Seminole Boosters, Inc. Financial Statements and Other Financial Information. Contents

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2 Financial Statements and Other Financial Information Years ended June 30, 2012 and 2011 Contents Required Supplementary Information Report of Independent Auditors...1 Management s Discussion and Analysis...3 Audited Financial Statements Statements of Net Assets...9 Statements of Revenues and Expenses and Changes in Net Assets...11 Statements of Cash Flows...13 Notes to Financial Statements...15 Other Financial Information Schedule of Revenues and Expenses and Changes in Net Assets Budget and Variance Unrestricted Fund...35 Schedule of Revenues and Expenses and Changes in Net Assets Budget and Variance Restricted Fund...38 Schedule of Revenues and Expenses and Changes in Net Assets Budget and Variance Reserve Fund...40 Schedule of Revenues and Expenses and Changes in Net Assets Budget and Variance Capital Projects Fund...42 Schedule of Revenues and Expenses and Changes in Net Assets Budget and Variance Endowment Fund...43 Schedule of Revenues and Expenses and Changes in Net Assets Budget and Variance FSU Financial Assistance...44 Schedule of Revenues and Expenses and Changes in Net Assets University Center Club...45 Combining Statements Combining Statement of Net Assets...46 Combining Statement of Revenues and Expenses and Changes in Fund Net Assets...50 Combining Statement of Cash Flows...52 Other Reports Report of Independent Auditors on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards...54

3 Board of Directors Seminole Boosters, Inc. Report of Independent Auditors We have audited the accompanying statements of net assets of the Seminole Boosters, Inc. (Seminole Boosters), a component unit of The Florida State University, as of June 30, 2012 and 2011, and the related statements of revenues and expenses and changes in net assets, and statements of cash flows for the years then ended. These financial statements are the responsibility of the Seminole Boosters 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 and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of 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 audits provide 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 the Seminole Boosters at June 30, 2012 and 2011, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated October 29, 2012, on our consideration of the Seminole Boosters internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. 1

4 Page Two Accounting principles generally accepted in the United States of America require that the Management s Discussion and Analysis on Pages 3 through 8 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of the financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide assurance. Our audits were performed for the purpose of forming an opinion on the financial statements that collectively comprise the Seminole Boosters basic financial statements. The accompanying other financial information and combining statements are presented for purposes of additional analysis and are not a required part of the basic 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 basic 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 basic financial statements as a whole. October 29,

5 MANAGEMENT S DISCUSSION AND ANALYSIS Organizational Vision As included in our Strategic Plan, our organizational vision is as follows: To be a nationally recognized Booster organization that underwrites the operations of a premier and fully endowed athletic program with state of the art facilities. 3 ~Seminole Boosters, Inc. Strategic Plan This is not a phrase used for promotional purposes. This is who we strive to be each and every day. Every decision of this organization can be tied back to this vision. Organizational Accomplishments During the fiscal year, the Organization was successful in funding the Department of Athletics at a level that promoted comprehensive excellence. That success was made possible, in part, by the following accomplishments: Annual Fund Development Our annual fundraising increased by $1,053,572 (8.17%) to a total of $13,947,126. This was a tremendous sign of support from our donors, who clearly seek to fund Florida State University s Athletic Program and its student-athletes. Indoor Practice Facility Gifts Our main capital fundraising purpose in was to move to the public phase of the Winning Edge Campaign to build an Indoor Practice Facility. The campaign resulted in a total amount raised of approximately $20.1 million through September 30, 2012, which will be collected over the pledge period and will help service the anticipated debt of Series 2012C, which will be issued in October Bond Refinancing In March 2012, FSU Financial Assistance, Inc. issued Series 2012A and Series 2012B refunding bonds, generating a savings of 10.52%. These bond series took advantage of historically low interest rates and we were able to generate significant debt service reductions between 2012 and Fair-Market Valuation of Investments We did experience a significant decrease of $4.4 million in Unrealized Gains and Losses related to our Investments in marketable securities and real estate holdings. That was largely the result of market conditions and expected given the investment benchmarks of the invested funds. We continue to work to diversify our invested funds and seek to position the funds to outperform the investment strategy benchmarks of the overall funds. Program Services for Capital Projects Expenses last year were due to practice field renovations that were non-recurring in nature in the fiscal year. Those renovations will be incorporated into the overall design once the Indoor Practice Facility is constructed during

