WESTERN NEW YORK PUBLIC BROADCASTING ASSOCIATION CONSOLIDATED FINANCIAL STATEMENTS by chrisandersen

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									WESTERN NEW YORK PUBLIC
BROADCASTING ASSOCIATION

     CONSOLIDATED
 FINANCIAL STATEMENTS

       June 30, 2008
INDEPENDENT AUDITORS' REPORT




The Board of Trustees
Western New York Public Broadcasting Association
Buffalo, New York


We have audited the accompanying consolidated balance sheets of Western New York Public Broadcasting
Association (the Association) as of June 30, 2008 and 2007 and the related statements of activities and cash flows
for the years then ended. These financial statements are the responsibility of the Association's management. Our
responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Association as of June 30, 2008 and 2007 and the changes in its net assets and its cash
flows for the years then ended, in conformity with accounting principles generally accepted in the United States
of America.




September 8, 2008
WESTERN NEW YORK PUBLIC BROADCASTING ASSOCIATION

Consolidated Balance Sheets

June 30,                                                       2008           2007

Assets
Current assets:
  Cash and cash equivalents                               $   1,006,934 $     1,030,413
  Receivables (Note 2)                                        2,192,217       2,821,640
  Prepaid expenses and other assets                             266,852         231,372
                                                              3,466,003       4,083,425

Receivables - noncurrent (Note 2)                               560,000       1,010,000

Investments (Note 3)                                          26,548,147     26,957,070

Charitable lead annuity trust (Note 4)                          620,723        696,762

Property and equipment, net (Note 5)                          16,542,760     16,635,773

Radio operating licenses, less accumulated amortization
 of $1,147,077 and $1,111,138                                   290,471        326,410

                                                          $ 48,028,104     $ 49,709,440
Liabilities and Net Assets
Current liabilities:
  Current portion of loan payable (Note 7)                $      47,547 $        42,456
  Accounts payable                                              878,384         900,349
  Accrued expenses                                              584,141         512,473
  Deferred revenue (Note 8)                                   1,873,466         667,088
                                                              3,383,538       2,122,366

Deferred revenue - noncurrent (Note 8)                          635,837        750,181

Loan payable (Note 7)                                           243,414        290,813

Net assets:
  Unrestricted                                                41,827,062     44,076,873
  Temporarily restricted (Note 9)                              1,927,381      2,458,335
  Permanently restricted                                          10,872         10,872
                                                              43,765,315     46,546,080

                                                          $ 48,028,104     $ 49,709,440




See accompanying notes.                                                                   2
WESTERN NEW YORK PUBLIC BROADCASTING ASSOCIATION

Consolidated Statements of Activities

For the years ended June 30,                                                                        2008

                                                                                      Temporarily Permanently
                                                                    Unrestricted      Restricted   Restricted            Totals

Operating revenues and grants:
  Contributions                                                     $    7,077,332    $      (19,039) $           -   $ 7,058,293
  Government grants and contracts                                        1,875,232                 -              -      1,875,232
  Corporation for Public Broadcasting                                    1,391,056                 -              -      1,391,056
  Funding for designated projects                                        1,573,046                 -              -      1,573,046
  Equipment rentals, royalties and other                                 1,168,745                 -              -      1,168,745
             Total operating revenues and grants                        13,085,411           (19,039)             -     13,066,372

Operating expenses:
  Television:
     WNED-TV:
        Broadcasting                                                     1,880,497                  -             -      1,880,497
        Production                                                         761,764                  -             -        761,764
        Designated projects                                              2,116,636                  -             -      2,116,636
        Educational services                                               306,895                  -             -        306,895
        Engineering                                                      1,287,973                  -             -      1,287,973
  Radio:
     WNED-AM                                                              879,959                   -             -       879,959
     WNED-FM                                                              804,051                   -             -       804,051
     WNJA-FM                                                               15,182                   -             -        15,182
  Support services:
     General and administrative                                           1,616,016                 -             -       1,616,016
     Facilities                                                          1,061,298                  -             -      1,061,298
     Development                                                         3,397,896                  -             -      3,397,896
     Corporate communications                                               705,617                 -             -         705,617
     Donated services, facilities and materials                                   -                 -             -               -
                                                                        14,833,784                  -             -     14,833,784
   Depreciation and amortization (primarily television and radio)        2,026,900                  -             -      2,026,900

