KVCR EDUCATIONAL FOUNDATION, INC.

Transcription

1 KVCR EDUCATIONAL FOUNDATION, INC. FINANCIAL STATEMENTS WITH INDEPENDENT AUDITORS' REPORT JUNE 30, 2006

2 CONTENTS JUNE 30, 2006 PAGE Organization Data... 1 Independent Auditors' Report... 2 Financial Statements Statements of Financial Position... 3 Statements of Activities... 4 Statements of Functional Expenses... 6 Statements of Cash Flows... 8 Notes to Financial Statements... 9

3 ORGANIZATION DATA JUNE 30, 2006 KVCR Educational Foundation, Inc. is a nonprofit organization established to meet the funding requirements of KVCR, a wholly-owned broadcasting affiliate of the San Bernardino Community College District. Date of Incorporation:... July 15, 1999 Date of Exemption Letter:... September 11, 2000 Officers and Directors: Wilfrid C. Lemann...President Eugene Wood... Vice President Larry R. Ciecalone... Secretary Robert W. Percy... Treasurer Donald F. Averill, Ed. D... Director Michael Bozick... Director Allen B. Gresham... Director Dr. Albert K. Karnig... Director Carleton W. Lockwood, Jr.... Director John M. Magness... Director Patrick J. O'Reilly... Director James Ramos... Director Ali Sahabi... Director Ronald Skipper... Director Robert J. Temple... Director Dr. Charles S. Terrell, Jr.... Director Janet M. Weder... Director -1-

4 DEBORAH L. CROWLEY, C.P.A. TODD C. LANDRY, C.P.A. JOHN F. PRENTICE, C.P.A. DAVID M. THAYER, C.P.A. FRANK M. ZABALETA, C.P.A. Cerhfid Public Accountants and Business Advisors INDEPENDENT AUDITORS' REPORT Board of Directors KVCR Educational Foundation, Inc. San Bernardino, California We have audited the accompanying statements of financial position of KVCR Educational Foundation, Inc. (a nonprofit organization) as of June 30, 2006 and 2005, and the related statements of activities, functional expenses, and cash flows for the years then ended. These financial statements are the responsibility of the management of KVCR Educational Foundation, Inc. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of KVCR Educational Foundation, Inc. as of June 30,2006 and 2005, and the changes in its net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. September 5,2006 REDLANDS OFFICE 300 E. State Street, Suite 350 Redlands, CA (909) FAX (909) ONTARIO OFFICE 430 North Vineyard Avenue, Suite 202 Ontario, CA (909) FAX (909)

5 STATEMENTS OF FINANCIAL POSITION JUNE 30, 2006 AND ASSETS Cash and cash equivalents $ 695,399 $ 526,228 Pledges receivable, less allowance for uncollectible pledges of $77,601 and $25,617, respectively 639, ,593 Other receivables 81,677 35,098 Inventory 67,351 27,659 Prepaid expenses 800 1,625 TOTAL ASSETS $ 1,484,570 $ 981,203 LIABILITIES Accounts payable $ 129,887 $ 60,537 Deferred revenue 53,520 45,520 Total Liabilities 183, ,057 NET ASSETS Unrestricted 583, ,496 Temporarily restricted 717, ,650 Total Net Assets 1,301, ,146 TOTAL LIABILITIES AND NET ASSETS $ 1,484,570 $ 981,203 The accompanying notes are an integral part of the financial statements. -3-

6 STATEMENTS OF ACTIVITIES FOR THE YEARS ENDED JUNE 30, 2006 AND CHANGES IN UNRESTRICTED NET ASSETS Support and Revenue Contributions and Grants Television $ 887,096 $ 796,007 Radio 237, ,525 Special Events Television 536,065 51,401 Underwriting Income Television 72,564 21,790 Radio 177, ,024 Interest income 3, ,913,682 1,234,361 Net Assets Released from Restrictions Satisfaction of programming restriction 130,000 Satisfaction of digital master control equipment restriction 252,750 Satisfaction of time restriction 12, ,900 - Total Unrestricted Support and Revenue 2,308,582 1,234,361 Expenses Program Services Television 496, ,951 Radio 395, ,816 General station 112, ,533 Total Program Services 1,004, ,300 Management and general 100,970 19,810 Fundraising 487, ,354 Costs of direct benefits to donors 397, ,678 Total Expenses 1,990,665 1,171,142 INCREASE (DECREASE) IN UNRESTRICTED NET ASSETS 317,917 63,219 CHANGES IN TEMPORARILY RESTRICTED NET ASSETS Contributions 503, ,650 Net assets released from restrictions (394,900) INCREASE IN TEMPORARILY RESTRICTED NET ASSETS 108, ,650-4-