6 College Town Development We were able to take a piece of donated real estate that was generating no return and invest into a development adjacent to the campus. The land, along with a cash investment from the Endowment Fund, totaled approximately $17.9 million. The development is currently under construction and is expected to open in August The returns from this investment are expected to be significant and will generate funds to be used to fund student-athletic scholarships at The Florida State University. Bond Rating Downgrade In February 2012, several rating agencies reviewed the credit rating of FSU Financial Assistance, Inc. as part of their due diligence as it related to our Series 2012A and Series 2012B bond refunding issuance. As a result of their review, the bond rating from Moody s Investor Service was downgraded from Aa3 to A1 with a stable outlook. Additionally, Fitch Ratings issued a first-time rating to FSU Financial Assistance, Inc. of A with a stable outlook. Both of these ratings are within the category of Investment Grade Upper Medium Quality. Those ratings were affirmed in September 2012 as part of the due diligence related to the Series 2012C bond issue. Future Outlook & Organizational Initiatives The outlook financially for the fiscal year is generally positive with reserve fund stability being the intended achievement. The concept of funding recurring expenses with recurring available revenues will be implemented. For the past several fiscal years, the strategy of using non-recurring funds to fund the Department of Athletics and the University s needs was utilized. The strategy was appropriate given the ever-changing economic climate that we were experiencing. As we begin this fiscal year, we acknowledge that available non-recurring reserve funds are at baseline minimum levels and that we now must find new revenue streams in order to fund the operational needs requested by the Department of Athletics. To that end, we have worked in conjunction with the Department of Athletics and the University Administration in order to identify, assess, review and implement a variety of actions that will produce significant additional revenue in future years. For the fiscal year, we have the following initiatives that are the main areas of emphasis for the organization: Annual Fund Development Individual Endowment Management and Reporting Revenue Enhancement via the Top 25 Idea Platform Series 2012C Debt Issuance for Construction of the Indoor Practice Facility Athletic Facility Enhancement Assessment and Implementation Sound Fiscal Management, Communication and Transparency Strategic Plan Update Management continues to use our strategic plan as the roadmap to the future. The financial component of that plan has allowed not only the Seminole Boosters but others within the Florida State University community to look long-term and to evaluate the effects the decisions of today 4

7 will have on our organization in the future. This plan is considered by management to be an essential part of our decision making process and is considered when significant business decisions are made. We look forward to incorporating our plan into that of the Department of Intercollegiate Athletics during the fiscal year. Summarized Financial Data Fiscal Year Ended June 30, 2010 Unrestricted Endowment Capital Reserve FSU Financial Other Fund Fund Projects Fund Fund Assistance, Inc. Funds Capital assets $ 6,297,835 $ - $ - $ 4,565,741 $ 77,596,787 $ 4,496,036 Noncapital assets 35,350,116 70,460,819 35,528,908 9,187,265 5,929,158 4,408,189 Total assets $ 41,647,951 $ 70,460,819 $ 35,528,908 $ 13,753,006 $ 83,525,945 $ 8,904,225 Current liabilities $ 20,447,150 $ - $ - $ - $ 4,348,564 $ 1,487,379 Long-term liabilities 14,835,022 5,750, ,541,657 2,911,644 Total liabilities $ 35,282,172 $ 5,750,000 $ - $ - $ 68,890,221 $ 4,399,023 Invested in capital assets, net of related debt $ 6,297,835 $ - $ - $ 4,565,741 $ 14,788,973 $ 2,018,302 Restricted net assets - 64,710,819 35,528, ,267,831 Unrestricted net assets 67, ,187,265 (153,249) 219,069 Total net assets $ 6,365,779 $ 64,710,819 $ 35,528,908 $ 13,753,006 $ 14,635,724 $ 4,505,202 Charges for services $ 756,966 $ - $ - $ 123,025 $ - $ 93,999 Contributions 11,971, ,239,568 In-kind contributions 865, Other revenues 5,432,832 40, ,517, ,823 Total revenues $ 19,026,857 $ 40,023 $ - $ 123,025 $ 4,517,645 $ 1,469,390 Program services $ 16,024,472 $ 71,123 $ - $ 2,340,473 $ 2,693,166 $ 942,226 Roundball Club ,546 Bullpen Club ,006 In-kind contributions 694, Total program expenses 16,718,516 71,123-2,340,473 2,693,166 1,140,778 Other program expenses 661, ,630 - Supporting services expenses 3,994, ,376 Total operating expenses $ 21,375,171 $ 71,123 $ - $ 2,340,473 $ 2,696,796 $ 1,153,154 Nonoperating revenue (expense) $ (114,682) $ (2,235,393) $ (1,036,466) $ 1,392,706 $ (3,161,997) $ (88,224) Change in net assets before capital contributions and transfers $ (2,462,996) $ (2,266,493) $ (1,036,466) $ (824,742) $ (1,341,148) $ 228,012 Capital contributions $ - $ 2,951,797 $ 2,685,504 $ - $ - $ - Changes in net assets $ (2,462,996) $ 685,304 $ 1,649,038 $ (824,742) $ (1,341,148) $ 228,012 Net assets at beginning of year 8,151,413 64,025,515 34,454,870 15,219,110 15,401,872 4,313,190 Net transfers from (to) other funds 677,362 - (575,000) (641,362) 575,000 (36,000) Net assets at end of year $ 6,365,779 $ 64,710,819 $ 35,528,908 $ 13,753,006 $ 14,635,724 $ 4,505,202 5

