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					    TOWN OF OAK ISLAND
      NORTH CAROLINA




COMPREHENSIVE ANNUAL FINANCIAL REPORT
 FOR THE FISCAL YEAR ENDED JUNE 30, 2011
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            TOWN OF OAK ISLAND
              NORTH CAROLINA



COMPREHENSIVE ANNUAL FINANCIAL REPORT

          For the Fiscal Year Ended
                  June 30, 2011

    Prepared by the Town of Oak Island Finance Office

          Bonnie M. Schwerd, Finance Director
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                                                 TOWN OF OAK ISLAND, NORTH CAROLINA
                                                         TABLE OF CONTENTS
                                                    For the Year Ended June 30, 2011

EXHIBIT/SCHEDULE                                                                                                                Page

                   INTRODUCTORY SECTION

                     Finance Director's Transmittal Letter                                                                        5
                     GFOA's Certificate of Achievement for Excellence in Financial Reporting                                     11
                     List of Principal Officials                                                                                 12
                     Organizational Chart                                                                                        13

                   FINANCIAL SECTION

                     Independent Auditor's Report                                                                                15
                     Management's Discussion and Analysis                                                                        18

                   Basic Financial Statements:

                   Government-Wide Financial Statements

        1            Statement of Net Assets                                                                                     33
        2            Statement of Activities                                                                                     34

                   Fund Financial Statements:

        3            Balance Sheet - Governmental Funds                                                                          36
        4            Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds                       38
        5            Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund          40
        6            Statement of Net Assets - Proprietary Funds                                                                 41
        7            Statement of Revenues, Expenses and Changes in Fund Net Assets - Proprietary Funds                          43
        8            Statement of Cash Flows - Proprietary Funds                                                                 44
        9            Statement of Fiduciary Assets and Liabilities                                                               46

                     Notes to the Financial Statements                                                                           49

                   Required Supplemental Financial Data:

        A-1          Law Enforcement Officers' Special Separation Allowance - Schedule of Funding Progress                       82
        A-2          Law Enforcement Officers' Special Separation Allowance - Schedule of Employer Contributions                 83
                     Law Enforcement Officers' Special Separation Allowance - Notes to the Required Schedules                    83
        A-3          Other Postemployment Benefits - Schedule of Funding Progress                                                84
        A-4          Other Postemployment Benefits - Schedule of Employer Contributions                                          85
                     Other Postemployment Benefits - Notes to the Required Schedules                                             85

                   Supplementary Statements and Schedules:

                   Individual Fund Statements and Schedules:

                   Governmental Funds

        B-1          Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund            88
        B-2          Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual - Capital Reserve Fund    95
        B-3          Combining Balance Sheet - Other Governmental Funds                                                          96
        B-4          Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Other Governmental Funds       97
        B-5          Combining Balance Sheet - Other Governmental Special Revenue Funds                                          98
      B-6          Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Other Governmental Special
                     Revenue Funds                                                                                               100
      B-7          Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual - Special Revenue -
                     Accomodations Tax Fund                                                                                      102
      B-8          Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual - Special Revenue -
                     Emergency 911 Fund                                                                                          104
      B-9          Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual - Special Revenue -
                     Beach Preservation Fund                                                                                     105
                                              TOWN OF OAK ISLAND, NORTH CAROLINA
                                                      TABLE OF CONTENTS
                                                 For the Year Ended June 30, 2011

EXHIBIT/SCHEDULE                                                                                                                   Page

      B-10         Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual - Special Revenue - Tree
                     Preservation Fund                                                                                               106
      B-11         Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual - Special Revenue - Pier
                     Preservation Fund                                                                                               107
        B-12         Combining Balance Sheet - Other Governmental Capital Project Funds                                              108
      B-13         Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Other Governmental Capital
                     Project Funds                                                                                                   109
      B-14         Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual - Capital Projects - Smith
                     Park Project                                                                                                    110
      B-15         Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual - Capital Projects - Police
                     Headquarters Project                                                                                            112
      B-16         Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual - Capital Projects - Town
                     Hall Replacement Project                                                                                        113

                   Proprietary Funds

      C-1          Schedule of Revenue, Expenditures and Other Financing Sources (Uses) - Budget and Actual (Non-GAAP) -
                     Water Fund                                                                                                      116
      C-2          Schedule of Revenue, Expenditures and Other Financing Sources (Uses) - Budget and Actual (Non-GAAP) -
                     Wastewater Fund                                                                                                 118
      C-3          Schedule of Revenue, Expenditures and Other Financing Sources (Uses) - Budget and Actual (Non-GAAP) -
                     Wastewater Capital Projects Fund                                                                                120
        C-4          Combining Statement of Net Assets - Other Enterprise Funds                                                      122
        C-5          Combining Statement of Revenues, Expenses and Changes in Fund Net Assets - Other Enterprise Funds               123
        C-6          Combining Statement of Cash Flows - Other Enterprise Funds                                                      124
      C-7          Schedule of Revenue, Expenditures and Other Financing Sources (Uses) - Budget and Actual (Non-GAAP) - Solid
                     Waste Fund                                                                                                      126
      C-8          Schedule of Revenue, Expenditures and Other Financing Sources (Uses) - Budget and Actual (Non-GAAP) -
                     South Harbour Golf Course Fund                                                                                  128
      C-9          Schedule of Revenue, Expenditures and Other Financing Sources (Uses) - Budget and Actual (Non-GAAP) -
                     Sewer District Fund                                                                                             130

                   Other Schedules

        D-1          Schedule of Ad Valorem Taxes Receivable                                                                         132
        D-2          Analysis of Current Tax Levy - Town-Wide Levy                                                                   133
        D-3          Statement of Changes in Assets and Liabilities - Agency Fund                                                    134




6
                                               TOWN OF OAK ISLAND, NORTH CAROLINA
                                                       TABLE OF CONTENTS
                                                  For the Year Ended June 30, 2011

EXHIBIT/SCHEDULE                                                                            Page
Statistical Section

Table

1           Net Assets By Component                                                   138
2           Changes in Net Assets                                                     140
3           Governmental Activities Tax Revenues by Source                            145
4           Fund Balances, Governmental Funds                                         146
5           Changes in Fund Balances, Governmental Funds                              148
6           Assessed Value and Estimated Actual Value of Taxable Property             150
7           Direct and Overlapping Property Tax Rates                                 151
8           Principal Property Tax Payers                                             152
9           Property Tax Levies and Collections                                       153
10          Ratio of Outstanding Debt by Type                                         154
11          Direct and Underlying Governmental Activities Debt                        156
12          Legal Debt Margin                                                         157
13          Pledged Revenue Coverage                                                  158
14          Demographic and Economic Statistics                                       159
15          Principal Employers for Brunswick County                                  160
16          Full-time Equivalent Town Government Employees by Function                161
17          Operating Indicators by Function                                          162
18          Capital Assets by Function                                                164

Compliance Section

Report on Internal Control Over Financial Reporting and On Compliance and Other       167
Matters Based on an Audit of Financial Statements Performed in Accordance with
Government Auditing Standards

Report on Compliance With Requirements Applicable To Each Major Federal Program and   169
Internal Control Over Compliance In Accordance With Applicable Sections of OMB
Circular A-1 33 and the State Single Audit Implementation Act

E-1         Schedule of Expenditures of Federal and State Awards                      171
E-2         Schedule of Findings and Questioned Costs                                 172
E-3         Corrective Action Plan                                                    176
E-4         Summary Schedule of Prior Audit Findings                                  177




                                                                                                   7
Introductory Section




8
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            14
                  Town of Oak Island, North Carolina
                      List of Principal Officials
                            June 30, 2011

                       Mayor and Town Council

                         Betty W. Wallace, Mayor
                       Dara F. Royal, Mayor Pro Tem
                              James B. Medlin
                              John R. Ramsey
                              Robert N. Seidel
                               Mary B. Snead


                              Town Officials


Jerry A. Walters                          Town Manager
Chad Hicks                                Assistant Town Manager
Lisa Sites                                Town Clerk
Van Eddinger                              Chief of Police
Craig Forlines                            Fire Chief
Eugene Kudgus                             Public Services Director
Patricia P. Galloway                      Finance Director
David Kelly                               Public Utilities Manager
Kellie Beeson                             Parks and Recreation Director
Troy Davis                                Capital Projects Coordinator
Sheila Bell                               Tax Collector/Customer Service
                        Town of Oak Island, North Carolina
                              Organizational Chart
                                  June 30, 2011




                            Citizens
                         of Oak Island


                          Mayor and
                        Town Council


                        Town Manager


                       Assistant Town Manager


    Finance Director                          Town Clerk


 Public Works Director                   Customer Svs. Officer

     Chief of Police                 Public Utilities Director
Parks & Recreation Director        Wastewater Project Director
       Fire Chief




                                                                 17
Financial Section




            18
15
16
Management’s Discussion and Analysis




                                       22
                                   MANAGEMENT’S DISCUSSION AND ANALYSIS


As management of the Town of Oak Island, we offer readers of the Town of Oak Island’s financial statements this
narrative overview and analysis of the financial activities of the Town of Oak Island for the fiscal year ended June 30,
2011. We encourage readers to read the information presented here in conjunction with additional information that
we have furnished in the Town’s financial statements, which follow this narrative.

Financial Highlights

       The assets of the Town of Oak Island exceeded its liabilities at the close of the fiscal year by $77,878,550
       (net assets).
       The government’s total net assets increased $29,378,961 with $26,918,980 of this amount due to increases
       in the business-type activities net assets. Increase in the governmental activities fund is due to overall
       reduction in long-term liabilities; whereas the increase in business-type activities is due to the construction of
       assets.
       As of the close of the current fiscal year, the Town of Oak Island’s governmental funds reported combined
       ending fund balances of $10,619,003, with a net change of $1,017,081 in fund balance. Approximately 62.1
       percent of this total amount, or $6,600,814, is non spendable or restricted.
       At the end of the current fiscal year, unassigned fund balance for the General Fund was $2,668,659, or
       18.2% percent of total general fund expenditures for the fiscal year.
       The Town of Oak Island’s total debt increased by $8,106,345 (7.28%) during the current fiscal year. The key
       factor in this net increase was the issuance of $10,592,112 in revenue bonds for the completion of the
       Wastewater Capital Project and an additional $1,087,291 in State Revolving Loan Funds for the same
       Wastewater Capital Project.
       The Town of Oak Island was able to comply with the rate covenants as defined in the Revenue Bonds Trust
       Agreement. The Town was able to substantially complete both phases of the Wastewater Project and put
       the entire system into operation during the current fiscal year which has enabled the Town to meet the
       required rate covenants.
       The Town issued $10,592,112 in revenue bonds during fiscal year 2011 to fund additional costs of the
       Wastewater Capital Project attributed to delays and significant cost overruns. Both Moody’s and Standard
       and Poor’s reviewed the Town’s bond rating during the 2011 debt issuance process and downgraded them to
       A2 and A- respectively.

Overview of the Financial Statements

This discussion and analysis are intended to serve as an introduction to Town of Oak Island’s basic financial
statements. The Town’s basic financial statements consist of three components; 1) government-wide financial
statements, 2) fund financial statements, and 3) notes to the financial statements (see Figure 1). The basic financial
statements present two different views of the Town through the use of government-wide statements and fund
financial statements. In addition to the basic financial statements, this report contains other supplemental information
that will enhance the reader’s understanding of the financial condition of the Town of Oak Island.




     23
Required Components of Annual Financial Report

Figure 1



                                Management's                                             Basic

                              Discussion and                                           Financial

                                  Analysis                                            Statements




               Government-Wide                                  Fund                                 Notes to

                    Financial                                 Financial                              Financial

                   Statements                               Statements                              Statements




                            Summary _____________________________________ Detail



Basic Financial Statements

The first two statements (Exhibits 1 and 2) in the basic financial statements are the Government-wide Financial
Statements. They provide both short and long-term information about the Town’s financial status.

The next statements (Exhibits 3 through 8) are Fund Financial Statements. These statements focus on the
activities of the individual parts of the Town’s government. These statements provide more detail than the
government-wide statements. There are three parts to the Fund Financial Statements: 1) the governmental funds
statements; 2) the budgetary comparison statements; and 3) the proprietary fund statements.

The final section of the basic financial statements is the notes. The notes to the financial statements explain in detail
some of the data contained in those statements. Following the notes, supplemental information is provided to
show details about the Town’s individual funds. Budgetary information required by the North Carolina General
Statutes also can be found in this part of the statements.

Government-Wide Financial Statements

The government-wide financial statements are designed to provide the reader with a broad overview of the Town’s
finances, similar in format to a private-sector business. The government-wide statements provide short and long-
term information about the Town’s financial status as a whole.




      24
The two government-wide statements report the Town’s net assets and how they have changed. Net assets are the
difference between the Town’s total assets and total liabilities. Measuring net assets is one way to gauge the Town’s
financial condition.

The government-wide statements are divided into three categories: 1) governmental activities; 2) business-type
activities; and 3) component units. The governmental activities include most of the Town’s basic services such as
public safety, parks and recreation, transportation, environmental protection and general administration. Property
taxes and state and federal grant funds finance most of these activities. The business-type activities are those that
the Town charges customers to provide. These include the water, wastewater, solid waste and golf course services
offered by the Town of Oak Island. The final category is the component unit. Although legally separate from the
town, the ABC Board is important to the Town. The Town exercises control over the Board by appointing its
members and because the Board is required to distribute its profits to the Town.

The government-wide financial statements are on Exhibits 1 and 2 of this report.

Fund Financial Statements

The fund financial statements (see Figure 1) provide a more detailed look at the Town’s most significant activities. A
fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for
specific activities or objectives. The Town of Oak Island, like all other governmental entities in North Carolina, uses
fund accounting to ensure and reflect compliance (or noncompliance) with finance-related legal requirements, such
as the General Statutes or the Town’s budget ordinance. All of the funds of the Town of Oak Island can be divided
into three categories: governmental funds, proprietary funds and fiduciary funds.

Governmental Funds: Governmental funds are used to account for those functions reported as governmental
activities in the government-wide financial statements. Most of the Town’s basic services are accounted for in
governmental funds. These funds focus on how assets can readily be converted into cash flow in and out, and what
monies are left at year-end that will be available for spending in the next year. Governmental funds are reported
using an accounting method called modified accrual accounting that provides a short -term spending focus. As a
result, the governmental fund financial statements give the reader a detailed short-term view that helps him or her
determine if there are more or less financial resources available to finance the Town’s programs. The relationship
between government activities (reported in the Statement of Net Assets and the Statement of Activities) and
governmental funds is described in a reconciliation that is a part of the fund financial statements.

The Town of Oak Island adopts an annual budget for its General Fund, as required by the General Statutes. The
budget is a legally adopted document that incorporates input from the citizens of the Town, the management of the
Town, and the decisions of the Council about which services to provide and how to pay for them. It also authorizes
the Town to obtain funds from identified sources to finance these current period activities. The budgetary statement
provided for the General Fund demonstrates how well the Town complied with the budget ordinance and whether or
not the Town succeeded in providing the services as planned when the budget was adopted. The budgetary
comparison statement uses the budgetary basis of accounting and is presented using the same format, language,
and classifications as the legal budget document. The statement shows four columns: 1) the original budget as
adopted by the council; 2) the final budget as amended by the council; 3) the actual resources, charges to
appropriations, and ending balances in the General Fund; and 4) the difference or variance between the final budget
and the actual resources and charges.

Proprietary Funds: The Town of Oak Island has one type of proprietary fund. Enterprise Funds are used to report
the same functions presented as business-type activities in the government-wide financial statements. The Town of
Oak Island uses enterprise funds to account for its water, wastewater, solid waste and golf course operations. These
funds are the same as those functions shown in the business-type activities in the Statement of Net Assets and the
Statement of Activities.


                                                                                                                    25
Proprietary funds provide the same type of information as the government-wide financial statements, only in more
detail. The proprietary fund financial statements provide separate information for the water and the wastewater
operations, both of which are considered to be major funds of the Town. Conversely, the solid waste and golf course
operations are combined into a single, aggregated presentation in the proprietary fund financial statements.
Individual fund data for the solid waste and golf course funds is provided in the form of combining statements
elsewhere in this report.

Fiduciary Funds: Fiduciary funds are used to account for resources held for the benefit of parties outside the
government. The Town of Oak Island has one fiduciary fund, which is used for funds collected by the Town for fines
and forfeitures but due to the Board of Education in accordance with the laws set forth in the Constitution of the State
of North Carolina.

Notes to the Financial Statements: The notes provide additional information that is essential to a full understanding
of the data provided in the government-wide and fund financial statements. The notes to the financial statements
begin on Exhibit 10 of this report.

Other Information: In addition to the basic financial statements and accompanying notes, this report also presents
certain required supplementary information concerning the Town of Oak Island’s progress in funding its obligation to
provide pension benefits to its public safety employees and other post-employment health benefits to employees.
Required supplementary information can be found beginning on Exhibit A-1 of this report.

Government-Wide Financial Analysis


Figure 2
Town of Oak Island Net Assets

                                          Governmental Activities                Business-Type Activities                     Total

                                         2011                 2010              2011                 2010           2011              2010

 Current and other assets            $   11,957,037    $      10,821,081   $    40,532,005    $      21,015,093 $    52,489,042 $      31,836,174
 Capital assets                          32,630,396           33,250,785       119,194,861         111,453,985      151,825,257       144,704,770

      Total assets                       44,587,433           44,071,866       159,726,866         132,469,078      204,314,299       176,540,944



 Long-term liabilities outstanding       16,168,602           17,900,896       104,031,662           94,047,330     120,200,264       111,948,226
 Other liabilities                        1,501,207            1,713,327         4,734,278           14,379,802       6,235,485        16,093,129

      Total liabilities                  17,669,809           19,614,223       108,765,940         108,427,132      126,435,749       128,041,355



 Net assets:
      Invested in capital assets,
           net of related debt
                                         17,522,549           16,607,639        22,390,247           28,836,777      39,912,796        45,444,416
  Restricted                              6,567,058            2,738,128        30,693,040                    -      37,260,098         2,738,128

  Unrestricted                            2,828,017            5,111,876       (2,122,361)          (4,794,831)        705,656           317,045

      Total net assets               $   26,917,624    $      24,457,643   $    50,960,926    $      24,041,946 $    77,878,550 $      48,499,589




        26
As noted earlier, net assets may serve over time as one useful indicator of a government’s financial condition. The
assets of the Town of Oak Island exceeded liabilities by $77,878,550 as of June 30, 2011. The Town’s net assets
increased by $29,378,961 for the fiscal year ended June 30, 2011. The most substantial part of this increase in net
assets is generated from the Town’s Wastewater operations. The Town’s investment in capital assets (e.g., land,
buildings, machinery, equipment and utilities); less any related debt still outstanding that was issued to acquire those
items is $39,912,796. The Town uses these capital assets to provide services to citizens; consequently, these
assets are not available for future spending. Although the Town’s investment in its capital assets is reported net of
related debt, it should be noted that the resources needed to repay this debt must be provided from other sources,
since the capital assets themselves cannot be used to repay these liabilities. An additional portion of the Town’s net
assets, in the amount of $37,260,098 represents resources that are subject to external restrictions on how they may
be used. The remaining balance of $705,656 is unrestricted.


Several particular aspects of the Town’s financial operations influenced the total governmental net assets:

       The Town adopted a Fiscal Year 2011 budget with a 10% tax rate increase which amounted to an
    increase of one and one-half cents per $100 valuation. The Town saw an overall 13% increase in
    property tax revenues for the current fiscal year.
       After a two-year trend of declining accommodations tax revenues which was attributed to the economic
    downturn, the accommodations tax revenue on short-term rental property increased 7.1% in the fiscal year
    ending June 30, 2011.
       Sales Taxes, which had declined significantly in the two previous fiscal years, were steady with a mere 0.1%
    decline from the prior fiscal year.
       The Town Fire Department received a federal grant this year to assist with the purchase of various
    equipment and necessary supplies.
       During these uncertain economic times, the Town continues to reduce budgets across all functions of the
    Town including personnel costs through efforts such as the suspension of merit raises.




                                                                                                                           27
Figure 3
Town of Oak Island's Changes in Net Assets


                                             Governmental Activities          Business-Type Activities                  Total
                                             2011              2010           2011               2010            2011               2010
Revenues:
  Program revenues:
   Charges for services                 $     2,228,229 $       2,097,788 $    6,381,406 $        4,724,588 $     8,609,635     $    6,822,376
   Operating grants and contributions           785,599           674,770          5,825              5,715         791,424            680,485
   Capital grants and contributions            129,225          3,615,699     34,194,519          4,862,482      34,323,744          8,478,181
 General revenues:
   Property taxes                             6,699,824         5,928,590               -                    -    6,699,824          5,928,590
   Local option sales tax                     1,639,858         1,640,696               -                    -    1,639,858          1,640,696
   Accommodation tax                           950,143            887,478               -                    -     950,143            887,478
  Grants and contributions not
    restricted to specific programs            610,523            581,317              -                     -     610,523            581,317
 Other                                         143,195             77,506         20,496                 9,856     163,691             87,362
    Total revenues                      $    13,186,596 $      15,503,844 $   40,602,246 $        9,602,641 $    53,788,842     $   25,106,485


Expenses:
 General government                     $     2,778,225 $       2,818,584              -                  - $     2,778,225     $    2,818,584
  Public safety                               5,627,760         5,708,808              -                  -       5,627,760          5,708,808
 Transportation                               1,175,304         1,220,894              -                  -       1,175,304          1,220,894
  Environmental protection                      186,828           201,611              -                  -         186,828            201,611
 Cultural and recreation                      1,260,386         1,327,630              -                  -       1,260,386          1,327,630
  Interest on long-term debt                    654,795           547,956              -                  -         654,795            547,956
 Water                                                -                 -      2,384,420          2,360,243       2,384,420          2,360,243
 Wastewater                                           -                 -      9,135,515          1,305,677       9,135,515          1,305,677
  Nonmajor funds                                      -                 -      1,185,626          1,114,124       1,185,626          1,114,124
    Total expenses                      $    11,683,298 $      11,825,483 $   12,705,561 $        4,780,044 $    24,388,859     $   16,605,527

     Increase in net assets
     before transfers                         1,503,298 $       3,678,361 $   27,896,685 $        4,822,597 $    29,399,983     $    8,500,958
Transfers                                       977,705       (1,349,300)      (977,705)          1,349,300               -                  -
Extraordinary item: environmental
remediation costs                              (21,022)          (90,404)               -                    -     (21,022)           (90,404)
    Increase in net assets
                                              2,459,981         2,238,657     26,918,980          6,171,897      29,378,961          8,410,554

Net assets, July 1                           24,457,643        22,218,986     24,041,946         17,870,049      48,499,589         40,089,035
Net assets, June 30                     $    26,917,624 $      24,457,643 $   50,960,926 $       24,041,946 $    77,878,550     $   48,499,589



Governmental activities: Governmental activities increased the Town’s net assets by $2,459,981 accounting for
8.4% of the total growth in the government’s net assets. Key elements of this net increase are as follows:

            The Town saw an increase in tax revenues as a result of a property tax rate increase in fiscal year 2011.
            The tax rate was increased one and one-half cents per $100 dollar of valuation (10%) and the tax revenues
            recognized for the fiscal year were 13% higher than the previous fiscal year.
            Funds transferred to the Wastewater Capital Project Fund in the previous fiscal year were returned to the
            governmental funds during the current fiscal year.



      28
        In fiscal year 2011, the Town continued to receive State Powell Bill Funds that are restricted for street paving
        purposes; however, the Town opted to postpone all major street repair and improvement projects until
        completion of the wastewater capital project. The Town plans to begin the major street repair and
        improvement projects in Fiscal Year 2012 and anticipates utilizing the built up reserve of State Powell Bill
        Funds.
        The Town saw sales tax revenues remain level in Fiscal Year 2011 where they had been declining in
        previous fiscal years.
        The Town saw accommodation tax revenues increase 7% during the current fiscal year.
        Due to uncertain economic conditions, the Town continues to reduce budgeted expenditures across all
        functions of the government and continues to look for ways to reduce costs.
        Environmental remediation costs are due to the continued monitoring of the new Police Headquarters’ site
        where soil contamination was found during the construction period in previous years.


Business-type activities: Business-type activities increased the Town of Oak Island’s net assets by $26,918,980,
accounting for 91.6% of the total growth in the government’s net assets. The key elements of this increase are as
follows:

        With the completion of both phases of the wastewater project early in the fiscal year, a majority of the
         assessments were billed and became due within the current fiscal year. This tot al amount billed,
         $33,603,795, is recognized as revenues for fiscal year 2010-2011.
        Due to the new wastewater system starting up and the new customers connecting to the system, the Town
         saw an increase in wastewater operating revenues of more than $1.3 mil lion in the current fiscal year.
         However, because the project was so delayed, this increased level of operating revenues was still less than
         the operating expenses causing an operating loss of over $3.37 million.
        Additional revenue bonds were issued during the current fiscal year in the amount of $10,592,112 for the
         completion of the wastewater capital project.
        Additional State Revolving Loan Funds in the amount of $1,087,291 were received in the Wastewater
         Capital Project Fund.

Financial Analysis of the Town’s Funds

As noted earlier, the Town of Oak Island uses fund accounting to ensure and demonstrate compliance with
finance-related legal requirements.

Governmental Funds: The focus of the Town of Oak Island’s governmental funds is to provide information on
near-term inflows, outflows, and balances of usable resources. Such information is useful in assessing the Town of
Oak Island’s financing requirements.

The general fund is the chief operating fund of the Town of Oak Island. At the end of the current fiscal year, the
Town’s fund balance available in the General Funds was $5,340,366, while total fund balance reached $6,573,597.
The Governing Body of the Town of Oak Island has determined that the Town should strive to maintain an available
fund balance of 25% of general fund budget in case of unforeseen needs or opportunities, in addition to meeting the
cash flow needs of the Town. The Town currently has an available fund balance of 23.8% of general fund
expenditures, while total fund balance available for appropriation including restricted cash and investments
represents 36.56% of the total general fund expenditures. Though the current percentages are well above the
statutory requirement of 8%, the Town continues to strive to reach its targeted available fund balance to general fund
expenditures through conservative revenue estimates, reduction in budgeted expenditures and any available grant
funding opportunities.




                                                                                                                     29
At June 30, 2011, the governmental funds of the Town of Oak Island reported a combined fund bala nce of
$10,619,003 with a net increase in fund balance of $1,017,081. Included in this change in fund balance are the net
effects of a decrease in General Fund balance together with increases in Other Governmental Funds.

General Fund Budgetary Highlights: During the fiscal year, the Town revised the budget on several occasions.
Generally, budget amendments fall into one of three categories: 1) amendments made to adjust the estimates that
are used to prepare the original budget ordinance once exact information is available; 2) amendments made to
recognize new funding amounts from external sources, such as Federal and State grants; and 3) increases in
appropriations that become necessary to maintain services.

In Fiscal Year 2011, the significant amendments to the budget were for the payback of governmental funds from the
wastewater capital project fund and for a Homeland Security grant awarded to the Town’s Fire Department for capital
and various supply needs that support the functions of the department.

Proprietary Funds: The Town’s proprietary funds provide the same type of information found in the
government-wide statements but in more detail. As of the end of the fiscal year, unrestricted net assets of the Water
and Wastewater Funds amounted to a negative balance of $2,535,369, while the non-major Solid Waste and
Golf Course Funds amounted to $413,008. The total change in net assets for proprietary funds was $26,918,980. The
increase in net assets in the Water Fund of $2,081,229 is mainly due to the payback of a temporary transfer of funds
to the wastewater project in the previous fiscal year and due to an increase in the user rates. The change in net
assets in the Wastewater Fund of $24,890,418 is due to construction activity of the wastewater system. The project
was completed during the fiscal year, after an additional issuance of revenue bonds were finalized. Once the system
was complete and operational, property owners were billed for the sewer assessments and recording these
assessments had a major impact on the wastewater fund revenues ($33.6 million). Wastewater user fee revenue
($2.2 million) also saw a significant increase due to new customers becoming users of the wastewater system. The
Wastewater Fund’s operating expenses exceed its operating revenues for a net loss of $3,372,517. This is attributed
to project delays that required the system to be brought online later than was originally anticipated. The fund
experienced a further loss of $3,445,167 from non-operating revenues as a result of interest charges and bond
issuance costs.

Capital Asset and Debt Administration

Capital assets: The Town of Oak Island’s investment in capital assets for its governmental and business-type
activities as of June 30, 2011, totals $151,825,257 (net of accumulated depreciation). These assets include buildings,
land, machinery and equipment, park facilities, vehicles, and utility systems.

Major capital asset transactions during the year include the following additions:

           Construction in Progress for the Wastewater Project in the amount of $9,112,828.
           The purchase of 4 new vehicles for the police department at a total cost of $123,948.
           Recreation improvements amounting to $193,265 for lighting at Bill Smith Park and for the tennis and
           basketball courts at Middleton Park Ext.




      30
 Figure 4
 Capital Assets
                                           Governmental Activities                 Business-Type Activities                           Total

                                           2011                 2010                2011                  2010                2011                 2010

 Land                                 $     9,499,923 $          9,499,923 $        4,684,602 $            4,969,999 $       14,184,525       $   14,469,922
 Buildings                                 15,367,992           15,752,804         13,248,187              5,257,470         28,616,179           21,010,274
 Improvements other than buildings          2,122,994            2,009,000                                37,399,746          2,122,994           39,408,746
 Motor vehicles                               308,740             334,490              87,050               148,408             395,790              482,898
 Heavy motor vehicles                         737,405             861,536             270,226               335,530           1,007,631             1,197,066
 Equipment                                    615,353             395,691           6,795,613              3,020,348          7,410,966             3,416,039
 Office equipment                             115,070             130,147                   -                      -            115,070              130,147
 Computers and electrical equipment           217,937             418,211              34,516                44,025             252,453              462,236
 Infrastructure                             3,394,982            3,519,262         83,167,225                     -          86,562,207             3,519,262
 Construction in progress                     250,000             329,721                      -          60,278,459            250,000           60,608,180
 Intangible assets                                  -                   -          10,622,045                      -         10,622,045                    -

 Other non-depreciable assets                           -                -            285,397                        -          285,397                       -

              Total                   $    32,630,396 $         33,250,785 $       119,194,861       $ 111,453,985         $ 151,825,257       $ 144,704,770




Additional information on the Town’s capital assets can be found in Note 5 of the Basic Financial Statements.


Long-term debt: As of June 30, 2011, the Town of Oak Island had bonded debt outstanding of $91,695,537 all of
which represents bonds secured solely by specified revenue sources (i.e. revenue bonds).


Figure 5
Town of Oak Island Outstanding Debt General Obligation and Revenue Bonds


                                              Governmental Activities                      Business-Type Activities                               Total

                                             2011                2010                   2011                      2010               2011                   2010

 Installment purchases           $          14,777,318 $         16,506,893    $        584,086       $          666,237       $ 15,361,404 $             17,173,130
 Capital leases                               846,226              957,441                   -                        -             846,226                  957,441
 Revolving loan fund                                -                    -           11,116,037             10,766,911           11,116,037               10,766,911
 Revenue notes                                      -                    -              473,921                  631,895             473,921                631,895
 Revenue bonds                                      -                    -           91,695,537             81,857,403           91,695,537               81,857,403

        Total                    $          15,623,544      $    17,464,334        $103,869,581           $ 93,922,446         $119,493,125          $111,386,780




The Town of Oak Island’s total debt increased by $8,106,345 (7.2%) during the fiscal year, primarily due to an
additional $10,592,112 in revenue bonds issued for the new wastewater system.




                                                                                                                                                                  31
North Carolina general statutes limit the amount of general obligation debt that a unit of government can issue to 8
percent of the total assessed value of taxable property located within that government’s boundaries. The legal debt
margin for Town of Oak Island as of June 30, 2011, is $328,009,156.

Additional information regarding the Town of Oak Island’s long-term debt can be found in Note 11.

Economic Factors and Next Year’s Budgets and Rates

          The unemployment rate for Brunswick County was 10.3% at June 30, 2011, which reflects no significant
          change from a year ago.
          The Town is experiencing economic trends similar to national trends, with higher unemployment levels, lower
          new homes construction projects and higher property foreclosures.
          The Town is a resort beach community and its economy can be reflected in the accommodations taxes
          collected on weekly rentals. During the current fiscal year, the Town saw a 7% increase in accommodation
          tax revenues.
          The 2010 Census data set the Town’s population at 6,830, of which the Town believes to not be an accurate
          count. The Town is evaluating various data sets to determine whether the Town should pursue a challenge
          to that count.


Budget Highlights for the Fiscal Year Ending June 30, 2012

Governmental Activities: The 2011-2012 Budget was adopted with a revenue-neutral tax rate at $0.2763 per $100
valuation. The Town’s property values declined an overwhelming 44% from its prior year valuat ion of
$4,290,446,146 to $2,407,882,084 for FY 201 1-2012 due to the 2011 revaluation of property values throughout
Brunswick County. The Town appropriated $369,199 of its General Fund balance to balance the FY 2011-2012
budget along with $1.5 million Powell Bill funds to be used for street paving. While the economic slowdown has led
to continued reductions in Sales tax revenue distributions since 2008, the revenues began to level out in 2011 and
are expected to remain flat at those levels for the 2011-2012 budget year; therefore, the Town projected no increase
or decrease in this revenue source.

