WXXI PUBLIC BROADCASTING COUNCIL. Financial Statements as of June 30, 2008 Together with Independent Auditors Report

Transcription

1 WXXI PUBLIC BROADCASTING COUNCIL Financial Statements as of June 30, 2008 Together with Independent Auditors Report

2 INDEPENDENT AUDITORS REPORT September 15, 2008 To the Board of Trustees of WXXI Public Broadcasting Council: We have audited the accompanying statement of financial position of WXXI Public Broadcasting Council ( the Council ) (a New York not-for-profit corporation) as of June 30, 2008, and the related statements of activities and change in net assets and cash flows for the year then ended. These financial statements are the responsibility of the Council s management. Our responsibility is to express an opinion on these financial statements based on our audit. The prior year summarized comparative information has been derived from the Council s 2007 financial statements and, in our report dated September 17, 2007, we expressed an unqualified opinion on those financial statements. We conducted our audit in accordance with auditing standards generally accepted in the United States. 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 audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of WXXI Public Broadcasting Council as of June 30, 2008, and the change in its net assets and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information in Exhibit I is presented for the purpose of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. 171 Sully s Trail Pittsford, NY p (585) f (585) ROCHESTER BUFFALO ALBANY SYRACUSE PERRY GENEVA

3 WXXI PUBLIC BROADCASTING COUNCIL STATEMENT OF FINANCIAL POSITION JUNE 30, 2008 (With Comparative Totals for 2007) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 74,248 $ 473,513 Cash and cash equivalents designated for property and equipment replacement 68,742 29,056 Accounts receivable - Government 170, ,453 Current portion of capital campaign pledges, net 9,547 41,924 Other, net 1,953,057 1,683,089 Costs incurred for programs not yet broadcast 199, ,334 Current portion of film rights, net of accumulated amortization 551, ,516 Prepaid expenses and other current assets 174, ,350 Total current assets 3,201,832 3,238,235 OTHER ASSETS: Property and equipment, net 9,080,404 9,554,165 Long-term portion of capital campaign pledges, net - 5,882 Film rights, net of current portion and accumulated amortization 180, ,600 Long-term investments designated for property and equipment replacement 173, ,444 Split-interest agreements 119, ,800 Interest rate swap - 31,355 Other long-term investments 10,530,216 9,865,308 Total other assets 20,084,326 19,962,554 Total assets $ 23,286,158 $ 23,200,789 LIABILITIES AND NET ASSETS CURRENT LIABILITIES: Current portion of lines-of-credit $ - $ 212,739 Accounts payable and accrued expenses 1,046, ,303 Current portion of note payable 100, ,000 Deferred revenue 47,459 86,179 Current portion of installment contracts payable and capital lease obligation 99,885 45,589 Total current liabilities 1,293,463 1,313,810 LONG-TERM LIABILITIES: Lines-of-credit, net of current portion 1,430, ,000 Note payable, net of current portion 1,366,667 1,466,667 Split-interest agreements 41,278 51,093 Interest rate swap 9,457 - Installment contracts payable and capital lease obligation, net of current portion 28,855 13,171 Total long-term liabilities 2,876,775 2,315,931 Total liabilities 4,170,238 3,629,741 NET ASSETS: Unrestricted - Operating 1,805,662 1,342,218 Board designated 7,065,544 8,161,543 Property and equipment 5,446,678 6,511,801 Total unrestricted net assets 14,317,884 16,015,562 Temporarily restricted 1,223,734 1,399,345 Permanently restricted 3,574,302 2,156,141 Total net assets 19,115,920 19,571,048 Total liabilities and net assets $ 23,286,158 $ 23,200,789 The accompanying notes are an integral part of these statements. 1