8 Fiscal Year Ended June 30, 2011 Unrestricted Endowment Capital Reserve FSU Financial Other Fund Fund Projects Fund Fund Assistance, Inc. Funds Capital assets $ 6,501,796 $ - $ - $ 4,565,742 $ 74,925,124 $ 4,426,666 Noncapital assets 27,419,784 73,303,795 31,571,617 11,027,529 5,867,121 4,170,234 Total assets $ 33,921,580 $ 73,303,795 $ 31,571,617 $ 15,593,271 $ 80,792,245 $ 8,596,900 Current liabilities $ 18,242,676 $ 1,500,000 $ - $ 3,395,029 $ 4,535,084 $ 1,189,693 Long-term liabilities 12,907,698 5,750, ,572,958 2,398,169 Total liabilities $ 31,150,374 $ 7,250,000 $ - $ 3,395,029 $ 66,108,042 $ 3,587,862 Invested in capital assets, net of related debt $ 6,501,796 $ - $ - $ 4,565,742 $ 15,733,129 $ 2,427,845 Restricted net assets - 66,053,795 31,571, ,388,656 Unrestricted net assets (3,730,590) - - 7,632,500 (1,048,926) 192,537 Total net assets $ 2,771,206 $ 66,053,795 $ 31,571,617 $ 12,198,242 $ 14,684,203 $ 5,009,038 Charges for services $ 959,361 $ - $ - $ 134,454 $ - $ 349,323 Contributions 12,113, ,040,285 In-kind contributions 779, Other revenues 5,056,830 42, ,803, ,246 Total revenues $ 18,909,745 $ 42,800 $ - $ 134,454 $ 4,803,478 $ 1,562,854 Program services $ 15,362,631 $ 1,527,862 $ - $ 3,395,029 $ 2,688,483 $ 835,568 Roundball Club ,676 Bullpen Club ,151 In-kind contributions 556, Total program expenses 15,919,611 1,527,862-3,395,029 2,688,483 1,003,395 Other program expenses 1,671, ,302 - Supporting services expenses 4,327, ,407 Total operating expenses $ 21,918,423 $ 1,527,862 $ - $ 3,395,029 $ 2,691,785 $ 1,012,802 Nonoperating revenue (expense) $ (554,723) $ 2,353,544 $ (5,210,301) $ 2,061,561 $ (3,063,214) $ (10,216) Change in net assets before capital contributions and transfers $ (3,563,401) $ 868,482 $ (5,210,301) $ (1,199,014) $ (951,521) $ 539,836 Capital contributions $ - $ 314,494 $ 1,830,088 $ - $ - $ - Changes in net assets $ (3,563,401) $ 1,182,976 $ (3,380,213) $ (1,199,014) $ (951,521) $ 539,836 Net assets at beginning of year 6,365,779 64,870,819 35,528,908 13,753,006 14,635,724 4,505,202 Net transfers from (to) other funds (31,172) - (577,078) (355,750) 1,000,000 (36,000) Net assets at end of year $ 2,771,206 $ 66,053,795 $ 31,571,617 $ 12,198,242 $ 14,684,203 $ 5,009,038 6

9 Fiscal Year Ended June 30, 2012 Unrestricted Endowment Capital Reserve FSU Financial Other Fund Fund Projects Fund Fund Assistance, Inc. Funds Capital assets $ 6,476,712 $ - $ 1,324,287 $ 4,625,742 $ 72,253,462 $ 7,704,778 Noncapital assets 22,995,269 74,252,189 39,623,381 8,971,770 7,425,923 3,632,461 Total assets $ 29,471,981 $ 74,252,189 $ 40,947,668 $ 13,597,512 $ 79,679,385 $ 11,337,239 Current liabilities $ 15,423,741 $ 1,770,333 $ - $ 3,405,260 $ 4,174,652 $ 771,967 Long-term liabilities 12,897,178 5,750, ,206,848 1,821,543 Total liabilities $ 28,320,919 $ 7,520,333 $ - $ 3,405,260 $ 65,381,500 $ 2,593,510 Invested in capital assets, net of related debt $ 6,476,712 $ - $ - $ 4,625,742 $ 13,451,083 $ 6,252,248 Restricted net assets - 66,731,856 40,947, ,277,798 Unrestricted net assets (5,325,650) - - 5,566, , ,683 Total net assets $ 1,151,062 $ 66,731,856 $ 40,947,668 $ 10,192,252 $ 14,297,885 $ 8,743,729 Charges for services $ 1,020,157 $ - $ - $ 74,100 $ - $ 363,910 Contributions 13,058, ,142,832 In-kind contributions 888, Other revenues 5,256,259 36, ,753, ,402 Total revenues $ 20,223,542 $ 36,207 $ - $ 74,100 $ 4,753,806 $ 1,648,144 Program services $ 13,581,415 $ 1,821,787 $ - $ 3,405,260 $ 2,676,898 $ 1,112,438 Roundball Club ,021 Bullpen Club ,160 In-kind contributions 570, Total program expenses 14,151,569 1,821,787-3,405,260 2,676,898 1,268,619 Other program expenses 2,800, Supporting services expenses 4,506, ,000 Total operating expenses $ 21,457,790 $ 1,821,787 $ - $ 3,405,260 $ 2,676,898 $ 1,274,619 Nonoperating revenue (expense) $ (143,724) $ 5,432,453 $ (2,781,204) $ 1,235,170 $ (2,907,476) $ (93,684) Change in net assets before capital contributions and transfers $ (1,377,972) $ 3,646,873 $ (2,781,204) $ (2,095,990) $ (830,568) $ 279,841 Capital contributions $ - $ 401,038 $ 12,534,333 $ - $ - $ - Changes in net assets $ (1,377,972) $ 4,047,911 $ 9,753,129 $ (2,095,990) $ (830,568) $ 279,841 Net assets at beginning of year 2,771,206 66,053,795 31,571,617 12,198,242 14,684,203 5,009,038 Net transfers from (to) other funds (242,172) (3,369,850) (377,078) 90, ,250 3,454,850 Net assets at end of year $ 1,151,062 $ 66,731,856 $ 40,947,668 $ 10,192,252 $ 14,297,885 $ 8,743,729 Conclusion The fiscal year was outstanding in terms of fundraising and commitment shown by the Organization s donors. Management continues to not only manage for today but to position this organization for the future, both financially and operationally. We expect the wide sweeping changes that are affecting charitable giving to continue and are attempting to stay ahead of those changes. At all times, our organizational mission and vision remain at the forefront of decisions made. 7