As a response to the uncertain economic times, the Town adopted a very conservative budget which included
significant reductions in the operating expenditures in the General Fund while still maintaining similar levels of
service. The Town continued its freeze on merit raises for a second year and further reduced overtime wages.
Although its budget included a 2% cost of living adjustment for employees, the Town began to reallocate resources
for better efficiency and continues to evaluate any workforce vacancies prior to permitting the filing of such positions.
The Town solicited bids for employee health benefits in an attempt to manage the rising costs. Although an increase
in health benefits costs was still incurred, the Town kept this as minimal as possible by changing benefit providers for
the second year in a row and by having to offer Town employees health benefits with a reduced level of coverage.
Travel budgets were reduced for FY 2012 with travel costs being limited to amounts necessary for employees to
maintain required work certifications. The Town funded only capital outlay items that were deemed absolutely
necessary. The Town reinstated the fees for privilege licenses and implemented a sponsorship program in an effort
to generate revenues from the business community for various Town activities.

Accommodations Tax Fund continues to accumulate capital reserves for future beach nourishment needs. The funds
transferred into the Accommodations Tax Fund from Capital Reserves represent the 2% portion of the
accommodations tax rate that is restricted by legislation for the purposes of beach re-nourishment.

Business-Type Activities: The water and sewer rates in the Town were projected to decrease by 4.8% in the 2011-
2012 Budget. This reduction of rates was to be accommodated through the receipt of additional utility customers
through new service requests to follow the completion of the expanded wastewater system within the Town.


     32
General-Other Council Actions/Information:

      Took action concerning the Town’s Wastewater Project including addressing construction, financial and
       permitting issues including system operation and levying of assessments for Phase II.

      Approved new beach management rules aimed at beach preservation and visitor safety.

      Authorized a Utility Assistance Program of voluntary contributions directed to hardship assistance in paying
       local water and sewer bills.

      Adopted a Resolution opposing the proposed International Port Project.

      Approved amendments to the Town of Oak Island Code of Ethics Policy.

      Authorized construction of the Oak Island Arboretum and accepted a grant from North Carolina Forestry
       Commission to be used with voluntary contributions.

      Authorized creation of a Waterway Park Memorial for Children.

      Approved participation in the NC Water Agency Response Network.

      Secured revenue bond financing for Completion Bonds for the Town’s Wastewater Project.

      Approved a management reorganization of Public Services Departments particularly focused on
       incorporating utility operation functions.

      Approved the grant of a conservation easement for the Oak Island Pier to the Oak Island Land Trust, LLC, a
       local non-profit organization whose board members were appointed by Town Council.

      Approved efficiency changes to the Town’s Solid Waste Services Program.

      Approved Utility Operations Plans including the following: Water Conservation Plan, Water Emergency Plan,
       Water Shortage Response Plan, and Connection/Backflow Prevention Policy.

      Council adjusted utility impact and connection fees to more accurately reflect costs associated with the
       expanded Wastewater System.

      Adjusted water and wastewater rates to reflect system financing and initial entire system operational
       requirements.

      Accepted State designation as a Fit Community for a new three-year term.

      Amended the Town’s Future Land Use Plan consistent with projected development patterns.

      Continued planning for the impacts of future development in the Swain’s Cut Bridge Corridor.

      Continued policy of voluntary annexation for expansion of Oak Island corporate limits.




                                                                                                                     33
     Implemented new employee healthcare program (Health Reimbursement Arrangement-HRA) as a means of
     addressing rising organization healthcare costs.

       Authorized submission of an application to Brunswick County to operate Emergency Medical Services at the
     Paramedic Level.

       Approved the recommended Parks and Recreation Master Plan.

       Approved local operation of a Farmers Market on Town property for the Summer 2011 season.

       Approved the recommended Capital Improvement Plan (CIP).

       Adopted policy concerning organization contract renewals.

       Approved funding of a Beach Lovers Education Campaign to educate citizens and visitors on the
     importance of a healthy beach.

       Authorized various initiatives to improve the local business districts and commercial tax base.

        Received major Federal Homeland Security grant to improve Fire Protection/Emergency Medical Service
     response.

       Obtained General Assembly approval for Charter amendment permitting recall elections under certain
     conditions.

       Approved a Special Events Permitting application and process for events requiring use of Town resources.

        Approved the final additions to a Parking Plan for the beachfront area in anticipation of continued tourism
     growth.

       Received continued designation (Intermediate Level) as a “Green Community” in the North Carolina
     League of Municipalities Green Challenge Program.

       Approved various development projects in the Swain’s Cut Bridge Corridor area and the Long Beach Road
     Corridor area.

       Continued active participation in the Brunswick Beaches General Re-evaluation Report (GRR) with
     Towns of Caswell Beach and Holden Beach and the US Army Corps of Engineers.

       Approved legal, legislative and administrative participation in activity to protect the Town’s interest in various
     beach nourishment and sand resource actions beyond the GRR involving the US Army Corps of Engineers
     and others.




34
Requests for Information

This report is designed to provide an overview of the Town’s finances for those with an interest in this area.
Questions concerning any of the information found in this report or requests for additional information should be
directed to:

Chad Hicks
Interim Town Manager
Town of Oak Island
4601 E. Oak Island Drive
Oak Island, N. C. 28465

Phone (910) 278-5011
Fax (910) 278-3400
chicks@ci.oak-island.nc.us




                                                                                                              35
     Basic Financial Statements




36
     (This Page Was Intentionally Left Blank)




37
                                                                Primary Government                     Component Unit
                                                                                         Total

                                             Governmental           Business-                            Oak Island
                                               Activities        type Activities                         ABC Board
ASSETS
Cash and equivalents                          7,419,734            4,241,987           11,661,721           277,647
Taxes receivable, net                             545,616               -                 545,616
Assessments receivable                          30,870                  -                  30,870
Accrued interest receivable on taxes            74,245                  -                  74,245
Accounts receivable, net                      1,379,950            1,224,092            2,604,042                87
Due from component unit                         42,894                  -                  42,894
Inventories                                     33,756               273,265          307,021               201,472
Prepaid items                                   55,435                  -             55 , 43 5              10,133
Restricted cash and cash equivalents          2,374,537           11,483,744           13,858,281           111,473
Restricted assessments receivable                                 20,886,906           20,886,906
Deferred charges                                  -               2,422,011             2,422,011
Capital Assets

 Land, non-depreciable improvements,
 and construction in progress                 9,749,923            4,969,999           14,719,922           101,178
 Other Capital Assets, net of
 depreciation                                22,880,473          114,224,862          137,105,335           274,385

Total Capital Assets                         32,630,396          119,194,861          151,825,257           375,563
    Total Assets                             44,587,433          159,726,866          204,314,299           976,375

LIABILITIES
Accounts payable and accrued expense            555,718            2,501,263          3, 0 56 ,9 8 1        270,018
Unearned revenue                                 11,585              41,525                 53,110               -
Accrued interest payable                        583,469              432,617            1,016,086
Customer deposits                               100,435              81,263                181,698
Due to primary government                                                                                    42,894
Claims and judgments                                  250,000           -                 250,000
Payable from restricted assets                                     1,677,610            1,677,610
Long-term liabilities
  Due within one year                         1,765,976           2,041,358            3,807,334             10,583
  Due in more than one year                  14,402,626          101,990,304          116,392,930            26,676
     Total liabilities                       17,669,809          108,765,940          126,435,749           350,171

NET ASSETS
Invested in capital assets, net of related
debt                                         17,522,549           22,390,247           39,912,796           375,563
Restricted for:
 Stabilization by State Statute                 1,199,475                   -           1,199,475                -
 Streets                                        1,858,841                               1,858,841
  Public Safety                                    332,085                                332,085
 Tourism                                        3,123,110                               3,123,110
 Cultural and Recreation                            53,547                                 53,547
 Other purposes                                  -                30,693,040           30,693,040           167,898
Unrestricted                                    2,828,017          (2, 1 22 ,3 6 1)   705,656                82,743
     Total net assets                        26,917,624           50,960,926           77,878,550           626,204




          38
                                                      Town of Oak Island                                                 Exhibit 1

                                                      Statement of Net Assets
                                                           June 30, 2011    Town of Oak Island
                                                                                  Statement of Activities
                                                                            For the Year Ended June 30, 2011


                                                                                           Program Revenue
                                                                                                    Operating Grants      Capital Grants
                                                     2,778,225                     Charges for
                                                                                 286,690         -         and            14,671and
           Functions/Programs                            Expenses                   Services         Contributions        Contributions
                                                  5,627,760                    1,551,164            428,966                3,069
 Primary government                                  1,175,304               -                      320,969                  157
  Governmental Activities                              186,828                   266,223           2 2 4                   1,309
    General Government                               1,260,386                   124,152         35,440                  110,019
    Public Safety                                      654,795                        -                  -                    -
    Transportation                                  11,683,298                 2,228,229            785,599              129,225
    Environmental Protection
    Culture and Recreation
    Interest on Long-term debt                    2,384,420                   3,194,533              -                     44,290
      Total governmental activities                  9,135,515             2,206,517                        -          34,150,229
                                                       927,608                  847,437                  5,825                 -
       Business-type activities                        258,018                  132,919                     -                  -
          Water Operations                          12,705,561                6,381,406             5 , 8 2 5          34,194,519
   Wastewater Operations
   Solid Waste Operations                             24,388,859              8,609,635           791,424              34,323,744
   Golf Course Operations
    Total business-type activities                1,916,478                   1,925,910                       -                 -
                                                     1,916,478                1,925,910                       -                 -
          Total primary government
 Component Unit
   Oak Island ABC Board
    Total component units

                                               General revenues:
                                               Taxes:
                                                 Property taxes, levied for general purposes
                                                 Local option sales tax
                                                 Accommodation Tax
                                                 Other taxes
                                               Grants and contributions not restricted to specific programs
                                               Unrestricted investment earnings
                                               Miscellaneous
                                               Total general revenues
                                               Extraordinary item - pollution remediation costs
                                               Transfers
                                                   Total general revenues, special items, and transfers
                                                      Change in net assets
                                               Net assets - beginning
                                               Net assets - ending




The accompanying notes are an integral part of the financial statements.                                                   39
                                                                                   Exhibit 2



                    Net (Expense) Revenue and Changes in Net Assets
                         Primary Government

      Governmental             Business-type
        Activities               Activities                  Total         Component Units


            (2,476,864)                                     (2,476,864)
            (3,644,561)                                     (3,644,561)
              (854,178)                                       (854,178)
                 80,928                                          80,928
              (990,775)                                       (990,775)
              (654,795)                                       (654,795)
            (8,540,245)                                     (8,540,245)


                                 854,403                       854,403
                               27,221,231                   27,221,231
                                 (74,346)                      (74,346)
                                (125,099)                    (125,099)
                               27,876,189                   27,876,189
        (8,540,245)            27,876,189                   19,335,944

                                                                                     9,432
                                                                                     9,432



             6,699,824                 -                     6,699,824                  -
             1,639,858                 -                     1,639,858                  -
           950,143                     -                       950,143                  -
                 65,128                -                         65,128                 -
              61 0,523                 -                       610,523                  -
            15,586                  20,496                       36,082              1,956
                 62,481                -                         62,481                 -
            10,043,543              20,496                  10,064,039               1,956
               (21,022)                                        (21,022)
           977,705                  (977,705)                     -                     -
            11,000,226            (957,209)                 10,043,017               1,956
         2,459,981             26,918,980                   29,378,961             11,388
        24,457,643             24,041,946                   48,499,589            614,816
        26,917,624             50,960,926                   77,878,550            626,204




The accompanying notes are an integral part of the financial statements.                       40
                                                  Town of Oak Island, North Carolina                                    Exhibit 3
                                                           Balance Sheet                                              Page 1 of 2
                                                        Governmental Funds
                                                           June 30, 2011

                                                            Major Funds       Non-Major Funds


                                                                                  Other
                                                                               Governmental         Total Governmental
                                                           General Fund           Funds                   Funds
          ASSETS
          Cash and cash equivalents                        3,944,263            3,475,471                     7,419,734
          Restricted cash                                  1,858,841             515,696                      2,374,537
          Receivables, net:
           Taxes                                               545,616                 -                        545,616
           Assessments                                       29,443                6,42 7                        35,870
           Accounts                                        1,148,820              218,978                     1,367,798
          Due from component unit                               42,894                                           42,894
          Receivable from other governments                      7,152                         -                  7,152
          Inventories                                           33,756                                           33,756
          Prepaids                                                 -               55,435                        55,435

             Total assets                                  7,610,785            4,272,007                    11,882,792

          LIABILITIES AND FUND BALANCES
          Liabilities:
           Accounts payable                                  319,544              220,174                      539,718
            Customer deposits                                    84,435                                         84,435
            Deferred revenue                                 605,624                       6,42 7              612,051
            Unearned revenue                                     11,585                                         11,585
            Other payables                                       16,000                -                        16,000

             Total liabilities                             1,037,188              226,601                     1,263,789

          Fund balances:
            Non Spendable
                Inventories                                         33,756                                      33,756
             Prepaids                                                              55,435                       55,435
            Restricted
             Stabilization by State Statute                      1,199,475                                    1,199,475
             Streets                                             1,858,841                                    1,858,841
             Public Safety                                             -         332,085                        332,085
             Tourism                                                            3,067,675                     3,067,675
             Cultural and Recreation                                              53,547                         53,547
            Committed
The accompanying notes are an integral part of the financial statements.                                                  41
       Capital projects                                   424,667                                      424,667
       Administration                                                         535,970                  535,970
       Public Safety                                                            6 9 4                      694
     Assigned
       Subsequent year's expenditures                     388,199                                       388,199
      Unassigned                                        2,668,659               -                     2,668,659

      Total fund balances                         6,573,597                 4,045,406                10,619,003
     Total liabilities and fund balances          7,610,785                 4,272,007                11,882,792




42                         The accompanying notes are an integral part of the financial statements
                                                        Town of Oak Island                                         Exhibit 3
                     Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets      Page 2 of 2
                                                         June 30, 2011




 Total fund balance, governmental funds                                                                       10,619,003

 Amounts reported for governmental activities in the Statement of Net Assets are
 different because:

 Capital assets used in governmental activities are not current financial resources and
 therefore are not reported in this fund financial statement, but are reported in the
 governmental activities of the Statement of Net Assets.                                                      32,630,396

 Certain other long-term assets are not available to pay current period expenditures and
 therefore are not reported in this fund financial statement, but are reported in the
 governmental activities of the Statement of Net Assets.
   Accrued interest receivable from taxes                                                                         74,245

 Liabilities for earned but deferred revenues in the fund statements                                             612,051

 Some liabilities are not due and payable in the current period and are not included in
 the fund financial statement, but are included in the governmental activities of the
 Statement of Net Assets.
    Installment notes payable                                                                (14,847,184)
   Capitalized lease contracts payable                                                          (776,359)
   Compensated absences payable                                                                 (378,832)
   Other postemployment benefits payable                                                        (166,227)
   Claims and judgements payable                                                                (250,000)
   Accrued interest payable                                                                     (583,469)    (17,002,071)

 Liability for environmental remediation is not included in the fund financial statement,
 but is included in the governmental activities of the Statement of Net Assets.                                  (16,000)


 Net Assets of Governmental Activities in the Statement of Net Assets                                         26,917,624




The accompanying notes are an integral part of the financial statements.                                            43
                                           Town of Oak Island, North Carolina                                                       Exhibit 4
                          Statement of Revenues, Expenditures and Changes in Fund Balances                                       Page 1 of 2
                                                 Governmental Funds
                                           For the Year Ended June 30, 2011

                                                                  Major Funds            Non-Major Funds


                                                                                              Other                   Total
                                                                                           Governmental           Governmental
                                                              General Fund                    Funds                  Funds
     REVENUES
     Ad valorem taxes                                              6,505,967                        -                   6,505,967
     Other taxes and licenses                                   1,682,441                      950,143                  2,632,584
     Unrestricted intergovernmental revenue                          610,523                        -                     610,523
     Restricted intergovernmental revenue                       1,753,978                      278,771                  2,032,749
     Permits and fees                                                335,236                        -                     335,236
     Sales and services                                              632,458                        -                     632,458
     Investment earnings                                           8,90 4                      10,397                      19,301
     Miscellaneous                                               143,825                       20,991                     164,816

     Total revenues                                           11,673,332                    1,260,302                  12,933,634

     EXPENDITURES
     Current:
      General government                                       2,573,934                       62,008                   2,635,942
      Public Safety                                            5,034,317                       156,412                  5,190,729
      Transportation                                               1,099,366                        -                   1,099,366
      Environmental protection                                       171,984                        -                     171,984
      Cultural and recreational                                 971,860                        231,267                  1,203,127
     Debt Service:
      Principal                                                        1,928,790                              -         1,928,790
      Interest and other charges                                         752,320                 -                        752,320

     Total Expenditures                                       12,532,571                       449,687                 12,982,258

     Excess (deficiency) of revenues over expenditures            (859,239)                    810,615                   (48,624)



     OTHER FINANCING SOURCES (USES)
     Debt issued                                   88,000                                           -                       88,000
     Transfers in                            1,554,895                                      2,140,764                    3,695,659
     Transfers out                          (2,161,141)                                      (556,813)                 (2,717,954)
     Total other financing sources and uses   (518,246)                                     1,583,951                    1,065,705



     Net change in fund balances                               (1,377,485)                  2,394,566                   1,017,081
     Fund balances - beginning                                  7,951,082                   1,650,840                   9,601,922
     Fund balances - ending                                     6,573,597                   4,045,406                  10,619,003




44                                 The accompanying notes are an integral part of the financial statements.
                                                           Town of Oak Island                                       Exhibit 4
                             Reconciliation of the Statement of Revenues, Expenditures, and Changes              Page 2 of 2
                              In Fund Balances of Governmental Funds to the Statement of Activities
                                                  For the Year Ended June 30, 2011




  Net change in fund balances - total governmental funds:                                                      1,017,081

    Amounts reported for Governmental Activities in the Statement of Activities are different because:

       Governmental funds report outlays for capital assets as expenditures because such outlays use
       current financial resources. In contrast, the Statement of Activities reports only a portion of the
       outlay as expense. The outlay is allocated over the assets' estimated useful lives as depreciation
       expense for the period.
       This is the amount by which capital outlays $579,263 are exceeded by depreciation $1,199,652 in
       the current period.                                                                                     (620,389)

       Revenues in the statement of activities that do not provide current financial resources are not
       reported as revenues in the funds.
         Change in deferred revenue for tax and assessment revenues                                              219,470



       Governmental funds report debt proceeds as current financial resources. In contrast, the Statement of
       Activities treats such issuance of debt as a liability. Governmental funds report repayment of debt
       principal as an expenditure, in contrast, the Statement of Activities treats such repayments as a
       reduction in long-term liabilities. This is the amount by which proceeds exceeded repayments.
       Debt proceeds                                                                                             (88,000)
       Debt repayments                                                                                         1,928,790

       Some expenses reported in the statement of activities do not require the use of current financial
       resources and these are not reported as expenditures in governmental funds:
         Accrued interest not reflected on Governmental funds                                                     97,526
         Compensated absences                                                                                   (11,470)
         Other postemployment benefits                                                                          (97,027)
         Future environmental remediation costs                                                                   14,000



       Change in net assets of governmental activities                                                         2,459,981




The accompanying notes are an integral part of the financial statements.                                            45
                                                         Town of Oak Island, North Carolina                                                           Exhibit 5
                                         Statement of Revenues, Expenditures and Changes in Fund Balance
                                                         Budget and Actual (with Variances)
                                                                           General Fund
                                                                 For the year ended June 30, 2011




                                                                                                                                          Variance with
                                                                                                                                          Final Budget -
                                                                                                                                             Positive
                                                                                Budgeted Amounts                  Actual Amounts            (Negative)
                                                                           Original           Final
REVENUES
Property taxes                                                            6,623,902           6,623,902             6,505,967                    (117,935)
Other taxes and licenses                                                  1,605,000           1,605,000             1,682,441                       77,441
Unrestricted intergovernmental revenues                                    540,000             540,000                610,523                       70,523
Restricted intergovernmental revenues                                     1,511,946           1,813,716             1,753,978                     (59,738)
Permits and fees                                                           129,300             129,300                335,236                      205,936
Sales and services                                                         620,440             620,440                632,458                       12,018
Investment earnings                                                         15,238              15,238                 8,380                        (6,858)
Miscellaneous                                                               89,500             114,519                143,825                       29,306

      Total revenues                                                     11,135,326          11,462,115            11,672,808                     210,693

EXPENDITURES
Current:
  General government                                                     2,914,510            3,045,430             2,573,934                     471,496
  Public safety                                                          4,872,100            5,265,816             5,034,317                     231,499
 Transportation                                                          1,217,638            1,231,263             1,099,366                     131,897
  Environmental protection                                                 181,240             182,127                171,984                      10,143
  Culture and recreation                                                   898,534            1,076,508               971,860                     104,648
Debt Service:
  Principal                                                               1,930,058           1,930,238              1,928,790                      1,448
  Interest and other charges                                               755,291             755,201                752,320                       2,881
Contingency                                                                    -               722,055                 -                          722,055

      Total Expenditures                                                 12,769,371          14,208,638            12,532,571                    1,676,067
         Excess (deficiency) of revenues over
         expenditures                                                    (1,634,045)         (2,746,523)                 (859,763)               1,886,760

OTHER FINANCING SOURCES (USES)
Fund balance appropriated                                                      -               279,300                    -                      (279,300)
Debt issued                                                                102,000             102,000                     88,000                 (14,000)
Transfers in                                                              1,532,045          2,402,045               1,287,020                 (1,115,025)
Transfers out                                                                  -               (36,822)                  (36,822)                      -

      T o t a l o t h e r f i n a n c i n g s o u rc e s a n d u s e s    1,634,045          2,746,523               1,338,198                 (1,408,325)
      Net change in fund balances                                                -                  -                    478,435                  478,435
Fund balance - beginning                                                                                                      5,670,495
Fund balance - ending                                                                                                         6,148,930

A legally budgeted Capital Reserve Fund is consolidated
into the General Fund for reporting purposes:
   Interest Income                                                                                                                524
  Transfers in                                                                                                                267,875
  Transfers out                                                                                                           (2,124,319)
   Fund balance, beginning                                                                                                  2,280,587

Fund balance - ending (Exhibit 4)                                                                                             6,573,597



46                                            The accompanying notes are an integral part of the financial statements.
                                                                            Town of Oak Island, North Carolina                                             Exhibit 6
                                                                                Statement of Net Assets
                                                                                    Proprietary Funds
                                                                                      June 30, 2011

                                                                                           Major Funds                  Non-Major Funds


                                                                                                   Wastewater           Other Enterprise
                                                                              Water Fund             Fund                    Funds         Total
           ASSETS
           Current assets:
           Cash and cash equivalents                                          3,177,428              609,646               454,913            4,241,987
           Accounts Receivable, net                                            447,537               721,331                5 3 , 8 6 0       1,222,728
           Assessments receivable, net                                                                        -                                    -
           Other receivables                                                     -                    -                      1 , 3 6 4            1,364
           Inventories                                                         196,149               6 8 , 5 8 8             8 , 5 2 8          273,265

             Total current assets                                             3,821,114             1,399,565              518,665            5,739,344
           Non-current assets:
             Restricted Assets:
              Cash and cash equivalents                                                                    11,483,744                        11,483,744
              Assessments receivable, net                                                                  20,886,906                        20,886,906
             Deferred charges:
              Bond issuance costs                                                 -                         2,422,011         -               2,422,011
             Capital Assets:
              Land and construction in progress                                135,068             3,433,136             1,401,795            4,969,999
              O the r cap i ta l a sse ts, n et o f dep re cia tion           3,174,099           110,673,538             377,225           114,224,862

                      Capital assets                                          3,309,167           114,106,674            1,779,020          119,194,861

            Total non-current assets                                          3,309,167           148,899,335            1,779,020          153,987,522

                        Total assets                                          7,130,281           150,298,900            2,297,685          159,726,866

           LIABILITIES
           Current Liabilities:
             Accounts payable                                                        122,313        2,264,781               6 2 , 3 0 9       2,449,403
             Salaries payable                                                   2 0 , 6 1 5           2 0 , 7 7 0            10,836              52,221
             Accrued interest payable                                             -                        432,617            -                 432,617
             Unearned revenue                                                                         4 1 , 2 0 8               3 1 7            41,525
             Customer deposits                                                  8 1 , 2 6 3                    -                                 81,263
             Payable from restricted assets                                                              1,677,249                            1,677,249
             C o m p e n sa te d a b se n ce s p a ya b l e , cu r re n t        16,159               2 6 , 9 0 7            10,950              54,016
             Installment notes payable, current                                                             86,152                               86,152
             Revenue notes payable, current                                                                871,190                              871,190
             Revenue bonds payable, current                                       -                      1,030,000            -               1,030,000

               Total current liabilities                                       240,350              6,450,874               8 4 , 4 1 2       6,775,636
           Non-current liabilities:
             Other postemployment benefits                                      3 6 , 0 3 3               7 , 7 2 1          10,295              54,049
             Compensated absences                                                16,159                  2 6 , 9 0 7         10,950              54,016
             Installment notes payable, noncurrent                                                            497,934                           497,934
             Revenue notes payable, noncurrent                                                             10,718,768                        10,718,768
             Revenue bonds payable, noncurrent                                    -                        90,665,537         -              90,665,537

               Total non-current liabilities                                    5 2 , 1 9 2               101,916,867       2 1 , 2 4 5     101,990,304

                        Total liabilities                                      292,542            108,367,741              105,657          108,765,940

           NET ASSETS
             Invested in capital assets, net of related debt                  3,309,167            17,302,060            1,779,020           22,390,247
             Restricted for capital projects                                     -                     30,693,040           -                30,693,040
             Unrestricted                                                     3,528,572            (6,063,941)            413,008            (2,122,361)

               Total net assets                                               6,837,739            41,931,159            2,192,028           50,960,926




The accompanying notes are an integral part of the financial statements.                                                                                    47
     (This Page Was Intentionally Left Blank)




48
                                               Town of Oak Island, North Carolina                                              Exhibit 7
                                Statement of Revenues, Expenses and Changes in Fund Net Assets
                                                          Proprietary Funds
                                                  For the Year Ended June 30, 2011

                                                                                                                            Total
                                                                 Major Funds                          Non-Major Funds


                                                                               Wastewater              Other Enterprise
                                                      Water Fund                 Fund                      Funds
REVENUES
Charges for services                                2,937,483                2,206,517                    966,799            6,110,799
Other operating revenues                                 257,050                    -                     13,557               270,607

Total operating revenues                            3,194,533                2,206,517                    980,356            6,381,406

OPERATING EXPENSES
Administration                                            163,672                   -                     177,836              341,508
Water purchases                                           772,124                   -                          -               772,124
Waste collection and treatment                                -              4,250,157                    880,244            5,130,401
Maintenance                                             1,260,776                   -                     70,380             1,331,156
Depreciation                                          187,848                1,328,877                    57,166             1,573,891

Total Operating Expenses                            2,384,420                5,579,034                  1,185,626            9,149,080

   Operating income (loss)                            810,113                (3,372,517)                 (205,270)          (2,767,674)

NON-OPERATING REVENUES
(EXPENSES)
Interest and investment revenue                          5,31 0                  14,205                             9 8 1        20,496
Operating grants and contributions                           -                            -                        5,82 5         5,825
Interest expense                                             -                    (3,467,608)                  -            (3,467,608)
Interest on assessments                                                                97,109                                    97,109
Bond issuance costs                                               -                  (88,873)                  -               (88,873)

Total non-operating revenue (expenses)                   5,31 0                    (3,445,167)                     6,80 6   (3,433,051)
  Income (loss) before contributions and
  transfers                                           815,423               (6,817,684)                  (198,464)          (6,200,725)
Capital contributions                                     44,290                34,053,120                      -           34,097,410
Transfers in                                        1,321,516                 103,545                     145,734             1,570,795
Transfers out                                        (100,000)                  (2,448,500)                -                (2,548,500)
      Change in net assets                          2,081,229               24,890,481                    (52,730)          26,918,980


Total net assets - beginning                        4,756,510               17,040,678                 2,244,758            24,041,946

Total net assets - ending                           6,837,739               41,931,159                 2,192,028            50,960,926




                                    The accompanying notes are an integral part of the financial statements.                    49
                                                        Town of Oak Island, North Carolina                                               Exhibit 8
                                                  Statement of Cash Flows - Proprietary Funds                                         Page 1 of 2
                                                        For the Year Ended June 30, 2011

                                                                         Major Enterprise Funds                     Non-Major
                                                                      Water           Wastewater                    Enterprise
                                                                      Fund                 Fund                      Funds            Total


Cash Flows From Operating Activities
Cash received from customers                                              2,870,381           1,772,654                  981,492        5,624,527
Cash paid for goods and services                                        (1,690,273)      (3,852,570)                   (852,759)      (6,395,602)
Cash paid to employees                                                    (539,914)       (296,720)                    (262,592)      (1,099,226)
Customer deposits received                                                    41,699                                           -            41,699
Customer deposits returned                                                  (26,257)                                           -          (26,257)
Other operating revenue                                                     257,050                       -                    -          257,050


   Net cash provided by (used in) operating activities                      912,686      (2,376,636)                   (133,859)      (1,597,809)



Cash Flows From Noncapital Financing Activities
Operating grants received                                                                                                  5,735            5,735
Transfers-in                                                              1,321,516              103,545                 145,734        1,570,795
Transfers-out                                                             (100,000) ( 2 , 4 4 8 , 5 0 0 )                      -      (2,548,500)
    Net cash provided by (used in) noncapital financing
    activities                                                            1,221,516     (2,344,955)                      151,469       (971,970)



Cash Flows From Capital and Related Financing Activities
Debt proceeds                                                                                 11,679,403                         -     11,679,403
Acquisition and construction of capital assets                             (65,186) ( 1 4 , 8 4 2 , 4 8 0 )                      -   (14,907,666)
Principal paid on bonds and leases                                                  (1,728,290)                                  -    (1,728,290)
Bond issuance costs                                                                 (361,046)                                           (361,046)
Interest paid on bonds and leases                                                   (3,369,083)                                  -    (3,369,083)
Contributions from customers                                                 44,290           14,090,844                               14,135,134
    Net cash used in capital and related financing                                                                               -
    activities                                                             (20,896)             5,469,348                              5,448,452

Cash Flows Provided By Investing Activities
Interest earned                                                                5,310               14,205                    981          20,496


   Net cash provided by investing activities                                  5,310                14,205                    981          20,496
   Net increase (decrease) in cash and cash equivalents                   2,118,616               761,962                 18,591       2,899,169



Cash and cash equivalents:

 Beginning                                                                1,058,812            11,331,428                436,322      12,826,562

 Ending                                                                   3,177,428            12,093,390                454,913      15,725,731


                        (Continued)




    50                                   The accompanying notes are an integral part of the financial statements.
                                                           Town of Oak Island, North Carolina                                      Exhibit 8
     Statement of Cash Flows - Proprietary Funds                                       Page 2 of 2
     For the Year Ended June 30, 2011

                        Major Enterprise Funds                  Non-Major
Water             Wastewater                  Enterprise
Fund                Fund                        Funds                Total



Reconciliation of Operating Income (Loss) to Net Cash
Provided By (Used In) Operating Activities


Operating income (loss)                                                       810,113     (3,372,517)               (205,270)   (2,767,674)


Adjustments to reconcile operating income (loss)
to net cash provided by (used in) operating activities:
 Depreciation                                                                 187,848           1,328,877             57,166     1,573,891
 Changes in assets and liabilities:
 (Increase) decrease in:
    Accounts receivable                                                      (67,102)      (433,863)                     993     (499,972)
    Inventory                                                                   1,862       (41,983)                 (2,207)      (42,328)
 Increase (decrease) in:
    Accounts payable                                                         (55,704)             106,838               5,390       56,524
    Customer deposits                                                          15,442                   -                           15,442
    Unearned revenue                                                                                                      143          143
    Accrued wages                                                               3,777               9,735               1,068       14,580
    Accrued vacation pay                                                     (1,616)               22,406               3,696       24,486
    Accrued OPEB liability                                                    18,066                3,871               5,162       27,099


    Total adjustments                                                         102,573             995,881             71,411     1,169,865

     Net cash provided by (used in) operating activities                      912,686     (2,376,636)               (133,859)   (1,597,809)




                                         The accompanying notes are an integral part of the financial statements.                  51
                                                                                                Agency Fund
ASSETS
Cash and cash equivalents                                                                              15,840




LIABILITIES

Due to other governments                                                                               15,840




 52                  The accompanying notes are an integral part of the financial statements.
(This Page Was Intentionally Left Blank)
     Notes to Financial Statements




54
  Town of Oak Island, North Carolina
  Notes to Financial Statements




Note 1. Summary of Significant Accounting Policies
The accounting policies of the Town of Oak Island, North Carolina (the “Town”) and its discretely presented
component unit conform to generally accepted accounting principles as applicable to governments. The following is
a summary of the more significant accounting policies:

  A.    Reporting Entity

  The Town is a municipal corporation that is governed by an elected mayor and a five-member Town Council. As
  required by generally accepted accounting principles, these financial statements pres ent the Town and its
  component unit, a legally separate entity for which the Town is financially accountable. The discretely presented
  component unit presented below is reported in a separate column in the Town’s financial statements in order to
  emphasize that it is legally separate from the Town.

  Town of Oak Island ABC Board (the “ABC Board”): The members of the ABC Board’s governing board are
  appointed by the Town. In addition, the ABC Board is required by State statute to distribute its surpluses to the
  General Fund of the Town. The ABC Board which has a June 30 year end is presented as if it were a
  proprietary fund (discrete presentation). Complete financial statements for the ABC Board may be obtained from
  the entity’s administrative offices at Oak Island ABC Board, 5402 East Oak Island Drive, Oak Island, NC 28465.