7 STATEMENTS OF ACTIVITIES (Continued) INCREASE IN NET ASSETS $ 426,017 $ 672,869 NET ASSETS, BEGINNING OF YEAR 875, ,277 NET ASSETS, END OF YEAR $ 1,301,163 $ 875,146 The accompanying notes are an integral part of the financial statements. -5-

8 STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED JUNE 30, 2006 COSTS OF PROGRAM SERVICES TOTAL DIRECT GENERAL PROGRAM MANAGEMENT BENEFITS TOTAL TELEVISION RADIO STATION SERVICES AND GENERAL FUNDRAISING TO DONORS EXPENSES Advertising $ 47,467 $ 43,236 $ 90,703 $ 557 $ 91,260 Bad debt expense 5,578 5,578 $ 89,450 95,028 Broadcast long lines - DBS Broadcast programming 89,736 31, , ,860 Capital expenditures 65,606 2,755 $ 7,863 76,224 76,224 Development - 77,680 77,680 Dues and memberships 6, ,520 7,520 Freelance labor 1,828 4,837 11,177 17,842 13,342 31,184 General supplies and expenses 9,549 1,306 19,697 30,552 7,301 37,853 Guide expense 34,404 34,404 34,404 Outside services 1, ,555 4,585 11,578 16,163 Postage and freight 2, ,566 23,918 23,918 Printing - 29,872 29,872 Professional fees 4, ,220 11, , ,504 Special events - 39,607 39,607 Telephone and utilities 3,194 3,194 9,589 12,783 Thank you gifts - $ 397, ,652 Transfer in support of KVCR 255, , , ,750 Transmitter site lease 1,680 1,680 1,680 Travel 10,298 5,552 14,786 30,636 30,636 TOTAL EXPENSES $ 496,919 $ 395,686 $ 112,148 $ 1,004,753 $ 100,970 $ 487,290 $ 397,652 $ 1,990,665 The accompanying notes are an integral part of the financial statements. -6-

9 STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED JUNE 30, 2005 COSTS OF PROGRAM SERVICES TOTAL DIRECT GENERAL PROGRAM MANAGEMENT BENEFITS TOTAL TELEVISION RADIO STATION SERVICES AND GENERAL FUNDRAISING TO DONORS EXPENSES Advertising $ 9,369 $ 9,369 $ 2,429 $ 11,798 Broadcast long lines - DBS 1,303 1,303 1,303 Broadcast programming 27,401 $ 26,820 54,221 54,221 Capital expenditures 11,672 5,229 $ 26,384 43,285 43,285 Development - 31,707 31,707 Dues and memberships 11, ,184 12,184 Freelance labor 3,285 6,301 10,189 19,775 5,614 25,389 General supplies and expenses 9, ,134 30,885 $ 2,200 13,226 46,311 Guide expense 36,426 36,426 36,426 Outside services 1, ,443 10,739 12,182 Postage and freight Professional fees , , ,577 Special events - 39,191 39,191 Telephone and utilities 1,088 1,088 9,549 10,637 Thank you gifts - $ 253, ,678 Transfer in support of KVCR 29, , , ,432 Transmitter site lease 15,480 15,480 15,480 Travel 7, ,930 14,204 14,204 TOTAL EXPENSES $ 126,951 $ 269,816 $ 101,533 $ 498,300 $ 19,810 $ 399,354 $ 253,678 $ 1,171,142 The accompanying notes are an integral part of the financial statements. -7-

10 STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 2006 AND CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets $ 426,017 $ 672,869 Adjustments to Reconcile Change in Net Assets to Net Cash Provided By Operating Activities (Increase) Decrease in Operating Assets Pledges receivable (248,750) (376,202) Other receivables (46,579) 8,946 Inventory (39,692) (27,659) Prepaid expenses 825 (1,625) Increase (Decrease) in Operating Liabilities Accounts payable 69,350 30,999 Deferred revenue 8,000 45,520 Net Cash Provided By Operating Activities 169, ,848 NET CHANGE IN CASH 169, ,848 CASH, BEGINNING OF YEAR 526, ,380 CASH, END OF YEAR $ 695,399 $ 526,228 The accompanying notes are an integral part of the financial statements. -8-

