COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR)

City of Knoxville, Tennessee For the Fiscal Year Ended June 30, 2004 Knoxville, Tennessee

Prepared by the Department of Finance and Accountability Christopher P. Kinney - Director and James E. York - Deputy Director

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INTRODUCTORY SECTION

Letter of Transmittal i-vi   Certificate of Achievement for Excellence in Financial Reporting 2003 viii   Officials of the City of Knoxville, Tennessee ix   Organization Chart x

FINANCIAL SECTION

Independent Auditor's Report 1-2   Management's Discussion and Analysis 3-18   Basic Financial Statements:     Government-wide Financial Statements:       Statement of Net Assets 19       Statement of Activities 20-21     Fund Financial Statements:       Balance Sheet - Governmental Funds 22       Reconciliation of Total Governmental Fund Balance to Net Assists of Governmental Activities 23       Statement of Revenues, Expenditures, and Changes in Fund Balance - Governmental Funds 24       Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 25       Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - GAAP Basis - General Fund 26       Statement of Net Assets - Proprietary Funds 27       Statement of Revenues, Expenses and Changes in Net Assets - Proprietary Funds 28       Statement of Cash Flows - Proprietary Funds 29       Statement of Fiduciary Net Asssets - Fiduciary Component Unit 30       Statement of Changes in Fiduciary Net Assets - Fiduciary Component Unit 31     Notes to Financial Statements:       Note 1 - Summary fo Significant Accounting Policies 32-37       Note 2 - Reconciliation fo Government-wide and Fund Financial Statements 38       Note 3 - Stewardship, Compliance and Accountability 39       Note 4 - Deposits and Investments 39-43       Note 5 - Receivables 43       Note 6 - Leases Receivable 44       Note 7 - Capital Assets 45-46       Note 8 - Interfund Receivables and Payables 47       Note 9 - Long-term debt 48-56       Note 10 - Leases 56       Note 11 - Fund Balances Designated for Future Use 57       Note 12 - Risk Management 57-59       Note 13 - Segment Information 59-62       Note 14 - Joint Ventures 62-63       Note 15 - Management Agreements 63-64       Note 16 - Commitments and Contingencies 64-67       Note 17 - Post-retirement Benefits 67       Note 18 - Business and Credit Concentrations 67       Note 19 - Transfers 68       Note 20 - Retirement and Disability Plans 68-72       Note 21 - Related Party Transactions 72       Note 22 - Prior Period Adjustment 73   Required Supplementary Information:     Schedule of Funding Progress - City Employee's Pension Plan 74     Schedule of Funding Progress - Knoxville Utilities Board Pension Plan 75     Schedule of Funding Progress - Firemen and Policemen Pension Act of 1929 75 Explanation: Nonmajor Governmental Funds - Special Revenue Funds   Combining and Individual Fund Statements and Schedules:       Combining Balance Sheet 76-77       Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds 78-79     Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - GAAP Basis:       Budgeted Nonmajor Special Revenue Funds 80-84       Debt Service Fund 85     Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - from Inception - Capital Projects Fund 86 Explanation: Nonmajor Enterprise Funds     Combining Statement of Net Assets - Nonmajor Enterprise Funds 87     Combining Statement of Revenues, Expenses and Changes in Net Assets - Nonmajor Enterprise Funds 88     Combining Statement of Cash Flows - Nonmajor Enterprise Funds 89 Explanation: Internal Service Funds     Combining Statement of Net Assets - Internal Service Funds 90     Combining Statement of Revenues, Expenses and Changes in Net Assets - Internal Service Funds 91     Combining Statement of Cash Flows - Internal Service Funds 92     Capital Assets Used in the Operation Governmental Funds:       Schedule by Source 93       Schedule by Function and Activity 94       Schedule of Changes by Function and Activity 95     Schedule of Long-term Bonds and Notes Payable Requirements by Issue 96-97     Schedule of Revenue Detail - General Fund 98     Schedule of Revenue and Expenditure Detail - State Street Aid 99     Schedule of Assets, Liabilities and Fund Balance - Drug Sub-fund 100     Schedule Revenue and Expenditure Detail - Drug Sub-fund 101     Schedule of Property Taxes Receivable 102     Schedule of Insurance in Force 103     Schedule of Investments 104-105

STATISTICAL SECTION

Expenditures by Function - Last Ten Years - General Fund 106   Revenues by Source - Last Ten Years - General Fund 107   Property Tax Levies and Collections - Last Ten Years 108   Assessed and Estimated Actual Value of Taxable Property - Last Ten Years 109   All Property Tax Rates - Direct and Overlapping Governments - Last Ten Years 110   Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita - Last Ten Years 111   Legal Debt Margin 111   Computation of Direct and Overlapping Debt 112   Ratio of Annual Debt Service Expenditures for General Obligation Bonded Debt to Total General Fund Expenditures - Last Ten Years 113   Revenue Bond Coverage - Last Ten Years 114 Demographic Statistics:     Population 115     Per Capita Personal Income - Last Ten Years 116     Unemployment Data - Last Ten Years 117     Assessment Classifications 118     Manufacturers With Largest Employment 119     Utility Connections - Last Ten Years 120   Property Values and Construction - Last Ten Years 121   Principal Taxpayers 122   Salaries of Principal Officials 123   Miscellaneous Statistics 124   General Fund Revenues, Expenditures, Transfers and Fund Balance - Last Five Years 125

COMPLIANCE SECTION

Schedule of Federal and State Awards 126-129   Report on Internal Control Over Financial Reporting and on Compliance and other Matters Based on an Audit of Financial Statements Performed With Government Auditing Standards 130   Report on Compliance with Requirements Applicable to Each Major Program and Internal Control Over Compliance in Accordance with OMB Circular A-133 131-132   Schedule of Findings and Questioned Costs 133-138

Information in the CAFR has not been updated for developments subsequent to the date of the independent auditor's report.