  B.    Basis of Presentation

  Government-wide statements: The statement of net assets and the statement of activities display information
  about the primary government and its component unit. These statements include the financial activities of the overall
  government. Eliminations have been made to minimize the double counting of internal activities. These
  statements distinguish between the governmental and business-type activities of the Town. Governmental
  activities generally are financed through taxes, intergovernmental revenues, and other non -exchange
  transactions. Business-type activities are financed in whole or in part by fees charged to external parties.

  The statement of activities presents a comparison between direct expenses and program revenues for the different
  business-type activities of the Town and for each function of the Town’s governmental activities. Direct expenses
  are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a
  particular function. Indirect expense allocations that have been made in the funds have been reversed for the
  statement of activities. Program revenues include (a) fees and charges paid by the recipients of good s or
  services offered by the programs and (b) grants and contributions that are restricted to meeting the operational
  or capital requirements of a particular program. Revenues that are not classified as program revenues, including all
  taxes, are presented as general revenues.
  Fund financial statements: The fund financial statements provide information about the Town’s funds. Separate
  statements for each fund category – governmental, proprietary, and fiduciary - are presented. The emphasis of fund
  financial statements is on major governmental and enterprise funds, each displayed in a separate column. All
  remaining governmental and enterprise funds are aggregated and reported as non-major funds.




55
  Town of Oak Island, North Carolina
  Notes to Financial Statements




Note 1. Summary of Significant Accounting Policies (Continued)

  B. Basis of Presentation (Continued)

  Proprietary fund operating revenues, such as charges for services, result from exchange transactions
  associated with the principal activity of the fund. Exchange transactions are those in which each party receives
  and gives up essentially equal values. Nonoperating revenues, such as subsidies result from nonexchange
  transactions. Other non-operating revenues are ancillary activities such as investment earnings.

  The Town reports the following major governmental fund:

  General Fund - The General Fund is the general operating fund of the Town. The General Fund accounts for all
  financial resources except those that are required to be accounted for in another fund. The primary revenue sources
  are ad valorem taxes, State grants, and various other taxes and licenses. The primary expenditures are for public
  safety, street maintenance and construction, and recreational facilities and programs. Additionally, the Town has
  legally adopted Capital Reserve Fund. Under GASB 54 guidance this fund is consolidated in the General Fund.
  The budgetary comparisons for the Capital Reserve Fund have been included in the supplemental information.

  The Town reports the following non-major governmental funds:

  Town Hall Replacement Capital Project – This fund is used to account for the construction of a new town hall.

  Beach Preservation Special Revenue Fund - This fund is used to account for donations that are restricted
  for publicizing and preserving the beach.

     Smith Park Capital Project Fund - This fund is used to account for construction of a multi-function recreation park.

  Emergency 911 System Fund – This fund is used to account for 911 revenues received by the State 911 Board to
  enhance the State 911 system.

  Accommodation Tax Special Revenue Fund - This fund is used to account for accommodation tax revenues that
  are restricted for use for a particular purpose.

  Tree Preservation Fund – This Fund is used to account for contributions that are restricted for
  publicizing and preserving trees located on the island.

  Police Department Headquarters Capital Project – This fund is used to account for the construction of the Police
  Headquarters.

  Pier Preservation Fund – this fund is used to account for contributions received restricted for the preservation of
  the Oak Island Fishing Pier.




56
     Town of Oak Island, North Carolina
     Notes to Financial Statements




Note 1. Summary of Significant Accounting Policies (Continued)

     B. Basis of Presentation (continued)

     The Town reports the following major enterprise funds:

     Water Fund - This fund is used to account for the Town’s water fund operation s.

     Wastewater Fund - This fund is used to account for the Town’s wastewater operations.


     Wastewater Capital Project Fund – This fund is used to account for the extension of the wastewater system currently
     located on the island.
     The Town reports the following non-major enterprise funds:

     Solid Waste Fund - This fund is used to account for the Town’s solid waste operations.

     South Harbour Golf Course Fund – This fund is used to account for the Town’s maintenance and operation of the
     golf course.
     Sewer District Fee Fund – This fund is used to account for fees charged for the availability of sewer service. These
     fees can only be used for payment of debt of the wastewater system.
     The Town reports the following fund type:

     Agency Fund – Agency funds are custodial in nature and do not involve the measurement of operating results. An
     agency fund is used to account for assets the Town holds on behalf of others. The Town maintains the Fines and
     Forfeitures Fund, which accounts for various legal fines and forfeitures that the Town is required to remit to the
     Brunswick County Board of Education.

     C. Measurement Focus and Basis of Accounting

     In accordance with North Carolina General Statutes, all funds of the Town are maintained during the year using
     the modified accrual basis of accounting.

     Government-wide, proprietary and fiduciary fund financial statements. The government-wide, proprietary,
     and fiduciary fund financial statements are reported using the economic resources measurement focus. The
     government-wide, proprietary, and fiduciary fund financial statements are reported using the accrual basis of
     accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are
     incurred, regardless of when the related cash flows take place. Nonexchange trans actions, in which the Town
     gives (or receives) value without directly receiving (or giving) equal value in exchange, include property
     taxes, grants, and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year
     for which the taxes are levied. Revenue from grants and donations is recognized in the fiscal year in which all
     eligibility requirements have been satisfied.

     Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or
     privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including
     special assessments. Internally dedicated resources are reported as general revenues rather than as program

57
 Town of Oak Island, North Carolina
 Notes to Financial Statements




 revenues. Likewise, general revenues include all taxes.




58
     Town of Oak Island, North Carolina
     Notes to Financial Statements




Note 1. Summary of Significant Accounting Policies (Continued)

     C. Measurement Focus and Basis of Accounting (Continued)

     Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues
     and expenses generally result from providing services and producing and delivering goods in connection with a
     proprietary fund’s principal ongoing operations. The principal operating revenues of the Town enterprise funds are
     charges to customers for sales and services. The Town also recognizes as operating revenue the portion of tap fees
     intended to recover the cost of connecting new customers to the water and sewer system after the systems are
     completed. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses,
     and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as
     nonoperating revenues and expenses.

     Governmental fund financial statements: Governmental funds are reported using the current financial
     resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are
     recognized when measurable and available. Expenditures are recorded when the related fund liability is incurred,
     except for principal and interest on general long-term debt, claims and judgments, and compensated
     absences, which are recognized as expenditures to the extent they have matured. General capital asset
     acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and
     acquisitions under capital leases are reported as other financing sources.

     The Town considers all revenues available if they are collected within 90 days after year-end, except for property
     taxes. Ad valorem taxes receivable are not accrued as revenue because the amount is not susceptible to
     accrual. At June 30, taxes receivable are materially past due and are not considered to be an available resource to
     finance the operations of the current year. Also, as of January 1, 1993, State law altered the procedures for the
     assessment and collection of property taxes on registered motor vehicles in North Carolina. Effective with this
     change in the law, Brunswick County is responsible for billing and collecting the property t axes on registered
     motor vehicles on behalf of all municipalities and special tax districts in the County, including the Town of Oak
     Island. For motor vehicles registered under the staggered system, property taxes are due the first day of the fourth
     month after the vehicles are registered. The billed taxes are applicable to the fiscal year in which they become due.
     Therefore, the Town’s vehicle taxes for vehicles registered in Brunswick County from March 2010 through February
     2011 apply to the fiscal year ended June 30, 2011. Uncollected taxes that were billed during this period are shown as
     a receivable in these financial statements and are offset by deferred revenues.
     Sales taxes and certain intergovernmental revenues, such as the utilities franchise tax, collected and held by the
     State at year-end on behalf of the Town are recognized as revenue. Intergovernmental revenues and sales and
     services are not susceptible to accrual because generally they are not measurable until received in cash. Grant
     revenues which are unearned at year-end are recorded as unearned revenues. Under the terms of grant
     agreements the Town funds certain programs by a combination of specific cost-reimbursement grants, categorical
     block grant and general revenues. Thus when program expenses are incurred, there are both restricted and
     unrestricted net assets available to finance the program. It is the Town’s policy to first apply cost -reimbursement
     grant resources to such programs, followed by categorical block grants, and then by general revenues.
     As permitted by generally accepted accounting principles, the Town has elected to apply only applicable FASB
     Statements and Interpretations issued on or before November 30, 1989 that do not contradict GASB pronouncements in
     its accounting and reporting practices for its proprietary operations.




59
     Town of Oak Island, North Carolina
     Notes to Financial Statements



Note 1. Summary of Significant Accounting Policies (Continued)

D.     Budgetary Data

The Town’s budgets are adopted as required by the North Carolina General Statutes. An annual budget is adopted for
the General Fund, Capital Reserve Fund, Accommodations Tax Fund, Emergency 911 Fund, Beach Preservation
Fund, Tree Preservation Fund, Pier Preservation Fund, Water Fund, Wastewater Fund, Solid Waste Fund, South
Harbour Golf Course Fund and Sewer District Fee Fund. Al l annual appropriations lapse at the fiscal year
end. Project budget ordinances are adopted for the Capital Projects funds. The Wastewater Capital Project
and the Sewer District Fee Fund are consolidated with the Wastewater Fund for reporting purposes. All
budgets are prepared using the modified accrual basis of accounting. Expenditures may not legally exceed
appropriations at the functional level for all annually budgeted funds and at the project level for the
multi-year funds. The Town Manager is authoriz ed to transfer appropriations within a fund as he sees
necessary; however, the governing board must approve any revisions that alter the total expenditures of any
fund or change functional appropriations by more than $1,000. The budget ordinance must be ad opted by
July 1 of the fiscal year or the governing board must adopt an interim budget that covers the time until the annual
ordinance can be adopted.

E. Assets, Liabilities and Fund Equity

Deposits and investments: All deposits of the Town and of the ABC Board are made in board-designated official
depositories and are secured as required by State law (G.S. 159-31). The Town and the ABC Board may
designate, as an official depository, any bank or savings association whose principal office is located in North Carolina.
Also, the Town and the ABC Board may establish time deposit accounts such as NOW and SuperNOW accounts,
money market accounts, and certificates of deposit.

State law (G.S. 159-30(c)) authorizes the Town and the ABC Board to invest in obligations of the United States or
obligations fully guaranteed both as to principal and interest by the United States; obligations of the State of North
Carolina; bonds and notes of any North Carolina local government or public authority; obligations of certain nonguaranteed
federal agencies; certain high quality issues of commercial paper and bankers’ acceptances; and the North Carolina
Capital Management Trust (“NCCMT”). The securities of the NCCMT Cash Portfolio, a SEC-registered (2a-7) money
market mutual fund, are valued at fair value, which is the NCCMT’s share price.

Cash and cash equivalents: The Town pools money from several funds to facilitate disbursement and
investment and to maximize investment income. Therefore, all cash and investments are essentially dem and
deposits and are considered cash and cash equivalents. The ABC Board considers all highly liquid investments
(including restricted assets) with maturity of three months or less when purchased to be cash and cash
equivalents.

Restricted assets: Certain proceeds of the Town’s enterprise fund revenue bonds, as well as certain resources set aside
for their repayment, are classified as restricted assets on the balance sheet because they are maintained in separate bank
accounts and their use is limited by applicable bond covenants. The “construction” account is used to report those
proceeds of revenue bond issuances that are restricted for use in construction. The “capitalized interest” account is used
to report resources set aside for paying interest on the respective bonds on such interest payment date. In addition to
the revenue bonds the Town has additional unexpended debt proceeds classified as restricted assets because their use
is completely restricted to the purpose of construction and acquisition of capital assets. Customer deposits held by the
Town before any services are supplied are restricted to the service for which the deposit was collected. Powell Bill funds are
also classified as restricted cash because it can be expended only for the



 60
    Town of Oak Island, North Carolina
    Notes to Financial Statements



                                             Note 1. Summary of

    Significant Accounting Policies (Continued) E. Assets,

    Liabilities and Fund Equity (Continued)

    purposes of maintaining, repairing, constructing, reconstructing or widening of local streets per NC G.S. 136-41.1
    through 136-41.4.

    Ad valorem taxes receivable: In accordance with State law (G.S. 105-347 and G.S. 159-13(a)), the Town levies ad
    valorem taxes on property other than motor vehicles on July 1 st, the beginning of the fiscal year. The taxes are
    due on September 1 st (lien date); however, interest does not accrue until the following January 6 th. These taxes
    are based on the assessed values as of January 1, 2010.

    Allowances for doubtful accounts: All receivables that historically experience uncollectible accounts are shown net
    of an allowance for doubtful accounts. This amount is estimated by analyzing the percentage of receivables that were
    written off in prior years.

    Inventory and Prepaid items: The inventories of the Town and the ABC Board are valued at cost (first-in, first-out),
    which approximates market. The inventories of the Town’s general and enterprise funds consist of materials and
    supplies held for subsequent use. The cost of these inventories is expensed when consumed rather than when
    purchased. Inventory of the Town of Oak Island ABC Board consists of products for resale to customers. The
    cost of these inventories is expensed when sold rather than when purchased.

    Certain payments to vendors reflect costs applicable to future accounting principals and are recorded as prepaid items
    in both government-wide and fund financial statements and expensed as the items are used.

    Capital assets: Capital assets are defined by the government as assets with an initial, individual cost of more
    than a certain cost and an estimated useful life in excess of two years. Minimum capitalization cost is $5,000.
    Purchased or constructed capital assets are reported at cost or estimated historical cost. Donated capital assets
    are recorded at their estimated fair value at the date of donation. General infrastructure assets acquired prior to
    July 1, 2003, consisting mainly of road networks, are not reported, because the Town is a Phase III town under
    GASB 34, and not required to report those assets. The cost of normal maintenance and repairs that do not add to the
    value of the asset or materially extend assets’ lives are not capitalized.
          Capital assets are depreciated using the straight-line method over the following estimated useful lives:

         Infrastructure                                                                                     1030
         Utility systems I                                                                                    40
         Utility systems II                                                                                   60
         Buildings                                                                                            40
         Other structures and improvements                                                                    – 25
         Motor vehicles                                                                                        5
         Heavy motor vehicles                                                                                 10
         Computer and electric equipment                                                                      5
         Office equipment                                                                                     10
                                                                                                              10
         Equipment
         Intangible assets                                                                                    30

                                                                                                                         6
1
  Town of Oak Island, North Carolina
  Notes to Financial Statements




Note 1. Summary of Significant Accounting Policies (Continued)

  E. Assets, Liabilities and Fund Equity (Continued)
      Property, plant and equipment of the ABC Board are depreciated over their useful lives on a straight-line
      basis as follows:

                                                                                                     Estimated
       Assets Class                                                                                  Useful Lives
       Buildings                                                                                          30 - 40
       Furniture and equipment                                                                             5 - 10
       Paving                                                                                                  15


  The Town and ABC Board evaluate prominent events or changes in circumstances affecting capital assets to
  determine whether impairment of a capital asset has occurred. A capital asset is generally considered impaired if
  both (a) the decline in service utility of the capital asset is large in magnitude and (b) the event or change in
  circumstance is outside the normal life cycle of the capital asset. Impaired capital assets that will no longer be
  used by the Town are reported at the lower of carrying value or fair valu e. Impairment losses on capital assets
  that will continue to be used by the Town are measured using the method that best reflects the diminished service
  utility of the capital asset. Any insurance recoveries received as a result of impairment events or cha nges in
  circumstances resulting in the impairment of a capital asset are netted against the impairment loss.

  Long-term obligations: In the government-wide financial statements, and proprietary fund types in the fund financial
  statements, long-term debt and other long-term obligations are reported as liabilities in the applicable
  governmental activities, business-type activities, or proprietary fund type statements of net assets. Bond
  premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the
  straight-line method that approximates the effective interest method. Bonds payable are reported net of the
  applicable bond premiums or discount. Bond issuance costs are reported as deferred charges and amortized over
  the term of the related debt.

  In fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond
  issuance costs, during the current period. The face amount of debt issued is reported as other financing
  sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt
  issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt
  proceeds received, are reported as debt service expenditures.

  Compensated absences: The vacation policy of both the Town and the ABC Board provides for the
  accumulation of up to two hundred forty (240) hours earned vacation leave with such leave being fully vested
  when earned. For the Town’s government-wide and proprietary funds, an expense and a liability for compensated
  absences and the salary-related payments are recorded as the leave is earned. The Town has assumed a first-in,
  first-out method of compiling accumulated compensated time. The portion of that time that is estimated to be
  used in the next fiscal year has been designated as a current liability in the government-wide financial statements.

  Both the Town and the ABC Board’s sick leave policies provide for an unlimited accumulation of earned sick leave.
  Sick leave does not vest, but any unused sick leave accumulated at the time of retirement may be used in the
  determination of length of service for retirement benefit purposes. Since neither the Town nor the ABC Board
  has any obligation for the accumulated sick leave until it is actually taken, no accrual for sick leave has been made.

62
     Town of Oak Island, North Carolina
     Notes to Financial Statements



Note 1. Summary of Significant Accounting Policies (Continued)

     E. Assets, Liabilities and Fund Equity (Continued)

     Net assets/fund-balances: Net assets in government-wide and proprietary fund financial statements are classified as
     invested in capital assets, net of related debt; restricted; and unrestricted. Restricted net assets represent
     constraints on resources that are either externally imposed by creditors, grantors, contributors, or laws or regulations
     of other governments or imposed by law through state statute.

     Fund Balances

     In the governmental fund financial statements, fund balance is composed of five classifications designed to
     disclose the hierarchy of constraints placed on how fund balances can be spent.

     The governmental fund types classify fund balance as follows:

     Non Spendable Fund Balance – This classification includes amounts that cannot be spent because they are either
     (a) not in spendable form or (b) legally or contractually required to be maintained intact.

           Inventories – portion of fund balance that is not an available resource because it represents the year-end
          balance of ending inventories, which are not spendable resources.

          Prepaids – portion of fund balance that is not an available resource because it represents the year -end
          balance of ending prepaids, which are not spendable resources.

     Restricted Fund Balance – This classification includes amounts that are restricted to specific purposes externally
     imposed by creditors or imposed by law.

           Restricted for Stabilization by State statute - portion of fund balance that is restricted by State Statute [G.S.
           159-8(a)].

          Restricted for Streets - Powell Bill portion of fund balance that is restricted by revenue source for street
          construction and maintenance expenditures. This amount represents the balance of the total unexpended
          Powell Bill funds.

          Restricted for Public Safety - portion of fund balance that is restricted by revenue source for certain emergency
          telephone system expenditures.

          Restricted for Tourism - portion of fund balance that is restricted by revenue source for certain tourism related
          purposes. This amount represents the balance of the unexpended accommodations tax receipts.

          Restricted for Cultural and Recreation – portion of fund balance that is restricted by revenue source for certain
          cultural and recreation related purposes. This amount represents the balance of funds restricted by donors for
          beach preservation.

     Committed Fund Balance – portion of fund balance that can only be used for specific purposes imposed by majority
     by quorum of Town of Oak Island’s governing body (highest level of decision making authority). Any changes or
     removal of specific purpose requires majority action by the governing body.



63
  Town of Oak Island, North Carolina
  Notes to Financial Statements



Note 1. Summary of Significant Accounting Policies (Continued)

  E. Assets, Liabilities and Fund Equity (Continued)

       Committed for Capital Projects – portion of fund balance committed by Town Council for certain capital project
       related purposes. This amount represents the balance in the legally budgeted capital reserve fund.

       Committed for Administration – portion of fund balance committed by Town Council for the town hall
       replacement. This amount represents the balance remaining in the Town Hall Replacement Capital Project
       Fund.

        Committed for Public Safety – portion of fund balance committed by Town Council for the police
       headquarters project. This amount represents the balance remaining in the Police Headquarters Capital
       Project Fund

  Assigned fund balance – portion of fund balance that the Town of Oak Island intends to use for specific purposes.

       Subsequent year’s expenditures – portion of fund balance that is appropriated in the next year’s budget that is
       not already classified in restricted or committed. The governing body approves the appropriation; however the
       budget ordinance authorizes the manager to modify the appropriations by resource or appropriation within
       funds up to $1 ,000.

  Unassigned fund balance – the portion of fund balance that has not been restricted, committed or assigned to
  specific purposes or other funds.

  The Town of Oak Island has a revenue spending policy that provides guidance for programs with multiple revenue
  sources. The Finance Officer will use resources in the following hierarchy: bond proceeds, federal funds, State
  funds, local non-town funds, Town funds. For purposes of fund balance classification expenditures are to be spent
  from restricted fund balance first, followed by in-order by committed fund balance, assigned fund balance and lastly
  unassigned fund balance. The Finance Officer has the authority to deviate from this policy if it is in the best interest
  of the Town.


Note 2. Stewardship, Compliance and Accountability

  A. Deficit Balance in Wastewater Capital Project

  The Wastewater Capital Project Fund ended the year with a negative fund balance. The negative balance was caused
  by funds being expended in one period and anticipated loan funds being received in later periods. The loan funds
  were not available for inclusion in the current year. The expenses were paid by advancing necessary funds from the
  Wastewater Fund. These negative balances will be covered with the receipt of anticipated loan funds. Management
  will review the undrawn loan proceeds and the current status of the project to prevent negative fund balances in the
  future.




64
     Town of Oak Island, North Carolina
     Notes to Financial Statements




     B. Fines not Remitted to Public Schools

Article IX Section 7 of the North Carolina Constitution requires that fines, penalties, and forfeitures be remitted to the
public schools. Fines collected for speeding within the Town limits were not transferred to the schools as required. This
occurred because staff did not understand what penalties and fines could be retained by the Town. The Town Attorney
and management will review current ordinances and provide staff training to ensure that these funds are handled properly
in the future.


Note 3. Petty Cash, Deposits and Investments
     Petty cash: At June 30, 2011, the Town had $985 of petty cash on hand to use for incidental expenditures and
     change funds. The ABC Board also had $1,500 in cash on hand.

     Deposits: All the deposits of the Town and the ABC Board are either insured or collateralized by using one of two
     methods. Under the Dedicated Method, all deposits that exceed the federal depository insurance coverage level are
     collateralized with securities held by the Town’s or the ABC Board’s agents in these units’ names. Under the Pooling
     Method, which is a collateral pool, all uninsured deposits are collateralized with securities held by the State
     Treasurer’s agent in the name of the State Treasurer. Since the State Treasurer is acting in a fiduciary capacity
     for the Town and the ABC Board, these deposits are considered to be held by the Town’s and the ABC Board’s
     agents in their names. The amount of the pledged collateral is based on an approved averaging method for
     noninterest bearing deposits and the actual current balance for interest-bearing deposits. Depositories using the
     Pooling Method report to the State Treasurer the adequacy of their pooled c ollateral covering uninsured
     deposits. The State Treasurer does not confirm this information with the Town, the ABC Board, or the escrow
     agent. Because of the inability to measure the exact amounts of collateral pledged for the Town or the ABC
     Board under the Pooling Method, the potential exists for under-collateralization, and this risk may increase in
     periods of high cash flows. However, the State Treasurer of North Carolina enforces strict standards of financial
     stability for each depository that collateralizes public deposits under the Pooling Method. The Town and the ABC
     Board have no policy regarding custodial credit risk for deposits, but rely on the State Treasurer to enforce
     standards of minimum capitalization for all pooling method financial institutions and to monitor them for compliance.
     The Town complies with the provisions of G.S. 159-31 when designating official depositories and verifying that
     deposits are properly secured.

     At June 30, 2011, the Town’s deposits had a carrying amount of $18,666, 690 and a bank balance of
     $18,778,752. The carrying amount of deposits of the ABC Board was $387,620 and the bank balance was
     $364,456. Deposits in the amount of $4,065,731 of the Town and $250,000 of the ABC Board were covered by
     federal depository insurance. The balances of the deposits $14,713,021 for the Town and $114,456 for the ABC
     Board were collateralized for institutions using the Pooling Method.

     Investments: At June 30, 2011, the Town had $6,868,167 invested in the North Carolina Capital
     Management Trust’s Cash Portfolio which carried a credit rating of AAAm by Standard and Poor’s. The Town has no
     formal policy regarding credit risk.




65
 Town of Oak Island, North Carolina
 Notes to Financial Statements




Note 4. Receivable - Allowances for Doubtful Accounts
     The amounts presented in the balance sheet and the statement of net assets is net of the following allowances for
     doubtful accounts:

  General Fund:
    Taxes receivable                                                                                      60,177
 Storm water fees receivable                                                                               1,831
                                                                                                          62,008
     Enterprise Funds:
       Water Fund                                                                                        195,936

      Wastewater Fund:
       Wastewater billing                                                                                 53,341
       Sewer district fees                                                                                10,476
       Sewer assessments                                                                               1,258,257

      Solid Waste Fund                                                                                    60,462
                                                                                                       1,578,472
                                                                                                      1 ,640.480




66
Town of Oak Island, North Carolina
Notes to Financial Statements


         Note 5. Capital Assets

         Primary government:            Capital asset activity for         the primary government for the year ended June 30, 2011 was as follows:

                                                                           6/30/10                                                                                  6/30/11
                                                                           Beginning                                                                                Ending
                                                                           Balances                   Increases                Decreases             Transfers     Balances
         Governmental Activities:
         Capital assets not being depreciated
          Land                                                                      9,499,923                                                                           9,499,923
          Contruction in progress                                                     329,721                                                        (79,721)             250,000
                       Total capital assets not being
                                depreciated                                         9,829,644            -                       -                   (79,721)           9,749,923

         Capital assets being depreciated
          Buildings                                                                16,920,225                  42,692                                                  16,962,917
          Motor vehicles                                                            1,653,788                 123,948                   70,139                          1,707,597
          Heavy motor vehicles                                                      2,463,536                                                                           2,463,536
          Equipment                                                                 1,282,685                 196,750                   72,200                          1,407,235
          Office Equipment                                                            167,086                   2,400                                                     169,486
          Other structures/improvements                                             2,646,687                 193,265                                7 9 , 7 2 1        2,919,673
          Computers/electrical equipment                                              889,338                  20,208                                                     909,546
          Infrastructure                                                            3,728,410                                                                           3,728,410
            Total capital assets being depreciated                                 29,751,755          5 7 9 , 2 6 3                  142,339        7 9 , 7 2 1       30,268,400

         Less accumulated depreciation for:
          Buildings                                                               1,167,421                   427,504                                                   1,594,925
          Motor vehicles                                                          1,319,298                   149,698                   70,139                          1,398,857
          Heavy motor vehicles                                                    1,602,000                   124,131                                                   1,726,131
          Equipment                                                                 886,994             7 9 , 5 7 8                     72,200                            894,372
          Office Equipment                                                    3 6 , 9 3 9                      17,477                                                      54,416
          Other structures/improvements                                      6 3 7 , 6 8 7                    158,992                                                     796,679
          Computers/electrical equipment                                     4 7 1 , 1 2 7                    117,992                                                     589,119
          Infrastructure                                                     2 0 9 , 1 4 8                    124,280                                                     333,428
            Total accumulated depreciation                                  6,330,614                       1,199,652                 142,339         -                 7,387,927
              Total capital assets being
                        depreciated, net                                           23,421,141                (620,389)           -                   7 9 , 7 2 1       22,880,473
         Governmental activity capital assets, net                                 33,250,785                (620,389)           -                    -                32,630,396


         Depreciation expense was charged to functions of the primary government as follows:

         General Government                                                            228,600
         Public Safety                                                                 572,690
         Transportation                                                                152,718
         Environmental protection                                                       12,580
         Cultural and recreational                                                     233,064

              Total depreciation expense                                             1,199,652




    67
Town of Oak Island, North Carolina
Notes to Financial Statements



         Note 5. Capital Assets (continued)

                                                         6/30/10                                                                         6/30/11
                                                         Beginning                                                                       Ending
                                                         Balances             Increases              Decreases      Transfers           Balances

         Business type activities:
         Water Fund
         Capital assets not being depreciated
            Land                                                135,068                                                                       135,068

         Capital assets being depreciated
          Buildings                                              121,451                    5,565                                              127,016
          Motor vehicles                                         339,009                                                                       339,009
          Equipment                                              360,355                    5,389                                              365,744
          Computer and electric equipment                         93,727                                                                        93,727
          Utility systems I                                    1,973,904                   54,232                                            2,028,136
          Utility systems III                                  3,870,546                                                                     3,870,546
                Total capital assets being depreciated         6,758,992   65,186                           -        -                       6,824,178

         Less accumulated depreciation for:
          Buildings                                               62,830                    2,941                                               65,771
          Motor vehicles                                         249,786                   34,304                                              284,090
          Equipment                                              190,063                   27,416                                              217,479
          Computer and electric equipment                         49,702                    9,509                                               59,211
          Utility systems I                                      907,588                   48,943                                              956,531
          Utility systems II                                   2,002,262                   64,735                                            2,066,997
            Total accumulated depreciation                     3,462,231   187,848                          -        -                       3,650,079
              Total capital assets being
                        depreciated, net                       3,296,761   (122,662)                        -        -                       3,174,099
         Water fund capital assets, net                        3,431,829   (122,662)                        -        -                       3,309,167

         Wastewater Fund
         Capital assets not being depreciated
          Land                                                 3,147,739                                                                     3,147,739
          Future Treatment rights                                285,397                                                                       285,397
          Construction in progress                            60,278,459                 9,112,828                       (69,391,287)              -
          Total capital assets not being depreciated          63,711,595   9,112,828                        -            (69,391,287)        3,433,136

         Capital assets being depreciated:
          Buildings                                            5,130,131                                         8,135,883                  13,266,014
          Motor vehicles                                         153,278                                                                       153,278
          Heavy vehicles                                         180,711                                                                       180,711
          Equipment                                            3,081,330                   59,230                          4,073,247         7,213,807
          Utility systems I                                       27,067                                                                        27,067
          Utility systems II                                  35,858,135                   77,523                    46,530,524             82,466,182
          Intangible assets                                                                                          10,651,633             10,651,633
                Total capital assets being depreciated        44,430,652   136,753                          -    69,391,287                113,958,692

         Less accumulated depreciation for:
          Buildings                                        2 7 , 3 1 5                    145,203                                              172,518
          Motor vehicles                                   9 4 , 0 9 3                     27,055                                              121,148
          Heavy vehicles                                         137,039                   18,071                                              155,110
          Equipment                                       2 7 7 ,7 7 4                    327,838                                              605,612
          Utility systems I                                        7,641                      677                                                8,318
          Utility systems II                                   1,412,415                  780,445                                            2,192,860
          Intangible assets                                                                29,588                                               29,588
            Total accumulated depreciation               1,956,277         1,328,877                        -        -                       3,285,154
              Total capital assets being
                        depreciated, net                     42,474,375    (1,192,124)                      -    69,391,287                110,673,538
         Wastewater fund capital assets, net                106,185,970    7,920,704                        -       -                      114,106,674




    68
Town of Oak Island, North Carolina
Notes to Financial Statements



       Note 5. Capital Assets (continued)

                                                                               6/30/10                                                                   6/30/11
                                                                              Beginning                                                                 Ending
                                                                              Balances                   Increases              Decreases   Transfers   Balances

                      Solid Waste Fund
              Capital assets being depreciated
         Buildings                                                                      5,304                                                                    5,304
         Motor vehicles                                                                53,350                                                                   53,350
         Heavy vehicles                                                               688,417                                                                  688,417
             Total capital assets being depreciated                                   747,071       -                                 -                        747,071

       Less accumulated depreciation for:
         Buildings                                                                      1,338                            132                                     1,470
         Motor vehicles                                                                53,350                                                                   53,350
         Heavy vehicles                                                               396,559                         47,232                                   443,791
           Total accumulated depreciation                                             451,247       47,364                            -                        498,611
           Total capital assets being
                     depreciated, net                                                 295,824                        (47,364)                                  248,460
       Sold Waste fund capital assets, net                                            295,824       (47,364)                          -            -           248,460

       South Harbor Golf Course Fund
       Capital assets not being depreciated
        Land                                                                        1,401,795                                                                1,401,795
        Total capital assets not being depreciated                                  1,401,795       -                                 -                      1,401,795

       Capital assets being depreciated
        Buildings                                                                      98,205                                                                   98,205
        Equipment                                                                      73,471                                                                   73,471
        Infrastructure                                                                     -                                                                       -
             Total capital assets being depreciated                                   171,676       -                                 -            -           171,676

       Less accumulated depreciation for:
         Buildings                                                              6 , 1 3 8                              2,455                                        8,593
         Equipment                                                                   26,971                            7,347                                       34,318
          Total accumulated depreciation                                             33,109         9,802                             -            -               42,911
           Total capital assets being
                     depreciated, net                                                 138,567       (9,802)                           -            -           128,765
       SHGC fund capital assets, net                                                1,540,362       (9,802)                           -            -         1,530,560



             Business-type activities capita l assets, net                       111,453,985        7,740,876                         -            -       119,194,861


       Depreciation expense was charged to proprietary functions of the primary government as follows:

       Water Fund                                                                     187,848
       Wastewater Fund                                                              1,328,872
       Solid Waste Fund                                                                47,364
       South Harbour Golf Course Fund                                                   9,802
             Total depreciation expense                                            1 ,573,886




                                                                                                                                                                            69
     Town of Oak Island, North Carolina
     Notes to Financial Statements


     Note 5. Capital Assets (continued)

     At June 30, 2011 all construction projects are “substantially complete”. However, the Town is withholding final
     payments on three projects until Town officials and the contractors can complete a final inspection and agree that all
     work has been completed to satisfy the terms of the contract. The withheld balances are as follows:

                                                                                                 Remaining
     Project                                                                                     Retainage
     Town Hall Replacement Capital Project                                                           25,000
     Police Headquaters Capital Project                                                              76,506
     Wastewater Capital Project                                                                   1,677,610
                                                                                                     1,779,116



     Discretely presented component unit

     Activity for the ABC Board for the year ended June 30, 2011 was as follows:



                                                                    Beginning                                   Ending
                                                                      Balances       Increases    Decreases      Balances
     Capital assets not being depreciated
      Land                                                           101,178       ______        ______          101,178
     Capital assets being depreciated
     Buildings                                                       330,523                                     330,523
     Furniture and equipment                                          90,029     2,341                            92,370
     Paving                                                           15,000       _____         ______           15,000
     Total capital assets being depreciated                          435,552     2,341                           437,893

     Less accumulated depreciation for:
      Buildings                                                    75,052         8,263                        83,315
      Furniture and equipment                                      62,208         7,902                        70,110
      Paving                                                        9,083         1,000                        10,083
      Total accumulated depreciation                              146,343        17,165                       163,508
      Total capital assets being depreciated, net                 289,209                                     274,385
     ABC Board capital assets, net                                390,387                                     375,563




70                          The accompanying notes are an integral part of the financial statements.
 Town of Oak Island, North Carolina
 Notes to Financial Statements




     Note 6. Pension Plan Obligations


       Local Governmental Employees’ Retirement System

       Plan description: The Town of Oak Island and the ABC Board contribute to the statewide Local Governmental
       Employees’ Retirement System (“LGERS”), a cost-sharing multiple-employer defined benefit pension plan
       administered by the State of North Carolina. LGERS provides retirement and disability benefits to plan members and
       beneficiaries. Article 3 of G.S. Chapter 128 assigns the authority to establish and amend benefit provisions to the
       North Carolina General Assembly. The Local Governmental Employees’ Retirement System is included in the
       Comprehensive Annual Financial Report (“CAFR”) for the State of North Carolina. The State’s CAFR includes
       financial statements and required supplementary information for LGERS. That report may be obtained by writing
       to the Office of the State Controller, 1410 Mail Service Center, Raleigh, North Carolina 27699-1410, or by calling
       (919) 981-5454.