10 Our annual fund, the lifeline of the organization, will certainly continue to be the emphasis as well as major gift fundraising, aimed at fully endowing our athletic scholarships and the building and maintaining of athletic facilities. The Board of Directors volunteer significant time and effort into the Seminole Boosters and should be applauded for their personal commitment. Sincerely, Matthew P. Behnke, CPA Chief Financial Officer Financial Reporting Requirements The above section of the Seminole Boosters, Inc. (the Boosters) Financial Statements presents management s discussion of the Boosters financial activity during the fiscal years ended June 30, 2012 and FSU Financial Assistance, a direct support organization of Florida State University created for the purpose of securing bond financing for athletic facilities, has been included with the financial statements of Seminole Boosters, Inc. As required by the accounting principles, the financial statements include three basic financial statements that provide information on the Boosters as a whole: the Statement of Net Assets; the Statement of Revenues, Expenses and Changes in Fund Net Assets; and the Statement of Cash Flows. There are combining statements with each fund of the Boosters shown separately as well as supplemental schedules that provide detailed budgetary and actual information. 8

11 Audited Financial Statements

12 Statements of Net Assets Assets Current assets: Cash and cash equivalents: Cash 37,667 June 30, $ $ 48,148 Cash equivalents 13,867,153 17,503,842 Total cash and cash equivalents 13,904,820 17,551,990 Investments: Investments 26,918,494 38,783,033 Investment in real estate 10,682,944 15,951,828 Investment in partnership 100,000 - Investment in College Town 24,483 - Total investments 37,725,921 54,734,861 Accounts receivable: Accounts receivable 1,406,105 1,401,061 Due from University Center Club - - Due from FSU Foundation 15,076 9,906 Other accounts receivable 328,942 - Total accounts receivable 1,750,123 1,410,967 Receivable from trust 666, ,998 Accrued interest 36,295 - Pledges receivable, net 5,818,993 5,550,859 In-kind pledges receivable 638, ,517 Inventory 81,977 82,875 Prepaid expenses 123, ,010 Total current assets 60,746,246 80,662,077 Land, buildings, and equipment, net 93,770,683 90,419,328 Construction in progress 1,324,287 - Pledges receivable, net 67,028,202 62,442,223 In-kind pledges receivable 776, ,969 Receivable from trust 666, ,338 Notes receivable 14,767,154 47,066 Bond issue costs and discount, net 4,465,565 3,068,005 Prepaid expenses 775,000 5,000 Prepaid tuition contracts 3,430,037 3,472,591 Other assets 335, ,847 Total assets $ 248,086,135 $ 242,401,444 9 (continued)

13 Statements of Net Assets (continued) Liabilities and fund net assets Current liabilities: Accounts payable 61,100 June 30, $ $ 38,707 Accrued interest 659, ,813 Accrued expenses 24, ,767 Annuity payable 40,174 36,789 Capital leases payable 2,971 5,618 Bonds payable 2,285,000 2,135,000 Deferred revenues 13,904,196 14,433,909 Due to FSU Department of Athletics 8,260,295 11,125,000 Due to other institutions 12,867 12,867 Other accrued liabilities 44,742 86,677 Total current liabilities 25,295,506 28,803,147 Long-term liabilities: Annuity payable 123, ,440 Bonds payable 59,130,000 60,230,000 Bond premium, net 1,852,944 1,430,995 Deferred revenues 13,530,269 13,255,798 Due to FSU Foundation 5,750,000 5,750,000 Subordinated debt - University Club Agreement 339, ,963 Total long-term liabilities 80,726,177 81,310,196 Total liabilities 106,021, ,113,343 Fund net assets: Invested in capital assets, net of related debt 33,515,774 27,797,517 Restricted: Restricted for athletic programs 2,277,798 2,388,656 Expendable contributions 67,362,202 53,979,386 Nonexpendable contributions 37,607,333 43,646,026 Unrestricted 1,301,345 4,476,516 Total fund net assets 142,064, ,288,101 Total liabilities and fund net assets $ 248,086,135 $ 242,401,444 See accompanying notes. 10

14 Statements of Revenues and Expenses and Changes in Net Assets Operating revenues Charges for services: Concessions, net 1,020,157 Years ended June 30, $ $ 959,361 University Center Club, net 363, ,323 Skybox revenues 74, ,454 Total charges for services 1,458,167 1,443,138 Program support: Contributions 14,200,993 13,153,936 Stadium revenues - security for the series 2002, 2003A, 2004, 2012A, and 2012B revenue bonds: Rent income-stadium lease 1,850,000 1,850,000 Conference facility revenues 2,182,567 2,215,316 License fee revenues 718, ,162 In-kind contributions 888, ,903 Media rights 4,279,175 4,747,614 Other revenues 1,157, ,262 Total program support 25,277,632 24,010,193 Total operating revenues 26,735,799 25,453,331 Operating expenses Program services: Program services 22,597,798 23,809,573 In-kind contributions 570, ,980 Roundball club 38,021 21,676 Bullpen club 118, ,151 Total program services 23,324,133 24,534,380 Other program services: Other expenses 2,800,165 1,674,939 Total other program services 2,800,165 1,674,939 Supporting services: Supporting services 4,223,853 4,077,535 In-kind contributions 282, ,640 Roundball club 3,000 3,000 Bullpen club 3,000 6,407 Total supporting services 4,512,056 4,336,582 Total operating expenses 30,636,354 30,545,901 Operating loss (3,900,555) (5,092,570) (continued) 11

