USA CYCLING, INC. USA CYCLING BV Consolidated Financial Statements & Supplemental Schedules For the Year Ended December 31, 2014

Transcription

1 USA CYCLING, INC. USA CYCLING BV Consolidated Financial Statements & Supplemental Schedules For the Year Ended December 31,

2 TABLE OF CONTENTS Independent Auditors' Report Consolidated Statement of Financial Position Consolidated Statement of Activities and Changes in Net Assets Consolidated Statement of Cash Flows Notes to Financial Statements Consolidated Schedule of Program Services Consolidated Schedule of Supporting Services

3 INDEPENDENT AUDITORS' REPORT Board of Directors USA Cycling, Inc. USA Cycling BV Colorado Springs, Colorado We have audited the accompanying consolidated financial statements of USA Cycling, Inc. (a nonprofit corporation), which comprise the statement of financial position as of December 31, 2014, and the related consolidated statements of activities and changes in net assets, and cash flows for the year then ended, and the related notes to the financial statements. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors` Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit 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 involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements Garden of the Gods Road, Suite 150 Colorado Springs, CO (719) Fax: (719)

4 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of USA Cycling, Inc. as of December 31, 2014, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Report on Summarized Comparative Information We have previously audited USA Cycling, Inc.'s 2013 financial statements, and our report dated May 23, 2014, expressed an unmodified opinion on those audited financial statements. In our opinion, the summarized comparative information presented herein as of and for the year ended December 31, 2013, is consistent, in all material respects, with the audited financial statements from which it has been derived. Other Matters Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The consolidated schedules of program and supporting services are presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. Waugh & Goodwin, LLP Colorado Springs, Colorado April 24,

5 USA CYCLING, INC. USA CYCLING BV Consolidated Statement of Financial Position December 31, 2014 (With Comparative Amounts for 2013) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 3,015,271 $ 3,235,419 Short-term investments 7,187,662 6,744,495 Accounts receivable, net 80, ,070 Due from USACDF 241, ,643 Due from USOC 95,000 14,399 Inventory 181, ,122 Prepaid expenses 243, ,808 Total current assets 11,044,367 10,551,956 PROPERTY AND EQUIPMENT - at cost: Building and improvements 7,009,962 7,008,956 Land 649, ,145 Office furniture and equipment 918, ,989 Training equipment 142, ,382 Vehicles 508, ,851 Leasehold improvements 140, ,613 Construction in process 26,251 Less accumulated depreciation (2,175,379) (1,761,501) Property and equipment - net 7,193,976 7,499,686 LONG TERM ASSETS: Due from USACDF 166,667 TOTAL ASSETS $ 18,405,010 $ 18,051,642 CURRENT LIABILITIES: Accounts payable $ 332,126 $ 363,680 Accrued liabilities 1,538,133 1,014,915 Deferred revenue 1,345,240 1,284,134 Total current liabilities 3,215,499 2,662,729 LONG TERM LIABILITIES: LIABILITIES AND NET ASSETS Long term accrued liabilities 333,334 TOTAL LIABILITIES 3,548,833 2,662,729 NET ASSETS: Unrestricted 11,953,327 12,599,988 Unrestricted - Board designated 10,639 10,639 Temporarily restricted 2,875,231 2,761,306 Permanently restricted 16,980 16,980 Total net assets 14,856,177 15,388,913 TOTAL LIABILITIES AND NET ASSETS $ 18,405,010 $ 18,051,642 See Notes to Financial Statements 3

6 USA CYCLING, INC. USA CYCLING BV Consolidated Statement of Activities and Changes in Net Assets For the Year Ended December 31, 2014 (With Comparative Totals for 2013) Temporarily Permanently Unrestricted Restricted Restricted Totals Totals REVENUE: Membership dues and fees $ 5,656,747 $ $ $ 5,656,747 $ 5,060,881 Sanction and entry fees 3,349,450 3,349,450 4,232,078 USOC grants 1,279,800 1,279,800 1,072,479 USA Cycling Development Foundation grants 1,274,116 1,274, ,146 Other income 729, , ,817 Sponsorship, licensing, and affinity royalties 693, ,266 1,396,527 Investment income 481, , ,322 Camps and clinics 371, , ,129 Contributions 248,814 20, , ,056 USA Cycling Development Foundation management fees, net of expenses of $104,943 and $130,651 21,660 21,660 24,517 Satisfaction of program restrictions 1,180,376 (1,180,376) Total revenue 14,012, ,925 14,126,916 14,820,952