4 WXXI PUBLIC BROADCASTING COUNCIL STATEMENT OF ACTIVITIES AND CHANGE IN NET ASSETS FOR THE YEAR ENDED JUNE 30, 2008 (With Comparative Totals for 2007) Temporarily Permanently Unrestricted Restricted Restricted REVENUE: Membership income $ 3,279,799 $ - $ - $ 3,279,799 $ 3,111,929 Contributions 1,711,556 1,679,599 1,418,161 4,809,316 4,915,224 In-kind contributions 85, ,582 25,358 Split-interest agreements - 4,808-4,808 4,233 Auction 237, , ,685 Corporation for Public Broadcasting grants 1,180,616 87,113-1,267,729 1,210,644 NYS Education Department grants 1,888, ,888,530 1,732,314 Other grants 211, , ,287 Rental and other income 487, , ,114 Investment income used for operations 403, , ,154 Satisfaction of purpose/time restrictions 2,203,555 (2,203,555) Total revenue 11,689,604 (432,035) 1,418,161 12,675,730 12,202,942 EXPENSES: Program services - Programming and production 6,193, ,193,727 5,593,192 Broadcasting 2,079, ,079,087 2,254,417 Program information 498, , ,858 Total program services 8,771, ,771,601 8,332,467 Supporting services - Fundraising and development: Auction 221, , ,059 Membership and other development 1,413, ,413,498 1,344,607 Underwriting 452, , ,631 Management and general 1,455, ,455,058 1,373,431 Total supporting services 3,543, ,543,019 3,336,728 Total expenses 12,314, ,314,620 11,669,195 INCOME (LOSS) FROM OPERATIONS (625,016) (432,035) 1,418, , ,747 CAPITAL CAMPAIGN CONTRIBUTIONS - 256, ,424 67,092 NON-OPERATING INVESTMENT INCOME (1,031,850) - - (1,031,850) 786,555 LOSS ON SWAP CONTRACT (40,812) - - (40,812) (24,128) CHANGE IN NET ASSETS (1,697,678) (175,611) 1,418,161 (455,128) 1,363,266 NET ASSETS - beginning of year 16,015,562 1,399,345 2,156,141 19,571,048 18,207,782 NET ASSETS - end of year $ 14,317,884 $ 1,223,734 $ 3,574,302 $ 19,115,920 $ 19,571,048 The accompanying notes are an integral part of these statements. 2 Total

5 WXXI PUBLIC BROADCASTING COUNCIL STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2008 (With Comparative Totals for 2007) CASH FLOW FROM OPERATING ACTIVITIES: Change in net assets $ (455,128) $ 1,363,266 Adjustments to reconcile change in net assets to net cash flow from operating activities: Depreciation 1,144,111 1,266,468 Bad debt expense 147, ,019 Gain on disposal of property and equipment (46) (4,735) (Gain) loss on investments, net 1,060,420 (891,460) Loss on swap contract 40,812 24,128 Split-interest agreements 7,045 (12,965) Capital campaign contributions (256,424) (67,092) Changes in: Accounts receivable (397,376) 314,849 Costs incurred for programs not yet broadcast (15,144) (12,344) Prepaid expenses and other current assets (38,074) 3,704 Accounts payable and accrued expenses 176,816 (5,718) Deferred revenue (38,720) 27,016 Net cash flow from operating activities 1,375,453 2,171,136 CASH FLOW FROM INVESTING ACTIVITIES: Purchases of investments, net (1,696,884) (1,530,335) Purchases of property and equipment (684,204) (787,732) Proceeds from the sale of property and equipment 13,900 5,002 Increase in film rights (65,286) (38,487) Net cash flow from investing activities (2,432,474) (2,351,552) CASH FLOW FROM FINANCING ACTIVITIES: Increase (decrease) in lines-of-credit, net 432,779 (201,241) Repayments on note payable (100,000) (100,000) Increase in installment contracts payable and capital lease obligation 69,980 49,509 Collection of capital campaign pledges 294, ,661 Net cash flow from financing activities 697, ,929 NET CHANGE IN CASH AND CASH EQUIVALENTS (359,579) 352,513 CASH AND CASH EQUIVALENTS - beginning of year 502, ,056 CASH AND CASH EQUIVALENTS - end of year $ 142,990 $ 502,569 The accompanying notes are an integral part of these statements. 3