       Funding policy: Plan members are required to contribute six percent of their annual covered salary. The Town
       and the ABC Board are required to contribute at an actuarially determined rate. F or the Town, the current rate
       for employees not engaged in law enforcement and for law enforcement officers is 6.35% and 6.27%, respectively,
       of annual covered payroll. For the ABC Board, the current rate for employees not engaged in law enforcement is
       6.35% of annual covered payroll. The contribution requirements of members and of the Town of Oak Island and
       the ABC Board are established and may be amended by the North Carolina General Assembly. The Town’s
       contributions to the LGERS for the years ended June 30, 2011, 2010 and 2009 were $390,440, $292,344, and
       $272,229, respectively. The ABC Board’s contributions to LGERS for the years ended June 30, 2011, 2010 and
       2009 were $9,594, $6,689 and $6,304, respectively. The contributions made by the Town and the ABC Board
       equaled the required contribution for each year.

       Law Enforcement Officers’ Special Separation Allowance

       1.    Plan Description

       The Town of Oak Island administers a public employee retirement system (the “Separation Allowance”), a
       single-employer defined benefit pension plan that provides retirement benefits to the Town’s qualified sworn law
       enforcement officers. The Separation Allowance is equal to .85 percent of the annual equivalent of the base rate of
       compensation most recently applicable to the officer for each year of creditable service. The retirement benefits are
       not subject to any increases in salary or retirement allowances that may be authorized by the General
       Assembly. Article 12D of G.S. Chapter 143 assigns the authority to establish and amend benefit provisions to the
       North Carolina General Assembly.
            All full-time law enforcement officers of the Town are covered by the separation allowance. At
            December 31, 2010, the Separation Allowance’s membership consisted of:

                      Retirees receiving benefits                                                            4
                      Terminated plan members entitled to but not yet
                          Receiving benefits                                                              0
                      Active plan members                                                                25

                          Total                                                                          29
     64
71                     The accompanying notes are an integral part of the financial statements.
Town of Oak Island, North Carolina
Notes to Financial Statements




Note 6. Pension Plan Obligations (Continued)

Law Enforcement Officers’ Special Separation Allowance (Continued)

      A separate report was not issued for the plan.


2. Summary of Significant Accounting Policies

Basis of accounting - The Town has chosen to fund the Separation Allowance on a pay-as-you-go basis. Pension
expenditures are made from the General Fund, which is maintained on the modified accrual basis of accounting.

Method used to value investments - No funds are set aside to pay benefits and administration costs. These
expenditures are paid as they come due.

3. Contributions
The Town is required by Article 12D of G.S. Chapter 143 to provide these retirement benefits and has chosen to
fund the benefit payments on a pay-as-you-go basis through appropriations made in the General Fund operating
budget. The Town’s obligation to contribute to this plan is established and may be amended by the North Carolina
General Assembly. There were no contributions made by employees.

The annual required contribution for the current year was determined as part of the December 31, 2010 actuarial
valuation using the projected unit credit actuarial cost method. The actuarial assumptions included (a) 5.00%
investment rate of return (net of administrative expenses) and (b) projected salary increases of 4.25% - 7.85% per
year. Both (a) and (b) included an inflation component of 3.00%. The assumptions did not include post-employment
benefit increases.

Annual pension cost and net pension obligation. The Town’s annual pension cost and net pension obligation to
the Separation Allowance for the current year were as follows:
Annual required contribution                                                                                     45,841
Interest on net pension obligation                                                                                 (813)
Adjustment to annual required contribution                                                                          808
Annual pension cost                                                                                              45,836
Contributions made                                                                                               45,836
Increase (decrease) in net pension obligation                                                                             0
Net pension obligation beginning of year                                                                                  0
Net pension obligation end of year                                                                                        0


                                                3 Year Trend Information
Year Ended                                                Annual Pension       Percentage of     Net Pension
June 30                                                     Cost APC           APC Contributed   Obligation

                 2009                                                      37,990            154.71%           (11,488)
                 2010                                                      63,399             81.88%                  0
                 2011                                                      45,836            100.00%                  0
Town of Oak Island, North Carolina
Notes to Financial Statements




Note 6. Pension Plan Obligations (Continued)

4. Funded Status and Funding Progress
As of December 31, 2010, the most recent actuarial valuation date, the plan was not funded. The actuarial accrued liability
for benefits and the unfunded actuarial accrued liability (UAAL) was $414,197. The covered payroll (annual payroll of
active employees covered by the plan) was $1,139,599 and the ratio of the UAAL to the covered payroll was 36.35
percent.
The schedule of funding progress, presented as required supplementary information following the notes to the financial
statements, presents multiyear trend information about whether the actuarial value of plan assets are increasing or
decreasing over time relative to the actuarial accrued liability for benefits.


Supplemental Retirement Income Plan
Plan description: The Town contributes to the Supplemental Retirement Income Plan (Plan), a defined contribution
pension plan administered by the Department of State Treasurer and a Board of Trustees. The Plan provides
retirement benefits to law enforcement officers employed by the Town. Article 5 of G.S. Chapter 135 assigns the
authority to establish and amend benefit provisions to the North Carolina General Assembly. The Supplemental
Retirement Income Plan for Law Enforcement Officers is included in the Comprehensive Annual Financial Report
(CAFR) for the State of North Carolina. The State’s CAFR includes the pension trust fund financial statements for the
Internal Revenue Code Section 401(k) plan that includes the Supplemental Retirement Income Plan for Law
Enforcement Officers. That report may be obtained by writing to the Office of the State Controller, 1410 Mail
Service Center, Raleigh, North Carolina 27699-1410, or by calling (919) 981-5454.
Funding policy: Article 12E of G.S. Chapter 143 requires the Town to contribute each month an amount equal to five percent
of each officer’s salary, and all amounts contributed are vested immediately. Also, the law enforcement officers may
make voluntary contributions to the Plan. In addition, the Town has elected to contribute four percent for all
employees not engaged in law enforcement to the Supplemental Retirement Income Plan. Total contributions
for the year ended June 30, 2011 were $369,651, which consisted of $258,343 from the Town and $111,308 from
the employees.
Firemen’s and Rescue Squad Workers’ Pension Fund

Plan description: The State of North Carolina contributes, on behalf of the Town of Oak Island, to the Firemen’s and
Rescue Squad Workers’ Pension Fund, a cost-sharing multiple-employer defined benefit pension plan with a special funding
situation administered by the State of North Carolina. The fund provides pension benefits for eligible fire and rescue
squad workers that have elected to become members of the fund. Article 86 of G.S. Chapter 58 assigns the authority
to establish and amend benefit provisions to the North Carolina General Assembly. The Firemen’s and Rescue
Squad Workers’ Pension Fund is included in the Comprehensive Annual Financial Report (CAFR) for the State of
North Carolina. The State’s CAFR includes financial statements and required supplementary information for the
Firemen’s and Rescue Squad Worker’s Pension Fund. That report may be obtained by writing to the Office of the
State Controller, 1410 Mail Service Center, Raleigh, North Carolina 27699 -1410, or by calling (919) 981-5454.
Funding policy: The Town contributes $10 per month to the Fund for members. The State, a nonemployer
contributor, funds the plan through appropriations. Contribution requirements of plan members and the State of
North Carolina are established and may be amended by the North Carolina General Assembly.



73
Town of Oak Island, North Carolina
Notes to Financial Statements




Note 7. Other Employment and Post-Employment Benefits

Healthcare Benefits
Plan Description. Under the terms of a Town resolution, the Town administers a single-employer defined benefit
Healthcare Benefits Plan (the HCB Plan). The HCB Plan provides postretirement health and dental care benefits to
retirees of the Town who meet the following requirements:

(1)     An employee who has a minimum of fifteen years in the North Carolina Local Governmental Employees
        Retirement System (“NCLGERS”), and a minimum of five years service to the Town, and are fifty-five years
        of age or older may continue health insurance with the Town until age sixty-five. The retiree shall share the
        cost of coverage at the rate of 5% for every year of service to the NCLGERS below twenty-five years.
        Medicare supplemental insurance shall be offered to retirees sixty-five or older who meet the above criteria
        with all costs being borne by the retiree. Continuation of coverage for the retiree’s spouse or family may be
        allowed until the retiree reaches age sixty-five, provided all costs are borne by the retiree.

(2)     An employee retiring from the Town of Oak Island who has a minimum of twenty -five years in the
        NCLGERS, a minimum five years service with the Town and who is fifty years of age or older, may continue
        health insurance coverage with the Town until age sixty-five at no cost to the retiree. Medicare
        supplemental insurance shall be offered to retirees sixty-five or older who meet the above criteria with all
        costs being borne by the retiree. Continuation of coverage for the retiree’s spouse or family shall be
        available until the retiree reaches age sixty-five, provided all costs are borne by the retiree.

(3) An employee retiring from the Town of Oak Island who has five continuous years of service with the
       Town, and thirty continuous years of service to the NCLGERS, regardless of age, may continue health
       insurance coverage with the Town until age sixty-five at no cost to the retiree. Medicare supplemental
       insurance shall be available for retirees who meet these criteria and are sixty-five or older with all costs being
       borne by the retiree. Continuation of coverage for the retiree’s spouse or family may be allowed until the
       retiree reaches age sixty-five, provided all costs are borne by the retiree.

Under either of the above, service with the Town of Long Beach or Town of Yaupon Beach will qualify as service to
the Town of Oak Island. The Town Council may amend the benefit provisions. A separate report was not issued for
the plan.

Membership in the HCB Plan consisted of the following at December 31, 2008, the date of the latest actuarial
valuation:

        Law enforcement officers                                                    25
        General Employees                                                          116
        Retirees                                                                    10

        Total                                                                     151




74
Town of Oak Island, North Carolina
Notes to Financial Statements




 Note 7. Other Employment and Post-Employment Benefits (Continued)

 Funding Policy. The Town has chosen to fund the healthcare benefits on a pay as you go basis. The current annual
 required contribution (ARC) is 3.26% of annual covered payroll. For the current year, the Town contributed $57,357
 or 1.03% of annual covered payroll. The Town obtains healthcare coverage through private insurers. Four retired
 employees contributed a portion of the cost of their insurance totaling $4,305. The Town’s obligation to contribute to
 the HCB Plan is established and may be amended by the Town Council.

 Summary of Significant Accounting Policies. Postemployment expenditures are made from the fund from which the
 retiree was employed. Currently all retirees are from the General Fund, which is maintained on the modified accrual
 basis of accounting. No funds are set aside to pay benefits and administration costs. These expenditures are paid
 as they come due.

 Annual OPEB Cost and Net OPEB Obligation. The Town’s annual OPEB Cost (expense) is calculated based on the
 annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the
 parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis is
 projected to cover normal costs each year and amortize any unfunded actuarial liabilities (or funding excess) over a
 period not to exceed thirty years. The following table shows the components of the Town’s annual OPEB cost for the
 year, the amount actually contributed to the plan, and changes in the Town’s net OPEB obligation for the healthcare
 benefits:
 Annual require contribution                                                               180,954
 Interest on net OPEB obligation                                                              3,846
 Adjustment to annual required contribution                                                 (3,318)
 Annual OPEB cost                                                                          181,482
 Contributions made                                                                        (57,357)
 Increase (decrease) in net OPEB obligation                                                124,125
 Net OPEB obligation, beginning of year                                                      96,150
 Net OPEB obligation, end of year                                                          220,275

 The Town’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB
 obligation as of June 30, 2011 were as follows:
    For Year Ended                  Annual            % of Annual OPEB                    Net OPEB
     June 30                      OPEB Cost           Cost Contributed                    Obligation

         2010                        180,954                 46.9%                          96,150
         2011                        181,482                 31.6%                         220,275




                                                                                                                          75
Town of Oak Island, North Carolina
Notes to Financial Statements




Note 7. Other Employment and Post-Employment Benefits (Continued)

Funding Status and Funding Progress. As of December 31, 2008, the most recent actuarial valuation date, the plan
was not funded. The actuarial accrued liability for benefits and, thus, the unfunded actuarial accrued liability was
$1,813,586. The covered payroll (annual payroll of active employees covered by the plan) was $5,555,994, and the
ratio of the UAAL to the covered payroll was 32.6 percent. Actuarial valuations of an ongoing plan involve estimates
of the value of reported amounts and assumptions about the probability of occurrence of events far into the future.
Examples include assumptions about future employment, mortality, and healthcare trends. Amounts determined
regarding the funded status of the plan and the annual required contributions of the employer are subject to continual
revision as actual results are compared with past expectations and new estimates are made about the future. The
schedule of funding progress, presented as required supplementary information following the notes to the financial
statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or
decreasing over time relative to the actuarial accrued liabilities for benefits.

Actuarial Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the
substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits
provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and
plan members at that point. The actuarial methods and assumptions used include techniques that are designed to
reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent
with the long-term perspective of the calculations.

In the December 31, 2008 actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial
assumptions included a 4.0 percent investment rate of return ( net of administrative expenses), which is the expected
long-term investment returns on the employer’s own investments calculated based on the funded level of the plan at
the valuation date, and an annual medical cost trend increase of 10.50 to 5.00 percent annually. The investment rate
included a 3.75 percent inflation assumption. The assumed investment rate of return reflects that no assets are set
aside within the Town that is legally held exclusively for retiree health benefits. The UAAL is being amortized as a
level percentage of projected payroll on an open basis. The remaining amortization period at December 31, 2008,
was 30 years.

Other Employment Benefits
The Town has elected to provide death benefits to employees through the Death Benefit Plan for members of the
Local Governmental Employees’ Retirement System (Death Benefit Plan), a multiple -employer,
State-administered, cost-sharing plan funded on a one-year term cost basis. The beneficiaries of those employees who
die in active service after one year of contributing membership in the System, or who die within 180 days after
retirement or termination of service and have at least one year of contributing membership service in the System at the
time of death are eligible for death benefits. Lump-sum death benefit payments to beneficiaries are equal to the
employee’s 12 highest month’s salary in a row during the 24 months prior to the employee’s death, but the benefit may
not exceed $50,000 or be less than $25,000. All death benefit payments are made from the Death Benefit Plan. The
Town has no liability beyond the payment of monthly contributions. Contributions are determined as a percentage of
monthly payrolls, based upon rates established annually by the State. Separate rates are set for employees not
engaged in law enforcement and for law enforcement officers. Because the benefit payments are made by the Death
Benefit Plan and not by the Town, the Town does not determine the number of eligible participants. For the fiscal
year ended June 30, 2011, the Town made contributions to the State for death benefits of $6,137. The Town’s
required contributions for employees not engaged in law enforcement and for law enforcement officers represented
.09% and .14% of covered payroll, respectively. The contributions to the Death Benefit Plan cannot be separated
between the post-employment benefit amount and the other benefit amount.

76
Town of Oak Island, North Carolina
Notes to Financial Statements




Note 8. Deferred Revenue/Unearned Revenue

The balance in deferred/unearned revenue at year-end is composed of the following elements:

                                                                                      Deferred             Unearned
                                                                                      Revenue              Revenue
     General Fund:
      Prepaid taxes                                                                                              1,695
      Prepaid privilege licenses                                                                                 9,890
      Taxes receivable                                                                 545,616
      Privilege licenses receivable                                                     30,565
     Assessments receivable                                                             29,443                       -
                                                                                       605,624                  11,585
     Nonmajor governmental funds:
      Assessment receivable                                                              6,427
                                                                                       612,051                  11,585
     Proprietary Funds:
     Wastewater Fund
       Prepaid assessment                                                                                       41,208
                 Nonmajor proprietary funds
                   Unredeemed gift cards                                                                           317
                                                                                                 0              41,525


Note 9. Risk Management

The Town is exposed to various risks of loss related to torts; theft of, damage to , and destruction of assets; errors
and omissions; injuries to employees; and natural disasters. The Town participates in two self-funded risk-financing
pools administered by the North Carolina League of Municipalities. Through these pools, the Town obtains general
liability, auto liability coverage of $2 million per occurrence, property coverage up to the total insurance values of the
property policy, workers’ compensation coverage up to the statutory limits. The pools are reinsured through commercial
companies for single occurrence claims against general liability, auto liability and property liability in excess of $500,000
and $300,000 statutory limits for workers’ compensation. The property liability pool has an aggregate limit of the total
property losses in a single year, with the reinsurance limit based upon a percentage of the total insurance values.

The Town provides health, dental, vision and life insurance through a commercial vendor. Employee health claims are
insured to a $5 million dollar lifetime limit. Employees can provide dependent coverage if desired.


The Town carries commercial coverage for all other risks of loss. There have been no significant reductions in insurance
coverage in the prior year, and settled claims have not exceeded coverage in any of the past three fiscal years.

The Town carries flood insurance through the National Flood Insurance Program (“NFIP”) for three buildings. All
three buildings were required to obtain flood insurance as part of their installment purchase agreement. The Town
does not feel that additional flood insurance is necessary because the danger of flooding as defined by the insurance
companies is low.


77
Town of Oak Island, North Carolina
Notes to Financial Statements




 Note 9. Risk Management (Continued)

 In accordance with G.S.159-29 the Town’s employees that have access to $100 or more at any given time of the
 Town’s funds are performance bonded through a commercial surety bond. The finance officer and tax collector are
 each individually bonded for $100,000 and $50,000, respectively. The remaining employees that have access to
 funds are bonded under a blanket bond for $50,000.

 The Town of Oak Island ABC Board is exposed to various risks of loss related to torts; theft of, damage to, and
 destruction of assets; errors and omissions; and natural disasters. The ABC Board has prop erty, general liability,
 auto liability, workers’ compensation, and employee health coverage. The ABC Board also has liquor legal liability
 coverage. There have been no significant reductions in insurance coverage in the past year, and settled claims have
 not exceeded coverage in any of the past three fiscal years.

 Note 10. Claims, Judgments and Contingent Liabilities

     At June 30, 2011, the Town was a defendant to various claims and lawsuits. In the opinion of the Town’s
     management and the Town Attorney, only the following items have more than a remote chance of having a
     material adverse effect on the Town’s financial position:

     Barris v. Town of Oak Island. This is a pending claim asserted by residents of the Town and arises out of the
     Town’s installation of improvements on a public street end. It was filed in August 2011 and is not yet set for trial.
     The improvements consist of on street parking and storm water management. The Plaintiffs claim that the Town’s
     actions constitute an inverse condemnation in that the improvements interfere with the Plaintiffs means of ingress
     to their property. In the opinion of the Town’s management and the Town attorney, the ultimate effect of this legal
     matter will not have a material adverse effect on the Town’s financial position.

     Carmichael Construction Company (“Carmichael”) v. Town of Oak Island. This is a claim asserted by one of the
     contractors responsible for installation of the waste water system against the Town. Carmichael alleges it is owed
     approximately $3 million for work it performed, but has yet to be paid. Carmichael’s claims are by and large
     predicated on alleged errors and omissions in the design of the system. The Town contracted with the engineering
     firm of Black and Veatch Corporation to design the system, and they have also been sued by Carmichael in this
     lawsuit. At this time the parties are engaged in written discovery that will assist in determining the Town’s potential
     liability. It is the opinion of the Town Attorney that any estimation of liability at this time would be premature.

     Construction Systems, Inc. (“CSI”) v. Town of Oak Island. This is a pending claim asserted by the General
     Contractor for the storm water system for the Town Hall / Police Department complex. CSI contends that it is
     owed $427,408 for work performed as a result of modifications to the original design of the storm water system.
     This claim is subject to mandatory arbitration; however, a demand for arbitration has not been made. The Town
     has denied this claim on the advice of the Town’s architect. It is the opinion of the Town Attorney that the upper
     limits of the Town’s exposure would be $250,000.
     In the government-wide financial statements the Town has recorded a liability of $250,000 in the Governmental
     Activities for the CSI claim.




78
Town of Oak Island, North Carolina
Notes to Financial Statements




 Note 11. Long-Term Obligations

 Capital leases: The Town has entered into agreements to lease certain equipment. The lease agreements qualify
 as capital leases for accounting purposes and, therefore, have been recorded at the present value of the
 future minimum lease payments as of the date of their inception. In all agreements, title passes to the Town at
 the end of the lease term. The provisions of the capital leases are summarized below:
      Date of                                                         Total of   Payment        Remaining     Frequency
      Lease        Fund                  Property Leased              Lease      Amount         Payments      of Payment
  3/25/2005     General Fund   2005 Emergency One Pumper Fire Truck   272,000        32,525          4             Annual
  6/22/2009     General Fund     2008 Rosenburgh Fire Truck           675,000        84,186          9             Annual
  8/15/2008     General Fund     Town Hall Telephone System            80,000        17,950          3             Annual
  9/28/2010     General Fund      Caterpillar Motor Grader             88,000        18,491          4             Annual



 The following is an analysis of the assets recorded under capital leases at June 30, 2011:
                                                                                Accumulated          Net Book
      Fund                   Class of Property                   Cost            Depreciation         Value

  General Fund             Computers/Electrical Equip             76,351            47,083                29,268
  General Fund             Equipment                             118,000             9,833               108,167
  General Fund             Heavy motor vehicles                  970,034           309,510               660,524
                                                               1,164,385           366,426               797,959

 The future minimum lease obligations and the net present value of these minimum lease payments
 as of June 30, 2011 were as follows:
 Year Ending June 30                                                                 Governmental Activities
 2012                                                                                           153,152
 2013                                                                                           153,152
 2014                                                                                           153,152
 2015                                                                                           135,203
 2016                                                                                             84,187
 2017 – 2021                                                                                    336,746
 Total minimum lease payments                                                                 1,015,592
 Less: amount representing interest                                                             169,366
 Present value of the minimum lease payments                                                    846,226




 79
Town of Oak Island, North Carolina
Notes to Financial Statements




     Note 11. Long-Term Obligations (Continued)

     Installment purchases: The Town has entered into various installment purchase contracts to finance the
     acquisition and renovation of various land and facilities. These installment purchase contracts are outlined as
     follows:

      General Fund

      Installment purchase contract for land near Middleton Park from BB&T dated May 15, 2008, due in annual
      installments of $247,892 with the exception of the first installment of $280,562, including interest of 3.46%
      through July 2011.

      Installment purchase for construction of police headquarters from BB&T dated May 15, 2008, due in annual
      principal installments of $266,667 plus interest of 3.89% through July 2021.

      Installment purchase for construction of fire stations at Yaupon Beach and South Harbour from BB&T
      dated May 15, 2008 due in annual principal installments of $408,643 plus interest of 3.93% through July
      2022.

      Installment purchase contract for additional financing for construction of police headquarters from BB&T
      dated August 14, 2008, due in annual principal installments of $127,940 plus interest of 4.44% through
      August 2021.

      Installment purchase contract for Yaupon Pier purchase and repair from BB&T dated June 17, 2009, due
      in annual principal installments of $90,000 plus interest of 4.39% through June 2019.

      Installment purchase contract for construction of town hall from BB&T dated May 13, 2009, due in annual
      principal installments of $326,667 plus interest of 4.59% through July 2024.

      Wastewater Fund
      Installment purchase contract for land purchase for future sewer expansion from BB&T dated May 30, 2002,
      due in annual installments of $114,597 including interest of 4.87% through May 2017.


      The future minimum payments of the installment purchases as of June 30, 2011, including $4,140,601
      of interest are as follows:
                                                              Governmental                     Business-Type
                                                                 Activities                        Activities
      Year Ending June 30                                 Principal         Interest        Principal      Interest

                                                                                             86,152        28,445
      2012                                                1,459,519          619,123
                                                                                             90,348        24,249
      2013                                                1,219,916          559,774
                                                                                             94,748        19,849
      2014                                                1,219,916          508,715         99,362        15,235
      2015                                                1,219,916          457,657         104,201       10,396
      2016                                                1,219,916          406,598         109,275        5,322
      2017 – 2021                                         5,829,580        1,271,065         -
      2022 – 2025                                         2,608,555          214,173         584,086     103,496
      Total                                              14,777,318        4,037,105
80
Town of Oak Island, North Carolina
Notes to Financial Statements




  Note 11. Long-Term Obligations (Continued)

  Revolving Loans

  In January 2008, the Town entered into a $9,000,000 revolving loan from the North Carolina Department of
  Environment and Natural Resources for a sanitary sewer project. The revolving loan requires bi -annual interest
  payments due on November 1 and May 1 and an annual principal payment due on May 1; interest is a 2.10%. As of
  June 30, 2011 the Town had drawn $7,035,139 of the $9,000,000.

  Additionally, in March 2009, the Town was approved for a second revolving loan from the North Carolina Department
  of Environment and Natural Resources in the amount of $8,500,000 for a sanitary sewer project. The revolving loan
  requires biannual interest payments due on November 1 and May 1 and an annual principal payment due on May 1;
  interest is at 2.48%. As of June 30, 2011 the Town had drawn $5,269,363 of the $8,500,000.

  Current annual debt service requirement to maturity for the revolving loans are as follows:

                                                                                        Business-Type Activities
  Year Ending June 30                                   Principal                                      Interest
  2012                                                                                     713,216    320,732
  2013                                                                                     719,743    310,139
  2014                                                                                     726,433    293,999
  2015                                                                                     733,286    277,694
  2016                                                                                     740,314    261,218
  2017-2021                                                                              3,813,206 1,052,707
  2022-2026                                                                              2,788,674    612,763
  Thereafter                                                                               881,165    155,729
                                                                                        11,116,037 3,284,981
  Revenue Debt

  On August 1, 1993, the Town of Yaupon Beach received a $3,159,476 loan from the North Carolina Water Pollution
  Revolving Fund. The Town of Oak Island assumed the balance of $2,369,607 owed on July 1, 1999. The proceeds
  of this debt were used to finance a wastewater treatment system. Solely the revenues produced by the wastewater
  treatment system collateralize this note. Principal payments are due annually on November 1 through November 1,
  2014 with semiannual interest payments due on May 1 and November 1 at an annual interest rate of 3.57%.

  Annual debt service requirements to maturity for revenue indebtedness in the Wastewater Fund are as follows:
                                                                                 Business-Type Activities
  Year Ending June 30                                                             Principal       Interest

  2012                                                                                157,974         16,919
  2013                                                                                157,974         11,279
  2014                                                                                157,973          5,640
                                                                                      473,921         33,838

  81
Town of Oak Island, North Carolina
Notes to Financial Statements




Note 11. Long-Term Obligations (Continued)
Revenue Bonds

$33,040,000 Wastewater revenue bonds, series 2008A, net of $561,329 issuance
premium, issued for wastewater system improvements. Principal installments are due
annually on June 1 with semiannual interest payments due on December 1 and June 1,
at an annual interest rate of 3.50% - 5.00%.                                                 32,061,376

$49,420,000 Wastewater revenue bonds, series 2009, net of $413,472 issuance
discount issued for wastewater system improvements. Principal installments are due
annually on June 1 with semiannual interest payments due on December 1 and June 1,
at an annual interest rate of 4.00% to 6.00%.
                                                                                            49,040,773

$10,670,000 Wastewater revenue bonds, series 2011, net of $77,888 issuance
discount issued for wastewater system improvements. Principal installments are due
annually on June 1 with semiannual interest payments due on December 1 and June 1,
at an annual interest rate of 2.25% to 5.75%.
                                                                                            10,593,388

                                                                                            91,695,537



Annual debt service requirements to maturity for the revenue bonds are as follows:


                                                                                Business-Type Activities
Year Ending June 30                              Principal                                       Interest

2012                                                                            1,032,190       4,699,406
2013                                                                            2,172,190       4,666,481
2014                                                                            2.262,190       4,583,506
2015                                                                            2,352,190       4,487,356
2016                                                                            2,447,190       4,393,881
2017 - 2021                                                                    13,880,949      20,333,775
2022 - 2026                                                                    17,510,949      16,697,000
Thereafter                                                                     50,037,689      16,125,764
                                                                               91,695,537      75,987,169




82
Town of Oak Island, North Carolina
Notes to Financial Statements




Note 11. Long-Term Obligations (Continued)

The Town has been in compliance with the covenants as to rates, fees, rentals and charges in Section 704 of the Bond
Order, authorizing the issuance of the Wastewater Revenue Bonds, Series 2008A, 2009 and 2011. Section 704(a) of
the Bond Order requires the sum of (i) Income available for debt service for such fiscal year and (ii) 15% of the balance
in the Revenue Fund as of the last day of the preceding fiscal year will not be less than the sum of (1) 120% of the
long-term debt service requirement for parity indebtedness for such fiscal year and (2) 100% of the long-term debt
service requirement for subordinated indebtedness, System G.O. indebtedness and System Other indebtedness for
such fiscal year. Section 704(b) requires Income available for debt service for such fiscal year will not be less than
100% of the long-term debt service requirement for parity indebtedness, subordinated indebtedness, System G.O.
indebtedness and System Other indebtedness for such fiscal year. The debt service coverage calculation for the year
ended June 30, 2011, is as follows:
     Operating and non operating revenues                                                           5,517,674
     Sewer district fee                                                                               443,102
     Sewer assessment revenue                                                                       6,000,000
     Total revenues*                                                                               11,960,776
     Current expenses**                                                                             6,446,729
     Income available for debt service                                                              5,514,047
     15% of the balance of the revenue fund                                                           343,458
     Total                                                                                          5,857,505

     100% of the long-term debt service requirement for parity indebtedness,
      subordinated indebtedness, system g.o. indebtedness and system
      other indebtedness for 2011                                                                   5,095,210
     Additional 20% of the long-term debt service requirement for parity
      indebtedness for 2011                                                                           747,130
     Total                                                                                          5,842,340
                                                                                                         1.00
     Coverage test 704(a)
     Coverage test 704(b)                                                                                 1.08

*In accordance with the Revenue Bond trust agreement assessment revenues shall be included in revenues if and to
the extent specified in the Officer’s Certificate filed in such fiscal year. In the current year $6 million in assessment
revenue was included.

**Per rate covenants, this does not include depreciation expense of $1,516,725.

The Town has pledged future water and wastewater customer revenues, net of specified current expenses, to repay
$91,695,537 in water and wastewater system revenue bonds issued in January 2008, March 2009 and January 2011.
Proceeds from the bonds provided financing for the extension to the wastewater system to the entire island. The
bonds are payable solely from water and wastewater income available for debt service and are payable through 2036.
The total principal and interest remaining to be paid on the bonds, net of the issuance premium, is $167,682,706.
Principal and interest paid for the current year was $5,121,040.


83
Town of Oak Island, North Carolina
Notes to Financial Statements


Note 11. Long-Term Obligations (Continued)


At June 30, 2011, the Town of Oak Island had a legal debt margin of $328,009,156.

Changes in long-term liabilities:

A summary of changes in long-term debt is as follows:
                                     Beginning                                           Ending          Current
Governmental Activities             Balance         Increases        Decreases         Balance        Portion

Installment Purchase                   16,506,893                      1,729,575       14,777,318          1,459,519
Ca p it a l i ze d                     957,441           88,000          199,215          846,226            117,041
l eas es Compensated                   367,362          223,040          211,570         378,832                189,416
absences                                69,200          154,383            57,357           166,226                  -
Other postemployment benefits                -           45,898              45,898              -                   -
Net pension obligation
                                    17,900,896          511,321        2,243,615       16,168,602          1,765,976



Business-type Activities                 666,237                          82,151          584,086                86,152
Installment purchases               10,766,911       1,087,291           738,165       11,116,037               713,216
State revolving loan                      631,895                        157,974         473,921                157,974
Revenue debt                        81,857,403      10,592,112           753,978       91,695,537          1,030,000
Revenue bonds                           26,950             27,099                           54,049                -
Other postemployment benefits           97,934           46,438            36,340        108,032                 54,016
Compensated absences
                                    94,047,330      11,752,940         1,768,608      104,031,662          2,041,358




Compensated absences for government activities have typically been liquidated in the General Fund.