15 Statements of Revenues and Expenses and Changes in Net Assets (continued) Years ended June 30, Nonoperating revenues (expenses): Interest and investment income (loss) $ 913,812 $ 1,746,252 Change in the fair value of investments (1,998,963) 4,568,553 Change in the fair value of real estate (189,447) (2,369,000) Gift shop revenue, net 255, ,978 Royalties, security for the series 2002, 2003A, 2004, 2012A, and 2012B revenue bonds 2,473,163 1,915,472 Royalty expense (211,498) (218,893) Affinity program 85, ,628 Program services - capital projects (172,140) (3,093,049) Other expenses - supporting services (1,132,037) (1,100,019) Bad debts - contributions (3,507,662) (3,226,636) Interest expense (2,937,699) (3,088,574) Gain on sale of asset 7,166,319 - Grant revenue 150,000 - Expenses paid on behalf of FSUFA (153,297) (82,061) Total nonoperating revenues (expenses) 741,535 (4,423,349) Loss before contributions (3,159,020) (9,515,919) Capital Contributions: Capital projects 12,534,333 1,830,088 Endowment 401, ,494 Total capital contributions 12,935,371 2,144,582 Increase (decrease) in net assets 9,776,351 (7,371,337) Net assets at beginning of year 132,288, ,659,438 Net assets at end of year $ 142,064,452 $ 132,288,101 See accompanying notes. 12

16 Statements of Cash Flows Years ended June 30, Operating activities Receipts from customers $ 17,965,448 $ 20,701,729 Other cash receipts for program services 8,488,514 8,287,151 Payments to suppliers and vendors 60,205 (159,851) Payments to employees (2,984,416) (2,784,394) Other payments for program services (28,566,465) (21,923,760) Net cash provided by operating activities (5,036,714) 4,120,875 Noncapital financing activities Payments to other funds (3,958,129) (980,560) Receipts from other funds 446, ,107 Principal collections on notes receivable 2,245 2,021 Principal payments on annuities payable (36,789) (33,688) Receipts from gift shop program 255, ,978 Receipts from affinity program 85, ,628 Receipts from royalty program 2,380,690 1,931,700 Receipt of grant revenue 150,000 - Payment for supporting service expenses (1,069,345) (2,387,346) Payments for other noncapital financing activities (4,209,790) (5,431,844) Net cash used in noncapital financing activities (5,954,027) (5,394,551) Capital and related financing activities Receipt of capital project contributions 6,207,475 3,943,231 Payments of bond issue costs and discount (975,611) (18,916) Principal payments on bonds payable (42,455,000) (2,030,000) Receipt of bonds payable proceeds 41,505,000 - Payments of interest expense (3,046,428) (3,088,464) Purchase of capital assets (1,401,802) (413,793) Net cash used in capital and related financing activites (166,366) (1,607,942) Investing activities Purchase of investment securities (23,564,528) (18,795,511) Investment income (loss) 775,034 1,721,084 Sale of investment securities 36,675,152 13,216,068 Receipt of endowment contributions 975,894 1,633,610 Payments received on real estate held for investment 7,166,319 - Issuance of note receivable (14,517,934) - Net cash (used in) provided by investing activities 7,509,937 (2,224,749) Net (decrease) increase in cash and cash equivalents (3,647,170) (5,106,367) Cash and cash equivalents at beginning of year 17,551,990 22,658,357 Cash and cash equivalents at end of year $ 13,904,820 $ 17,551, (continued)

17 Statements of Cash Flows (continued) Years ended June 30, Reconciliation of operating loss to net cash provided by operating activities Operating loss $ (3,900,555) $ (5,092,570) Adjustments to reconcile operating loss to net cash (used in) provided by operating activities: Depreciation and amortization 2,881,000 2,950,865 Changes in operating assets and liabilities: Accounts receivable (109,013) 3,336,099 Due from FSU Foundation (5,169) 232,896 Pledges receivable (10,539) 2,385,505 In-kind pledges receivable 77, ,308 Inventory ,575 Prepaid expenses 26, ,996 Prepaid tuition contracts 42,554 9,618 Other assets (597,028) - Long-term receivable Investment in University Center Club 178, ,938 Investment in College Town (24,483) - Accounts payable 75,996 (217,597) Accrued interest payable (828) (424) Deferred revenues (255,244) (2,435,972) Due to FSU Department of Athletics (2,864,705) 2,725,000 Other liabilities (41,935) (21,418) Subordinated debt - University Club Agreement (509,502) (445,224) Net cash (used in) provided by operating activities $ (5,036,714) $ 4,220,595 Supplemental disclosure of noncash capital and financing activities Change in market value of investments and real estate $ (2,188,410) $ 2,199,553 See accompanying notes. 14