6 WXXI PUBLIC BROADCASTING COUNCIL NOTES TO FINANCIAL STATEMENTS JUNE 30, THE COUNCIL WXXI Public Broadcasting Council (the Council) (a New York not-for-profit corporation) is located in Rochester, NY and operates a non-commercial public television station (WXXI-TV) including, with its digital service, six television channels. WXXI also operates three noncommercial public radio stations (WXXI-FM, WXXI-AM, and WJSL-FM), as well as WRUR-FM - an LMA with the University of Rochester - and Reachout Radio, a reading service for the printhandicapped. WXXI also recently began broadcasting in HD Radio and offers three stations on that channel. For four decades, WXXI has been recognized as an essential community media gateway in the area of arts, education and citizenship for the Greater Rochester Area. By providing programming that inspires the spirit, expands thought, and promotes understanding of the diverse issues in the community, WXXI helps make a difference in lives every day. By being the only source of PBS and NPR programming, WXXI is one of the most accessible and trusted voices in the community. In the last several years, WXXI has bloomed from broadcasting one television channel and two radio stations to countless means of media delivery. Using the power of digital technology, WXXI operates four distinct digital streams of television, as well as helping pioneer a First Response digital training program with the Rochester Fire Department, which could have invaluable impact with Homeland Security. WXXI s EdVideo Online service gives teachers over 30,000 instructional video clips to download. WXXI also makes available numerous radio programs for podcasting off the web site. WXXI streams all of its radio stations online, and many WXXI local television productions are available On Demand from the local cable provider. WXXI is on the forefront of innovative and accessible technologies, and is constantly looking at ways to deliver quality educational, cultural and informational programming essential to the community. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The Council s financial statements have been prepared in conformity with accounting principles generally accepted in the United States. Financial Reporting The assets, liabilities, and activities of the Council are reported in the following net asset classifications: Unrestricted Unrestricted net assets include funds available for the Council s operating activities. Unrestricted net assets also include certain amounts designated by the Board of Trustees to be held for the long-term growth of the Council s investments. The amount designated by the Board of Trustees for this purpose was $7,065,544 and $8,161,543 at June 30, 2008 and 2007, respectively. Temporarily Restricted Temporarily restricted net assets include resources that have been donated subject to time or purpose restrictions, as defined by the donor. 4

7 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Financial Reporting (Continued) Permanently Restricted Permanently restricted net assets include resources that have been donated with the stipulation that the principal be maintained in perpetuity. Income from these funds is currently available for the general use of the Council, unless the donor stipulates otherwise. Gifts of Long-Lived Assets The Council reports gifts of property and equipment as unrestricted support unless explicit donor stipulations specify how the donated assets must be used. Gifts of long-lived assets with explicit restrictions that specify how the assets are to be used and gifts of cash or other assets that must be used to acquire long-lived assets are reported as temporarily restricted support. Absent explicit donor stipulations about how long those long-lived assets must be maintained, the Council reports expiration of donor restrictions when the donated or acquired long-lived assets are placed in service. Cash and Cash Equivalents The Council maintains its cash and cash equivalents in bank demand deposit and money market accounts. These accounts may, at times, exceed federally insured limits. The Council has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk with respect to cash and cash equivalents. The Council considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The carrying amount approximates fair value because of the short maturity of these instruments. Accounts Receivable Accounts receivable represents services provided in advance of cash received, as well as pledges received for operational support. The Council does not charge interest on these accounts and records an allowance for uncollectible amounts based on historical collection experience and a review of specific outstanding balances. Amounts are written-off against the allowance when uncollectiblity becomes known. Capital Campaign Pledges Receivable Capital campaign pledges receivable represent amounts due to the Council for the 21/21 Vision Capital Campaign to help fund the mandatory conversion to digital television broadcasting, as well as the digital convergence of technologies in radio broadcasting and production. Pledges are recorded at their estimated net present value using a discount rate of 7%. Allowances for uncollectible pledges are provided based on management s review of payments received on current pledges and estimates applied to remaining amounts owed. Pledge write-offs are recorded when the certainty of their uncollectibility becomes known. Costs Incurred for Programs Not Yet Broadcast Costs incurred for programs not yet broadcast are recorded as an asset. Such costs relate to programs produced by the Council that will be broadcast subsequent to June 30. Programs to be completed and broadcast within one year are classified as current assets whereas programs to be completed and broadcast in more than one year are classified as long-term. At June 30, 2008 and 2007, there were no long-term costs incurred for programs not yet broadcast. As the programs are broadcast, the costs incurred will be included in operating expenses. Program status is evaluated annually. Costs associated with programs not considered to have future benefit are charged to operating expense. 5