84
Town of Oak Island, North Carolina
Notes to Financial Statements


                                                   Note 12. Interfund Balances and Activity
Transfers to/from other funds at June 30, 2011, consist of the following:
                                                                   Transfer to
                                                      Non-Major                                Non-Major
                                    General        Governmental      Water       Wastewater    Enterprise
Transfer from                            Fund          Funds         Fund          Fund          Funds            Totals


General Fund                                          2,140,764         11,516        3,545         5,316          2,161,141
Non-Major Governmental Funds             416,395                                                  140,418            556,813
Water Fund                                                                           100,000                            100,000
Wastewater Fund                     1,138,500                  -     1,310,000            -              -         2,448,500

                      Totals        1,554,895         2,140,764      1,321,516      103,545       145,734          5,266,454


Interfund transfers were made during the year to accumulate resources for funding of capital projects and to
supplement other funding sources in the Capital Projects, Special Revenue, Wastewater, Solid Waste and South
Harbour Golf Course funds.


Note 13. On-Behalf Payments for Fringe Benefits and Salaries
For the fiscal year ended June 30, 2011, the Town of Oak Island has recognized on-behalf payments for pension
contributions made by the state as a revenue and expenditure of $10,114 for the 11 volunteer firemen and the 20
employed firemen who perform firefighting duties for the Town’s fire department. The volunteers and employees
elected to be members of the Firemen and Rescue Worker’s Pension Fund, a cost sharing, multiple employer public
employee retirement system established and administered by the State of North Carolina. The plan is funded by a
$10 monthly contribution for each member, investment income and a State appropriation.


Note 14. Fund Balance

The following schedule provides management and citizens with information on the portion of General fund balance that
is available for appropriation:

     Total fund balance - General Fund                                                                      6,573,597
     Less:
     Inventories                                                                                               33,756
     Stabalization by State Statute                                                                         1,199,475
     Streets- Powell Bill                                                                                   1,858,841
     Appropriated Fund Balance in 2012 budget                                                                 388,199
     Capital Projects                                                                                         424,667
     Remaining Fund Balance                                                                                 2,668,659




85
Town of Oak Island, North Carolina
Notes to Financial Statements




Note 14. Fund Balance (Continued)

The outstanding encumbrances are amounts needed to pay any commitments related to purchase orders and
contracts that remain unperformed at year-end. At June 30, 2011 the General Fund had encumbrances totaling
$31,174 and the Non-Major Funds had none.

Note 15. Joint Ventures
The Town and the members of the Town’s fire department each appoint two members to the five-member local board of
trustees for the Firemen’s Relief Fund. The State Insurance Commissioner appoints one additional member to the local
board of trustees. The Firemen’s Relief Fund is funded by a portion of the fire and lightening insurance premiums
that insurers remit to the State. The State passes these moneys to the local board of the Firemen’s Relief Fund.
The funds are used to assist fire fighters in various ways. The Town obtains an ongoing financial benefit from the
Fund on-behalf of payments for salaries and fringe benefits made to members of the Town’s fire department by the board
of trustees. During the fiscal year ended June 30, 2011, the Town reported no revenues and expenditures for the payments
made through the Firemen’s Relief Fund. The participating governments do not have any equity interest in the joint
venture, so no equity has been reflected in the Town’s financial statements at June 30, 2011. The Firemen’s Relief
Fund does not issue separate audited financial statements. Instead, the local board of trustees files an annual
financial report with the State Firemen’s Association. This report can be obtained from the Association at 323 West
Jones Street, Suite 401, Raleigh, North Carolina 27603.

Note 16. Jointly Governed Organizations
Cape Fear Council of Governments: The Town, in conjunction with four counties and forty other municipalities
established the Cape Fear Council of Governments (“Council”). The participating governments established the
Council to coordinate various funding received from federal and State agencies. Each participating government
appoints one member to the Council’s governing board. The Town paid membership fees of $1,757 to the Council
during the fiscal year ended June 30, 2011. Complete financial information for the Council can be obtained from the
Council’s administrative offices at 1480 Harbour Drive, Wilmington, NC 28401.

Brunswick County Airport Commission: The Town in conjunction with Brunswick County and the City of Southport
established the Brunswick County Airport Commission. The purpose of the Commission is to acquire land, establish,
construct, own, control, lease, equip, improve, maintain, operate, and regulate airports or landing fields within the
County, to provide and maintain an airport facility for the use of the general aviation public and to promote the
economic development of Brunswick County. The Town of Oak Island appoints t wo members and the City of
Southport appoints one member to the Commission while Brunswick County appoints a total of four. The Town is not
obligated to furnish any funds to the Commission but in the past has made contributions. During the year ended
June 30, 2011, the Town contributed $7,500 to the Commission. The participating governments do not have any
equity interest in the Commission, so no equity interest has been reflected in the Town’s financial statements at
June 30, 2011. Complete financial information for the Airport Commission can be obtained at the airport’s
administrative offices at 380 Long Beach Road, Southport, NC 28461.

West Brunswick Regional Water Reclamation Facility

The Facility is owned, operated and maintained by Brunswick County. The Town of Oak Island, Town of Holden Beach,
Town of Shallotte and the County have entered into a wastewater service agreement for a portion of the treatment
capacity in the plant. Currently the Town of Oak Island is allocated treatment of three million gallons per day. Each
participant is charged capacity service fees based on their share of capacity in the plant. Participants are also charged
treatment service fees based on metered flow they send to the plant. The participant fees and the costs allocation to the
86
     Town of Oak Island, North Carolina
     Notes to Financial Statements


                                              County for their flow are combined so that the operating and maintenance
costs of the plant are recovered by county retail revenues and participant service fees on a proportional and breakeven
basis. Each participant has the ability to appoint one representative and one alternate to an Oversight Committee. This
committee makes budget and operating recommendations to the County Commissioners. During the year ended June
30, 2011, the Town of Oak Island recorded $3,248,450 in capacity fees and $124,849 in service fees to Brunswick
County.

Note 17. Summary Disclosure of Significant Contingencies

Federal and state assisted programs: The Town has received proceeds from several federal and State grants.
Periodic audits of these grants are required and certain costs may be questioned as not being appropriate
expenditures under the grant agreements. Such audits could result in the refund of grant moneys to the grantor
agencies. Management believes that any required refunds will be immaterial. No provision has been made in the
accompanying financial statements for the refund of grant moneys.

Note 18. Pollution Remediation Obligation

During construction of the new police headquarters building, groundwater contamination was discovered. The source
of this contamination was leakage from previously removed storage containers of petroleum products and pesticides.
This contamination was reported to the appropriate agencies and environmental engineers were hired to remove the
contamination. To date, the known contaminated area had been dewatered and the known contamination has been
removed. There is a possibility that an additional layer of soil will need to be added to areas around the contaminated
site, but in the opinion of the environmental engineers, minimal additional excavation is all this is anticipated. The work
in this area that remains to be done is monitoring of the area to ensure additional contamination is not present without
being detected.

During the year ended June 30, 2011, the Town expended $ 35,022 for removal of the contamination. These funds were
expended from the Police Headquarters and Town Hall Replacement Capital Project Funds. The amount estimated by
management and the environmental engineers to complete the cleanup is approximately $16,000. A liability for this
amount has been recorded in the Governmental Funds on the Statement of Net Assets, while the estimated expense to
complete the cleanup is recorded on the Statement of Activities. There will be no recovery of costs from insurance or
grants.




87
                   Required Supplemental Financial Data




88   The accompanying notes are an integral part of the financial statements.
                                            Town of Oak Island, North Carolina                                                      Exhibit A-4

                                          Required Supplementary Information
                     Law Enforcement Officer's Special Seperation Allowance- Schedule of Funding Progress
                                                        June 30, 2011


                                                                                                               Unfunded
                                                                                                               Actuarial
                                                     Actuarial                                                   Accrued
                                                     Accrued         Unfunded                                  Liability as a
                                Actuarial             Liability      Actuarial                                   Percent of
                                Value of         Projected Unit      Accrued      Funded          Covered        Covered
Actuarial Valuation Date       Assets                 Credit       Liability     Ratio           Payroll        Payroll
December 31:
1999                       $                                                     0.00                           22.10           %
                                   -        $          137,986 $      137,986              %$        624,267
2000                               -                  190,934        190,934     0.00              833,443      22.91
2001                               -                  212,480       212,480      0.00              848,902      25.03
2002                               -                  268,781       268,781      0.00              836,623      32.13
2003                               -                  278,926       278,926      0.00              792,942      35.18
2004                               -                  369,658       369,658      0.00              780,787      47.34
2005                               -                  322,470       322,470      0.00              918,365      35.11
2006                               -                  298,853       298,853      0.00              994,570      30.05
2007                               -                  391,206       391,206      0.00            1,011,832      38.66
2008                               -                  376,725       376,725      0.00            1,073,205      35.10
2009                               -                  439,890       439,890      0.00            1,129,298      38.95
2010                               -                  414,197       414,197      0.00            1,139,599      36.35




    89
                                       Town of Oak Island, North Carolina                                            Exhibit A-4

                                       Required Supplementary Information
                   Law Enforcement Officer's Special Seperation Allowance- Schedule of Employer Contributions
                                                         June 30, 2011




Year Ended June 30,                                             Annual Required Contribution                 Percent Contributed

2001                                                                                  18,634                                  68.90
2002                                                                                  22,755                                  73.07
2003                                                                                  24,648                                  67.47
2004                                                                                  29,916                                  55.59
2005                                                                                  34,761                                 146.19
2006                                                                                  32,482                                 156.44
2007                                                                                  31,352                                 182.58
2008                                                                                  37,884                                 159.25
2009                                                                                  37,997                                 154.68
2010                                                                                  38,565                                 134.61
2011                                                                                  45,841                                  99.99




Notes to Required Supplementary Information

The information presented in the required supplementary schedules was determined as part of the actuarial valuations at
the dates indicated. Additional information as of the latest actuarial valuation follows:

Valuation date                                                                                 December 31, 2010
Actuarial cost method                                                                          Projected unit credit
Amortization method                                                                            Level percent of pay closed
Remaining amortization method                                                                  20 years
Asset valuation method                                                                         Market Value
Actuarial assumptions:
 Investment rate of return*                                                                    5.00%
 Projected salary increases*                                                                   4.25-7.85%
 *Includes inflation at                                                                        3.00%
 Cost of living adjustments                                                                    N/A



Since the previous valuation, the assumed interest rate has not changed.




                                                                                                                             90
                                           Town of Oak Island, North Carolina                                        Exhibit A-4

                                           Required Supplementary Information
                                 Other Postemployment Benefits - Schedule of Funding Progress
                                                       June 30, 2011

                                                                                                                Unfunded
                                                                                                                Actuarial
                                                        Actuarial                                                   Accrued
                                                        Accrued          Unfunded                                Liability as a
                               Actuarial               Liability       Actuarial                                 Percent of
                                Value of            Projected Unit       Accrued     Funded          Covered       Covered
Actuarial Valuation Date       Assets                   Credit         Liability    Ratio          Payroll       Payroll
December 31:
2008                       $       -          $        1,813,586 $      1,813,586    0.00     %$    5,555,994     32.60           %




                                                                                                                          91
                                                Town of Oak Island, North Carolina                                                        Exhibit A-4

                                             Required Supplementary Information
                              Other Postemployment Benefits - Schedule of Employer Contributions
                                                       June 30, 2011




Year Ended June 30,                                                 Annual Required Contribution                   Percent Contributed


          2010                                                                          180,954                                   44.65
          2011                                                                          180,954                                   31.70




Notes to Required Supplementary Information


The information presented in the required supplementary schedules was determined as part of the actuarial valuations at
the dates indicated. Additional information as of the latest actuarial valuation follows:


Valuation date                                                                                     December 31, 2008
Actuarial cost method                                                                              Projected unit credit
Amortization method                                                                                Level percent of pay, open
Remaining amortization method                                                                      30 years
Asset valuation method                                                                             Market Value of Assets
Actuarial assumptions:
Investment rate of return*                                                                         4.00%
Medical cost trend rate                                                                            1 0.50%-5.00%
Year of Ultimate trend rate                                                                        2016
*Includes inflation at                                                                             3.75%




                                                                                                                                              92
     Supplementary Statements and Schedules




93
     Individual Fund Statements and Schedules

               Governmental Funds




94
                                       Town of Oak Island, North Carolina                              Exhibit B-1
                                                  General Fund                                         Page 1 of 7
                 Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual
                                         For the Year Ended June 30, 2011

                                                                    Final                        Variance
                                                                  Budgeted                       With Final
                                                                  Amounts                         Budget
                                                                                    Actual

Revenue:
Ad valorem taxes:
 Current year                                                        6,472,902       6,242,140       (230,762)
 Prior years                                                            75,000         138,080          63,080
 Motor vehicle tax                                                      50,000          80,179          30,179
 Penalties and interest                                                 26,000         45,568          19,568
     Total ad valorem taxes
                                                                     6,623,902       6,505,967       (117,935)

Other taxes and licenses
  Local option sales tax:
    1%                                                                 610,000        628,159           18,159
    1/2%, 40                                                           335,000        361,978           26,978
    1/2%, 42                                                           290,000        321,145           31,145
    1/2%, 44                                                           340,000        328,576         (11,424)
  Privilege licenses                                                    25,000         34,563            9,563
 Animal control                                                          5,000           8,020          3,020
     Total other taxes and licenses
                                                                     1,605,000       1,682,441         77,441

Unrestricted intergovernmental revenue:
 Beer and wine tax                                                      12,000         37,877          25,877
 Utility franchise tax                                                 345,000        412,760          67,760
 Telephone communication tax                                            33,000         34,679           1,679
 Video franchise fees                                                   15,000         18,578           3,578
 ABC profit distribution                                               135,000        106,629         (28,371)

     Total unrestricted intergovernmental revenue                      540,000        610,523          70,523

Restricted intergovernmental revenue:
    National Recreation and Parks Assn Grant                                 -          4,000            4,000
    Rural Center Grant - Oak Island Pier                                19,840         14,147          (5,693)
    FEMA SAFR grant                                                    244,999        238,787          (6,212)
    FEMA AFF grant                                                     265,212        142,514        (122,698)




                                                                                                                 95
                                            Town of Oak Island, North Carolina                               Exhibit B-1
                                                     General Fund                                          Page 2 of 7
                           Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual
                           (Continued) For the Year Ended June 30, 2011

                                                                         Final                             Variance
                                                                       Budgeted                            With Final
                                                                       Amounts                               Budget
                                                                                          Actual
  NC control substance tax distribution                                        4,243           4,330               87
  Brunswick County fire district fees                                        935,947         972,723           36,776
  Brunswick County rescue contract                                            36,000          36,000                -
 On-behalf of payments - Fire and Rescue                                           -          10,114           10,114
  US OJP - BVP Grant                                                               -           2,919            2,919
  US OJP - JAG Grant                                                           2,225           2,225                -
  NC DNER Arboretum Gramt                                                      5,250           5,250                -
 State Street Aid allocation                                                 300,000         320,969           20,969
                                                                           1,813,716        1,753,978
       Total restricted intergovernmental revenue                                                             (59,738)

Permits and fees:
  Planning board fees                                                          1,000             715            (285)
  Homeowners Recovery Fund                                                       300             580              280
  Building permits                                                            60,000         113,919           53,919
 Other permits and fees                                                       36,000         161,958          125,958
  Inspection fees                                                             30,000          54,584           24,584
 CAMA reimbursement                                                            2,000           3,480            1,480

                                                                             129,300         335,236          205,936
       Total permits and fees

Sales and services:
  Recreation department fees                                                  85,000          84,341             (659)
 Stormwater fees, residential                                                235,000         234,840             (160)
 Stormwater fees, commercial                                                  21,240          22,470             1,230
  Rescue Squad fees                                                           35,000          51,067            16,067
 Sponsorship ads                                                              20,000           4,720          (15,280)
 Weight room fees                                                             35,000          35,456               456
  Merchandising                                                                6,800           4,943           (1,857)
 Video programing revenue                                                    180,000         192,221            12,221
  Lease, Southern Bell                                                         2,400            2,400                -
       Total sales and services                                              620,440         632,458           12,018

                                                                              15,238            8,380
Investment earnings                                                                                            (6,858)




  96
                                         Town of Oak Island, North Carolina                                  Exhibit B-1
                                                  General Fund                                              Page 3 of 7
                        Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual (Continued)
                        For the Year Ended June 30, 2011

                                                                      Final                            Va ri anc e
                                                                    Budgeted                           With Final
                                                                    Amounts                               Budget
                                                                                       Actual
Miscellaneous:
 Street assessments                                                             -             514              514
 Underground utility assessments                                                -           4,309            4,309
 Pier lease                                                                72,000          72,000                -
 Sponsorship- Oak Island Fireworks                                         10,000               -         (10,000)
 Donations                                                                 13,700          30,454           16,754
 Brunswick Arts Council                                                     1,000           1,000                -
 Miscellaneous                                                             13,444          22,956            9,512
 Stormwater Program Fees                                                        -             120              120
 Civil citations                                                            3,875           4,525              650
 Turtle program                                                               500           6,475            5,975
    Interest on assessments                                                     -           1,472            1,472
     Total miscellaneous
                                                                          114,519         143,825          29,306
     Total revenue
                                                                       11,462,115      11,672,808         210,693

Expenditures:
General government:
 Governing body:
   Salaries                                                                39,000          29,950
   Fringe benefits                                                          2,990           2,291
   Operating expense                                                      325,400         201,865
   Donations:
    Brunswick Family Assistance                                             1,000           1,000
    Chamber of Commerce                                                     5,000           5,000
    Oak Island Senior Citizens                                              5,300           5,300
    Communities in Schools                                                  1,000           1,000
    Hope Harbor Home                                                        1,800           1,800
    Family Emergency Teen Shelter                                           1,200           1,200
    Kay Beasley Sea Turtle Hospital                                         1,000           1,000
    NC Fourth of July Festival                                              1,000           1,000
    Oak Island Art Guild                                                      500             500
    Brunswick County Literacy Council                                       1,500           1,500
    Oak Island Feral Cat Program                                            2,000           2,000
    Brunswick County Airport Commission                                     7,500           7,500
    NC Beach Inlet & Waterway Assn.                                         1,000           1,000


     Total governing body                                                 397,190         263,906         133,284




                                                                                                                     97
                                        Town of Oak Island, North Carolina                                Exhibit B-1
                                                General Fund                                           Page 4 of 7
                       Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual (Continued)
                       For the Year Ended June 30, 2011

                                                                      Final                          Variance
                                                                    Budgeted                         With Final
                                                                    Amounts                           Budget
                                                                                       Actual
Administration:
  Salaries                                                               843,669          706,668
  Fringe benefits                                                        292,667          252,589
  Operating expenditures                                                 603,795          513,722
  Capital outlay                                                          33,825           28,831
    Total administration
                                                                        1,773,956       1,501,810         272,146

Grounds maintenance:
  Salaries                                                               201,372          173,229
  Fringe benefits                                                        109,518           87,957
  Operating expenditures                                                  67,200           57,438

        Total grounds maintenance                                        378,090          318,624          59,466

  Facilities management:
  Salaries                                                                60,325           59,481
  Fringe benefits                                                         39,329           40,972
  Operating expenditures                                                 388,140          389,141
  Capital outlay                                                            8,400               -


    Total facilities management                                          496,194          489,594           6,600

    Total general government                                            3,045,430       2,573,934         471,496

Public safety:
Police:
  Salaries                                                              1,270,892       1,270,888
  Fringe benefits                                                         494,344         506,393
  Operating expenditures                                                  233,608         188,866
  Capital outlay                                                          126,293         119,448


    Total police                                                        2,125,137       2,085,595          39,542

Emergency communications:
 Salaries                                                                196,400          196,398
 Fringe benefits                                                          87,885           87,822
  Operating expenditures                                                  10,994            9,686

    Total emergency communications                                       295,279          293,906           1,373
  98
                                          Town of Oak Island, North Carolina                              Exhibit B-1
                                                   General Fund                                         Page 5 of 7
                        Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual
                        (Continued) For the Year Ended June 30, 2011

                                                                      Final                          Variance
                                                                    Budgeted                         With Final
                                                                    Amounts                           Budget
                                                                                       Actual
 Fire and EMS Department:
  Salaries                                                                961,389         953,265
  Fringe benefits                                                         340,667         335,505
  Operating expenditures                                                  431,743         335,891
  Contracted services - Yaupon Beach VFD                                   80,000          80,000
  Capital outlay                                                          138,750          78,750                 -

                                                                        1,952,549       1,783,411         169,138
    Total Fire and EMS Department

 Development services:
  Salaries                                                                494,921         493,935
  Fringe benefits                                                         198,254         198,157
  Operating expenditures                                                   76,367          59,013
                                                                          769,542         751,105          18,437
    Total development services

Animal control:
  Salaries                                                                 74,357          74,282
  Fringe benefits                                                          32,445          32,308
  Operating expenditures                                                   16,507          13,710
    Total animal control                                                  123,309         120,300           3,009

                                                                        5,265,816       5,034,317         231,499
    Total public safety

 Transportation:
Administration, public works:
  Salaries                                                                125,204         110,717
  Fringe benefits                                                          37,538          32,440
  Operating expenditures                                                    8,780           7,836
                                                                          171,522         150,993          20,529
    Total administration, public works

 Street repair and construction:
  Salaries                                                                325,854         305,891
  Fringe benefits                                                         129,731         120,959
  Operating expenditures                                                  237,340         203,512
  Capital outlay                                                          102,000          88,000
                                                                          794,925         718,362          76,563
    Total street repair and construction
                                                                                                                  99
                                           Town of Oak Island, North Carolina                                 Exhibit B-1
                                                    General Fund                                            Page 6 of 7
                           Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual (Continued)
                           For the Year Ended June 30, 2011

                                                                        Final                          Variance
                                                                      Budgeted                         With Final
                                                                      Amounts                           Budget
                                                                                         Actual
  Fleet maintenance:
   Salaries                                                                 136,720         116,062
   Fringe benefits                                                           62,738          54,849
      Operating expenditures                                                 65,358          59,100
        Total fleet maintenance
                                                                            264,816         230,011          34,805

        Total transportation                                              1,231,263       1,099,366        131,897

Environmental protection:
 Stormwater:
   Salaries                                                                  69,338          69,337
   Fringe benefits                                                           19,188          19,182
   Operating expenditures                                                    93,601          83,465

        Total environmental protection                                      182,127         171,984          10,143

Cultural and recreation:
 Recreation:
   Salaries                                                                 416,323         411,288
   Fringe benefits                                                          131,096         125,821
   Operating expenditures                                                   199,555         168,167
   Capital outlay                                                           125,000          78,232
        Total recreation
                                                                            871,974         783,508          88,466

 Community Resource Center:
   Salaries                                                                  74,773          69,846
   Fringe benefits                                                           20,941          16,710
   Operating expenditures                                                    20,650          20,650
        Total resource center
                                                                            116,364         107,206           9,158

 Smith Park
  Operating expenditures                                                    28,170           21,146
      Capital outlay                                                        60,000           60,000
        Total Smith Park
                                                                             88,170          81,146           7,024
        Total cultural and recreation
                                                                          1,076,508         971,860        104,648

100
Town of Oak Island, North Carolina                                                                 Exhibit B-1
         General Fund                                                                              Page 7 of 7
                Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual (Continued) For the
                Year Ended June 30, 2011

                                                                         Final                          Variance
                                                                       Budgeted                         With Final
                                                                       Amounts           Actual          Budget
Debt service
  Principal                                                               1,930,238       1,928,790             1,448
  Interest and fees                                                         755,201         752,320             2,881
     Total debt service                                                   2,685,439       2,681,110             4,329


                                                                            722,055                -         722,055

Contingency
                                                                         14,208,638      12,532,571        1,676,067
     Total expenditures
                                                                                                           1,886,760
     Revenues over (under) expenditures                                 (2,746,523)      (859,763)

Other financing sources (uses):
 Appropriated fund balance                                                  279,300                -        (279,300)
 Operating transfers from other funds:
   Accommodations Tax Fund                                                  402,020         402,020                 -
   Capital Projects                                                         435,025               -         (435,025)
   Capital Reserve                                                          146,500         146,500                 -
   Solid Waste Fund                                                          80,000               -          (80,000)
   Water Fund                                                               300,000               -         (300,000)
   Wastewater Fund                                                          300,000               -         (300,000)
   Wastewater Capital Project                                               738,500         738,500                 -

 Operating transfers to other funds:
  Water Fund                                                               (11,516)         (11,516)                 -
  Solid Waste Fund                                                          (3,544)          (3,544)                 -
  South Harbour Golf Course Fund                                            (1,772)          (1,772)                 -
  Police Headquarters Capital Project                                      (16,445)         (16,445)                 -
  Wastewater Fund                                                           (3,545)          (3,545)                 -
  Debt issued                                                               102,000          88,000          (14,000)
                                                                          2,746,523       1,338,198
     Total other financing sources (uses)                                                                 (1,408,325)
      Revenues and other financing sources over expenditures                       -        478,435           478,435
      and other financing uses
                                                                                          5,670,495
Fund balance, beginning

Fund balance, ending                                                                      6,148,930
                                                                                                                     101
                                      Town of Oak Island, North Carolina                              Exhibit B-2
                                             Capital Reserve Fund
                Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual
                                        For the Year Ended June 30, 2011

                                                                                                   Variance
                                                                                                   Favorable
                                                                     Budget         Actual         (Unfavorable)
Revenue:
Investment earnings                                                           -              524             524


Other financing sources (uses):
 Appropriated fund balance                                            2,270,820              -       (2,270,820)
 Transfers from other governmental funds                                 14,375         14,375                 -
 Transfer from Wastewater Capital Project                               400,000        400,000                 -
 Transfer to General Fund                                            (146,500)       (146,500)                 -
 Transfer to Accomodation Tax Fund                                 (2,124,320)    (2,124,319)                  1
 Appropriated Reserve for Capital Projects                            (414,375)              -           414,375
                                                                              -
   Total other financing sources (uses)                                            (1,856,444)       (1,856,444)
                                                                              -
   Revenue and other financing sources over other financing
   uses
                                                                                   (1,855,920)       (1,855,920)


Fund balance, July 1                                                                 2,280,587
Fund balance, June 30
                                                                                       424,667



Note: This fund is budgeted separately, but is consolidated in the General Fund for
        reporting purposes.




                                                                                                              102
                                          Total Other                   Total Other
                                      Governmental Special          Governmental Capital    Total Other Governmental
                                        Revenue Funds                  Project Funds                Funds
AS S E T S
Current Assets
Cash and cash equivalents                               3,357,377                 118,094                  3,475,471
Restricted cash                                     -                             515,696                    515,696
Assessments receivable, net                                6,427                       -                       6,427
Accounts receivable                                      214,598                    4,380                    218,978
Prepaids                                                  55,435                       -                      55,435

   Total assets                                         3,633,837                 638,170                  4,272,007


LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable                                         118,668                  101,506                    220,174
Deferred revenue                                           6,427                       -                       6,427
   Total liabilities                                     125,095                  101,506                    226,601

Fund balances:
                Non Spendable
                   Prepaids                               55,435                       -                      55,435
Restricted
 Tourism                                                3,067,675                                          3,067,675
 Public Safety                                            332,085                                            332,085
 Cultural and Recreation                                   53,547                                             53,547
Committed
 Administration                                                                   535,970                    535,970
 Public Safety                                                                        694                        694
Total fund balances                                     3,508,742                 536,664                  4,045,406

Total liabilities and fund balances                     3,633,837                 638,170                  4,272,007




                                                                                                                  103
                                               Town of Oak Island, North Carolina                         Exhibit B-3

                                               Combining Balance Sheet
                                               Other Governmental Funds
                                                     June 30, 2011
                                          Town of Oak Island, North Carolina                               Exhibit B-4
                     Combining Statement of Revenues, Expenditures and Changes in Fund Balances
                                              Other Governmental Funds
                                          For the Year Ended June 30, 2011



                                                           Total Other              Total Other
                                                           Governmental             Governmental       Total Other
                                                          Special Revenue           Capital Project   Governmental
                                                            Funds                     Funds            Funds
REVENUES
Other taxes and licenses                                            950,143                     -            950,143
Restricted intergovernmental                                        168,771               110,000            278,771
Investment earnings                                                   9,238                 1,159             10,397
Miscellaneous                                                        20,991                     -             20,991

Total revenues                                              1,149,143                 111,159              1,260,302

EXPENDITURES
Current:
General government                                                      280                61,728             62,008
Public Safety                                                       156,412                     -            156,412
Culture and recreation                                              176,234                55,033            231,267

Total Expenditures                                            332,926                 116,761                449,687

Excess (deficiency) of revenues over expenditures             816,217                  (5,602)               810,615

OTHER FINANCING SOURCES (USES)
Transfers in                                                     2,124,319               16,445            2,140,764
Transfers out                                                 (542,438)               (14,375)             (556,813)
Total other financing sources and uses                            1,581,881             2 , 0 7 0          1,583,951

Net change in fund balances                                       2,398,098            (3,532)             2,394,566
Fund balances - beginning                                         1,110,644               540,196          1,650,840
Fund balances - ending                                            3,508,742                536,664         4,045,406




 104
                               Town of Oak Island, North Carolina                                    Exhibit B-5
                                   Combining Balance Sheet                                           Page 1 of 2
                           Other Governmental Special Revenue Funds
                                        June 30, 2011


                                                                                                 Beach
                                                     Accommodations        Emergency 911      Preservation
                                                        Tax Fund               Fund              Fund
ASSETS
Current Assets
Cash and cash equivalents                                      2,896,067      407,535             53,775
Assessments receivable, net                                        6,427       -                      -
Accounts receivable                                              174,134         40,464               -
Prepaids                                                          55,435       -                      -
   Total assets                                                3,132,063      447,999             53,775


LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable                                          2 , 5 2 6                 115,914          228
Deferred revenue                                               6,427            -                     -
   Total liabilities                                           8 , 9 5 3            115,914          228

Fund balances:
Non Spendable
 Prepaids                                                         55,435
Restricted
 Tourism                                                       3,067,675        -                     -
 Public Safety                                             -                        332,085           -
 Cultural and Recreation                                                                          53,547
Total fund balances                                            3,123,110      332,085             53,547
Total liabilities and fund balances                            3,132,063      447,999             53,775




                                                                                                             105
                                                          Exhibit B-6
                                                          Page 2 of 2




                                         Total Other
     Tree              Pier            Governmental
Preservation       Preservation       Special Revenue
    Fund               Fund               Funds


               -                  -           3,357,377
               -                  -               6,427
               -                  -             214,598
               -                  -              55,435
          -                  -                3,633,837




               -                  -            118,668
               -                  -              6,427
          -                  -                 125,095



                                                55,435

               -                  -           3,067,675
               -                  -             332,085
                                                 53,547
          -                  -                3,508,742
          -                  -                3,633,837




                                                                 106
                                                                                                    Exhibit B-6
                              Town of Oak Island, North Carolina                                  E Page 2 of 2
         Combining Statement of Revenues, Expenditures and Changes in Fund Balances               x
                         Other Governmental Special Revenue Funds                                 hibit B-6
                               For the Year Ended June 30, 2011                                   Page 1 of 2



                                               Accommodations          Emergency 911
                                                  Tax Fund                Fund                   Beach
                                                                                          Preservation
                                                                                             Fund
REVENUES
Other taxes and licenses                                    950,143        -                   -
Restricted intergovernmental                           -                        168,771        -
Investment earnings                                           8,269            8 2 3           127
Miscellaneous                                                   422        -                 20,569
Total revenues                                              958,834            169,594       20,696

EXPENDITURES
Current:
General government                                               -         -                   -
Public safety                                          -                       156,412         -
Culture and recreation                                      148,348        -                 20,614

Total Expenditures                                          148,348            156,412       20,614
Excess (deficiency) of revenues over
expenditures                                                810,486             13,182        82

OTHER FINANCING SOURCES (USES)
Transfers in                                               2,124,319       -                  -
Transfers out                                              (542,438)       -                  -

Total other financing sources and uses                     1,581,881       -                  -


Net change in fund balances                                2,392,367            13,182        82
Fund balances - beginning                                   730,743            318,903       53,465
Fund balances - ending                                     3,123,110           332,085       53,547




   107
                                                                              Exhibit B-6
                                                                              Page 2 of 2



                                                             Total Other
        Tree                       Pier                     Governmental
    Preservation               Preservation                Special Revenue
       Fund                       Fund                         Funds

                       -                              -             950,143
                       -                              -             168,771
                           1                          18              9,238
                       -                              -              20,991
                   1                             18               1,149,143




              280                         -                             280
               -                          -                         156,412
               -                        7,272                       176,234
              280                       7,272                       332,926

              (279)                     (7,254)                     816,217


               -                             -                    2,124,319
-                                        -                        (542,438)
               -                             -                    1,581,881


                       (279)                     (7,254)          2,398,098
                       279                       7,254            1,110,644
               -                             -                    3,508,742




                                                                                      108
                                            Town of Oak Island, North Carolina                                 Exhibit B-7
                                     Special Revenue - Accommodations Tax Fund                                Page 1 of 2
                 Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual
                                          For the Year Ended June 30, 2011