7 EXPENSES: Program services: Coaches, training center and athletes 5,452,580 5,452,580 4,121,837 Membership and development 5,038,361 5,038,361 5,319,396 National and international events 2,356,128 2,356,128 3,266,712 Total program services 12,847,069 12,847,069 12,707,945 Supporting services: National office 943, ,912 1,031,960 Fundraising 538, , ,063 Governance 329, , ,509 Total supporting services 1,812,583 1,812,583 1,993,532 Total expenses 14,659,652 14,659,652 14,701,477 CHANGE IN NET ASSETS (646,661) 113,925 (532,736) 119,475 NET ASSETS, beginning of year 12,610,627 2,761,306 16,980 15,388,913 15,269,438 NET ASSETS, end of year $ 11,963,966 $ 2,875,231 $ 16,980 $ 14,856,177 $ 15,388,913 See Notes to Financial Statements 4

8 USA CYCLING, INC. USA CYCLING BV Consolidated Statement of Cash Flows For the Year Ended December 31, 2014 (With Comparative Amounts for 2013) CASH FLOWS FROM OPERATING ACTIVITIES: Change in net assets $ (532,736) $ 119,475 Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation 445, ,468 Change in allowance for doubtful accounts 16,043 7,127 Net unrealized and realized gains on investments (254,033) (583,580) Gain on disposal of property and equipment (1,034) (5,572) (Increase) decrease in assets: Accounts receivable 44,886 (44,329) Due from USACDF (280,704) 1,035,959 Due from USOC (80,601) (14,399) Inventory (27,133) 37,282 Prepaid expenses (108,550) (34,857) Increase (decrease) in liabilities: Accounts payable and accrued liabilities 824,998 (109,049) Deferred revenue 61, ,737 Total adjustments 640, ,787 Net cash provided by operating activities 107,761 1,036,262 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of investments 387,332 6,009,765 Purchases of investments (576,466) (7,090,619) Acquisition of property and equipment (140,775) (463,697) Proceeds from sale of property and equipment 2,000 7,532 Net cash used by investing activities (327,909) (1,537,019) NET DECREASE IN CASH (220,148) (500,757) CASH AND CASH EQUIVALENTS, beginning of year 3,235,419 3,736,176 CASH AND CASH EQUIVALENTS, end of year $ 3,015,271 $ 3,235,419 See Notes to Financial Statements 5

9 USA CYCLING, INC. USA CYCLING BV Notes to Consolidated Financial Statements For the Year Ended December 31, 2014 A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization USA Cycling, Inc. (Corporation) is the national governing body for cycling, making it responsible for the conduct and administration of amateur and professional cycling in the United States. The mission of USA Cycling is to achieve sustained success in international cycling competition and to grow competitive cycling in America. During the year ended December 31, 2013, USA Cycling established an international wholly owned for-profit subsidiary, USA Cycling BV (Subsidiary), to support ongoing program activities of the Corporation in Europe. USA Cycling BV's financial statements have been consolidated with the Corporation. Prior-Year Comparisons The financial statements include certain prior-year summarized comparative information in total but not by net asset or functional expense class. Such information does not include sufficient detail to constitute a presentation in conformity with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the Corporation's financial statements for the year ended December 31, 2013, from which the summarized information was derived. Contributions Contributions are recorded when received as unrestricted, temporarily restricted, or permanently restricted support, depending on the existence or nature of any donor restrictions. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily or permanently restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restriction. 6