8 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Film Rights Film rights relate to programs that will be aired primarily in the next fiscal year. Film rights purchased by the Council are amortized on an accelerated method over the period of their expected usage. Property and Equipment Property and equipment are recorded at cost, if purchased, or fair value at the time of donation. The Council capitalizes expenditures for property and equipment in excess of $500 that have a useful life greater than one year. Depreciation is provided using accelerated methods over the assets estimated useful lives, which range from five (5) to forty (40) years. Impairment losses are recognized when the carrying value of an asset exceeds its fair value. Long-Term Investments The Council invests in various types of investment securities. Investment securities are exposed to various risks, such as interest rate, market, and credit risk. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the accompanying financial statements. Long-term investments are stated at fair value based on quoted market prices and are maintained to provide for capital replacement and other operating needs as the board designates. In order to maximize return on all long-term investments, the board has chosen to invest operating and equipment replacement funds with board-designated funds without distinction. Although returns on these investments are intended for the long-term growth of the account and for the offset of depreciation, actual transfers are only made on an as needed basis as prescribed in the annual budget. Split-Interest Agreements The Council is the beneficiary of various charitable gift annuities. The Council s beneficial interest is measured at the discounted value of its expected future cash flows and is reported as either temporarily or permanently restricted based on the donors original gift agreement. Deferred Revenue Deferred revenue represents cash received in advance of service provision. Installment Contracts Payable Installment contracts payable represent contracts entered into for program acquisitions. Advertising Advertising costs are recognized as expense when incurred. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Income Taxes The Council is a New York not-for-profit corporation and is exempt from income taxes as an organization qualified under Section 501(c)(3) of the Internal Revenue Code. The Council has also been classified by the Internal Revenue Service as an entity that is not a private foundation. 6

9 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Comparative Information The financial statements include certain prior year summarized comparative information, in total, but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the Council s financial statements for the year ended June 30, 2007, from which the summarized information was obtained. 3. TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets represent the accumulated principal of gifts that have not yet been used in accordance with donor stipulations. At June 30, these funds were restricted for the following purposes: Capital campaign $ 4,044 $ 3,155 Designated for productions 1,117,197 1,254,482 Minority and other training grants 23,831 24,557 Split-interest agreements, net of obligations 78,662 85,707 Capital grants - government - 31,444 Net assets released from donor restrictions related to the following purposes: $ 1,223,734 $ 1,399,345 Capital campaign $ 250,534 $ 526,231 Designated for productions 1,813,485 1,125,284 Minority and other training grants 3,092 5,368 Split-interest agreements - 6,946 Capital grants - government 36,444 8,684 Membership 100,000 - $ 2,203,555 $ 1,672, ACCOUNTS RECEIVABLE Government Receivables Government receivables consisted of the following at June 30: Corporation for Public Broadcasting $ 41,500 $ 52,500 County of Monroe, New York 10,000 10,000 City of Rochester 57,159 - NYS Education Department and Other 62, ,953 $ 170,700 $ 190,453 7