                Total operating expenses                                16,860,684                  -             -     16,860,684

                Loss from operating activities                          (3,775,273)          (19,039)             -     (3,794,312)

Nonoperating activities:
  Investment earnings                                                     (381,278)                 -             -       (381,278)
  Capital campaign contributions and government grants                           -         1,224,572              -      1,224,572
  Other, net                                                               170,253                  -             -        170,253
  Net assets released from restrictions                                  1,736,487        (1,736,487)             -              -
              Total nonoperating gains                                   1,525,462           (511,915)            -      1,013,547

                Change in net assets                                    (2,249,811)        (530,954)              -     (2,780,765)


Net assets - beginning                                                  44,076,873        2,458,335          10,872     46,546,080

                Net assets - ending                                 $   41,827,062 $       1,927,381     $   10,872   $ 43,765,315


See accompanying notes.
                          2007

                Temporarily Permanently
Unrestricted     Restricted  Restricted      Totals


$ 6,385,968 $      710,348 $            - $ 7,096,316
   1,676,058             -              -   1,676,058
   1,334,809             -              -   1,334,809
   2,291,723             -              -   2,291,723
     828,591             -              -     828,591
  12,517,149             -              -  13,227,497




   1,760,439              -             -    1,760,439
     742,483              -             -      742,483
   2,684,238              -             -    2,684,238
     308,809              -             -      308,809
   1,251,902              -             -    1,251,902

    849,391               -             -      849,391
    744,461               -             -      744,461
     16,922               -             -       16,922

   1,695,570              -             -    1,695,570
   1,097,489              -             -    1,097,489
   3,225,646              -             -    3,225,646
     590,333              -             -      590,333
       8,320              -             -        8,320
  14,976,003              -             -   14,976,003
   1,854,901              -             -    1,854,901

  16,830,904              -             -   16,830,904

  (4,313,755)      710,348              -    (3,603,407)


   3,182,378              -             -    3,182,378
           -        209,935             -      209,935
     159,984              -             -      159,984
   1,433,594     (1,433,594)            -            -
   4,775,956     (1,223,659)            -    3,552,297

    462,201       (513,311)             -      (51,110)


  43,614,672      2,971,646        10,872   46,597,190

$ 44,076,873 $ 2,458,335       $   10,872 $ 46,546,080


                                                           3
  WESTERN NEW YORK PUBLIC BROADCASTING ASSOCIATION

  Consolidated Statements of Cash Flows

  For the years ended June 30,                                             2008             2007

  Cash flows from operating activities:
    Decrease in net assets                                            $   (2,780,765) $       (51,110)
    Adjustments to reconcile decrease in net assets to
     net cash flows from operating activities:
       Depreciation and amortization                                        2,026,900       1,854,901
       Net realized and unrealized (gains) losses on investments            1,039,766      (2,469,961)
       Loss from sale and disposition of property and equipment                     -         101,774
       Contributions restricted for long-term purposes                     (1,224,572)       (209,935)
       Changes in other operating assets and liabilities:
          Receivables                                                         386,490         (23,650)
          Prepaid expenses and other assets                                   (35,480)          9,762
          Charitable lead annuity trust                                        76,039        (696,762)
          Accounts payable                                                    (21,965)        244,932
          Accrued expenses                                                     71,668         (35,820)
          Deferred revenue                                                  1,092,034        (278,458)
                Net cash flows from (for) operating activities                630,115      (1,554,327)

  Cash flows from investing activities:
    Property and equipment additions:
       Purchase of digital conversion equipment                            (1,663,724)     (1,109,089)
       Other property and equipment additions                                (234,224)       (661,986)
    Purchase of investments                                               (38,648,169)    (21,024,534)
    Proceeds from sale of investments                                      38,017,326      21,732,870
               Net cash flows for investing activities                     (2,528,791)     (1,062,739)