                                                                       Final
                                                                     Budgeted
                                                                                                       Variance With
                                                                     Amounts                           Final Budget
                                                                                        Actual
Revenue:
Other taxes and licenses:
 Accommodations tax receipts                                                 524,000       566,769              42,769
 Accommodations tax receipts, 2%                                             349,000       383,374              34,374
        Total other taxes and licenses
                                                                             873,000       950,143              77,143

Investment earnings:
   Interest earned                                                                 -         8,269               8,269

Miscellaneous:
 Sand Project assessments                                                          -             123               123
  Interest earned on assessments                                                   -             224               224
 Miscellaneous revenue                                                             -              75                   75
        Total miscellaneous                                                        -             422               422

        Total revenue
                                                                             873,000       958,834              85,834
Expenditures:
Cultural and recreational:
 Professional services                                                        10,000         7,601
 Greenhouse expenses                                                          15,000        11,434
 Mosquito control                                                             20,000        12,719
 Beach access expenses                                                        12,160        12,159
 Telephone and postage                                                           500             -
 Erosion control expenses                                                     23,300        23,300
 Dune maintenance                                                              1,000           475
 Bulkheading                                                                  15,000        15,000
 Boat ramp maintenance and construction                                       19,080         6,678
 Sidewalks, bike paths                                                         4,000           794
 Oak Island pier                                                              65,460        58,188
 Oak Island pier reserve                                                    10,000                 -
 Capital outlay                                                          2,438,320                 -

        Total cultural and recreational
                                                                         2,633,820         148,348           2,485,472




                                                                                                                            109
                                                                                                            Exhibit B-7
                                         Town of Oak Island, North Carolina                                 Page 2 of 2
                                     Special Revenue - Accommodations Tax Fund
                 Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual
                                     Special Revenue - Accommodations Tax Fund
                                          For the Year Ended June 30, 2011


                                                                        Final
                                                                      Budgeted
                                                                                                     Variance With
                                                                      Amounts
                                                                                       Actual        Final Budget


        Total expenditures                                               2,633,820        148,348           2,485,472

        Revenue over expenditures                                     (1,760,820)         810,486           2,571,306

Other financing sources (uses):
Appropriated fund balance                                                    178,938             -          (178,938)
Transfers from:
  Capital Reserve                                                        2,124,320       2,124,319                   (1)
Transfers to:
  General Fund                                                          (402,020)        (402,020)                     -
  Solid Waste Fund                                                       (23,000)         (23,000)                     -
  Golf Course Fund                                                      (117,418)        (117,418)                     -


        Total other financing uses                                       1,760,820       1,581,881          (178,939)
        Revenue and other financing sources over expenditures                    -
        and other financing uses                                                         2,392,367          2,392,367

Fund balance, July 1                                                                      730,743

Fund balance, June 30                                                                    3,123,110




                                                                                                                           110
                                      Town of Oak Island, North Carolina                               Exhibit B-8
                                     Special Revenue - Emergency 911 Fund
                Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual
                                        For the Year Ended June 30, 2011

                                                                     Final
                                                                   Budgeted
                                                                                                   Variance With
                                                                   Amounts
                                                                                    Actual         Final Budget
Revenue:
Restricted intergovernmental:
  County 911 Fun                                                       105,600         105,600              -
 State 911 Fund                                                        63,171           63,171              -
                                                                                                            -
   Total restricted intergovernmental                                 168,771          168,771


Investment earnings:
  Interest earned                                                             -              823                823

   Total revenue                                                       168,771         169,594                  823

Expenditures:
  Public safety:
   Professional services                                                   500               -
   Maintenance and repair - equipment                                    2,400           2,400
   Departmental supplies                                               120,066         120,065
   911 service                                                          26,000          23,175
   Capital outlay                                                      150,643          10,772
                                                                       299,609         156,412            143,197
   Total public safety
                                                                                        13,182            144,020

   Revenue over expenditures                                        (130,838)
Other financing sources (uses):
 Appropriated fund balance                                             130,838                 -        (130,838)
                                                                       130,838                 -
   Total other financing uses                                                                           (130,838)
                                                                              -         13,182             13,182
   Revenue and other financing sources under expenditures
   and other financing uses

Fund balance, July 1                                                                   318,903

Fund balance, June 30                                                                  332,085




    111
                                       Town of Oak Island, North Carolina                               Exhibit B-9
                                   Special Revenue - Beach Preservation Fund
                Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual
                                       For the Year Ended June 30, 2011

                                                                    Final                           Variance
                                                                  Budgeted                          With Final
                                                                  Amounts          Actual             Budget
Revenue:
  Investment earnings                                                      100              127             27
Miscellaneous:
 Fund raisers                                                            2,200          9,880            7,680
 Beach Bum Bonnie proceeds                                                 100            261               161
 Donations                                                               3,500         10,428            6,928
       Total miscellaneous
                                                                         5,800         20,569          14,769
       Total revenue                                                     5,900         20,696          14,796

Expenditures:
Cultural and recreational:
  Miscellaneous supplies                                                    65             64
  Float and other events                                                   750            608
  Beach lobbyist                                                         1,200          1,200
  Fund raiser events                                                     2,966          2,965
  Miscellaneous                                                          1,190          1,002
  Beach Preservation Newsletter                                            914            913
  Beach Preservation Projects                                           13,865         13,862
                                                                        20,950         20,614              336
       Total expenditures
                                                                                            82
       Revenue over (under) expenditures                              (15,050)                         15,132

Other financing sources:
Appropriated fund balance                                               15,050                -       (15,050)
                                                                        15,050                -
   Total other financing sources                                                                      (15,050)
                                                                              -             82              82


   Revenues and other financing sources over expenditures



Fund balances, July 1                                                                  53,465

Fund balances, June 30                                                                 53,547


                                                                                                                  112
                                     Town of Oak Island, North Carolina                          Exhibit B-10
                                 Special Revenue - Tree Preservation Fund
               Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual
                                       For the Year Ended June 30, 2011

                                                                    Final                           Variance
                                                                  Budgeted                          With Final
                                                                  Amounts          Actual            Budget
Revenue:
 Miscellaneous
     Donations                                                          10,000                  -       (10,000)
                                                                                            1
                                                                             -
  Investment earnings                                                                                            1
 Total revenue                                                          10,000              1
                                                                                                         (9,999)


Expenditures:
 Cultural and recreational                                              10,000           280
   Miscellaneou
                                                                                                          9,720
                                                                                         280
 Total expenditures                                                     10,000                            9,720
                                                                             -

  Revenues under expenditures                                                          (279)               (279)
                                                                                         279

Fund balance, July 1
                                                                                            -
Fund balance, June 30




                                                                                                                 113
                                       Town of Oak Island, North Carolina                          Exhibit B-11
                                     Special Revenue - Pier Preservation Fund
                 Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual
                                         For the Year Ended June 30, 2011

                                                                     Final                            Variance
                                                                   Budgeted                           With Final
                                                                   Amounts           Actual            Budget
Revenue:
 Miscellaneous
     Donations                                                           10,000                   -
                                                                                                          (10,000)
                                                                                              18
                                                                               -
  Investment earnings                                                                                              18
 Total revenue                                                           10,000               18

                                                                                                            (9,982)


Expenditures:
 Cultural and recreational                                               10,000           7,272              2,728
                                                                         10,000           7,272              2,728

 Total expenditures
                                                                               -

  Revenues under expenditures                                                           (7,254)             (7,254)
                                                                                         7,254

Fund balance, July 1
Fund balance, June 30                                                                         -




                                                                                                               114
                                             Town of Oak Island, North Carolina                                  Exhibit B-12
                                                Combining Balance Sheet                                         Page 1 of 1
                                         Other Governmental Capital Project Funds
                                                      June 30, 2011


                                                                                                                  Total Other
                                                                             Police             Town Hall        Governmental
                                                      Smith Park          Headquarters         Replacement       Capital Project
                                                     Capital Project        Project           Capital Project       Funds
AS S E T S
Current Assets
Cash and cash equivalents                             -                  77,200           40,894                118,094
Restricted cash                                                                          515,696                515,696
Accounts receivable                                       -                  -            4 , 3 8 0               4,380
   Total assets                                       -                  77,200          560,970                638,170


LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable                                      -                  76,506           25,000                101,506

   Total liabilities                                  -                  76,506           25,000                101,506

Fund balances:
  Committed
  Administration                                                                         535,970                535,970
  Public Safety                                                             694                                     694

   Total fund balances                                -                     694          535,970                536,664
   Total liabilities and fund balances                -                  77,200          560,970                638,170




                                                                                                                          115
                                                Town of Oak Island, North Carolina                                    Exhibit B-13
                           Combining Statement of Revenues, Expenditures and Changes in Fund Balances                 Page1 of 1
                                           Other Governmental Capital Project Funds
                                                For the Year Ended June 30, 2011

                                                                                                                         Total Other
                                                                                   Police            Town Hall          Governmental
                                                             Smith Park         Headquarters        Replacement         Capital Project
                                                            Capital Project       Project           Capital Project        Funds
REVENUES
Restricted intergovernmental                               110,000               -             -                      110,000
Investment earnings                                            -                 1 5 0               1,009              1,159
Total revenues                                             110,000               1 5 0         1 , 0 0 9              111,159

EXPENDITURES
Current:
General government                                             -                 -                  61,728              61,728
Culture and recreation                                      55,033               -             -                        55,033
Total Expenditures                                          55,033               -             61,728                 116,761

Excess (deficiency) of revenues over expenditures           54,967               1 5 0             (60,719)            (5,602)

OTHER FINANCING SOURCES (USES)
Transfers in                                          -                       16,445           -                        16,445
Transfers out                                              (14,375)              -             -                      (14,375)
Total other financing sources and uses                     (14,375)           16,445           -                         2,070


Net change in fund balances                                  40,592            16,595              (60,719)            (3,532)
Fund balances - beginning                                  (40,592)           (15,901)             596,689            540,196

Fund balances - ending                                 -                         6 9 4             535,970            536,664




    116
                                        Town of Oak Island, North Carolina                                  Exhibit B-14
                                       Capital Projects - Smith Park Project                               Page 1 of 2
               Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual
                                        For the Year Ended June 30, 2011

                                                      Project         Prior           Current        Total
                                                   Authorization      Year              Year         to Date
  Revenue:
   Phase I
   Restricted intergovernmental:
     PARTF grant                                          250,000        250,000                 -        250,000
  Investment earnings                                       1,858          1,856                 -          1,856
  Miscellaneous donations                                  15,000         15,000                 -         15,000
 Phase II
  Restricted intergovernmental:
     PARTF grant                                          110,000                 -      110,000          110,000
     Recreation trails                                     50,000            50,000            -           50,000
       Total revenue
                                                          426,858        316,856         110,000          426,856

 Expenditures:
 Cultural and recreational
 Phase I
     Engineering                                           40,441         40,440                 -         40,440
     Miscellaneous                                         23,513         23,513                 -         23,513
     General site improvements                            288,477        288,477                 -        288,477
     Little League baseball field                         417,175        417,176                 -        417,176
     Football field                                        92,446         91,925               521         92,446
     Sand volleyball court                                  4,680          4,680                 -          4,680
     Electrical and related expenses                      164,565        164,565                 -        164,565
 Phase II
     Trail construction                                    48,973            48,972              -         48,972
     Engineering                                              510               510                           510
     Miscellaneous                                          3,212             3,212                         3,212
     Picnic Shelter                                        11,587            11,587            -           11,587
     Disc Golf course                                       2,541             2,541            -            2,541
     Croquet yard                                          14,860            14,860            -           14,860
     Irrigation System                                      9,463             9,463            -            9,463
     Softball fields                                      150,384            95,871       54,512          150,383
     A-Frame renovation                                    30,456            30,456            -           30,456

       Total expenditures                                1,303,283      1,248,248         55,033        1,303,281

       Revenue under expenditures                       (876,425)      (931,392)          54,967        (876,425)




117
                                         Town of Oak Island, North Carolina                                Exhibit B-14
                                       Capital Projects - Smith Park Project                              Page 2 of 2
               Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual
                                       For the Year Ended June 30, 2011

                                                       Project       Prior            Current       Total
                                                    Authorization    Year              Year         to Date


Other financing sources (uses):
Phase I
Transfer from General Fund                               130,000         130,000                -        130,000
Transfer from Wastewater Fund                            298,300         298,300                -        298,300
Transfer from Accommodations Tax Fund                    140,000         140,000                -        140,000
Transfer from Wastewater                                 200,000         200,000                -        200,000
Phase II
Transfer from Capital Reserve Fund                       122,500         122,500                -        122,500
Transfer to Capital Reserve Fund                         (14,375)              -       (14,375)         (14,375)

    Total other financing sources                        876,425         890,800      (14,375)           876,425
      Revenue and other financing sources under                -                                               -
      expenditures                                                     (40,592)          40,592

Fund balance, July 1                                                                    (40,592)
                                                                                               -
Fund balance, June 30




                                                                                                               118
                                       Town of Oak Island, North Carolina                         Exhibit B-15
                                      Capital Projects - Police Headquarters
                Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual
                                         For the Year Ended June 30, 2011


                                                      Project          Prior         Current         Total

                                                   Authorization                      Year          to Date
                                                                       Year
Revenue:
Interest on investments                                  207,427        207,969              150       208,119

  Total revenue                                          207,427        207,969              150       208,119
Expenditures:
Project expenditures:
  Professional services                                  165,140        165,140                -       165,140
  Environmental remediation costs                        838,647        838,646                -       838,646
  Miscellaneous                                           27,996         27,995                -        27,995
  Building construction                                5,160,245      5,160,246                -     5,160,246
  Capital Outlay                                          49,059         49,058                -        49,058

     Total expenditures                                6,241,087      6,241,085                -     6,241,085
                                                                                             150
     Revenue under expenditures                      (6,033,660)    (6,033,116)                     (6,032,966)
Other financing sources:
Operating transfers in:
   Capital Reserve Fund                                  354,000        354,000              -         354,000
   General Fund                                           16,445                        16,445          16,445
Debt Issued                                            5,663,215      5,663,215              -       5,663,215
     Total other financing sources                     6,033,660      6,017,215         16,445       6,033,660
     Revenue and other financing sources over                   -                                            694
     (under) expenditures                                             (15,901)          16,595

Fund balance, July 1                                                                   (15,901)
Fund balance, June 30                                                                        694




   119
                             Town of Oak Island, North Carolina                                        Exhibit B-16
                       Capital Projects Fund - Town Hall Replacement
Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual
                       For the Year Ended June 30, 2011


                                                                Project              Prior                 Current         Total
                                                             Authorization           Year                   Year          To Date
Revenue:
   Restricted Intergovernmental
   Rural Center PEG Grant                                                  25,000             25,000                  -       25,000
   Investment earnings                                                       4,828             3,929             1,009         4,938
           Total revenue
                                                                           29,828             28,929             1,009        29,938

Expenditures:
 Capital outlay:
 General government
   Professional services                                                  193,152            193,152                  -      193,152
    Special inspections                                                    22,506             22,505                  -       22,505
    Prof svc. - environmental remediation                                 195,515            153,060           35,022        188,082
   Miscellaneous                                                           45,835             41,360            4,052         45,412
   Capital outlay - land                                                  628,742            628,741                -        628,741
   Land improvements                                                        8,305           7,587                 718          8,305
   Construction                                                         2,558,541       2,542,665              11,495      2,554,160
   Site work                                                               53,769          52,769               1,000         53,769
   Furnishings                                                             30,812          28,412               2,400         30,812
   Equipment                                                              356,331         310,694               7,041        317,735
   Contingency                                                             50,000               -                   -              -


     Total expenditures                                                 4,143,508       3,980,945              61,728      4,042,673

     Revenue under expenditures                                        (4,113,680)    (3,952,016)            (60,719)     (4,012,735)

Other financing sources:
 Transfer to General Fund                                               (786,320)        (351,295)                    -     (351,295)

 Proceeds of installment purchases                                      4,900,000       4,900,000                     -    4,900,000
                                                                                                                      -
     Total other financing sources                                      4,113,680       4,548,705                          4,548,705
                                                                                -

     Revenue and other financing sources
     (under) expenditures                                                                    596,689        (60,719)         535,970



Fund balance, July 1                                                                                          596,689

Fund balance, June 30                                                                                         535,970



    120
(This Page Was Intentionally Left Blank)




                                           121
      Individual Fund Statements and Schedules
                 Proprietary Funds




122
                                     Town of Oak Island, North Carolina                          Exhibit C-1
                                                 Water Fund                                      Page 1 of 2
                    Schedule of Revenue, Expenditures and Other Financing Sources (Uses) -
                                       Budget and Actual (Non-GAAP)
                                      For the Year Ended June 30, 2011


                                                            Final                            Variance
                                                          Budgeted                            With Final
                                                          Amounts                               Budget
                                                                              Actual
Operating revenue: Charges for services
 Charges for utilities                                        2,500,000         2,787,642        287,642
 Reconnect fees                                                  40,000            54,081         14,081
 Late fees                                                       50,000            53,529          3,529
 Water taps                                                      15,000            42,231         27,231

                                                              2,605,000         2,937,483        332,483
Other operating revenue                                         233,800           257,050         23,250

         Total operating revenue                              2,838,800         3,194,533        355,733
Non-operating revenue:
 Impact fees                                                    15,000             44,290         29,290
 Interest on investments                                         5,000              5,310            310

         Total non-operating revenue                            20,000             49,600         29,600
         Total revenue                                        2,858,800         3,244,133        385,333
Expenditures
Water administration:
  Salaries                                                      70,599             70,593
  Fringe benefits                                               37,477             37,060
  Operating expenditures                                        58,050             57,635

         Total water administration                            166,126            165,288           838

Water maintenance
 Salaries                                                      473,101            473,098
 Fringe benefits                                               232,194            232,193
 Operating expenditures                                        574,843            537,419
 Capital outlay                                                428,562             65,186
 Cost of water                                                 895,490            772,124

         Total water treatment and distribution               2,604,190         2,080,020        524,170


         Total expenditures                                   2,770,316         2,245,308        525,008


         Revenue over expenditures                              88,484            998,825        910,341



                                                                                                     123
                                   Town of Oak Island, North Carolina                           Exhibit C-1
                                               Water Fund                                       Page 2 of 2
                  Schedule of Revenue, Expenditures and Other Financing Sources (Uses) -
                                Budget and Actual (Non-GAAP) (Continued)
                                    For the Year Ended June 30, 2011

                                                            Final                          Variance
                                                          Budgeted                          With Final
                                                          Amounts                              Budget
                                                                            Actual
Other financing sources (uses):

Transfers from:
  General Fund                                                 11,516            11,516               -

  Wastewater Fund                                            1,310,000        1,310,000               -
Transfers to:
  Wastewater Fund                                           (100,000)         (100,000)               -
  Fund Balance Reserve                                   (1,310,000)                  -     (1,310,000)

           Total other financing uses                        (88,484)         1,221,516     (1,310,000)


           Revenue and other financing sources over                  -        2,220,341      2,220,341
           expenditures and other uses



Reconciliation from budgetary basis
(modified accrual) to full accrual:
Reconciling items:
  Excess of revenues and other financing sources
    over expenditures and other financing uses (above)                        2,220,341
  Depreciation                                                                (187,848)
  Capital outlay                                                                 65,186
  Increase in:
      Accrued vacation pay                                                        1,616
      Other postemployment benefits                                            (18,066)


           Change in net assets                                               2,081,229




124
                                             Town of Oak Island, North Carolina                            Exhibit C-2
                                                      Wastewater Fund                                      Page 1 of 2
                            Schedule of Revenue, Expenditures and Other Financing Sources (Uses)
                                               Budget and Actual (Non-GAAP)
                                              For the Year Ended June 30, 2011


                                                                  Final                                Variance
                                                                Budgeted                               With Fin al
                                                                Amounts                Actual              Budget
Operating revenue:
Charges for services:
 In town utility charges                                              1,892,524            2,068,238       175,714
 Out of town utility charges                                            133,800              133,793            (7)
  Sewer taps                                                              5,000                4,486          (514)
       Total operating revenue                                        2,031,324            2,206,517       175,193
Non-operating revenue:
     Impact fees                                                          5,000               6,223            1,223
  Sewer assessment revenue                                            6,920,000          12,716,889       5,796,889
  Interest on sewer assessments                                         138,000              97,109         (40,891)
  Interest on investments                                                13,200              13,691              491

       Total non-operating revenue                                    7,076,200          12,833,912       5,757,712
       Total revenue                                                  9,107,524          15,040,429       5,932,905

Expenditures:
Waste collection
  Salaries                                                              171,142             171,050
  Fringe benefits                                                        57,726              57,646
  Repairs and maintenance                                                75,000              34,153
  Other operating expenses                                              543,191             238,752
  Capital outlay                                                         72,229             120,398
       Total waste collection                                           919,288             621,999        297,289

Waste treatment:
 Salaries                                                               135,412              135,408
 Fringe benefits                                                         41,788               41,397
 County treatment capital charge                                      3,248,450            3,248,450
 County treatment service fees                                          138,000              124,849
 Repairs and maintenance                                                 31,000               25,116
  Other operating expenses                                              161,875             147,062
  Capital outlay                                                         30,000              16,355

       Total waste treatment                                          3,786,525            3,738,637         47,888


Debt service:
  Principal payments                                                  1,728,290            1,728,290
  Interest expense                                                    3,210,647            3,369,083
       Total debt service                                             4,938,937            5,097,373      (158,436)
       Total expenditures                                             9,644,750            9,458,009       186,741

                                                                                                                   125
                                             Town of Oak Island, North Carolina                               Exhibit C-2
                                                      Wastewater Fund                                         Page 2 of 2
                            Schedule of Revenue, Expenditures and Other Financing Sources (Uses)
                                               Budget and Actual (Non-GAAP)
                                              For the Year Ended June 30, 2011


                                                                         Final                            Variance
                                                                      Budgeted                            With Fin al
                                                                      Amounts            Actual               Budget
                                                                                            5,582,420        6,119,646

       Revenue over (under) expenditures                                   (537,226)
Other financing sources (uses):
Transfers from:
   Water Fund                                                                 100,000         100,000                -
   Wastewater Capital Project Fund                                          4,656,938       4,656,937              (1)
   Sewer District Fund                                                       419,500           424,703           5,203

   General Fund                                                                  3,545           3,545               -
Reserve for future expansion                                              (4,642,757)                -       4,642,757

        Total other financing sources                                        537,226        5,185,185        4,647,959
                                                                                     -     10,767,605       10,767,605

        Excess of revenues and other financing sources
        over expenditures and other uses


Reconciliation from budgetary basis (modified accrual) to full accrual:

Excess of revenues and other financing sources over expenditures and
 other uses (above)                                                                        10,767,605
Payment of debt principal                                                                    1,728,290
Amortization of debt issuance costs                                                            (88,873)
Amoritzation of premium and discount                                                              3,977
Capitalization of equipment                                                                    136,753
Wastewater assessments deferred                                                            20,886,906
Depreciation                                                                               (1,328,877)
(Increase) decrease in:
  Accrued vacation pay                                                                       (22,403)
  Accrued OPEB liability                                                                      (3,871)
  Interest expense accrual                                                                  (102,502)
Sewer District Fund
  Sewer District Fees                                                                         443,102
  Interest Income                                                                                 514
  Transfer to Wastewater Fund                                                               (424,703)
Capital projects:
  Transfers to other funds                                                                 (7,105,437)

        Change in net assets                                                              24,890,481




  126
                                                   Town of Oak Island, North Carolina                                   Exhibit C-3
                                                                                                                        Page 1 of 2
                                                   Wastewater Capital Projects Fund
                                  Schedule of Revenue, Expenditures and Other Financing Sources (Uses)
                                                     Budget and Actual (Non-GAAP)
                                                    For the Year Ended June 30, 2011


                                                                    Project          Prior             Current        Total
                                                                 Authorization       Years              Year         to Date


Revenue:
Restricted intergovernmental:
  NC Rural Center Grant-Phase I                                                  -            96,849             -             96,849
  NC Rural Center Grant-Phase II                                         500,000                   -             -                  -
  NC Clean Water Management Trust-Phase I                              2,487,000         2,302,812               -        2,302,812
  Brunswick County Reimbursement                                               -           400,000               -          400,000

                                                                       2,987,000         2,799,661                        2,799,661
                                                                                                                 -
     T o ta l r e st r i ct e d i n t e r g o ve r n m en t al

Miscellaneous income:
  Prepaid Discount Assessment                                          5,314,050         5,314,050               -        5,314,050
  Miscellaneous Revenue                                                  472,665            35,041         37,625            72,666

     Total miscellaneous                                               5,786,715         5,349,091         37,625         5,386,716

                                                                         887,500             880,771        8,092          888,863
Investment earnings
         Total revenue                                                 9,661,215         9,029,523         45,717         9,075,240



Expenditures:
Capital outlay:
  Wastewater System:
     Phase I                                                          60,898,195        58,033,628      2,053,307       60,086,935
     Phase II                                                         52,848,616        44,030,747      7,780,672       51,811,419
                                                                     113,746,811       102,064,375      9,833,979      111,898,354
           T o t a l       e x p e n d i t u r e s

           Revenues under expenditures                             (104,085,596)      (93,034,852)     (9,788,262)    (102,823,114)




   127
                                           Town of Oak Island, North Carolina                               Exhibit C-3
                                                                                                            Page 2 of 2
                                           Wastewater Capital Projects Fund
                          Schedule of Revenue, Expenditures and Other Financing Sources (Uses)
                                             Budget and Actual (Non-GAAP)
                                            For the Year Ended June 30, 2011


                                                       Project          Prior              Current        Total
                                                    Authorization       Years               Year         to Date
Other financing sources (uses):
  Transfers In:
     General Fund                                        1,613,500          1,613,500                -       1,613,500
     Water Fund                                          1,760,000          1,760,000                -       1,760,000
     Accommodations Tax Fund                               331,041            331,041                -         331,041
     Commercial Wastewater Project                         266,706            266,706                -         266,706
     Capital Reserve Fund                                  462,253            462,253                -         462,253
  Transfers Out:
     General Fund                                      (1,613,500)          (875,000)       (738,500)       (1,613,500)
     Water Fund                                        (1,760,000)          (450,000)     (1,310,000)       (1,760,000)
     Wastewater Fund                                  (10,055,102)        (5,398,164)     (4,656,937)      (10,055,101)
     Accommodations Tax Fund                             (331,041)           (331,041)              -         (331,041)
     Capital Reserve Fund                                (728,959)          (328,959)      (400,000)          (728,959)
     Reuse Park Phase I                                  (200,000)           (200,000)             -          (200,000)
  Debt issued
     NC State Revolving Loan Fund-1st Allocation         9,000,000          6,678,228         356,611        7,034,839
     NC State Revolving Loan Fund-2nd Allocation         8,500,000          4,538,683         730,680        5,269,363
     Loan Proceeds-Land Acquisition                      3,710,000          3,710,000               -        3,710,000
     Revenue Bond Proceeds-Series 2008A-Ph I            33,040,698         33,601,329               -       33,601,329
     Revenue Bond Proceeds-Series 2008B-Ph II           49,420,000         49,006,528               -       49,006,528
                                                        10,670,000                  -      10,592,112       10,592,112
    Revenue Bond Proceeds-Series 2011-Ph II
                                                       104,085,596         94,385,104       4,573,966       98,959,070
         Total other financing sources
                                                                    -       1,350,252
         Revenues and other financing sources
         over (under) expenditures                                                        (5,214,296)       (3,864,044)




   128
Town of Oak Island, North Carolina                                                               Exhibit C-4
Combining Statement of Net Assets
    Other Enterprise Funds
         June 30, 2011

                                                                                                                                   Total
                                                                                            Non-Major Enterprise Funds


                                                                                                           South Harbour Golf
                                                                                 Solid Waste Fund             Course Fund
ASSETS
Current assets:
Cash and cash equivalents                                                                     319,489                    135,424           454,913
Accounts Receivable, net                                                                       53,860             -                         53,860
Other receivables                                                                               1,364             -                          1,364
Inventories                                                                            -                                   8,528             8,528

 Total current assets                                                                         374,713                    143,952           518,665
Non-current assets:
  Capital Assets:
   Land and improvements                                                               -                           1,401,795          1,401,795
   Buildings                                                                               5 , 3 0 4            9 8 , 2 0 5             103,509
   Motor Vehicles                                                                              53,350            -                       53,350
   Heavy Vehicles                                                                             688,417            -                      688,417
   Equipment                                                                           -                              73,471             73,471
          Less Accumulated depreciation                                                     (498,611)           (42,911)              (541,522)

              Total non-current assets                                                248,460                          1,530,560      1,779,020

              Total assets                                                            623,173                          1,674,512      2,297,685

LIABILITIES
Current Liabilities:
 Accounts payable                                                                              54,599                 7 , 7 1 0             62,309
   Salaries payable                                                                             5,861                 4 , 9 7 5             10,836
   Unearned revenue                                                                                                    3 1 7                   317
   Compensated absences                                                                         6,078                 4 , 8 7 2             10,950

   Total current liabilities                                                                   66,538                     17,874            84,412
Non-current liabilities:
  Other postemployment benefits                                                                10,295             -                         10,295
  Compensated absences                                                                          6,078                 4 , 8 7 2             10,950

     Total non-current liabilities                                                             16,373                 4 , 8 7 2             21,245

     Total liabilities                                                                         82,911            2 2 , 7 4 6               105,657

NET ASSETS
  I n v e s t e d i n c a p i t a l a ss e t s , ne t o f re l a t e d d e b t        248,460                          1,530,560      1,779,020
  Unrestricted                                                                           291,802                         121,206        413,008


     Total net assets                                                                 540,262                          1,651,766      2,192,028




                                                                                                                                                     129
                                                 Town of Oak Island, North Carolina                          Exhibit C-5
                               Combining Statement of Revenues, Expenses and Changes in Fund Net Assets
                                                        Other Enterprise Funds
                                                   For the Year Ended June 30, 2011

                                                                     Non-Major Enterprise Funds               .