10 4. ACCOUNTS RECEIVABLE (Continued) Accounts Receivable - Other Accounts receivable - other consisted of the following at June 30: Trade and underwriting billed (net of allowance for doubtful accounts of $11,136 and $4,596 for 2008 and 2007, respectively). $ 1,654,942 $ 1,361,383 Membership pledges (net of allowance for doubtful accounts of $21,652 and $20,893 for 2008 and 2007, respectively). 122, ,394 Underwriting commitments, unbilled. 170, ,163 Barter-trade balance (net of allowance for doubtful accounts of $464 and $3,056 in 2008 and 2007, respectively). 5,339 35,149 Total $ 1,953,057 $ 1,683,089 The Council engages in an annual fund-raising campaign manifested by offering special programs and on-air and mail fund-raising appeals. These appeals encourage supporters, both individuals and organizations, to provide financial contributions to the Council for enhancement of program offerings and other operating expenses. Financial contributions are frequently evidenced by pledges received from responding viewers and listeners. Contributions and collected pledges are reported as unrestricted membership pledges based on the nature of the campaign and solicitation. Bad debt write-offs for trade receivables amounted to $4,736 and $1,170 in 2008 and 2007, respectively. Bad debt write-offs for membership pledges amounted to $140,625 and $151,052 in 2008 and 2007, respectively. Capital Campaign Pledges Receivable Capital campaign pledges receivable are expected to be collected as follows: 2009 $ 22,350 22,350 Less: Discount to net present value (203) Less: Allowance for uncollectible pledges (12,600) 9,547 Less: Current portion (9,547) $ - Campaign pledges written-off in 2008 and 2007 amounted to $1,800 and $13,797, respectively. 8

11 5. FILM RIGHTS Film rights consisted of the following at June 30: Acquisition costs $ 1,990,561 $ 1,803,529 Accumulated amortization (1,258,159) (1,136,413) 732, ,116 Less: Current portion (551,636) (499,516) $ 180,766 $ 167,600 Program acquisition expense, including amortization of program rights, amounted to $1,258,160 and $1,173,009 for the years ended June 30, 2008 and 2007, respectively. 6. PROPERTY AND EQUIPMENT Property and equipment consisted of the following at June 30: Land and land improvements $ 739,522 $ 739,522 Buildings 13,485,238 13,497,120 Transmitter, antennae and tower 3,221,497 3,075,551 Satellite interconnection system 585, ,729 Studio and technical equipment 8,398,001 8,810,192 Furniture and fixtures 768, ,508 Computer and related equipment 1,046, ,051 Other equipment 486, ,974 Construction-in-progress 43, ,183 28,774,518 29,346,830 Less: Accumulated depreciation (19,694,114) (19,792,665) $ 9,080,404 $ 9,554,165 The National Telecommunications and Information Administration (NTIA) has liens against certain property purchased with two NTIA grants. The terms of the liens extend ten years each and expire September 30, 2009 and September 30, Equipment purchased with these grants totaled approximately $400,000 and $294,615, respectively. 9

12 7. INVESTMENTS The following summarizes the Council s investments held as of June 30: Fair Value Temporary cash investments $ 19,895 $ 268,052 U.S. government and agency obligations 355,046 1,474,775 Corporate bonds 3,039,069 1,446,304 Common and preferred stocks 7,289,206 6,877,621 $ 10,703,216 $ 10,066,752 Cost $ 10,765,106 $ 9,154,155 Total Investment Return The following schedule summarizes the total investment return and its classification in the statements of activities and change in net assets for the years ended June 30: Dividends and interest $ 432,533 $ 302,249 Net realized and unrealized gains (losses) on investments (1,060,420) 891,460 Total investment return (627,887) 1,193,709 Investment return allocated for operating activities (403,963) (407,154) Non-operating investment return $ (1,031,850) $ 786,555 Spending Policy The Board of Trustees authorized a spending policy under which allowable income utilization in support of operations is limited to 5% of the average market values for the last 20 quarters for both unrestricted long-term funds and the permanently restricted endowment fund. 8. SPLIT-INTEREST AGREEMENTS The Council received funds under the terms of charitable gift annuity agreements totaling $10,000 for both 2008 and Assets consisting of temporary cash investments, U.S. government and agency obligations, and stock mutual funds are recorded at the fair value of the investment and were $119,940 and $136,800 as of June 30, 2008 and 2007, respectively. Liabilities are recorded at an amount equal to the estimated present value of payments that the Council is required to make to specific beneficiaries under the terms of these arrangements and were $41,278 and $51,093 as of June 30, 2008 and 2007, respectively. The expected liability for payments to the annuitants is based on factors established at the time of the gift and is updated annually based on the estimated present value of the liability and the primary beneficiaries estimated remaining life expectancy. 10

