LOUISVILLE ZOO FOUNDATION, INC. - LOUISVILLE, KENTUCKY FINANCIAL STATEMENTS

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1 - LOUISVILLE, KENTUCKY FINANCIAL STATEMENTS YEARS ENDED

2 CONTENTS Independent Auditor's Report... 3 STATEMENTS OF FINANCIAL POSITION... 4 STATEMENTS OF ACTIVITIES... 5 STATEMENTS OF CASH FLOWS... 6 NOTES TO FINANCIAL STATEMENTS Page

3 Independent Auditor s Report Board of Directors Louisville Zoo Foundation, Inc. Louisville, Kentucky We have audited the accompanying statements of financial position of the Louisville Zoo Foundation, Inc. (a not-for-profit organization) as of June 30, 2012 and 2011, and the related statements of activities and cash flows for the years then ended. These financial statements are the responsibility of the Foundation's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and supplementary information referred to above present fairly, in all material respects, the financial position of Louisville Zoo Foundation, Inc. as of June 30, 2012 and 2011 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. New Albany, Indiana January 22,

4 STATEMENTS OF FINANCIAL POSITION ASSETS Cash and cash equivalents $ 1,552,522 $ 1,442,014 Pledges receivable 812,159 2,104,660 TOTAL ASSETS $ 2,364,681 $ 3,546,674 LIABILITIES AND NET ASSETS LIABILITY Accounts payable $ 1,692 $ 25,211 NET ASSETS Unrestricted 19,040 18,217 Temporarily restricted 2,343,949 3,503,246 2,362,989 3,521,463 TOTAL LIABILITIES AND NET ASSETS $ 2,364,681 $ 3,546,674 See notes to financial statements

5 STATEMENTS OF ACTIVITIES YEARS ENDED 2012 Temporarily Unrestricted Restricted Total Revenues and support: Contributions $ 17,961 $ 108,970 $ 126,931 Program revenue Net investment income Net assets released from restrictions 1,268,411 (1,268,411) - Total revenues and support 1,286,389 (1,159,297) 127,092 Expenses: Program services 1,237,469-1,237,469 Administrative 17,451-17,451 Fundraising 30,646-30,646 Total expenses 1,285,566-1,285,566 Net Increase (Decrease) in Net Assets 823 (1,159,297) (1,158,474) Net assets at beginning of year 18,217 3,503,246 3,521,463 Net Assets at End of Year $ 19,040 $ 2,343,949 $ 2,362,989 See notes to financial statements

6 2011 Temporarily Unrestricted Restricted Total $ 11,749 $ 2,817,528 $ 2,829, (1,474) (1,351) 5,191,544 (5,191,544) - 5,203,416 (2,375,355) 2,828,061 5,147,328-5,147,328 40,076-40,076 30,145-30,145 5,217,549-5,217,549 (14,133) (2,375,355) (2,389,488) 32,350 5,878,601 5,910,951 $ 18,217 $ 3,503,246 $ 3,521,463

7 STATEMENTS OF CASH FLOWS YEARS ENDED OPERATING ACTIVITIES Contributions, grants and program revenue received $ 1,419,432 $ 3,180,861 Cash paid to suppliers (1,309,085) (5,228,778) Investment income received 161 (1,351) Net Cash Provided By (Used In) Operating Activities 110,508 (2,049,268) Cash and cash equivalents at beginning of year 1,442,014 3,491,282 Cash and Cash Equivalents at End of Year $ 1,552,522 $ 1,442,014 Reconciliation of changes in net assets to net cash used in operating activities Cash flows from operating activities: Net decrease in net assets $ (1,158,474) $ (2,389,488) Adjustment to reconcile decrease in net assets to net cash provided by (used in) operating activities Amortization of discount on pledges receivable (15,309) 3,037 Donation of stock - (13,147) Change in assets and liabilities Decrease in pledges receivable 1,307, ,559 Decrease in accounts payable (23,519) (11,229) Net cash provided by (used in) operating activities $ 110,508 $ (2,049,268) SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES: Stock donations $ - $ 13,147 See notes to financial statements

8 NOTES TO FINANCIAL STATEMENTS (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Louisville Zoo Foundation, Inc. is a not-for-profit organization located in Louisville, Kentucky, which benefits and furthers the development of Louisville Zoological Garden, Metro Louisville. This development includes the provision of financial support for teaching, research and service programs, as well as the purchase of animals, construction of buildings and displays and equipment necessary for such programs. Basis of Presentation The financial statements are presented on the accrual basis. Net assets and revenues, expenses, gains, and losses based on the existence or absence of donor-imposed restrictions. Accordingly, net assets of the Organization and changes therein are classified and reported as follows: Unrestricted net assets Net assets that are not subject to donor-imposed stipulations. Temporarily restricted net assets Net assets subject to donor-imposed stipulations that may or will be met either by actions of the Organization and/or the passage of time. Permanently restricted net assets Net assets subject to donor-imposed stipulations that they be maintained permanently by the Organization. Generally, the donors of these assets permit the Organization to use all or part of the income earned on related investments for general or specific purposes. The Organization has no permanently restricted net assets. Cash and Cash Equivalents For purposes of the statements of cash flows, the Organization considers all undesignated cash, certificates of deposit and commercial paper to be cash and cash equivalents. The Organization maintains its cash and cash equivalents in various financial institutions, which at times, may exceed the federally insured limits. The Organization has not experienced any losses on such accounts. Management believes the Organization is not exposed to any significant risk on bank deposits