18 Notes to Financial Statements Years ended June 30, 2012 and Summary of Significant Accounting Policies Nature of Operations The Seminole Boosters, Inc. (the Seminole Boosters) is a component unit and direct support organization of The Florida State University (the University) pursuant to Section , Florida Statutes and regulations thereunder at 6C of the Florida Administrative Code. The Seminole Boosters is a nonprofit Florida corporation exempt from tax under Code Section 501(c)(3) of the Internal Revenue Code (IRC). The purpose of the Seminole Boosters is to stimulate and promote the education, health, and physical welfare of the students of the University by providing financial support for the intercollegiate athletic programs at the University, including, but not limited to, scholarships, capital projects, and authorized travel and entertainment. The significant source of support is derived from annual contributions. The Seminole Boosters also operates retail concession outlets for most major University sporting events with main facilities located at Doak Campbell Stadium and Dick Howser Stadium. Other special projects and fund raising activities occur during the year. The University Center Club, Inc. (the Club) was founded in 1996 as a program of the Seminole Boosters. The purpose of the Club is to provide a superior dining facility to be used exclusively for the pleasure, recreation, and other purposes of its members and to provide a dining and entertainment facility for alumni, students, faculty, and friends of the University. The Club also serves as part of the Department of Hospitality and Administration within the University. The Club s fiscal year is accounted for on a 52/53-week year, ending the last Tuesday in December. The Club balances reported on the Seminole Boosters financial statements represent balances at June 12, T Alley Properties, LLC, (T Alley Properties) a wholly-owned subsidiary of the Seminole Boosters, was formed to account for real estate holding and development activities associated with the College Town project. T Alley Properties fiscal year end is December 31, however; balances reported on the Seminole Boosters financial statements represent balances at June 30, FSU Financial Assistance, Inc. (Financial Assistance), a nonprofit Florida corporation exempt from income tax under IRC Section 501(c)(3), was incorporated on December 26, Financial Assistance was created for the purpose of securing bond financing as a direct support organization of the University in accordance with Section , Florida Statutes Reporting Entity The financial statements of the Seminole Boosters represent all of the Seminole Boosters operating funds as well as the financial activity of Financial Assistance, T Alley Properties and the Club. Collectively, these funds and supporting organizations represent the primary reporting activity. 15

19 Notes to Financial Statements 1. Summary of Significant Accounting Policies (continued) Reporting Entity (continued) The Seminole Boosters maintains direct control of Financial Assistance and has the ability to determine the direction of management and policies through common officers and board members. Each year significant transfers are made by the Seminole Boosters to Financial Assistance to help service the bond debt of which the Seminole Boosters is the guarantor. Additionally, the Seminole Boosters maintain direct control of T Alley Properties since it is a single member limited liability corporation of which the Seminole Boosters is the sole member. Based on these criteria, Financial Assistance and T Alley Properties are included as a blended component unit of the Seminole Boosters. Separate financial statements of Financial Assistance and T Alley properties are not issued. Basis of Accounting The Seminole Boosters follows financial reporting requirements for enterprise funds, which use the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recognized when they are incurred. In order to comply with restrictions that donors place on contributions and other gifts, as well as designations made by the Board of Directors, the principles of fund accounting are used. 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 the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Cash and Cash Equivalents The Seminole Boosters considers demand deposits, repurchase agreements, cash with fiscal agents, certificates of deposit, and investments with original maturities of three months or less to be cash and cash equivalents. Deposits with financial institutions are insured by the Federal Deposit Insurance Corporation up to $250,000 per depositor. Bank deposits at times may exceed federally insured limits. The Seminole Boosters has not experienced any losses in such accounts. 16

20 Notes to Financial Statements 1. Summary of Significant Accounting Policies (continued) Cash and Cash Equivalents (continued) The Seminole Boosters has certain cash deposit accounts that are swept nightly into United States Treasury bills for interest earning purposes. These overnight investments are not covered by federal insurance or collateralized by any other securities. Investments Investments in marketable equity securities and marketable debt securities are carried at their market values. The values of investments are estimated based on their quoted market values for the specific investments or similar instruments. Investments in real estate purchased are carried at cost. Investments in real estate held by the Endowment Fund are carried at fair value. Fair value is determined by evaluating current listings and recent sales for similar assets. Investment earnings on endowment contributions are considered unrestricted unless internally designated as restricted by the Board of Directors. The Seminole Boosters has other investments, including a membership interest in a limited liability corporation through its wholly-owned subsidiary T Alley Properties, and a limited ownership interest in a partnership. These investments are accounted for using the equity method as the Seminole Boosters do not have controlling interests or rights in these entities. Inventory Inventory consists of food and beverage inventories. Food and beverage inventories are associated with services provided by the Club and are valued at the lower of cost or market, calculated on a first-in, first-out basis. Land, Buildings, Equipment, and Leasehold Improvements Land, buildings, equipment, and leasehold improvements are recorded at cost less accumulated depreciation. Donated materials and equipment are reflected at their estimated values at the date of receipt. All real estate donations are recorded at their appraised value at the time donated. Depreciation is provided for over the estimated useful lives of the assets using the straight-line method. The estimated useful lives are as follows: 17 Years Stadium and facility improvements Equipment 5-7 Capital assets, which include land, buildings, equipment, and improvements other than buildings are defined as assets with a cost of $1,000 or more and an estimated useful life greater than one year.