13 9. FINANCING ARRANGEMENTS Lines-of-Credit As of June 30, 2007, the Council had a $1,000,000 line-of-credit with a local banking institution, which was secured by an interest in the investment account held by another local banking institution. Borrowings on this line-of-credit bore interest at the bank s prime lending rate (8.25% at June 30, 2007). In December 2007, the line-of-credit was paid off and not renewed at the Council s discretion and was replaced by a sub-note on the revolving line-of-credit. The Council has a $4,000,000 revolving line-of-credit with a local banking institution, which is secured by long-term investments. This line-of-credit is used for digital conversion and operating purposes. Borrowings on this line-of-credit bear interest at the bank s prime lending rate (5.00% at June 30, 2008) or 30 day London Interbank Offered Rate (LIBOR) plus.65% (3.12% at June 30, 2008) based on the duration of the borrowing. At June 30, 2008 and 2007, there was $1,430,000 and $785,000, respectively, outstanding on this line-of-credit. At June 30, 2008, $1,430,000 of the balance outstanding bore interest at 3.12%. The outstanding balance on this line-of-credit is due in full on August 25, The Council has a credit facility agreement with a bank under which the bank made a $2,000,000 mortgage loan to the Council. The mortgage loan bears interest at the rate equal to the one-month LIBOR rate plus.65% (3.12% at June 30, 2008). Interest is payable monthly along with principal payments equal to 1/240 th of the original principal amount of the loan. All remaining principal and accrued interest under the loan is payable at the end of the ten-year term, February The mortgage loan is secured by real property, buildings and improvements in an amount equal to $2,000,000. The bank holds the mortgage for this property and the bank may record the mortgage upon occurrence of an event of default. The credit facility agreement with the bank contains various covenants, including a minimum debt service coverage ratio and a minimum investment balance of $5,000,000. The Council was in compliance with these covenants at June 30, Future minimum principal payments are as follows for the years ending June 30: 2009 $ 100, , , , ,066,667 1,466,667 Less: Current portion (100,000) $ 1,366,667 11

14 9. FINANCING ARRANGEMENTS (Continued) Lines-of-Credit (Continued) On August 10, 2004, the Council entered into an interest rate swap agreement in order to hedge its interest rate risk. At June 30, 2008, the Council s interest rate swap agreement had a notional amount of $1,067,415. The agreement involves the exchange of fixed-rate and floating rate payments over the life of the agreement. The interest rate swap agreement terminates on September 30, The floating-rate piece of the interest rate swap agreement is based on LIBOR as set by the British Bankers Association. The fixed portion of the interest rate swap agreement is set at 3.89%. The fair value of the interest swap agreement of $(9,457) and $31,355 is recorded as a liability and asset in the statement of financial position as of June 30, 2008 and 2007, respectively. The change in the fair value of the interest rate swap agreement is recorded as a non-operating gain or loss in the statement of activities and change in net assets for the years ended June 30, 2008 and Supplemental Cash Flow Information Interest paid under the terms of all of the Council s financing arrangements during 2008 and 2007 was $115,352 and $165,711, respectively. 10. RETIREMENT PLAN The Council participates in contributory retirement plans administered by the Teachers Insurance Annuity Association of America (TIAA) and College Retirement Equities Fund (CREF) for substantially all employees. The Council s policy is to accrue the costs of these defined contribution benefits as they are incurred. Total expense charged to operations relating to these plans was approximately $263,000 and $257,000 for the years ended June 30, 2008 and 2007, respectively. In 2002, the Council established deferred compensation plans in accordance with sections 457(b) and 457(f) of the Internal Revenue Service Code and entered into participation agreements with its president and executive vice president under the terms of the plans. The Council has accrued $102,235 and $94,545 at June 30, 2008 and 2007, in connection with these plans. The amounts accrued through 2008 are funded with TIAA/CREF. These funds are included in other long-term investments in the accompanying balance sheet. 11. COMMITMENTS Leases The Council leases land for its transmission tower, transmitting equipment and building space that contains production facilities under the terms of various operating leases. Rent expense under the terms of these lease arrangements was $42,178 and $41,143 in 2008 and 2007, respectively. 12