                                                                                     South Harbour Golf
                                                             Solid Waste Fund          Course Fund          Total
REVENUES
Charges for services                                                  845,099                    121,700           966,799
Miscellaneous                                                        2,33 8                       11,219            13,557
Total operating revenues                                                 847,437                 132,919           980,356

OPERATING EXPENSES
Administration                                                       -                           177,836           177,836
Waste collection and treatment                                           880,244            -                      880,244
Repairs and maintenance                                              -                        70,380                70,380
Depreciation                                                              47,364            9,80 2                  57,166
Total Operating Expenses                                                 927,608          258,018                 1,185,626
Operating income (loss)                                             (80,171)             (125,099)                (205,270)


NON-OPERATING REVENUES (EXPENSES)
Interest and investment revenue                                              797                     184               981
Operating grants and contributions                                         5,825            -                        5,825
Total non-operating revenue (expenses)                                     6,622                1 8 4                6,806
Income (loss) before contributions and transfers                    (73,549)             (124,915)                (198,464)


Transfers in                                                         26,544                      119,190           145,734
     Change in net assets                                                (47,005)          (5,725)                 (52,730)
Total net assets - beginning                                       587,267                      1,657,491         2,244,758
Total net assets - ending                                          540,262                      1,651,766         2,192,028




    130
                                              Town of Oak Island, North Carolina                                      Exhibit C-6
                                          Combining Statement of Cash Flows                                           Page 1 of 2
                                               Other Enterprise Funds
                                               For the Year Ended June 30, 2011

                                                                  Non-Major Enterprise Funds
                                                                 Solid             South Harbour
                                                                 Waste              Golf Course
                                                                 Fund                  Fund           Total

Cash Flows From Operating Activities
Cash received from customers                                          848,430              133,062       981,492
Cash paid for goods and services                                    (721,712)           (131,047)      (852,759)
Cash paid to employees                                              (143,656)           (118,936)      (262,592)
    Net cash provided by (used in) operating
    activities                                                       (16,938)           (116,921)      (133,859)


Cash Flows From Noncapital Financing Activities
Operating grants received                                                5,735                                5,735
Transfers-in                                                           26,544              119,190      145,734
     Net cash provided by (used in) noncapital
   financing activities                                                32,279              119,190      151,469



Cash Flows Provided By Investing Activities
Interest earned                                                            797                 184             981

                                                                           797                 184             981
 Net cash provided by investing activities
   Net increase (decrease) in cash and cash                            16,138                 2,453      18,591
   equivalents

Cash and cash equivalents:
 Beginnin                                                             303,351              132,971      436,322


 Ending                                                               319,489              135,424      454,913

                      (Continued)




     131
                                             Town of Oak Island, North Carolina                                       Exhibit C-6
                                           Combining Statement of Cash Flows                                          Page 2 of 2
                                                Other Enterprise Funds
                                              For the Year Ended June 30, 2011


                                                                   Non-Major Enterprise Funds
                                                                Solid             South Harbour
                                                                Waste              Golf Course
                                                                Fund                  Fund              Total


Reconciliation of Operating Income (Loss) to Net Cash
Provided By (Used In) Operating Activities


Operating income (loss)                                             (80,171)            (125,099)        (205,270)



Adjustments to reconcile operating income (loss) to net
cash provided by (used in) operating activities:
  Depreciation                                                          47,364               9,802         57,166
  Changes in assets and liabilities:
(Increase) decrease in:
    Accounts receivable                                                   993                       -           993
    Inventory                                                                             (2,207)          (2,207)
Increase (decrease) in:
    Accounts payable                                                     7,456           (2 , 0 6 6 )       5,390
   Unearned revenue                                                                             143             143
   Accrued wages                                                          368                   700         1,068
   Accrued vacation pay                                                  1,890               1,806          3,696
   Accrued OPEB liability                                                5,162                   -          5,162


   Total adjustments                                                    63,233               8,178         71,411
     Net cash provided by (used in) operating
     activitie                                                        (16,938)          (116,921)        (133,859)




                                                                                                                              132
                                                  Town of Oak Island, North Carolina                                       Exhibit C-7
                                                           Solid Waste Fund                                                Page 1 of 2
                                 Schedule of Revenue, Expenditures and Other Financing Sources (Uses)
                                                    Budget and Actual (Non-GAAP)
                                                   For the Year Ended June 30, 2011

                                                                           Final                           Variance
                                                                        Budgeted                             With Final
                                                                        Amounts              Actual            Budget
      Operating revenue:
      Charges for services:
        Charges for collection                                                 852,000           845,099         (6,901)
        Other operating revenue                                                      -             2,338          2,338

          Total operating revenue                                              852,000           847,437         (4,563)
      Non-operating revenue:
        Solid waste disposal tax                                                   6,000           5,825          (175)
        Interest on investments                                                        -             797            797

                                                                                                                    622
          Total non-operating revenue                                              6,000           6,622
          Total revenue
                                                                               858,000           854,059         (3,941)

      Expenditures:
      Salaries                                                                 144,337           144,024
      Fringe benefits                                                           57,753            57,634
      Operating expenditures                                                   232,443           222,441
      Maintenance and repair - vehicles                                         43,902            42,997
      Recycling program                                                        366,109           366,106
      Yard waste recycling                                                      40,000            39,990

          Total sanitation operation expenditures                              884,544           873,192         11,352

                Total revenue under expenditures                               (26,544)         (19,133)          7,411
      Other financing sources (uses)
      Transfers in:
         Accommodations tax                                                     23,000            23,000               -
        General Fund                                                               3,544           3,544               -

                                                                                                                       -
               Total other financing sources                                    26,544            26,544
               Revenue and other financing sources over (under)                      -
               expenditures and other uses                                                         7,411          7,411




133
                                         Town of Oak Island, North Carolina                                     Exhibit C-7
                                                  Solid Waste Fund                                              Page 2 of 2
                        Schedule of Revenue, Expenditures and Other Financing Sources (Uses)
                                           Budget and Actual (Non-GAAP)
                                          For the Year Ended June 30, 2011

                                                                 Final                             Variance
                                                                Budgeted                           With Final
                                                                Amounts            Actual          Budget



Reconciliation from budgetary basis
  (modified accrual) to full accrual:
  Revenue and other sources over (under)
     expenditures and other uses                                                           7,411
  Depreciation                                                                          (47,364)
  (Increase) decrease in:
     Accrued vacation pay                                                                (1,890)
     Other postemployment benefits                                                       (5,162)

Change in net assets                                                                    (47,005)




                                                                                                                        134
                                                                                                  Exhibit C-8
                                                                                                  Page 1 of 2

                                         Town of Oak Island, North Carolina
                                          South Harbour Golf Course Fund
                        Schedule of Revenue, Expenditures and Other Financing Sources (Uses)
                                           Budget and Actual (Non-GAAP)
                                          For the Year Ended June 30, 2011

                                                              Final                              Variance
                                                            Budgeted                              With Final
                                                            Amounts                                 Budget
                                                                                  Actual
Operating revenue:
Charges for services:
  Annual Membership                                                 26,450            28,074            1,624
  Green Fee Play                                                   108,477            93,626         (14,851)
  Merchandise Sales                                                 12,676            11,219          (1,457)

      Total operating revenue                                      147,603           132,919         (14,684)
                                                                         -                 184           184
Non-operating Revenue
 Interest on investments
      Total revenue                                                147,603           133,103         (14,500)



Expenditures:
Administration
  Salaries                                                          43,270            41,061
  Fringe benefits                                                    3,406             3,130
  Operating expenditures                                            35,580            26,189
           Total administration                                     82,256            70,380          11,876

 Maintenance
  Salaries                                                          84,063            78,575
  Fringe benefits                                                   31,904            31,181
  Operating expenditures                                            68,570            66,274

          Total maintenance                                        184,537           176,030           8,507

          Total expenditures                                       266,793           246,410          20,383
                                                                                                  Exhibit C-8




    135
                                                                                                  Page 2 of 2

                                          Town of Oak Island, North Carolina
                                           South Harbour Golf Course Fund
                         Schedule of Revenue, Expenditures and Other Financing Sources (Uses)
                                            Budget and Actual (Non-GAAP)
                                           For the Year Ended June 30, 2011

                                                                 Final                           Variance
                                                               Budgeted                           With Final
                                                               Amounts                              Budget
                                                                                  Actual
          Total revenue under expenditures                        (119,190)         (113,307)          5,883



Other financing sources:
Transfers in:
  Accommodations tax                                                117,418           117,418              -
  General Fund                                                        1,772             1,772              -

          Total other financing sources                             119,190           119,190              -


                                                                          -              5,883         5,883
          Revenue and other financing sources under
          expenditures



Reconciliation from budgetary basis
 (modified accrual) to full accrual:
              Revenue and other sources under
                expenditures and other uses                                              5,883
  Depreciation                                                                         (9,802)
  (Increase) decrease in:
       Accrued vacation pay                                                            (1,806)


Change in net assets                                                                   (5,725)




    136
                                                                                                           Exhibit C-9


                                          Town of Oak Island, North Carolina
                                                  Sewer District Fund
                         Schedule of Revenue, Expenditures and Other Financing Sources (Uses)
                                            Budget and Actual (Non-GAAP)
                                           For the Year Ended June 30, 2011

                                                               Final                                Variance
                                                             Budgeted                               With Final
                                                             Amounts              Actual            Budget
Non-operating Revenue
  Sewer District Fees - Current                                       530,000           407,826            (122,174)
  Sewer District Fees - Prior years                                         -            16,363               16,363
  Interest on investments                                                   -               514                  514

      Total revenue                                                   530,000           424,703            (105,297)



Expenditures:
          Total expenditures                                                 -                  -                   -
          Total revenue over expenditures                              530,000           424,703            (105,297)




 Other financing uses:
 Transfers out:
    Wastewater Fund                                                  (530,000)         (424,703)            (105,297)
Revenue and other financing sources over
expenditures                                                     -                 -                   -




                                                                                                                  137
Other Schedules




                  138
                                                Town of Oak Island                                       Exhbit D -1
                                     Schedule of Ad Valorem Taxes Receivable
                                                  June 30, 2011



                                  Uncollected                                                          Uncollected
                                   Balance                                          Collections         Balance
        Fiscal Year              June 30, 2010             Additions               and Credits       June 30, 2011
         2010-2011                           -               6,645,495                6,314,365             331,130
 2009-2010                             229,677                                   107,962                    121,715
                                                                       -
 2008-2009                              85,918                         -         23,269                      62,649
 2007-2008                              35,301                         -         8,115                       27,186
 2006-2007                              16,150                         -         3,019                       13,131
 2005 - 2006                            15,982                         -         3,169                       12,813
          2004 - 2005              10,452                              -                     875         9,577
          2003 - 2004              10,765                              -                     698        10,067
          2002 - 2003               9,253                              -                     286         8,967
          2001 - 2002               8,818                              -                     260         8,558
 2000 - 2001                            4,621                                               4,621                 -
                                       426,937                  6,645,495                6,466,639           605,793

      Less: Allowance for uncollectible accounts                                                            60,177

      Ad valorem taxes - net                                                                               545,616


                                                   Reconcilement with revenues:
                                                        Taxes, ad valorem, General Fund                   6,505,967
                                                        Other credits and adjustments                          1,619
                                                        Taxes written off                                      4,621
                                                                                                          6,512,207
                                                     Less penalties and interest collected                   (45,568)
                                                                                                           6,466,639




139
                                               Town of Oak Island, North Carolina                                          Exhibit D-2
                                          Analysis of Current Tax Levy - Town-Wide Levy
                                                    Year Ended June 30, 2011

                                                                                                              Total Levy
                                                                                                     Property
                                                                                                     Excluding
                                                          Town-Wide                                  Registered        Registered
                                              Town-Wide                            Total             Motor                Motor
                                              Valuation               Rate         Levy                Vehicles          Vehicles
Original levy:
 Property taxed at current rate                    4,263,685,806      0.1550         6,608,713          6,552,515            56,198
  Registered motor vehicles taxed
   at prior year's rate                               18,879,286      0.1400             26,431                              26,431
 Annexed area taxed at prior rate                     12,827,618      0.1400            17,959              17,959
 Late listing penalties                                      -                            134                  134
           Total levy                              4,295,392,710                     6,653,237          6,570,608            82,629

Discoveries:
 Prior year taxes                                      1,101,178                            1,632             1,632

Abatements                                            (6,047,742)                          (9,374)         (8,737)            (637)
       Total valuation                             4,290,446,146

         Net levy                                                                    6,645,495          6,563,503            81,992
Uncollected taxes at June 30, 2011                                                     331,130            321,363             9,767
         Current year's taxes collected                                              6,314,365          6,242,140            72,225

Current levy collection percentage                                                         95.02%           95.1 0%         88.09%




                                                                                                                             140
                                                 Town of Oak Island, North Carolina               Exhibit D-3
                                                 Agency Fund
                                 Statement of Changes in Assets and Liabilities
                                       For the Year Ended June 30, 2011



                                               Balance                                          Balance
                                             July 01, 2010      Additions         Deletions   June 30, 2011


Beach Maintenance Fund

Assets
 Cash and investments                                  -             15,840              -          15,840



Liabilities
  Accounts payable and accrued liabilities             -             15,840              -          15,840




                                                                                                       141
Statistical Section




   142
(This Page Was Intentionally Left Blank)
                              STATISTICAL SECTION

This part of the Town of Oak Island's comprehensive annual financial report presents
detailed information as a context for understanding what the information in the financial
statements, note disclosures, and required supplementary information say about the
Town of Oak Island's overall financial condition. The schedules included in this section
can be categorized as follows:

Financial Trends
          These schedules contain trend information to help the reader understand
         how the government's financial performance and well-being have changed
         over time.

Revenue Capacity
        These schedules contain information to help the reader assess the
       government's most signigicant revenue source, the property tax.

Debt Capacity
        These schedules present information to help the reader assess the
       affordability of the government's current levels of outstanding debt and
       the government's ability to issue additional debt in the future.

Demographic and Economic Information
        These schedules offer demographic and economic indicators to help the
       reader understand the environment within which the government's
       financial activities take place.

Operating Information
         These schedules contain service and infrastructure data to help the reader
        understand how the information in the government's financial report relates
        to the services the government provides and the activities it performs.

Sources: Unless otherwise noted, the information in these schedules is derived
from the comprehensive annual financial reports for the relevant year. The Town
implemented GASB Statement 34 in 2004; schedules presenting government-wide
information include information beginning in that year.




                                  144
TOWN OF OAK ISLAND, NORTH CAROLINA

Net Assets By Component
Last Eight Fiscal Years
(accrual basis of accounting)

                                                                         Year Ending June 30,
                                                                2004                  2005        2006

Governmental activities
   Invested in capital assets, net of related debt         5,407,877              6,212,996      6,984,228
   Restricted                                               635,473                 469,495        562,671
   Unrestricted                                            4,558,779              7,834,744      9,751,755

Total governmental activities net assets                  10,602,129              14,517,235    17,298,654

Business-type activities
    Invested in capital assets, net of related debt         9,854,050             13,077,466    13,312,018
    Restricted                                                    -                      -               -
    Unrestricted                                              784,602              1,409,328     1,167,800

Total business-type acctivities net assets                10,638,652              14,486,794    14,479,818

Primary government
    Invested in capital assets, net of related debt       15,261,927              19,290,462    20,296,246
    Restricted                                              635,473                  469,495       562,671
    Unresticted                                            5,343,381               9,244,072    10,919,555

Total primary government net assets                       21,240,781              29,004,029    31,778,472




Notes:
    Eight years presented due to implementation of GASB 34 in Fiscal Year 2004.




                                                                                                             145
TOWN OF OAK ISLAND, NORTH CAROLINA




   2007        2008         2009         2010        2011



11,367,542   13,385,214   12,186,929   16,607,639    17,522,549
 3,525,983    1,201,767    2,554,360    2,738,128     6,567,058
 5,691,674    5,787,309    7,477,697    5,111,876     2,828,017

20,585,199   20,374,290   22,218,986   24,457,643    26,917,624


13,346,979   17,144,378   18,522,970   28,836,777    22,390,247
       -            -            -             -     30,693,040
 1,605,437    (129,671)    (652,921)   (4,794,831)   (2,122,361)

14,952,416   17,014,707   17,870,049   24,041,946    50,960,926


24,714,521   30,529,592   30,709,899   45,444,416    39,912,796
 3,525,983    1,201,767    2,554,360    2,738,128    37,260,098
 7,297,111    5,657,638    6,824,776      317,045       705,656

35,537,615   37,388,997   40,089,035   48,499,589    77,878,550




                                                                   146
                                                                                               Table 1


Changes in Net Assets
Last Eight Fiscal Years
(accrual basis of accounting)

                                                                                        Year Ending June 30,
                                                                               2004                  2005       2006

Expenses
Governmental activities:
    General Government                                                      2,001, 158          1,970,599       2,536,890
    Public Safety                                                           3,083,367           3,177,712       3,361,638
    Transportation                                                            953,007           1,254,597       1,105,765
    Environmental Protection                                                  603,147             99,541          621,421
    Cultural and Recreation                                                   887,118           1,255,861       1,854,788
    Interest on long-term debt                                                101,297             57,372           51,989
Total governmental activities expenses                                      7,629,094           7,815,682       9,532,491
Business-type activities:
    Water                                                                    1,634,529          2,063,521       2,060,316
    Wastewater                                                                 619,978            716,819         614,162
    Solid Waste                                                                585,814            628,978         723,015
    Golf Course                                                                    -                  -                 -
Total business-type activities expenses:                                     2,840,321          3,409,318       3,397,493
Total primary government expenses                                           10,469,415         11,225,000      12,929,984

Program Revenues
Governmental activities:
       Charges of services:
               General Government                                                  -              38,460          209,562
               Public Safety                                                1,003,927              1,041,525      976,032
               Transportation                                                      -              59,806           49,134
               Environmental Protection                                       223,750             997,780       1,481,070
               Cultrual and Recreation                                        67,242              119,947         198,788
       Operating grants and contributions                                      1,055,144          340,474         447,792
       Capital grants and contributions                                            -                   -          422,312
Total government activities program revenue                                 2,350,063           2,597,992       3,784,690
Business-type activities:
       Charges of services:
               Water                                                        1,716,110           1,892,817       1,954,676
               Wastewater                                                     550,747             584,968         679,317
               Solid Waste                                                    619,881             597,625         645,971
               Golf Course                                                        -                    -                -
       Operating grants and contributions                                       193,890                -                -
       Capital grants and contributions                                       792,146              5,310,060        3,990
T o t a l b u s i n e ss -t yp e a c ti vi t ie s p ro g ra m re ve n u e   3,872,774           8,385,470       3,283,954
Total primary government program revenues                                   6,222,837          10,983,462       7,068,644

Net (Expense)/Revenue
    Governmental activities                                                 (5,279,031)         (5,217,690)    (5,747,801)
    Business-type activities                                                 1,032,453           4,976,152       (113,539)
Total primary government net revenue                                           (4,246,578)        (241,538)    (5,861,340)

(Continued on next page)




                                                                                                                             147
TOWN OF OAK ISLAND, NORTH CAROLINA
                                                             Table 2
                                                          Page 1 of 2




    2007           2008          2009          2010          2011




 2,656,802       2,543,281     2,609,454     2,818,584       2,778,225
 4,140,542      4,460,532     4,865,023      5,708,808       5,627,760
   963,276       1,124,923     1,091,194     1,220,894       1,175,304
 1,638,627        913,861        168,901       201,611         186,828
 1,046,713       1,103,879     1,251,666     1,327,630       1,260,386
   278,218         100,775      348,881        547,956         654,795
10,724,178      10,247,251    10,335,119    11,825,483      11,683,298

 2,030,019       2,268,926     2,306,039     2,360,243       2,384,420
   749,095        847,312       877,710      1,305,677       9,135,515
   684,144         751,182       828,169       857,941         927,608
   244,545        251,594       251,971        256,183         258,018
 3,707,803       4,119,014     4,263,889     4,780,044      12,705,561
14,431,981      14,366,265    14,599,008    16,605,527      24,388,859




    1,050          1,999         1,290        260,452          286,690
   943,087        902,128     1,389,593     1,426,437        1,551,164
      (4,382)         -             -             -                  -
   23,082         310,884      273,169        268,250          266,223
   617,276        123,270       134,658       142,649          124,152
 1,324,283       491,894       593,557        674,770          785,599
   303,480       322,534      1,033,792     3,615,699          129,225
 3,207,876      2,152,709     3,426,059     6,388,257        3,143,053


 2,213,385      2,516,987     2,775,465      2,869,997       3,194,533
   743,500        745,123      847,739         876,112       2,206,517
   660,241        747,861      836,354         847,213         847,437
   118,655        160,400       129,705        131,266         132,919
       -              -         48,574          5,715            5,825
       -        1,560,049       38,616       4,862,482      34,194,519
 3,735,781      5,730,420     4,676,453      9,592,785      40,581,750
 6,943,657      7,883,129     8,102,512     15,981,042      43,724,803



 (7,516,302)    (8,094,542)   (6,909,060)   (5,437,226)     (8,540,245)
    27,978       1,611,406      412,564      4,812,741      27,876,189
 (7,488,324)    (6,483,136)   (6,496,496)     (624,485)     19,335,944




                                                                          148
TOWN OF OAK ISLAND, NORTH CAROLINA
Changes in Net Assets
Last Eight Fiscal Years
(accrual basis of accounting)

                                                                            Year Ending June 30,
                                                                2004                 2005          2006


General Revenue and Other Changes in Net Assets
Governmental activities:
    Taxes
           Property taxes, levied for general purposes       4,825,150            4,740,502         4,773,346
           Local option sales tax                            1,480,951            1,645,516         1,825,885
           Accommodation Tax                                   649,966              692,478           789,577
           Other Taxes                                              -                    -                  -
    Grants and contributions not restricted                    571,514              615,060           632,706
    Unrestricted investment earnings                            28,820              114,599           323,328
    Miscellaneous                                                  19,320                -                  -
    Gain (loss) on sale of assets                                 185,752                -                  -
    Extraord ianary item-environmental remediation                  -                    -                  -
    Transfers in (out)                                        (682,398)              1,324,641        184,378
Total governmental activities                                7,079,075            9,132,796         8,529,220
Business-type activities:
    Interest and investment earnings                            8,743               56,970            130,444
    Miscellaneous                                                  -                139,661           160,497
    Gain on sale of assets                                         -                      -                 -
    Transfers in (out)                                         682,398              (1,324,641)     (184,378)
Total business-type activities                                 691,141              (1,128,010)       106,563
Total primary government                                     7,770,216            8,004,786         8,635,783

Changes in Net Assets
Governmental activities                                      1,800,044            3,915,106         2,781,419
Business-type activities                                     1,723,594               3,848,142         (6,976)
Total primary government                                     3,523,638            7,763,248         2,774,443


Notes:
    Eight years presented due to implementation of GASB Statement 34 in Fiscal Year 2004.




                                                                                                                 149
TOWN OF OAK ISLAND, NORTH CAROLINA
                                                            Table 2
                                                         Page 2 of 2




    2007         2008          2009           2010          2011




 4,972,207    5,299,352    5,981,663        5,928,590       6,699,824
 2,005,558    1,967,505    1,802,031        1,640,696       1,639,858
   936,253      964,054      930,170          887,478         950,143
        -            -             -              -             65,128
   726,866      727,434      791,850          581,317         610,523
   645,011      158,552       68,872          14,201            15,586
    18,009       36,269        6,926          63,305            62,481
        -         7,500        (240,090)          -                  -
        -      (738,561)    (192,741)        (90,404)         (21,022)
  (319,644)    (347,552)    (394,925)      (1,349,300)        977,705
 8,984,260    8,074,553    8,753,756        7,675,883      11,000,226

   124,530      103,333      47,853           9,856            20,496
       -            -            -               -                  -
     4 4 6          -            -               -                  -
  31 9,644      347,552      394,925       1,349,300        (977,705)
   444,620     450,885      442,778        1,359,156        (957,209)
 9,428,880    8,525,438    9,196,534       9,035,039       10,043,017


 1,467,958     (19,989)    1,844,696       2,238,657        2,459,981
  472,598     2,062,291     855,342        6,171,897       26,918,980
 1,940,556    2,042,302    2,700,038       8,410,554       29,378,961




  150
(This Page Was Intentionally Left Blank)




                                           151
                                                                                                                             Table 3
TOWN OF OAK ISLAND, NORTH CAROLINA
Governmental Activities Tax Revenues By Source
Last Ten Fiscal Years




Fiscal Year                                                                                Video             Alcohol
  Ended            Property        Sales          Accommodations         Franchise      Programming         Beverage
  June 30            Tax           Tax                 Tax                  Tax             Tax                Tax       Total

     2002        3,466,477         1,135,855               539,387          277,392                                  0   5,419,111
     2003        3,619,019         1,269,835               580,441          394,739                             29,202   5,893,236
     2004        4,785,534         1,480,951               649,966          421,495                             30,205   7,368,151
     2005        4,833,108         1,645,516               692,478          451,434                             31,515   7,654,051
     2006        4,763,084         1,825,885               789,577          485,462                             32,548   7,896,556
     2007        4,963,214         2,005,558               936,253          549,818                             34,845   8,489,688
     2008        5,306,256         1,967,505               964,154          359,803          153,994            37,280   8,788,992
     2009        5,833,628         1,802,031               930,170          415,512          191,626            37,100   9,210,067
     2010        5,942,136         1,640,696               887,658          441,436          187,180            11,961   9,111,067
     2011        6,505,967         1,639,858               950,143          466,017          192,221            37,877   9,792,083


Note: During FY 07-08, Franchise Fees were eliminated by the State and replaced by the Video Programming Tax.




                                                                                                                                 152
TOWN OF OAK ISLAND, NORTH CAROLINA


Fund Balances, Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)


                                             2002        2003        2004      2005

General Fund
  Reserved                                   535,215     986,248   1,070,904   1,194,006
  Unreserved                               1,090,212   1,653,089   2,331,676   4,676,619
  Non-spendable                                  -           -           -             -
  Restricted                                     -           -           -             -
  Committed                                      -           -           -             -
  Assigned                                       -           -           -             -
  Unassigned                                     -           -           -             -
Total general fund                         1,625,427   2,639,337   3,402,580   5,870,625

All Other Governmental Funds
  Reserved                                  141,674     131,771     134,650     321,168
  Unreserved, reported in:
      Special Revenue Funds                  625,185   1,099,239   1,117,148   2,216,150
      Capital Projects Funds                 254,256     257,014     57,361    1,465,057
  Non-spendable in Special Revenue Funds         -           -           -             -
  Restricted in Special Revenue Funds            -           -           -             -
  Committed in Capital Projects Funds            -           -           -             -
Total all other governmental funds         1,021,115   1,488,024   1,309,159   4,002,375

Total governmental funds                   2,646,542   4,127,361   4,711,739   9,873,000




                                                                                       153
                                                                   Table 4




2006           2007         2008         2009         2010         2011



1,321,411   1,507,673    3,039,927    3,309,170       3,121,360            -
4,283,868   3,743,723    2,324,010    3,399,438       2,549,135            -
     -            -            -            -             -           33,756
     -            -            -            -             -        3,058,316
     -            -            -            -             -          424,667
     -            -            -            -             -          388,199
     -            -            -            -             -        2,668,659
5,605,279   5,251,396    5,363,937    6,708,608    5,670,495       6,573,597
300,101     3,132,151      254,575     315,801          318,271            -




1,331,246   2,305,284    3,462,467    3,616,626       3,142,790            -
744,217       318,863    1,725,379    3,863,103         470,366            -
     -            -            -            -             -           55,435
     -            -            -            -             -        3,453,307
     -            -            -            -             -          536,664
2,375,564   5,756,298    5,442,421    7,795,530    3,931,427       4,045,406

7,980,843   11,007,694   10,806,358   14,504,138   9,601,922      10,619,003




    154
TOWN OF OAK ISLAND, NORTH CAROLINA
Changes in Fund Balances, Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)


                                     2002             2003             2004             2005           2006
Revenues



Ad valorem taxes                  3,466,477         3,619,019        4,785,534        4,833,108         4,763,084
Other taxes and licenses          1,852,306         2,030,936        2,292,413        2,494,248         2,766,128
Unrestricted intergovernmental      209,244           328,626         412,170           458,806           489,880
Restricted intergovernm ental       778,502         1,074,474          946,841          899,030         1,428,574
Permits and fees                    173,843           304,555         404,868           487,185           391,457
Sales and services                  351,218           370,778         413,287           329,842           486,021
Investment earnings                 44,242            33,652           28,823           114,599           323,328
Miscellaneous                       88,734          1,704,102          989,772          981,236         1,371,017

Total revenues                    6,964,566         9,466,142        10,273,708       10,598,054       12,019,489
Expenditures



General Government                1,899,820         1,980,978        2,045,287        1,986,125         3,912,780
Public Safety                     2,522,069         2,905,139        3,093,918        3,035,993         3,541,059
Transportation                      974,052           740,935          991,293        1,337,887         1,188,093
Environmental protection            152,465           143,155          681,337          126,097           611,311
Cultural and recreational         1,564,095           849,829        1,417,605        1,197,749         2,076,395
Debt Service
  Interest                          328,992           141,626          117,264          85,460             47,646
  Principal                         872,176         1,169,504        1,223,758        1,156,280           344,175

Total expenditures                8,313,669         7,931,166        9,570,462        8,925,591        11,721,459
                                                    1,534,976          703,246        1,672,463           298,030

Excess of revenues
over (under) expenditures         (1,349,103)
Other Financing
Sources (Uses)

Debt Issuances                      584,770          224,095           595,651          272,000          1,409,749
Transfers in                        315,167          375,252           540,737        2,303,754          1,643,500
Transfers out                           -           (700,078)        (1,223,135)       (979,113)       (1,459,122)

Total other financing               899,937         (100,731)          (86,747)       1,596,641         1,594,127
sources (uses)

Net change in fund balances        (449,166)        1,434,245          616,499        3,269,104         1,892,157

Capital outlay included in
total expenditures                  255,563          388,622         1,145,378          784,819         3,897,623

Debt service as a percentage
 of noncapital expenditures                 14.9%            17.4%            15.9%            15.3%          5.0%




                                                                                                               155
                                                                     Table 5




  2007            2008              2009             2010           2011




4,963,214       5,306,256        5,833,628         5,942,136         6,505,967
3,134,220       3,115,973        2,740,787         2,533,834         2,632,584
 542,779          559,452          791,850          581,317            610,523
1,508,878       1,132,564        3,291,287         1,908,855         2,032,749
 316,213          212,613          165,901           189,532           335,236
 366,541          388,682         430,006           635,174            632,458
 645,011         436,062           163,029           29,465             19,301
 760,016          225,457          62,244           224,287            164,816

12,236,872      11,377,059       13,478,732        12,044,600       12,933,634




4,826,238       2,827,219        5,159,304         5,662,558         2,635,942
6,440,734       9,782,918        8,798,376         5,228,736         5,190,729
1,079,222       1,043,830        1,164,819         1,063,382         1,099,366
1,627,464         916,103          155,129           186,713           171,984
1,367,281       1,244,600        1,170,426         1,185,947         1,203,127

  84,298          275,353          241,949           719,169           752,320
 508,296          912,311          914,239         1,551,011         1,928,790

15,933,533      17,002,334       17,604,242        15,597,516       12,982,258


(3,696,661)     (5,625,275)      (4,125,510)         (3,552,916)      (48,624)




 5,151,000       5,721,000           8,218,215            -              88,000
 1,498,925       1,310,072        1,526,522         1,368,766         3,695,659
(1,818,569)     (1,607,133)      (1,921,447)       (2,718,066)      (2,717,954)

4,831,356       5,423,939        7,823,290         (1,349,300)       1,065,705


1,134,695        (201,336)       3,697,780         (4,902,216)       1,017,081



7,068,528       5,719,117        7,058,008         3,332,698           579,263


         6.7%            10.5%             11.0%            18.5%          21.6%




                                                                                   156
                                                                                                                Table 6
TOWN OF OAK ISLAND, NORTH CAROLINA
Assessed Value and Estimated Actual Value of Taxable Property
Last Ten Fiscal Years

      Fiscal                                                                                                    Total
          Year                                           Public                     Less:     Total Taxable    Direct
       Ended            Real       Personal             Service     Mot or       Tax Exempt     Assessed       Tax
        June 30,      Property     Property            Companies   Vehicles       Property        Value        Rate

  2   0   0   2     841,965,270    1 5 ,4 7 1, 2 64    9,856,584   52,327, 025    1,145,225      918,474,918   0.3800
  2   0   0   3     870,010,900    1 5 ,3 3 3, 7 36   10,070,775   54,959, 727    2,105,873     948,269,265    0.3800
  2   0   0   4    1,231,968,780   1 5 ,4 1 5, 6 61   9,973,170    57,528, 341    2,536,467   1,312,349,485    0.3650
  2   0   0   5    1,277,107,430   1 4 ,6 7 6, 8 70   11,790,912   62,622, 873    2,959,228   1,363,238,857    0.3500
  2   0   0   6    1,347,859,840   1 7 ,2 2 2, 1 64   12,946,463   66,808, 965    2,778,038   1,442,059,394    0.3300
  2   0   0   7    1,403,618,416   1 7 ,7 3 5, 7 23   15,003,707   66,582, 294    2,196,822   1,500,743,318    0.3300
  2   0   0   8    4,095,479,230   2 6 ,4 5 3, 4 02   16,649,108   64,269, 743    6,998,541   4,195,852,942    0.1245
  2   0   0   9    4,147,111,229   2 6 ,0 4 3, 5 27   17,175,781   60,612, 679    9,172,173   4,241,771,043    0.1400
  2   0   1   0    4,180,139,988   2 7 ,0 6 3, 8 89   16,788,818   55,585, 536   10,002,490    4,269,575,741   0.1400
  2   0   1   1    4,194,402,922   3 9 ,7 2 1, 8 52   17,141,597   55,135, 066   11,008,727   4,295,392,710    0.1550

Source: Town's Tax Department




  157
                                                                                                                                                              Table 7
                                                                    TOWN OF OAK ISLAND, NORTH CAROLINA
                                                                    Direct and Overlapping Property Tax Rates
                                                                    Last Ten Fiscal Years (rate per $100 of assessed value)


                                                                                                                    Overlapping Rates
                                                                                                            Brunswick              Smithville
                                                       Town of Oak Island                                   County                 Township


                                                                                         Total
   Fiscal Year Ended            Operating                   Debt Service                 Town
        June 30,                Rate                            Rate                      Rate

           2002                         0.24922                      0.13078                0.3800               0.5925                   0.0400    1.0125
           2003                         0.24174                      0.13827                0.3800               0.5200                   0.0400    0.9400
           2004                         0.26281                      0.10219                0.3650               0.5400                   0.0400    0.9450
           2005                         0.25891                      0.09109                0.3500               0.5400                   0.0400    0.9300
           2006                         0.30283                      0.02717                0.3300               0.5400                   0.0400   0.91 00
           2007                         0.29051                      0.03949                0.3300               0.5400                   0.0400   0.91 00
           2008                         0.09619                      0.02831                0.1245               0.3050                   0.0400    0.4695
           2009                         0.11272                      0.02728                0.1400               0.3050                   0.0225    0.4675
           2010                         0.08679                      0.05321                0.1400               0.3050                   0.0225    0.4675
           2011                         0.09247                      0.06253                0.1550               0.3050                   0.0225    0.4825

Notes:
(1) Property is revalued every four years. Property was revalued in January 1999, 2003, 2007 and 2011.
(2) The property tax rates listed above are based on unit-wide tax rates. Certain motor vehicles were taxed at the preceding year's rate.
(3) Overlapping rates are those of local and county governments that apply to property owners with the Town of Oak Island. Not all overlapping
rates apply to all Town of Oak Island property owners (e.g. the rates for the Smithville Township apply only to the town's property owners whose
property is located within the geographic boundaries of the Smithville Township).
(4) The Smithville Township is a hospital district. The levy collected is specific for debt retirement and capital improvements.
(5) Components of the Overlapping Rates are not available

Source: Town of Oak Island and Brunswick County Financial Reports




                                                                                                                                                        158
Table 8
T OWN OF OAK ISL AND, NORT H CAROLINA
Principal Property Tax Payers
Current Year and Past Two Years

                                                                                Fiscal Year 2011                       Fiscal Year 2010                   Fiscal Year 2009

                                                                                              Percentage                             Percentage                          Percentage
                                                                                              of Total                               of Total                            of Total
                                                                        2010                     Town          2009                     Town          2008                 Town
                                                                    Taxable                     Taxable    Taxable                     Taxable    Taxable                 Taxable
                                                Type of             Assessed                   Assessed    Assessed                   Assessed    Assessed               Assessed
Taxpayer                                        Property               Value         Rank        Value        Value         Rank        Value        Value      Rank       Value
Brunswick Electric Membership Corp.         U t i l i t y           13,148,543        1       0 . 5 5 %    12,382,729        2       0 . 2 9 %    12,739,291     2         0.31%
Ladane Enterprises LLC & ETAL              D e v e l o p e r        11,761,520        2       0 . 4 9 %    12,878,779        1          0.30%
BWPT LLC                                                            8,444,470         3          0.35%
Capel, Jesse                              Re side ntial             7,085,000         4       0 . 2 9 %    10,000,000         3      0 . 2 3 %    10,000,000      3          0.24%
Preserve Holding LLC                      Re side ntial             4,287,980         5       0 . 1 8 %    4,392,371          5      0 . 1 0 %    15,489,610      1          0.38%
Food Lion, Inc.                          Commercial/Retail          3,277,680         6       0 . 1 4 %    3,277,679          8      0 . 0 8 %    3,277,680       6          0.08%
Oak Island Property Holdings, LLC          Re side ntial            3,087,000          7      0 . 1 3 %    3,191,393          9      0 . 0 7 %    3,087,000       8          0.08%

Paragon Commercial Bank                 Commercial & Residential    3,060,000          8      0 . 1 3 %    3,164,393         10           0.07%                              0.00%
OCP LLC                                                             3,036,330          9         0.13%
Vereen, Susan Trustee                   Commercial & Residential    3,016,770         10         0.13%                                            3,043,290      10          0.07%
Mickey, Carl                                  Residential                                                  5,479,000          4      0 . 1 3 %    5,479,000      4           0.13%
Bellsouth Telecommunications                     Utility                                                   4,117,821          6      0 . 1 0 %    4,139,679      5           0.10%
Station Development Corp                       Developer                                                   3,762,050          7         0.09%
Brian Keith Keesee Construction                Developer
Air Travel, LLC                                 Airplane                                                                                          3,200,000       7          0.08%
Time Warner Enter/Advance Newhouse        Machinery/Equipment
Oak Island Marina                               Marina
Wrenn, Christopher B Etux Allison        Commercial & Residential                                                                                 3,060,000       9          0.07%


Totals                                                              60,205,293                2 . 5 0 %    62,646,215                1 . 4 7 %    63,515,550                 1.55%




Source: Town's Tax Department Records




   159
                                                                                                              Table 9
TOWN OF OAK ISLAND, NORTH CAROLINA
Property Tax Levies and Collections
Last Ten Fiscal Years


    Fiscal Year     Total Tax          Collected within the
      Ended         Levy for           Fiscal Year of Levy              Collections in   Total Collections to Date
     June 30         Fiscal Year       Amount          % of Levy      Subsequent Years    Amount           % of Levy

2   0   0   2       3,478,420         3,374,446      9   7   .01%            95,416      3,469,862           99.75%
2   0   0   3       3,597,410         3,489,809      9   7   .01%            98,634      3,588,443           99.75%
2   0   0   4       4,788,258         4,648,561      9   7   .08%           129,631      4,778,192           99.79%
2   0   0   5       4,771,213         4,687,158      9   8   .24%            74,479      4,761,637           99.80%
2   0   0   6       4,742,288         4,646,056      9   7   .97%            83,419      4,729,475           99.73%
2   0   0   7       4,944,595         4,857,815      9   8   .24%            73,648      4,931,463           99.73%
2   0   0   8       5,274,322         5,147,268      9   7   .59%            99,869      5,247,137           99.48%
2   0   0   9       5,931,901         5,698,669      9   6   .07%           170,583      5,869,252           98.94%
2   0   1   0       5,973,528         5,743,851      9   6   .16%           107,962      5,851,813           97.96%
2   0   1   1       6,645,495         6,314,365              95.02%             -        6,314,365           95.02%




                                                                                                               160
TOWN OF OAK ISLAND, NORTH CAROLINA
Ratio of Outstanding Debt by Type
Last Ten Fiscal Years


                          Governmental Activities                                    Business-Type Activities

       Fiscal Year

       Ended           Installment          Capital          Installment          Revenue          State Revolving    Capital
       June 30         Purchases            Leases           Purchases              Note              Loan Fund       Lease

      2   0   0   2    2,962,032          689,967           1,761,379             1,895,686                   -                 -
      2   0   0   3    2,017,161          689,430           1,498,954             1,737,712                   -           245,495
      2   0   0   4    1,422,048          656,635           1,453,747             1,579,738                   -           201,331
      2   0   0   5     468,848           725,555           2,898,191             1,421,764                   -           149,724
      2   0   0   6    1,617,156          642,820           2,833,423             1,263,790                   -           156,702
      2   0   0   7    6,378,511          524,169           4,714,156             1,105,816                   -            40,432
      2   0   0   8   11,311,227          400,142            819,272             33,987,842                   -            62,735
      2   0   0   9   17,949,723         1,065,622           744,573          83,372,526                  6,510,920             -
      2   0   1   0   16,506,893          957,441            666,237          82,489,298                 10,766,911             -
      2   0   1   1   14,777,318          846,226            584,086          92,169,458                 11,116,037             -


Note: Details regarding the town's outstanding debt can be found in the notes to the financial statements.