10 Notes to Financial Statements A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued Cash and Cash Equivalents Cash and cash equivalents consist of cash in the Corporation's checking, savings, and money market accounts. The Corporation maintains its cash and cash equivalents in a commercial bank. In the unlikely event of a bank failure, the Corporation could suffer a loss to the extent its deposits exceed the respective bank's insurance limits. Accounts Receivable The Corporation's and Subsidiary's accounts receivable are recorded at the amount management expects to collect from balances outstanding at year-end. Management closely monitors outstanding balances. Outstanding receivables are recorded net of an allowance for doubtful accounts of $57,272 and $41,229 at December 31, 2014 and 2013, respectively. Inventory Inventory consists of competitive clothing, bicycles and bicycle parts, which are stated at the lower of cost (first-in, first-out method) or market. These items are used internally and are not held for sale. Some inventory items are non-cash contributions which are budget relieving in nature. The Corporation's policy is to record as revenue value in kind merchandise received that is budget relieving and to expense these items as they are used. Property and Equipment Property and equipment with estimated useful lives over one year are recorded at cost at the date of acquisition. The Corporation's capitalization policy states that property and equipment with an initial cost of $1,500 or more will be capitalized. Cost of repairs and maintenance, which do not materially prolong the useful lives of the assets, are charged to expense when incurred. Depreciation is recorded using the straight-line method over estimated useful lives as follows: Office furniture and equipment, training equipment and vehicles Building and improvements 3-10 years 4-39 years 7

11 Notes to Financial Statements A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued Property and Equipment - continued Depreciation expense for the years ended December 31, 2014 and 2013, amounted to $445,519 and $436,468, respectively. Membership Registrations Membership registrations consist of annual and single event licenses and are recognized as revenue in the corresponding year of the license. Some specialty membership categories offer a two year license, and this revenue is also recognized as revenue in the corresponding year of the license. Functional Allocation of Expense The costs of providing various program and supporting services have been summarized on a functional basis in the statements of activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Supplemental Cash Flow Information During the years ended December 31, 2014 and 2013, the Corporation did not pay any interest or income taxes. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Income Taxes The Corporation qualifies as a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code and, accordingly, is not subject to federal income tax. Accordingly, no income tax provision has been recorded. The Subsidiary is required to file income tax returns and pay the appropriate tax to the Netherlands. The Corporation's form 990, Return of Organization Exempt from Income Tax, is subject to examination by various taxing authorities, generally for three years after the date filed. Management of the Corporation believes that it does not have any uncertain tax positions that are material to the financial statements. 8

12 Notes to Financial Statements A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued Date of Management's Review In preparing the financial statements, the Corporation has evaluated events and transactions for potential recognition or disclosure through April 24, 2015, the date that the financial statements were available to be issued. B. FAIR VALUE MEASUREMENTS The Corporation applies Generally Accepted Accounting Principles (GAAP) for fair value measurements of financial assets that are recognized or disclosed at fair value in the financial statements on a recurring basis. GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of fair value hierarchy are as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Corporation has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. The level in the fair value hierarchy within which a fair measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The following tables present assets that are measured at fair value on a recurring basis at December 31, 2014 and 2013: Assets at Fair Value as of December 31, 2014 Level 1 Level 2 Level 3 Total - Mutual funds: Domestic equity $ 3,466,567 $ $ $ 3,466,567 Fixed income 2,762,068 2,762,068 Stocks 860, ,737 Money market 98,290 98,290 $ 7,187,662 $ $ 0 $$ 7,187,662 9

13 Notes to Financial Statements B. FAIR VALUE MEASUREMENTS - Continued Assets at Fair Value as of December 31, 2013 Level 1 Level 2 Level 3 Total - Mutual funds: Domestic equity $ 3,191,878 $ $ $ 3,191,878 Fixed income 2,670,877 2,670,877 Stocks 796, ,152 Money market 85,588 85,588 $ 6,744,495 $ $ $$ 6,744,495 Investment income in the accompanying statement of activities consists of the following for the years ended December 31, 2014 and 2013: Interest and dividends $ 227,392 $ 150,742 Realized and unrealized gains 254, ,580 C. DEFERRED REVENUE $ 481,425 $ 734,322 Deferred revenue consists of the following at December 31, 2014 and 2013: Club, license and permit fees $ 1,002,751 $ 1,002,241 Event revenue 145, ,269 Bid fees 67,475 98,250 Other 45,125 67,874 USOC grant 75,000 Marketing royalties and sponsorship 9,125 4,500 D. DONATED SERVICES $ 1,345,240 $ 1,284,134 The Corporation recognizes donated services that create or enhance non-financial assets or that require specialized skills and would typically need to be purchased if not provided by donation. At December 31, 2014 and 2013, donated services recorded were for insurance brokerage services and amounted to $100,000 each year. 10