15 11. COMMITMENTS (Continued) Leases (Continued) A summary of minimum rental commitments under the terms of all leases is as follows for the years ending June 30: Minimum Minimum Annual Sub-lease Net Minimum Rentals Rental Income Annual Rentals 2009 $ 51,574 $ (8,295) $ 43, ,259 (8,295) 40, ,949 (8,295) 20, ,590 (8,295) 8, ,590 (8,295) 8,295 Thereafter 257,145 (128,573) 128,572 $ 420,107 $ (170,048) $ 250,059 13

16 WXXI PUBLIC BROADCASTING COUNCIL SCHEDULE OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED JUNE 30, 2008 (With Comparative Totals for 2007) Program Services Programming Total and Program Program Production Broadcasting Information Services Salaries and wages $ 2,242,781 $ 650,850 $ 167,609 $ 3,061,240 Program acquisition 1,258, ,258,160 Contract service 595,381 94,381 38, ,835 Payroll taxes and employee benefits 485, ,512 62, ,384 Depreciation 370, ,151 31, ,376 Occupancy 150, ,985 15, ,325 Program production 420, , ,851 Memberships 278, , ,891 Printing and publications 37,357 2, , ,345 Premiums Direct mail Telephone and telecommunications 50,109 56,572 2, ,097 Interest - 103, ,873 Rental and maintenance of equipment 47,709 52, ,760 Professional services, excluding in-kind contributions Postage 8, ,169 36,210 Advertising 49,889-33,823 83,712 Travel 28,263 13,584 1,404 43,251 Bank charges In-kind contributions 38,000-5,517 43,517 Videotape 27, ,117 29,902 Office supplies 10,644 1,014 1,539 13,197 Stationwide training 16,169 2, ,468 Shipping 14,444 2, ,834 Other 77, ,517 6,208,871 2,079, ,787 8,786,745 COSTS INCURRED FOR PROGRAMS NOT YET BROADCAST - beginning of year 184, ,334 COSTS INCURRED FOR PROGRAMS NOT YET BROADCAST - end of year (199,478) - - (199,478) Total $ 6,193,727 $ 2,079,087 $ 498,787 $ 8,771,601

17 Exhibit I Supporting Services Total Expenses Fundraising Management Total and and Supporting Development Underwriting General Services Amount % Amount % $ 556,535 $ 305,058 $ 793,940 $ 1,655,533 $ 4,716, $ 4,271, ,258, ,173, ,936 25,113 96, ,382 1,201, ,172, ,261 81, , ,785 1,153, ,017, ,243 12, , ,735 1,144, ,266, ,512 9,513 29,141 67, , , , , , , ,866 1,953 12,445 19, , , ,136 3,798 10,386 54, , , , , , , , , , , ,140 2,216 6,035 13, , , ,479 11, , , , ,314 12, , , , , , , ,902 1,228 3,840 64, , , , ,424 95, , ,524 6,173 14,848 36,545 79, , ,707-10,962 68,669 68, , , , , ,379 31, , , ,787 15,672 28, , ,763 1,095 2,475 5,333 24, , , , , ,574 29, , , ,635, ,559 1,455,058 3,543,019 12,329, ,681, , , (199,478) (1.62) (184,334) (1.58) $ 1,635,402 $ 452,559 $ 1,455,058 $ 3,543,019 $ 12,314, $ 11,669, The accompanying notes are an integral part of this exhibit. 14