11 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2006 AND NATURE OF ORGANIZATION AND ACTIVITIES KVCR Educational Foundation, Inc. is a nonprofit public benefit corporation organized under the Nonprofit Public Benefit Corporation Law, the Implementing Regulations of the San Bernardino Community College District, and the Master Agreement of the San Bernardino Community College District. The purpose of the corporation is to be an auxiliary organization of the San Bernardino Community College District (District), subject to applicable provisions of the California Educational Code and Title V of the California Administrations Code. The primary mission of the corporation is to meet the funding requirements of KVCR, a wholly-owned broadcasting affiliate of the San Bernardino Community College District. The Foundation is a not-for-profit organization that is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Basis of Accounting The Foundation maintains its records on the accrual basis for financial reporting purposes and, accordingly, includes all significant receivables, payables, and other liabilities. The Foundation is required to report information regarding its financial position and activities in three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. The Foundation had no permanently restricted net assets as of June 30, B. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. C. Cash and Cash Equivalents The Foundation considers all highly liquid debt instruments with an initial maturity of three months or less to be cash equivalents. -9-

12 NOTES TO FINANCIAL STATEMENTS (Continued) D. Inventory Inventory is valued at cost using the first-in, first-out method. E. Promises to Give Unconditional promises to give are recognized as contributions in the period received and as assets, decreases of liabilities, or expenses depending on the form of the benefit received. Promises to give are recorded at net realizable value if they are expected to be collected within one year and at net present value if they are expected to be collected in more than one year. Conditional promises to give are recognized when the conditions on which they depend are substantially met. F. Contributions All contributions are considered to be available for unrestricted use unless specifically restricted by the donor. Contributions received that are designated for future periods or restricted by the donor for specific purposes are reported as temporarily restricted or permanently restricted support that increases those net asset classes. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Donor-restricted contributions whose restrictions are met in the same reporting period are reported as unrestricted support. G. Revenue Recognition The Foundation is financially interrelated with the District and KVCR. Therefore, donations received by the Foundation on behalf of these entities are recognized as contribution revenue when received. KVCR may deposit certain grant funds with the Foundation. These funds may be treated as an agency transaction by the Foundation. As of June 30, 2006 and 2005, the Foundation did not hold any funds as an agent for KVCR. H. Donated Services Individuals have donated significant amounts of time in the advancement of the Foundation's programs and objectives. No amounts have been included in the financial statements because they do not meet the criteria for recognition. -10-

13 NOTES TO FINANCIAL STATEMENTS (Continued) 3. PLEDGES RECEIVABLE Pledges receivable consisted of the following: Unrestricted pledges $ 229,944 $ 177,210 Restricted for specific programming 125, ,000 Restricted for purchase of digital conversion equipment 375, ,000 Gross Pledges Receivable 729, ,210 Less: Unamortized discount (13,000) (16,000) Allowance for uncollectible pledges (77,601) (25,617) NET PLEDGES RECEIVABLE $ 639,343 $ 390,593 Amounts due in: Less than one year $ 644,277 $ 332,060 One to five years 65,667 75,150 More than five years 20,000 25,000 TOTALS $ 729,944 $ 432,210 Pledges receivable due in more than one year are reflected at the present value of estimated future cash flows using a discount rate of 5%. 4. DEFERRED REVENUE The Foundation entered into an agreement with Journey Films, Inc. to collect funds raised for the production, distribution, and promotion of a television documentary to be produced by Journey Films, Inc. and aired by KVCR upon completion. All contributions are to be retained by the Foundation until a threshold of $250,000 has been raised. After the threshold amount has been raised, the Foundation will receive an administrative fee of $18,500. In the event that the project threshold of $250,000 is not met, the Foundation will contact the donors and ascertain the disposition of their donation. Cumulative contributions collected by the Foundation as of June 30, 2006 and 2005 amounted to $53,520 and $45,520, respectively. -11-

14 NOTES TO FINANCIAL STATEMENTS (Continued) 5. TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets are available for the following purposes or periods: RELEASED JUNE 30, FROM JUNE 30, 2005 CONTRIBUTIONS RESTRICTION 2006 Digital conversion equipment $ 375,000 $ 375,000 $ (252,750) $ 497,250 Programming 130, ,000 (130,000) 125,000 For periods after June 30, 104,650 3,000 (12,150) 95,500 TOTALS $ 609,650 $ 503,000 $ (394,900) $ 717, RELATED-PARTY TRANSACTION The Foundation utilizes the services of a law firm owned by a member of the Board of Directors. Legal fees incurred by the Foundation with this firm for the years ended June 30, 2006 and 2005 amounted to $4,735 and $3,035, respectively. Amounts due to the law firm as of June 30, 2006 and 2005 were $1,088 and $668, respectively. 7. CONCENTRATIONS OF CREDIT RISK The Foundation maintains its cash balances at one financial institution. The balances are insured by the Federal Deposit Insurance Corporation up to $100,000. At June 30, 2006, the uninsured cash balance was $617,