  Cash flows from financing activities:
    Proceeds from issuance of loan payable                                          -        348,950
    Payments on loan payable                                                  (42,308)       (15,681)
    Proceeds from contributions restricted for long-term investment         1,917,505      1,420,008
               Net cash flows from investing activities                     1,875,197      1,753,277

                  Net decrease in cash and cash equivalents                  (23,479)       (863,789)

  Cash and cash equivalents - beginning                                     1,030,413      1,894,202

                  Cash and cash equivalents - ending                  $     1,006,934 $    1,030,413




See accompanying notes.                                                                                  4
WESTERN NEW YORK PUBLIC BROADCASTING ASSOCIATION

Notes to Consolidated Financial Statements


1. Summary of Significant Accounting Policies:                  Investments:

Organization:                                                   The Association considers investments with original
                                                                maturities of ninety days or less to be cash equivalents and
The consolidated financial statements include the accounts of   reports them in its investment balance as “cash for
Western New York Public Broadcasting Association (the           investments.” Investments include mutual funds, exchange
Association) and a supporting organization, The WNED            traded funds and equity securities which are valued at
Foundation, Inc. (the Foundation).                              quoted market prices at year end.
The Association is a nonprofit corporation chartered by the
                                                                Alternative investments include equities, fixed income
New York State Board of Regents to serve the educational,
                                                                securities, U.S. and foreign government obligations, foreign
cultural and informational needs of residents in Western
                                                                currency contracts, and credit default and interest rate
New York and Southern Ontario through the operation of
                                                                swaps. Some alternative investments are comprised of
public television and radio stations, the provision of public
                                                                marketable securities that are valued on the basis of quoted
television and radio programming and outreach activities.
                                                                market prices at year end while others are valued by
The Foundation is a nonprofit corporation whose purpose is      management based upon estimates of their fair value.
to solicit, collect and invest funds on behalf of the           Management’s estimate of fair value is generally based upon
Association, the Foundation’s sole member.                      information provided by external investment and fund
                                                                managers including audited financial statements. Some
All significant accounts and transactions between the           alternative investments, for which no quoted market price
Association and the Foundation have been eliminated in the      is available, are valued based upon the investment balance
accompanying financial statements.                              increased for earnings and contributions and decreased for
                                                                distributions and losses. However, the recorded value of
Basis of Presentation:                                          some alternative investments could differ from the value
                                                                that would have been used had a readily available market
The Association reports information regarding its financial     existed for such investments and those differences could be
position and activities according to three classes of net       material. Alternative investments whose value is based
assets: unrestricted net assets, temporarily restricted net     upon management’s estimate of their fair value at June 30,
assets, and permanently restricted net assets.                  2008 were approximately $1,200,000.
Temporarily restricted net assets are those whose use has
been limited by donors to a specific time period or             Property and Equipment:
purpose. Permanently restricted net assets have been            Property and equipment is stated at cost, or fair market
restricted by donors to be maintained by the Association in     value at the date of donation, net of accumulated
perpetuity.                                                     depreciation. Depreciation is computed by the straight-line
Cash and Cash Equivalents:                                      method over estimated service lives.

Cash and cash equivalents include investments in highly         Radio Operating Licenses:
liquid securities with original maturities of ninety days or    Radio operating licenses represent the excess of cost over
less. Cash and cash equivalents in financial institutions may   the fair values of identifiable assets of the Association’s
exceed insured limits at various times during the year and      radio stations at the date of acquisition. The licenses are
subject the Association to concentrations of credit risk.       amortized by the straight-line method over 40 years.




                                                                                                                          5
Grants:                                                         Tax Status:

Grant revenue is generally recognized as the Association        The Association and the Foundation are 501(c)(3)
incurs related expenditures. Recognition of income from         corporations exempt from income taxes under Section
cash received in advance of incurring expenditures is           501(a) of the Internal Revenue Code. However, taxes on
deferred.                                                       income from certain activities subject to taxation as
                                                                unrelated business income amounted to $91,124 in 2008
Contributions:                                                  and $65,650 in 2007.