14 Notes to Financial Statements E. BOARD DESIGNATED NET ASSETS The Board of Directors has designated a portion of the unrestricted net assets of the Corporation to support the John R. Stenner scholarship program. F. TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets at December 31, 2014 and 2013 consist of contributions received for the following purposes: Building and improvements $ 2,124,254 $ 2,287,658 Land 407, ,842 Time restrictions 333,333 18,533 Trail tune-up 9,569 9,096 Collegiate scholarships 579 7,177 $ 2,875,231 $ 2,761,306 During the year ended December 31, 2007, the Corporation was the recipient of donated land and building valued at $3,895,000. The donor has stipulated that as a condition of this gift, the Corporation must use the property as its national headquarters until December 31, Net assets are released from donor restrictions by incurring expenses that satisfy the restricted purpose. During the year ended December 31, 2014, net assets were released from restrictions for satisfying the following purposes: USA Cycling Development Foundation programs $ 959,316 Building 163,404 Land 31,346 NCAA Scholarship 9,500 Anti-doping programs 8,543 Junior athlete travel 5,693 Trail tune-up 2,532 Armando fund program 42 G. PERMANENTLY RESTRICTED NET ASSETS $ 1,180,376 Permanently restricted net assets at December 31, 2014 and 2013, consist entirely of the Armando fund, which is restricted in perpetuity (Note H). Income from the Armando fund is used to support racing in the Northeast area of the United States. 11

15 Notes to Financial Statements G. PERMANENTLY RESTRICTED NET ASSETS - Continued Earnings on these net assets are subject to donor restrictions that stipulate that the original principal of the gift is to be held and invested by the Corporation indefinitely and income from the fund is to be used for racing in the Northeast area of the United States. At December 31, 2014 and 2013, the underlying assets of the endowment fund are included in the statement of financial position as cash. H. ENDOWMENT FUNDS In accordance with generally accepted accounting principles, net assets associated with endowment funds are classified between permanently and temporarily restricted net assets and reported based on the existence of donor-imposed restrictions. Interpretation of Relevant Law The Corporation's Board of Directors has interpreted the Colorado Uniform Prudent Management of Institutional Funds Act (UPMIFA) as requiring the preservation of the fair value of the original gift as of the date of the donor-restriction except for explicit donor-stipulations to the contrary. As a result of this interpretation, permanently restricted assets include the original value of the gift and any required accumulations for inflation stipulated by the donor. The Corporation's permanently restricted net assets consist of an endowment gift received from one donor. The gift instrument does not require that a percentage of the annual income, including realized and unrealized gains, be added to the original gift as a hedge against the effects of inflation. As of December 31, 2014, the original gift was equal to the fair market value of the permanently restricted net assets. The remaining portion of the donor-restricted Endowment that is not classified as permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure in a manner consistent with the standard of prudence prescribed by UPMIFA and the Corporation`s investment and spending policies. 12

16 Notes to Financial Statements H. ENDOWMENT FUNDS - Continued Composition of Endowment These funds are invested in cash and cash equivalents, pursuant to the Corporation's spending objectives of subjecting the fund to low investment risk and providing this program with current income. The Corporation expends this fund's investment earnings for the restricted purpose in the year of receipt. Temporarily Permanently Restricted Restricted Total - Endowment net assets, January 1, 2013 $ $ 16,980 $ 16,980 Investment income Expenditures (42) (42) Endowment net assets, December 31, ,980 16,980 Investment income Expenditures (42) (42) Endowment net assets, December 31, 2014 $ 0 $ 16,980 $ 16,980 Return Objectives and Risk Parameters The Corporation has adopted objectives and parameters in its investment policy for the purpose of providing reasonably predictable earnings while preserving the required fair value of the Endowment`s permanently restricted net assets. Spending Policy and Relation to Investment Objectives To the extent that expenses satisfy donor stipulations, the Corporation considers the long-term expected return on the Endowment to determine appropriate distributions each year. Accordingly, over the long-term, the Corporation expects its spending policy to provide funding for its programs as well as preserve the required fair values of the Endowment`s permanently restricted net assets. Strategies Employed for Achieving Objectives The Corporation employs a total-return strategy to achieve its investment objectives, which utilizes current yield (interest). Full allocation in cash is applied to maintain an acceptable level of prudent risk. 13