(1)
      See the schedule of Demographic and Economic Statistics for Personal Income and Population data.




                                                                                                                                161
                                             Table 10




                        Ratio
   Total                Debt to

  Primary               Personal         Per
Government              Income(1)      Capita(1)

      7,309,064         0.40%                 1,039
      6,188,752         0.34%                   869
      5,313,499         0.27%                   721
      5,664,082         0.26%                   735
      6,513,891         0.27%                   845
     12,763,084         0.46%                 1,577
     46,581,218         1.50%                 5,639
    109,643,364         3.37%                13,075
    111,386,780         3.33%                12,961
    119,493,125 n o t a va il a bl e         17,495




                                                        162
TOWN OF OAK ISLAND, NORTH CAROLINATable 11
Direct and Underlying Governmental Activities Debt
As of June 30, 2011


                                                                                                   Estimated
                       Estimated                                                                    Share of
  Debt                                                                       Percentage          Overlapping
                                                   Outstanding                                                       Applicable


              Governmental Unit

  Debt repaid with property taxes
                                                                                13.40%
 Brunswick County's general obligation debt               77,850,000                                10,431,900
     Town of Oak Island direct debt                       15,623,544           100.00%              15,623,544

 Total direct and overlapping debt                                                           $      26,055,444


Source: County Debt Outstanding and Estimated Percentage Applicable to Town provided by Brunswick County Finance




                                                                                                                   163
TOWN OF OAK ISLAND, NORTH CAROLINATable 13




        Legal Debt Margin
        Last Ten Fiscal Years




                                                                                        Total Debt
                                                                                           as a
         Fiscal Year                               Total Debt            L e g a l      Percentage
         Ended                    Debt             Applicable            D e b t          of Debt
         June 30                  Limit              to Limit                Margin        Limit

         2002                  73,477,993            3,651,999       69,825,994                    4.97%
         2003                  75,861,541            2,706,591       73,154,950                    3.57%
         2004                 104,987,959            2,078,683      102,909,276                    1.98%
         2005                 109,059,109            1,194,403      107,864,706                    1.10%
         2006                 115,364,752            2,259,976      113,104,777                    1.96%
         2007                 120,128,827            6,902,679      113,226,148                    5.75%
         2008                 335,668,235           11,711,369      323,956,866                    3.49%
         2009                 339,341,683           19,015,351      320,326,332                    5.60%
         2010                 341,566,059           17,464,334      324,101,725                    5.11%
         2011                 343,632,700           15,623,544      328,009,156                    4.55%

        Calculation of Legal Debt Margin for Fiscal Year 2011

        Assessed value of taxable property                                               4,295,408,749
                                                                                                 x0.08
        Debt limit- 8 percent of assessed value                                            343,632,700

        Debt applicable to limit:
         Total installment purchases                                                           14,777,318
         Total capital leases                                                                     846,226

        Total amount of debt applicable to debt limit (net debt)                            15,623,544
        Legal debt margin                                                                  328,009,156


        Note: Under State finance law, the Town's outstanding general obligation debt should
        not exceed eight percent (8%) of total assessed property value.




  164
 TOWN OF OAK ISLAND, NORTH CAROLINATable 11
Pledged-Revenue Coverage
Last Three Fiscal Years



 Fiscal                        Enterprise Funds
    Year              Operating        Operating        Sewer             Net               All Enterprise Fund Debt Service                 Enterprise Fund Parity Debt Service
 Ended                and          Expenses          District       Available
                 Non-operating         Less           Fee                                                                                                                                     Net
June 30             Revenue       Depreciation      Revenue         Revenue           Principal         Interest           Total         Principal         Interest           Total         Coverage

 2008               3,360,697       2,705,022                 -      655,675          229,203            82,845          312,048                  -                -                 -          2.10
 2009               3,667,735       2,767,342                 -      900,393          232,672            73,737          306,409                  -                -                 -          2.94
 2010               3,754,856      2,818,573        5 8 5 , 9 7 9 1 , 5 2 2 , 2 6 2 1, 4 06 , 3 1 0 1 , 4 7 0 , 8 2 9 2 , 8 7 7 , 1 3 9 7 2 0 , 0 0 0 1 , 1 8 3 , 1 5 6 1 , 9 0 3 , 1 5 6       0.53
 2011              11,517,674       6,446,729       4 4 3 , 1 0 2 5 , 5 1 4 , 0 4 7 1, 7 28 , 2 9 0 3 , 3 6 6 , 9 2 0 5 , 0 9 5 , 2 1 0 7 5 0 , 0 0 0 2 , 9 8 5 , 6 5 0 3 , 7 3 5 , 6 5 0       1.08

Required Coverage:

  Fiscal
   Year               Net            15%                Total        Parity          20% Parity                  Coverage
  Ended             Available     Unrestricted          Debt         Debt              Debt                100%        120%
 June 30            Revenue       Net Assets                        Servic e          Service                         Parity
                                                      Service                                              Parity
 2   0   0   8        655,675        233,737         312,048        -                          -              2.10         2.85
 2   0   0   9        900,393        265,924         306,409        -                          -              2.94         3.81
 2   0   1   0      1,522,262        342,008       2,877,139 1,903,156                   380,631              0.53         0.57
 2   0   1   1      5,514,047        343,458       5,095,210 3,735,650                   747,130              1.08         1.00



Notes:
     (1)     The Town issued wastewater revenue bonds in January 2008 and March 2009.
     (2)     Non-operating Revenues include investment earnings.
     (3)     Operating expenses are exclusive of depreciation and interest expense.
     (4)     All enterprise fund debt service includes Revenue Bonds, State loans and other installment debt plus accrued interest at
             fiscal year end.
         (5) 15% of Unrestricted Net Assets is calculated as 15% of the previous fiscal year ending Cash and Investment Balance
         (6) In accordance with the Revenue Bond Trust Agreement definition of 'Revenue', 'Assessment Revenues shall
             not be included in Revenues in the Fiscal Year of receipt if and to the extent that an Officer's Certificate is filed
             that secifies that such amounts shall not be included in Revenues in such Fiscal ear, and such amounts shall
                    p                                            y                                                                                                      be included in Revenues if and to
             the extent specified in an Officer's Certificate filed in future Fiscal Years.'




                                                                                                                                                                                       165
TOWN OF OAK ISLAND, NORTH CAROLINATable 13




     Demographic and Economic Statistics
     Last Ten Fiscal Years




           Fiscal Year                       Personal
             Ended                           Income(1)        Per Capita      Median         School          Unemployment
            June 30       Population(2)     (in thousands)    Income(1)       Age(3)       Enrollment(3)        Rate(1)

              2002          7   ,   033     1,819,075               23,013        49.2                769             5.4%
              2003          7   ,   120     1,829,637               22,457        49.2                769             6.1%
              2004          7   ,   369     1,942,639               22,948        49.2                769             6.4%
              2005          7   ,   711     2,195,457               24,666        49.2                769             5.0%
              2006          7   ,   711     2,440,703               25,869        49.2                769             4.1%
              2007          8   ,   093     2,799,335               28,403        49.2                769             4.7%
              2008          8   ,   261     3,101,372               30,324        49.2                769             6.1%
              2009          8   ,   386     3,256,908               30,952        49.2                769            11.0%
              2010          8   ,   594     3,342,667               30,900        49.2                769            10.2%
              2011                  6,830     not available   not available       52.6       not available           10.3%


     Note: Personal Income, Per Capita Income and Unemployment Rates are not available for the Town of Oak Island.
     Statistics for Brunswick County were used.

     Source:
     (1) Brunswick County Finance Department
     (2) Office of State Budget and Management
     (3)   State Data Center, 2010 Census Data




   166
TOWN OF OAK ISLAND, NORTH CAROLINATable 11
                                                                                                                                         Table 15
TOWN OF OAK ISLAND, NORTH CAROLINA
Principal Employers for Brunswick County
Current Year and Nine Years Ago

                                                                           Fiscal Year 2011                         Fiscal Year 2002
                                                                                          Percentage                              Percentage
                                                                    Number                  of Total         Number                  of Total
                                                Type of               of                    County             of                    County
          Name of Employer                      Business           Employees     Rank     Employment        Employees    Rank     Employment

Brunswick County Board of Education     Education                         1,955      1            4.49%           1,500     1             4.03%
County of Brunswick                     Local Government                  1,029      2            2.37%             800     4             2.15%
Progress Energy Carolinas, Inc.         Utility                             833      3            1.91%           1,000     3             2.68%
Wal-Mart Associates, Inc.               Retail Chain                        750      4             1.72%            N/A    N/A               N/A
Food Lion, LLC                          Grocery Chain                       455      5             1.05%            N/A    N/A               N/A
Brunswick Community Hospital, LLC       Medical Care Facility               450      6            1.03%             350     5             0.94%
DAK Americas                            Dacron Polyester Fiber              383      7            0.88%           1,000     2             2.68%
Dosher Memorial Hospital                Medical Care Facility               362      8            0.83%             200     8             0.54%
Brunswick Community College             Education                           358      9             0.82%            N/A    N/A               N/A
Ports America/Marine Terminals Corp     Trade/T ransp ortation              325     10             0.75%            N/A    N/A               N/A
Sunny Point Military Terminal           Military                            N/A     N/A             N/A             250     6             0.67%
Rampage                                 Yacht Manufacture                   N/A     N/A             N/A             225     7             0.60%
Victaulic Company of America            Pipe Fittings & Seals               N/A     N/A             N/A             200     9             0.54%
Archer Daniels Midland Company          Citric Acid                         N/A     N/A             N/A             150    10             0.40%

Totals                                                                    6,900                 15.85%            5,675                  15.23%


Note: Economic data on total Town employment is not available. The above table is based on Brunswick County employment data.

Source: Brunswick County Finance Department




                                                                                                                                   167
Full-time Equivalent Town Government Employees by Function
Last Ten Years




Function                        2002        2003       2004       2005    2006    2007    2008    2009    2010    2011

Administration                         13      13         13         12      12      12      13      12      14      16
Public Safety
  Police                               25      24         25         24      24      25      25      26      26      25
  Communications                        8       8          4          4       4       4       6       6       6       6
  Animal Control                        0       1          1          1       1       2       2       2       2       2
  Fire                                  5       5          5          3       3       7      13      19      20      19
Development Serivces                    6       6          7         11      10      11      11      12      12      11
Public Works                            2       2          1          2       2       2       2       2       2       4
Fleet Maintenance                       2       2          2          2       3       3       4       4       4       3
Building and Ground                     5       7          7          8       8       9      10       9       6       8
Street Department                       8       8          8          8       8       8       8       8       8       7
Cultural and Recreation                 7       7          8          8       8       9      13      10      10       9
Utility
  Water                                7           7          8      10      10      11      13      12      12      12
  Sewer                                3           3          3       3       4       4       4       4       4       7
Solid Waste                            3           3          4       4       4       4       4       4       4       4
Stormwater                             1           0          1       1       1       1       1       1       1       1
Golf Course                            0           0          0       0       0       2       5       2       2       2
Capital Projects                       0           0          0       0       1       1       4       5       5       0

  Total                                95      96         97        101     103     115     138     138     138     136



Source: Town's payroll department




    168
TOWN OF OAK ISLAND, NORTH CAROLINA
Operating Indicators by Function
Last Ten Years




Function                                                                2002          2003         2004         2005       2006

Public Safety
   Police
        Number of calls dispatched (1)                                      N/A         3,289        2,844        2,205      3,007
        Number of physical arrests                                          308           323          344          335        369
        Number of violations                                              2,993         2,843        2,644        2,932      2,631
   Fire
        Number of Fire runs                                                 N/A           83            77          101          112
        Number of EMS and Rescue runs (2)                                   N/A          804           863            4           70
   Code Enforcement/Building permits
        Number of building permits                                          400           995        1,158        1,259      1,171
           Number of inspections                                          6,635         8,341       10,186       12,919     12,860

Transportation
   Streets
       New streets paved (miles)                                            N/A          N/A          1.30          1.07          0
           Streets resurfaced (miles)                                       N/A          N/A          4.83          3.00          0

Environmental Protection
   Sanitation
       Refuse collected (tons)                                              N/A         2,700        2,800        3,000      3,100
       Bulky/Brush collected (tons)                                         N/A         1,800        1,900        2,000      2,000
           Recyclables collected (tons)                                     N/A           500          520          550        560

Cultural and Recreation
   Number of weight fitness program participants                         18,181        20,824       14,958       18,124     21,986
   Number of fitness class participants                                     958         6,313        5,128        4,395      3,817
   Number of athletic program participants                                3,698         4,520        2,773        7,140     10,003
   Number of teen program participants                                    9,992         7,762        5,655        4,365      3,961
   Number of Community Center program participants                          129         1,415        2,268        8,445      7,550
   Number of Skate Park participants                                        N/A           N/A        1,470        1,075      1,579
   Number of Ocean Education Center participants                            N/A           916        1,063          800        987
   Number of Nature Center participants                                     N/A          4026        3,482        2,461      2,617
   Number of paid golf course rounds played                                   0             0            0            0          0
   Number of youth and miscellaneous program participants                   N/A           N/A          N/A          N/A        N/A
Water
   Number of water customers                                              6,803         7,023        7,386         7,583     7,718
       Average daily water consumption (gallons)                            N/A           N/A    1,170,417     1,040,750   978,000

Wastewater
  Number of sewer customers                                                709           792           840          855        859
  Sewer average daily treatment (gallons)                              107,875       108,522       176,865      126,232    141,084


Notes:
(1)
    The Town implemented the 911 Communication System in Fiscal Year 2007.
(2)
      EMS service was turned over to Brunswick County in Fiscal Year 2005 then reverted back to Town in 2006

Source: Various Town Departments




                                                                                                                           169
  2007        2008      2009      2010      2011




   5,314       7,224     10,565    12,042    12,620
     350         267        269       301       331
   2,404       1,561      2,422     2,070     4,255

     121         208       228       249       258
     260         816       863       945       942

   1,105       1,377      1,153     1,292     1,286
  16,615      11,372     10,392     8,532




     0.18        0.00      0.00      0.00      0.00
     1.04        0.00      0.00      0.00      0.00




   3,100       3,150      3,200     4,000     4,100
   2,000       2,080      2,250     2,300     2,300
     600         620        625       650       670


  23,894      23,969     24,023    22,624    22,858
   4,411       3,568      5,235     5,990     5,980
  12,421      12,062     12,644    11,549    12,153
   3,835       5,884      5,420     4,234     3,744
   7,066       7,784      1,933     7,834     7,907
   2,209       2,174      2,189     1,625     1,335
   1,575       1,178      2,341     2,151     2,268
   4,281       3,351      4,058     3,664     3,376
  11,161      11,844     11,373    17,832    11,048
     N/A         N/A      3,903     4,884     5,017

    7,822       7,867     8,203     8,236     8,240
1,101,976   1,017,788   893,941   878,257   878,700


     884         906        925       929     4,241
 156,530     125,062    148,335   145,425   663,900




                                                      170
TOWN OF OAK ISLAND, NORTH CAROLINA
Capital Assets by Function
Last Ten Years




Function                                        2001         2002       2003         2004        2005

Public Safety
  Police
      Police Stations                                   2         1             1            1            1
      Police Patrol Units                              16        16            25           25           25
      Police Motorcycle Units                           0         0             0            0            0
  Fire
      Fire Stations                                     2           2          2            2            2
      Fire Trucks                                       4           4          4            4            5

Transportation
  Streets -Paved (miles)                               N/A      N/A         N/A        90.15        92.38
  Sidewalks (miles)                                    N/A      N/A        6.53         6.53         6.53

Environmental Protection
  Curbside Truck                                       N/A      N/A        N/A           N/A            N/A
  Leaf Machine                                         N/A      N/A        N/A           N/A            N/A
  Beach Trash Truck                                      0        0          0             0              0

Cultural and Recreation
  Parks                                                11        11            14           15           15
  Tennis Courts                                         4         4             4            4            4
  Playgrounds                                           2         2             2            2            1
  Baseball/Softball fields                              2         2             2            2            2
  Soccer Fields                                         1         1             1            1            1
  Recreation Center                                     1         1             1            1            1
  Community Centers                                     0         0             1            1            1
  Golf Courses                                          0         0             0            0            0
  Croquet Court                                         0         0             0            0            0
  Disc Golf Course                                      0         0             0            0            0
  Fishing Pier                                          0         0             0            0            0
  Dog Park                                              0         0             0            0            0

Water
 Water Mains (miles)                             1 2 0          120     1 2 0         1 2 0            120
 Fire Hydrants                                   8 0 0          800     8 0 0         8 0 0            800
 Average daily water consumption (in gallons)       N/A         N/A        N/A      1,170,417    1,040,750
  Peak daily demand (in gallons)                    N/A         N/A        N/A      2,922,000    2,824,000

Wastewater
 Sanitary Sewers (miles)                             16           20         20           20           20
 Lift Stations                                       11           13         13           13           14
 Man Holes                                          180          220        220          220          220
 Sewer Treatment Capacity (in gallons)          256,000      256,000    281,250      281,250      400,000



  Source: Various Town Departments




                                                                                                   171
                                                                   Table 18




 2006          2007          2008         2009         2010         2011




         1             1             1            2            2            2
        25            25            25           25           26           26
         2             2             2            2            1            1

         2             2            2            4            3               3
         5             5            5            6            6               6


   92.38         92.48         92.57        92.57        96.00         96.00
    7.68          7.68          7.68         7.68         7.68          7.68


        N/A           N/A           2            2            2               3
        N/A           N/A           2            2            2               2
          0             1           1            2            2               3



        15            17            17           17           17           17
         4             4             4            4            6            6
         1             1             1            1            1            2
         2             4             4            5            5            5
         1             1             1            1            1            1
         1             1             1            1            1            1
         1             1             1            1            1            1
         0             1             1            1            1            1
         1             1             1            1            1            1
         0             1             1            1            1            1
         0             0             1            1            1            1
         0             1             1            1            1            1



      120           120           120          120          120          120
      800           800           800          800          800          800
  978,000     1,101,976     1,017,788      893,491      878,257      878,700
2,884,000     2,369,000     2,541,000    2,336,000    2,488,000    2,485,000


      20            20            20           20           20           106
      14            15            15           15           15            34
     220           220           220          220          220           220
 400,000       400,000       400,000      400,000      400,000     2,535,308




                                                                                  172
Compliance Section




   173
167
168
176
177
                                                                         Town of Oak Island                                                                      Exhibit E-1
                                                        Schedule of Expenditures of Federal and State Awards
                                                                    For year ended June 30, 2011



                                                                                                       State
 Federal                                                                                           Pass-through
 CFDA                                                                                                Grantor's             Federal          State             Local
Grantor/Pass-through Grantor/Program Title                                          Number          Number               Expenditures    Expenditures      Expenditures


FEDERAL GRANTS:
Office of Justice
   Department of Justice
       ARRA-FY 09 Recovery Act Edward Byrne Memorial Justice
       Assistant Program                                                           16.804      2009-G7333-NC-SB                  2,225                 -             -
       Bulletproof Vest Partnership Program                                        16.607                                        1,291                 -         2,086
Department of Homeland Security

  Staffing for Adequate Fire and Emergency Response                                97.044     EMW-2008-FF-00526               236,938                  -      155,473
  Assistance to Firefighters FY 2010                                               97.044     EMW-2010-FO-05137               142,514                           5,561
Environmental Protection Agency
  Passed through NC Department of Environment and Natural Resources
      Water Pollution Control Revolving Loan Fund (Note 2 and 3)                   66.458       E-SRF-T-07-0173             285,289            71,322                -
      Water Pollution Control Revolving Loan Fund (Note 2 and 3)                   66.458       E-SRF-T-09-0182             584,544             146,136
USDA Forest Service
  Passed through NC Department of Environment and Natural Resources
      Oak Island Arboretum                                                         10-664              3339                      5,250                           9,268

TOTAL FEDERAL GRANTS:                                                                                                     1,258,051          217,458          172,388



STATE GRANTS:
NC Rural Economic Development Center, Inc.
  NC Economic Infrastructur Fund/ Building Reuse & Restoration Grant
     Oak Island Pier and Restaurant                                                             2009-426-60501-107                             14,147          14,147
TOTAL STATE:                                                                                                                       -           14,147          14,147



            Total Federal and State Awards                                                                                1,258,051          231,605          186,535


Notes to the Schedule of Expenditures of Federal and State Financial Awards:
  1.     The accompanying schedule of expenditures of federal and State awards includes the federal and State grant activity of the To wn of Oak
         Island and is presented on the modified accrual basis of accounting. The information in this schedule is presented in accordance with the
         requirements of OMB Circular A-1 33, Audits of States, Local Governments, and Non-Profit Organizations and the State Single Audit
         Implementation Act. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of
         the basic financial statements.

  2.     Loans Outstanding
         The Town of Oak Island had the following loan balances outstanding at June 30, 2011. These loan balances outstanding ar e also included
         in the federal and State expenditures presented in the schedule

                                                                                                    State
                                                                                                 Pass-through
                                                                                      CFDA         Grantor's             Amount
         Program Title                                                              Number         Number                 Outstanding
         Water Pollution Control Revolving Loan Fund                                 66.458   E-SRF-T-07-0173              6,584,839
         Water Pollution Control Revolving Loan Fund                                 66.458   E-SRF-T-09-0182               5,269,363

  3.      Subrecipients
         Of the federal and State expenditures presented in the schedule, The Town of Oak Island provided State awards to subrecipient s as follows:

                                                                                                     State
                                                                                                  Pass-through
                                                                                      CFDA          Grantor's             Federal            State
         Program Title                                                              Number          Number               Expenditures     Expenditures
         Water Pollution Control Revolving Loan Fund                                 66.458   E- SRF - T - 07 - 0 1 73     285,289              71,322
         Water Pollution Control Revolving Loan Fund                                 66.458   E- SRF - T - 09 - 0 1 82     584,544             146,136




                                                                                                                                                                          178
                                       Town of Oak Island, North Carolina                     Exhibit E-2
                                  Schedule of Findings and Questioned Costs                  Page 1 of 4
                                    For the Fiscal Year Ended June 30, 2011



I.    Summary of Auditor’s Results

     Financial Statements

     Type of auditor’s report issued: Unqualified

     Internal control over financial reporting:

            Material weakness identified?                           yes            X no

            Significant Deficiencies identified
            that are not considered to be
            material weaknesses                                    X yes            no
     Noncompliance material to financial
     statements noted                                               yes            X no


     Federal Awards

     Type of auditor’s report issued on compliance for major federal programs: Unqualified

     Internal control over major Federal programs:

            Material weakness identified?                           yes           _X no

            Significant Deficiency identified
           that is not considered to be
           material weakness                                       X yes             no

     Any audit findings disclosed that are required
       to be reported in accordance with Section
       510(a) of Circular A-133                                      yes           X no

     Identification of major Federal programs:

       CFDA Number Program name
       16.804        ARRA- 09 Recovery Act- Edward Bryme
                    Memorial Justice Assistance Program
       66.458       Capitalization Grants For State Revolving
                      Fund (CWSRF)
       97.044       Staffing for Adequate Fire and Emergency
                    Response


       Dollar threshold used to distinguish
       Between Type A and Type B Programs                         $ 300,000

       Auditee qualified as low risk auditee?                   ___ yes           _X_ no




                                                                                                     179
                                             Town of Oak Island, North Carolina                                Exhibit E-2
                                       Schedule of Findings and Questioned Costs                              Page 2 of 4
                                       For the Fiscal Year Ended June 30, 2011

II. Financial Statement Findings

     MATERIAL WEAKNESS – None


     SIGNIFICANT DEFICIENCIES

     Finding 11-1 Negative Fund Balance

     Criteria: Expenditures should not be incurred that exceed revenues available for appropriation.

     Condition: The town had a negative balance in the Waster Water System Capital Project due to funds
     being committed before revenues were available to satisfy the obligation.

     Effect: Expenditures were made before budgeted revenues were received.

     Cause: Finance revenues were not available in the same period that expenditures were made.

     Recommendation: Do not obligate funds until revenues are available or make budgeted advances from the
     General Fund until funds are received.

     Views of responsible officials and planned corrective actions: The Town agrees with this finding.

     Finding 11-2 Utility Billing System Usage Totals

     Criteria: The utility billing system should correctly record the total units that were billed in a billing cycle.

     Condition: After changes in the utility billing system, the system did not correctly record the total units that
     were billed in a billing cycle.

     Effect: The comparison of units billed to revenues should indicate that the effects of one on the other are
     relational.

     Cause: The software provider indicated that the cause was failure to enter correct beginning information
     when a new meter is installed.

     Recommendation: Billings after the change of any equipment, software update and monthly billings should
     be subjected to detail and comparative review by a designated individual with appropriate knowledge.

     Views of responsible officials and planned corrective actions: The Town agrees with this finding.




                                                                                                                         180
      Finding 11-3 Benefit Withholding Accounts Not Reconciled

      Criteria: Transactions should be properly recorded to provide correct financial reports.

      Condition: Expenditures for health insurance for retirees were incorrectly recorded as a liability when
      they should have been recorded as expenditure.

      Effect: The cost of health insurance for retirees and liabilities of the town are understated

      Cause: The expenses paid by the town were coded incorrectly as a liability and reconciliation procedures
      were not adequate to detect the error.

      Recommendation: Internal procedures should be established to reconcile accounts and review financial
      statements for unreasonable account balances such as debit liability accounts.

      Views of responsible officials and planned corrective action: We agree with the finding.


      Finding 11-4 Improper Accounting of Civil Citations

      Criteria: Article IX Section 7 of the North Carolina Constitution requires that fines, penalties and
      forfeitures be remitted to the public schools.

      Condition: Revenues collected for traffic citations were reported as revenues of the town.

      Effect: Overstatement of revenues and the failure to report funds that should be held and paid to the
      state public school system.

      Cause: Improper interruption of the state statutes and constitution as related to traffic fees.

      Recommendation: Review of town ordinances by a third party for compliance with state statutes

      Views of responsible officials and planned corrective action: We agree with the finding.

      Finding 11-5 Adopted Fee Schedule Not Followed

      Criteria: Fee schedules outlined in Chapter 22 of the town ordinances should be followed unless an
      exception has been previously approved by the council

      Condition: Not all patrons at the skate park had paid for access when compared to receipts on hand.

      Effect: Revenues due the town will not be available as planned by the budget.

      Cause: Some patrons were allowed to skate without first paying.

      Recommendation: Policy is made clear to employees as to the ability to waive charges and implementing
      a numbered cash receipt system for patrons and city to have at admission. Oversight by supervision to
      ensure policies are followed

      Views of responsible officials and planned corrective action: We agree with the finding.

181
                                         Town of Oak Island, North Carolina     Exhibit E-2
                                   Schedule of Findings and Questioned Costs   Page 4 of 4
                                   For the Fiscal Year Ended June 30, 2011


III. Federal Awards Findings and Questioned Costs

      See item II above: Findings 11-1, 11-2, 11-3 11-4 and 11-5




                                                                                    182
                                       Town of Oak Island, North Carolina                         Exhibit E-3
                                               Corrective Action Plan
                                         For the Year Ended June 30, 2011


      l. Financial Statement Findings

          Finding 11-1

          Name of contact person: Chad Hicks

          Corrective Action: The negative fund balances will be covered by receipts of grant funds.

          P r o p o s e d c o m p l e t i o n d a t e : J a n u a r y 3 1 , 2 0 1 2 Finding

          11-2

          Name of contact person: Chad Hicks

          Corrective Action: The public utilities manager will be assigned oversight responsibility to review
          individual accounts after changes of equipment and overall billing for reasonableness of usage
          compared to charges for the services.

          Proposed completion date: March 31, 2012

          Finding 11-3

          Name of contact person: Chad Hicks

          Corrective Action: Control procedures will be implemented to establish the finance officer review
          of reasonableness and reconciliation of payroll liabilities and expenses.

          Proposed completion date: January 31, 2012

          Finding 11-4

          Name of contact person: Chad Hicks

          Corrective Action: The town ordinances will be reviewed for compliance with state law.

          Proposed completion date: June 30, 2012.

          Finding 11-5

          Name of contact person: Chad Hicks

          Corrective Action: Department heads will review fee collection polices with their staffs.

          Proposed completion date: February 29, 2012

    II.    Federal Awards Findings - None

.          See Item 1 above: Findings 11-1, 11-2, 11-3, 11-4 and 11-5.




                                                                                                                183
 Town of Oak Island, North Carolina       E   x   h   i   b   i   t   E   -   4
Summary Schedule of Prior Year Findings
  For the Year Ended June 30, 2011




Finding: 10-1
Status: The condition continues.

Finding: 10-2 & 09-1
Status: The condition continues.

Find ing: 1 0 - 3
Status: Corrected.


Find ing: 1 0 - 4
Status: Corrected.


Find ing: 1 0 - 5
Status: Corrected.




                                                                                  184

				
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