21 Notes to Financial Statements 1. Summary of Significant Accounting Policies (continued) Land, Buildings, Equipment, and Leasehold Improvements (continued) Interest on borrowed funds is capitalized for qualifying assets during the construction period and amortized over the lives of the related assets. Election to Apply FASB Statements The Seminole Boosters has elected not to apply all FASB Statements and interpretations issued after November 30, 1989, as permitted by GASB Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting. Revenue Recognition Program support and operating revenues Program revenues consist of contributions, stadium rent, conference facility, and license fee revenues collected, which are the principal revenues used by the Seminole Boosters to carry out its exempt purpose. Operating revenues and expenses generally result from providing services in connection with ongoing operations. Operating revenues of the Seminole Boosters consist of activities of the stadium concessions, the Club, and skybox seating. Operating expenses include the cost of sales, administrative expenses, and depreciation on capital assets. Contributions - Annual contributions and gifts, including pledges, are recorded as revenue at the time they are received or when all eligibility requirements are met, whichever is first. In-kind contributions represent donated goods and services recorded as revenue based on their fair market value at the time of the contribution or pledge. Contributions designated by donors to be used in future years are recorded as deferred revenues or advance receipts until such time restrictions have elapsed. When both restricted and unrestricted resources are available for use, it is the Seminole Boosters policy to use restricted resources first, and then unrestricted resources, as they are needed. Concession revenue - Concession revenue is derived from the sale of food and beverage items at various University athletic events. In 2004, the Seminole Boosters outsourced the concessions operations to Aramark Sports & Entertainment Services, Inc. The contract is effective through June 2014 and guarantees a minimum return of $800,000 annually during that time. The guarantee is on the premise that the University will have six home football games every season. The guarantee from year to year could fluctuate if the actual number of home games is different. Additionally, actual concession revenue could surpass the guarantee amount if certain sales levels are achieved. Affinity program and scoreboard royalty revenue - Amounts received under affinity program agreements and scoreboard royalty are recognized as revenue in the period for which they are collected. 18

22 Notes to Financial Statements 1. Summary of Significant Accounting Policies (continued) Revenue Recognition (continued) Varsity Club seating - Certain skybox seating (separate from conference facility and license fee revenues) is available to varsity club members in ten-year increments. Pledges made for these seating arrangements are recognized as revenue in the year the varsity club seating is used. Conference facility and license fee revenue - As more fully described in Note 6, Financial Assistance is entitled to receive lease and contribution revenues from skybox seating at Doak Campbell Stadium. Revenues received for this purpose are recognized as revenue in the period the skybox seating is used. Membership Dues and Initiation Fees - Dues associated with the Club are recognized as income in the applicable membership period. Initiation fees are recorded as revenue at the time the member joins, at which time the fees are due. Dues received in advance for lifetime memberships are recorded as deferred revenues and amortized as revenue over a twenty-year period. Internal Activity - Material account balances between funds, as well as revenues and expenses between funds that are, in effect, allocation of overhead from one function to another, are eliminated for financial statement purposes. However, the effects of interfund services provided and used between funds in the normal course of operations are not eliminated. Bond Discounts, Premiums, Issuance Costs, and Refunding Losses Bond discounts, premiums, and issuance costs are deferred and amortized over the term of the bonds using the effective interest and straight-line methods. Bond refunding losses are deferred and amortized over the remaining life of the old debt or the life of the new debt, whichever is shorter, using the effective interest and straight-line methods. Functional Allocation of Expenses The costs of providing the various programs and supporting services have been summarized on a functional basis. Accordingly, certain costs have been allocated among the programs benefited. Subsequent Events The Seminole Boosters has evaluated subsequent events through October 29, 2012, the date the financial statements were available to be issued. During the period from June 30, 2012 to October 29, 2012, the Seminole Boosters did not have any material recognizable subsequent events, except as noted in Note

23 2. Cash, Cash Equivalents, and Investments Seminole Boosters, Inc. Notes to Financial Statements Cash and cash equivalents are comprised of the following: June 30, Demand deposit accounts $ 9,123,384 $ 8,989,099 Repurchase agreements 131, ,095 Cash management accounts 1,216,127 4,529,730 Certificates of deposit 1,050,000 1,300,000 State Board of Administration pooled deposits 1,000 1,000 Treasury bills 2,381,894 2,365,766 Petty cash 1,300 1,300 Total cash and cash equivalents $ 13,904,820 $ 17,551,990 A credit rating is not available for deposits in the Local Government Surplus Trust Fund (LGSF), administered by the State Board of Administration (SBA). Interest earnings of the LGSF are allocated on a pro-rata basis using the weighted average deposit balance per fund. The LGSF is an external investment pool that is not a registrant with the Securities and Exchange Commission (SEC); however, the SBA has adopted operating procedures consistent with the requirements for an SEC Rule 2a-7 fund. The LGSF is governed by Chapter 19-7 of the Florida Administrative Code, which identifies the rules of the SBA. These rules provide guidance and establish the general operating procedures for the administration of the LGSF. Additionally, the Office of the Auditor General performs the operational audit of the activities and investments of the SBA. The Seminole Boosters fair value of its position in the pool approximates its value of the pool shares. Investments consist of the following at June 30, 2012: Unrealized Market and Gains Carrying Cost (Losses) Value Mutual funds $ 21,738,749 $ (221,975) $ 21,516,774 Corporate stocks 2,542, ,893 2,761,232 Real estate limited partnership 3,536,452 (895,964) 2,640,488 Investment in partnership 100, ,000 Investment in College Town 24,483 24,483 Investment in real estate: Real estate held by the endowment fund 8,836,501 (3,033,035) 5,803,466 Real estate held by other funds 7,589,467 7,589,467 $ 44,367,991 $ (3,932,081) $ 40,435,910 20