9 NOTES TO FINANCIAL STATEMENTS - CONTINUED (1 - continued) Donations Donations other than cash are recorded at their fair market values as of the date of donation. Donated services must meet the specific expertise requirements and would normally have been purchased before they are recorded. Donations of long-lived assets with explicit restrictions that specify how the assets are to be used and donations of cash or other assets that must be used to acquire long-lived assets are reported as restricted support. Absent explicit donor stipulations about how long those long-lived assets must be maintained, the Organization reports expirations of donor restrictions when the donated or acquired longlived assets are placed in service. When a donor's temporary restriction expires, those net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. (2) EXEMPTION FROM INCOME TAXES The Organization is exempt from federal and Kentucky income taxes as a not-for-profit Organization under Internal Revenue Code Section 501(c)(3). The Organization believes its tax-exempt status would be upheld if examined. The Organization implements the accounting guidance for uncertainty income taxes. Under that guidance, tax positions need to be recognized in the financial statements when it is more-likely-than the position will be sustained upon examination by the taxing authorities. As of June 30, 2012, the Organization has no uncertain tax positions that qualify for either recognition or disclosure in the financial statements. The Foundation files a form 990 and any 990 s filed on or after June 30, 2009 are subject to examination

10 NOTES TO FINANCIAL STATEMENTS - CONTINUED (3) PLEDGES RECEIVABLE AND CAPITAL CAMPAIGN The Organization, along with Louisville Zoological Garden, Metro Louisville, conducted a major campaign for a five-year exhibit renovation and construction program incorporating Polar Bears and Sea Lions (Glacier Run). The goal of the capital campaign was to raise approximately $25 million. The Organization will reimburse Metro Louisville for expenses as the project progresses. Pledges receivable as of June 30, 2012 and 2011 are related to Glacier Run. Pledges receivable due in more than one year are reflected at the present value of estimated future cash flows using a discount rate of 2.56% for the years ended June 30, 2012 and The Organization considers all pledges collectible. Accordingly, no allowance for uncollectible accounts has been calculated Pledges receivable $ 828,553 $ 2,136,363 Less unamortized discount (16,394) (31,703) Net pledges receivable $ 812,159 $ 2,104,660 Amounts due in: Less than one year $ 354,805 $ 1,321,230 One to five years 457, ,430 (4) LINE OF CREDIT $ 812,159 $ 2,104,660 The Organization has an unsecured $3,000,000 line of credit to provide bridge financing for the Glacier Run Exhibit for the Louisville Zoological Garden. The line of credit matures on December 14, Interest charged on the line is the 30-day LIBOR plus 1.8%. There were no borrowings as of June 30, (5) SUBSEQUENT EVENTS The Organization has evaluated whether any subsequent events that require recognition or disclosure in the accompanying financials and related notes thereto have taken place through January 22, 2013, the date these financial statements were issued. The Organization has determined that there no such subsequent events

11 NOTES TO FINANCIAL STATEMENTS - CONTINUED (6) CHANGES IN TEMPORARILY RESTRICTED NET ASSETS Changes in temporarily restricted net assets during the years ended June 30, 2012 and 2011 were as follows: Contributions restricted for: Balance Contributions Balance 6/30/11 Grants/Other Transfers Released 6/30/12 Foundation $ 40,046 $ 48,348 $ - $ (19,064) $ 69,330 Education endowment 37, ,702 Gorilla forest 34, (25,703) 8,956 Conservation endowment 191,580 11, ,302 Animal acquisition and endowment fund 105, ,757 General endowment 108, ,281 Grant botanical 35, ,785 Youth board 13,769 12,982 - (9,333) 17,418 Glacier Run 2,898,561 19,132 - (1,202,842) 1,714,851 Other 37,131 16,905 - (11,469) 42,567 $ 3,503,246 $ 109,114 $ - $ (1,268,411) $ 2,349,

12 NOTES TO FINANCIAL STATEMENTS - CONTINUED (6 - continued) Contributions restricted for: Balance Contributions Balance 6/30/2010 Grants/Other Transfers Released 06/30/2011 Foundation $ 65,669 $ 13,434 $ - $ (39,047) $ 40,056 Education endowment 32,674 5, ,699 Gorilla forest 34, ,659 Conservation endowment 182,814 8, ,580 Animal acquisition and endowment fund 105, ,748 General endowment 108, ,271 Grant botanical 35, ,782 Youth board 12,757 11,526 - (10,514) 13,769 Glacier Run 5,260,591 2,766,451 - (5,128,481) 2,898,561 Other 39,823 10,800 - (13,502) 37,121 $ 5,878,601 $ 2,816,189 $ - $ (5,191,544) $ 3,503,246 Other temporarily restricted net assets consist of the Conservation, Orangutan, Gorilla Forest Endowment, AZA Conference, Employee Honoraria and Docent Association funds. (7) RELATED PARTY TRANSACTIONS The Organization's office is located in the offices of Louisville Zoological Garden, Metro Louisville. Metro Louisville donates the use of staff, facilities and equipment. The value of this donation is not readily determinable; therefore, it has not been included on the statement of activities