles 13,670 Boxelder Easements - 3,600 Office Equipment - 3,688 Stonewall Project - 125,014 Other Land - 22,474 Total 70,812 163,802

Payment of Long-Term Debt 31,508 30,203

Purchase of Oil and Gas Royalty Units 610 325

Increase Current Portion of Long-Term Debt 15,000

-Increase in Working Capital 52,545 22,563

Total Resources Applies 170,475 216,893

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

Exhibit C 5

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Note 1 - Significant Accounting Policies:

A) Property Assets - Property Assets are recorded at cost. Depreciation is being taken by the straight-line method over the following useful lives:

Item

Ditches and Reservoirs Buildings and Improvements Radio and Office Equipment Machinery and Equipment Transportation Equipment Life 100 years 20 years 10 years 10 years 4-5 years

B) Investments - Stock in other companies is recorded at cost.

C) Income Taxes - The company is incorporated under the laws of the State of Colorado as a tax exempt corporation, therefore, no provision for Income Taxes has been made. Note 2 - Note Receivable Detail:

Balance

Steamboat Ltd. 7,250

Note 3 - Long-Term Debt Detail:

Rate Security

8% Land (Fossil Creek)

Equipment Notes

Balance Rate

Annual

Payment Security

First National Bank

Lease Purchase Agreement 68,834 5-1/2% 17,824 Vehicles and

Equipment

First National Bank 10,000 6-3/4% 1979 IHC Truck

Total 78,834 17,824

Other Long-Term Notes

Bureau of Reclamation 842,334 VAR 15,600 Dams and Reservoirs

Neilson 30,400 8% 7,600 Land

Stephenson 9,716 8% 2,434 Land

Total 882,450 25,634

Total Long-Term Debt 961,284 43,458

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Note 4 - Boxelder Flood Control Costs

The following amounts are the companys cost for the Boxelder Flood Control Project during the past three years: 1978 36,575 1977 7,237 1976 11,899 Total 55,711 7

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