24 Notes to Financial Statements 2. Cash, Cash Equivalents, and Investments (continued) As of June 30, 2012 and 2011, the Seminole Boosters had an interest and is considered a limited partner of a real estate limited partnership (the Partnership). The Partnership invests in commercial and mixed-use types of real estate. The Seminole Boosters have a capital commitment to the Partnership of $4,148,000, of which $3,536,452 and $2,565,399 has been funded as of June 30, 2012 and 2011, respectively. The carrying value of the Partnership at June 30, 2012 and 2011 is $2,640,488 and $1,843,189, respectively. The difference between the amount funded and the carrying value is due to fees and expenses incurred by the Partnership that reduce the Seminole Boosters contributed capital. Such reductions are reported as changes in investment value on the statements of revenues and expenses and changes in net assets. Investments consist of the following at June 30, 2011: Unrealized Market and Gains Carrying Cost (Losses) Value Mutual funds $ 22,191,110 $ (491,687) $ 21,699,423 Corporate stocks 12,916,607 2,323,814 15,240,421 Real estate limited partnership 2,565,339 (722,150) 1,843,189 Investment in real estate: Real estate held by endowment fund 17,839,985 (5,892,035) 11,947,950 Real estate held by other funds 4,003,878 4,003,878 $ 59,516,919 $ (4,782,058) $ 54,734,861 Interest rate risk The Seminole Boosters do not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Credit risk The Seminole Boosters mutual fund investments had ratings of Aaa by Moodys and AAAm by Standard & Poors as of June 30, 2012 and 2011, if they were rated. Certain mutual fund investments of the Seminole Boosters were not rated as of June 30, 2012 and

25 3. Land, Buildings, and Equipment Seminole Boosters, Inc. Notes to Financial Statements Land, buildings, and equipment consist of the following: June 30, June 30, 2011 Additions Deletions 2012 Land $ 11,801,011 $ 6,214,839 $ $ 18,015,850 Buildings and equipment 114,083,415 42, ,126,015 Construction in progress 1,324,287 1,324, ,884,426 7,581, ,466,152 Less accumulated depreciation 35,465,098 2,906,084 38,371,182 $ 90,419,328 $ 4,675,642 $ $ 95,094,970 During 2011, land held by the Seminole Boosters valued at $6,154,839 as an investment was reclassified to a fixed asset. This reclassification is included in the above additions. In accordance with University policies, all infrastructure assets are recorded on the financial statements of the University rather than the Seminole Boosters. 4. Pledges Receivable Unrestricted pledges receivable consists of amounts pledged for annual gifts and are presented net of an allowance for uncollectible amounts. These pledges are classified as current because of their scheduled collection date. Pledges receivable in the restricted fund are for varsity club seating and various athletic programs supported by the Seminole Boosters. These pledges are classified as long-term because of their scheduled collection date and are considered by management to be fully collectible as of June 30, 2012 and Endowment and capital campaign pledges receivable represent long-term bequests made to the Seminole Boosters and are presented net of allowance for uncollectible amounts. In-kind pledges receivable are considered by management to be fully collectible as of June 30, 2012 and The following is a summary, by fund, of pledges receivable: June 30, Unrestricted fund $ 17,355,223 $ 17,550,559 Unrestricted fund allowance (639,835) (899,919) Restricted fund 1,402,855 1,457,064 Endowment fund 28,212,982 26,235,603 Endowment fund allowance (2,453,406) (2,597,121) Capital Campaign fund 36,100,989 33,801,205 Capital Campaign fund allowance (4,435,663) (7,554,309) 72,847,195 67,993,082 Less current portion 5,818,993 5,550,859 $ 67,028,202 $ 62,442,223 22

26 4. Pledges Receivable (continued) Seminole Boosters, Inc. Notes to Financial Statements In satisfaction of a pledge made to the Seminole Boosters, a donor placed $2,000,000 in trust to be paid to the Seminole Boosters over a period of 12 years. Payments in the amount of $202,125 are to be made on December 16 of each year beginning December 16, The amount deposited in trust has been recorded as a receivable from trust on the statements of net assets. The amount receivable from trust was $1,333,336 for each of the years ended June 30, 2012 and Bonds Payable Bonds payable consist of the following: June 30, $34,885,000 Educational, including Athletic Facilities Improvement Subordinated Revenue Bonds Series 2002, due in annual interest-only payments of $1,744,250, from October 1, 2004 to October 1, 2016, then annual principal installments of $615,000 to $4,405,000 from October 1, 2017 to October 1, 2031, interest rate at 5.000%. This series was refunded as part of the Series 2012A and 2012B below. $ $ 34,885,000 $14,145,000 Educational, including Athletic Facilities Improvement Revenue Refunding Bonds Series 2003A, due in annual installments of $55,000 to $2,085,000, from October 1, 2004 to October 1, 2023, interest rates at 2.000% to 5.000%, depending on maturity date. Bonds are secured by the pledged revenues and secured as to the payment of the principal redemption price and interest thereon, by a lien upon and security interest as provided by the Guaranty Agreement between Seminole Boosters, Inc. and the Trustee. As part of the Series 2012A and B, $5,935,000 was refunded. The current principal and interest due during the fiscal year ended June 30, 2013 for the bond issue is $65,000 and $371,666, respectively. 8,170,000 13,670,000 23