Gifts are reported as restricted support if they are received   Reclassifications:
with donor stipulations that limit their use. When a donor
restriction expires, that is, when a stipulated time            The 2007 financial statements have been reclassified to
restriction ends or purpose restriction is accomplished,        conform with the presentation adopted for 2008.
temporarily restricted net assets are reclassified as
unrestricted net assets and reported in the statement of        2. Receivables:
activities as net assets released from restrictions. Donor
restricted contributions whose restrictions are met within                                                2008        2007
the same year as received are reported as unrestricted          Capital campaign for digital coversion:
contributions in the accompanying financial statements.         Gross contributions receivable       $ 1,136,405 $ 1,949,492
                                                                Less: allowance for uncollectible
Unconditional promises to give that are expected to be           pledges                                   (11,500)    (19,500)
collected within one year are recorded as contributions         Less: unamortized discount                (56,265)   (168,419)
                                                                Net contributions receivable            1,068,640   1,761,573
receivable at their net realizable value. Unconditional
promises to give that are expected to be collected in future    Other receivables:
years are recorded at the present value of estimated future     Contributions - membership               235,000      233,532
cash flows. The discounts on those amounts are computed         Government and private grants            111,269      290,944
using a risk-free interest rate applicable to the year in       Underwriting and other                 1,362,308    1,570,591
which the promise is received. Amortization of the                                                     1,708,577    2,095,067
discount is included in contribution revenue.                   Less: allowance for uncollectibles       (25,000)     (25,000)
                                                                                                       1,683,577    2,070,067
Program underwriting revenue is reported as contributions       Total receivable                      $ 2,752,217 $ 3,831,640
upon receipt of a promise from the underwriting entity.
                                                                Current                              $ 2,192,217 $ 2,821,640
Use of Estimates:                                               Noncurrent                               560,000   1,010,000
                                                                Total receivable                     $ 2,752,217 $ 3,831,640
The preparation of financial statements in conformity with
accounting principles generally accepted in the United          Capital campaign for digital conversion:
States of America requires management to make estimates         Amounts due in:
and assumptions that affect the amounts reported in the          Less than one year                $ 504,161 $ 746,510
financial statements and accompanying notes. Actual              One to five years                      632,244  1,202,982
results could differ from those estimates.                                                         $ 1,136,405 $ 1,949,492

Operating Indicator:                                            Gross unconditional promises to give from four donors
                                                                total $598,199 at June 30, 2008.
Investment earnings, grants and gift revenue restricted for
long-term investments or capital expenditures, and
permanently restricted gifts, are outside of the activities
fundamental to the daily operations of the Association and,
accordingly, are considered nonoperating activities in the
accompanying statements of activities.




                                                                                                                                  6
3. Investments:                                                  6. Line of Credit:

                                       2008        2007          The Association has available a $950,000 bank demand
Cash and cash equivalents           $ 6,975,405 $ 4,705,978      working capital line of credit with interest payable at either
Mutual funds                          5,711,205           -      LIBOR plus 1.65% or prime minus 1% as selected by the
Equity securities                     3,976,530  19,691,804
Alternative investments -
                                                                 Association. The line is secured by certain investments,
 pooled investments                  10,071,084             -    and is reviewed and renewed annually. There were no
Fixed income securities                 787,510     3,560,586    borrowings outstanding at June 30, 2008 and 2007.
Other                                    33,347        29,115
                                     27,555,081    27,987,483    7. Loan Payable:
Less cash and cash equivalents
 available for current operations      1,006,934    1,030,413
                                                                 In March 2007, the Association entered into a bank loan
                                    $ 26,548,147 $ 26,957,070
                                                                 agreement. The loan is part of the Energy Smart Program
                                                                 sponsored by the New York State Energy Research and
Investment earnings:                                             Development Authority, and was used for improvements
                                          2008        2007       to the building’s HVAC and lighting systems. The loan
Dividends and interest, net of invest-                           bears interest at 2.74% and is payable monthly over seven
 ment fees of $223,124 and $191,307 $ 658,488 $ 712,417          years. Interest expense for the years ended June 30, 2008
Realized gains                             667,548   1,481,549   and 2007 was $8,036 and $2,626.
Unrealized gains (losses)               (1,707,314)    988,412
                                       $ (381,278) $ 3,182,378
                                                                 Aggregate maturities on long-term debt subsequent to June 30,
4. Charitable Lead Annuity Trust:                                2008 are:

                                                                               2009                 $       47,547
In January 2007, the Association was named as the                              2010                         48,866
recipient of a Charitable Lead Annuity Trust.            In                    2011                         50,222
accordance with the terms of the trust, WNED-FM will                           2012                         51,615
receive $57,000 per year for a period of 20 years. For the                     2013                         53,048
years ended June 30, 2008 and 2007, the Association                          Thereafter                     39,663
received payments of $57,000 and $13,586, the latter of                                             $      290,961
which represented a pro-rated payment. The outstanding
balance at June 30 is calculated at its present value based      8. Deferred Revenue:
upon a 20-year Treasury bond.
                                                                 In February 2000, the Association entered into an
5. Property and Equipment:                                       agreement to build-out and lease unused space in its
                                                                 building and certain parking areas to the Board of
                                         2008       2007         Education of the City of Buffalo (Board of Education).
Land and improvements                $ 1,289,726 $ 1,289,726     The lease is essentially noncancellable, and requires
Buildings and improvements             16,734,818 16,637,072     monthly rental payments through at least August 2015.
Antenna, tower, transmitter and                                  Minimum future annual rentals to be received for each of
 microwave                              6,020,657   7,586,576    the next five years and in the aggregate as of June 30, 2008
Technical equipment                     6,171,748   7,390,007    are:
Other equipment                         6,686,941 10,355,993
Construction in progress                   25,769      76,345                   2009                    $ 317,000
                                       36,929,659 43,335,719                    2010                       325,000
Less accumulated depreciation          20,386,899 26,699,946                    2011                       331,000
                                     $ 16,542,760 $16,635,773                   2012                       339,000
                                                                                2013                       346,000
                                                                              Thereafter                   716,000
                                                                                                        $2,374,000




                                                                                                                             7
In connection with the agreement, the Association received
grants of approximately $1,999,000 from the Board of
Education to complete the build-out and pay for certain
furniture expenditures. The grant money was received
over a 24-month period beginning February 2000, and the
portion related to the buildout is recognized as revenue
ratably over the lease term. Unrecognized amounts at June
30, 2008 and 2007 was $750,182 and $864,526, and is
reported as deferred revenue on the balance sheets.

Also included in deferred revenue are unspent funds from
grantors for designated projects. Management recognizes
these amounts as revenue once the related spending
requirements are met. Management anticipates that some
amounts deferred at June 30, 2008 will be recognized as
revenue in the next fiscal year. Accordingly, the amounts
are classified on the accompanying balance sheets as
current and noncurrent based on these estimates.

9. Temporarily Restricted Net Assets:

Temporarily restricted net assets represent contributions
for the Association’s digital equipment conversion program
and the outstanding balance on the Charitable Lead
Annuity Trust.

10. Retirement Plan:

The Association sponsors a contributory, defined-
contribution retirement plan covering substantially all full-
time employees. Benefits are provided by the purchase of
retirement annuity contracts based upon a percentage of
the participant’s salary. The Association’s contributions to
the plan amounted to $338,204 in 2008 and $320,438 in
2007.

Starting in 2007, the Association adopted a deferred
compensation plan in accordance with section 457(f) of the
Internal Revenue Service Code, and entered into a
participation agreement with its president under the plan.
The Association has accrued $31,961 and $23,475 through
June 30, 2008 and 2007 in connection with this plan.




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