17 Notes to Financial Statements I. INSURANCE SURCHARGE Costs for athlete accident medical and general liability insurance are charged to the membership and development expense category. Premiums for these policies are based on a formula which takes into account prior losses, the number of events and the number of members. In addition to the insurance costs reported in the supplemental schedules attached to this report, there are significant indirect costs associated with administering this insurance program. The Corporation collects an insurance surcharge when athletes register for road, track, mountain bike and cyclocross events. The Corporation also collects insurance surcharges and fees from event organizers, clubs, and coaches. This income, which is included in sanction and entry fees, is recorded when received and amounted to $2,090,946 and $2,250,473, for the years ended December 31, 2014 and 2013, respectively. J. RETIREMENT PLANS Effective July 1, 2007, the Corporation adopted a Safe Harbor 403(b) plan. The Corporation's non-elective Safe Harbor contribution matches 100% of each employee's elective deferrals up to 4% of eligible compensation. The Corporation may also make employer supplemental contributions at its discretion which will be allocated among all eligible employees, whether or not they make contributions. Employer contributions to the 403(b) plan for the years ended December 31, 2014 and 2013, were $310,329 and $285,119, respectively. The Corporation's contributions are fully funded. K. RELATED PARTY TRANSACTIONS During the years ended December 31, 2014 and 2013, the United States Olympic Committee (USOC) provided grants to the Corporation under the following project categories: NGB funding $ 1,120,000 $ 1,045,000 Women's training 125,000 HPP grant 20,000 International relations 14,800 27,479 $ 1,279,800 $ 1,072,479 The USOC also paid stipends, performance bonuses and tuition support of $117,000 and $183,150 directly to athletes or on their behalf in 2014 and 2013, respectively. 14

18 Notes to Financial Statements K. RELATED PARTY TRANSACTIONS The Corporation has committed to provide $1,000,000 in funding to the USOC in support of the USOC Velodome project, payable over a three year period beginning in In addition, at December 31, 2014 and 2013, the Corporation owed the USOC $18,490 and $17,879, respectively. The USA Cycling Development Foundation (USACDF) was formed to operate exclusively for the benefit and support of the Corporation. The purpose of the USACDF is to raise funds and acquire assets that will enable the Corporation to encourage, improve and promote cycling in the United States. The Corporation does not control the USACDF and therefore does not prepare consolidated financial statements with the Foundation. During the years ended December 31, 2014 and 2013, the Foundation provided grants in support of USA Cycling, Inc.'s programs in the amount of $761,984 and $959,681, respectively. In addition, during the year ended December 31, 2014, the Foundation committed to provide $500,000 in funding to USA Cycling, Inc. in support of the USOC Velodrome program, with one third of this amount paid each year over a three year period beginning in Also, during the years ended December 31, 2014 and 2013, grant funds in the amount of $12,132 and $14,465, respectively, were provided to USA Cycling, Inc. in support of the Edmund R. Burke Fund program. The Corporation also provided administrative services to the USACDF. Total gross revenue for these services for the years ended December 31, 2014 and 2013, amounted to $126,603 and $155,168, respectively. The USACDF owed the Corporation $408,347 and $127,643 at December 31, 2014 and 2013, respectively. The Corporation is economically dependent upon grants from the USOC and the USACDF in order to maintain its programs at current levels. The Corporation made payments to certain non-employee board members, trustees and members of their immediate families during the years ended December 31, 2014 and 2013, for the following: Athlete stipends and prize money, officiating and other $ 7,405 $ 10,522 The Corporation does not compensate any non-employee board members for their service on the Board of Directors.

19 Notes to Financial Statements L. CONTINGENCIES The Corporation has been named as a defendant in several lawsuits. In the opinion of management, these pending lawsuits as of December 31, 2014, are either without merit or will not exceed insurance limits. M. COMMITMENTS In 2014, the Corporation entered into an employment contract with a key employee, which expires September 30, This contract includes a provision for a final compensation payment, if certain contract provisions are met, which is payable in N. LEASES The Corporation has leased a postage meter under a 64 month operating lease. This lease requires monthly payments of $189 through May, This lease was renewed for an additional 60 months requiring monthly payments of $255 through May The Corporation entered into a lease for warehouse space in the Netherlands through February 14, This lease requires annual rent in the amount of 15,300 euros, with annual increases, not to exceed 2.5%, beginning February 14, Future minimum lease payments for the years ending December 31 are as follows: 2015 $ 24, , , , ,273 During the year ended December 31, 2009, the Corporation entered into a capital lease for a vehicle used in on-going programs in Europe. This lease expires December 31, The full amount of lease payments, $36,783, was paid at the inception of this lease and the vehicle is included in property and equipment. During the year ended December 31, 2010, the Corporation entered into a capital lease for a vehicle used in on-going programs in Europe. This lease expires December 31, The full amount of lease payments, $23,287, was paid at the inception of this lease and the vehicle is included in property and equipment. 16

20 Notes to Financial Statements N. LEASES - Continued During the year ended December 31, 2011, the Corporation entered into two capital leases for vehicles used in on-going programs in Europe. These leases expire December 31, The full amount of lease payments, $42,665, was paid at the inception of these leases and the vehicles are included in property and equipment. Therefore, there are no future minimum lease payments associated with these leases. 17

21 USA CYCLING, INC. USA CYCLING BV Consolidated Schedule of Program Services For the Year Ended December 31, 2014 Coaches, National & Training Center Membership & International & Athletes Development Events Total Advertising & promotion $ 1,558 $ 32,075 $ 300 $ 33,933 Airfare 573,627 46,525 86, ,894 Bad debts 5,208 12,333 17,541 Bank & credit card processing fees 3, , ,916 Contract labor & fees 629, , ,525 1,849,475 Depreciation 169, ,090 65, ,032 Dues, subscriptions & fees 45,915 4,453 17,055 67,423 Employee benefits 304, , , ,120 Food & housing 1,020,548 62, ,460 1,277,980 Foreign exchange (gain) loss 7,366 7,366 Foreign taxes Gear, equipment & supplies 214,815 9,725 95, ,778 Gifts & grants 1,018,264 17,246 3,203 1,038,713 Ground transportation 263,826 37,757 65, ,788 Insurance 14,821 1,474,551 47,203 1,536,575 Local rebates & promoter incentives 433, ,879 Medals, awards & apparel 158,087 20, , ,602 Office expense & supplies 9,770 11,424 3,757 24,951 Payroll taxes 63, ,705 24, ,269 Photography, video & artwork 11 1,015 1,026 Postage & fulfillment 28,938 63,398 11, ,547 Printing & publications 6,021 24,796 50,106 80,923 Professional fees 9,947 7,131 2,476 19,554 Race entry fees 16,361 16,361 Rental expense 4, ,963 Repairs & maintenance 11,496 24,869 4,621 40,986 Salaries 858,662 1,456, ,252 2,663,396 Small equipment 5,086 17,434 2,104 24,624 Telephone & broadband 2,972 10,485 1,807 15,264 Utilities 9,321 18,270 3,356 30,947 $ 5,452,580 $ 5,038,361 $ 2,356,128 $ 12,847,069 18

22 USA CYCLING, INC. USA CYCLING BV Consolidated Schedule of Supporting Services For the Year Ended December 31, 2014 National Office Fundraising Governance Total Advertising & promotion $ $ 399 $ $ 399 Airfare 28,157 20,920 54, ,997 Bad debts Bank & credit card processing fees Contract labor & fees 23, ,291 18, ,288 Depreciation 46,403 6,084 52,487 Dues, subscriptions & fees 7,141 1,102 35,408 43,651 Employee benefits 123,606 28,955 26, ,586 Food & housing 24,452 20,634 45,345 90,431 Gear, equipment & supplies 1, ,114 3,256 Gifts & grants 2,707 4,162 2,991 9,860 Ground transportation 5,442 5,037 11,844 22,323 Insurance 26, ,034 Investment expense 25,975 25,975 Medals, awards & apparel 1, ,267 7,052 Office expense & supplies 14,254 1,080 3,343 18,677 Payroll taxes 39,074 13,312 8,023 60,409 Photography, video & artwork Postage & fulfillment 2, ,901 4,532 Printing & publications 1,798 11, ,518 Professional fees 61, ,374 63,011 Rental expense Repairs & maintenance 11, ,284 Salaries 487, , , ,769 Small equipment 189 1, ,278 Telephone & broadband 3,242 1,529 2,394 7,165 Utilities 5, ,339 $ 943,912 $ 538,688 $ 329,983 $ 1,812,583 19