Discovery Channel Global Education Partnership and Affiliate

Transcription

1 Discovery Channel Global Education Partnership and Affiliate CONSOLIDATED FINANCIAL STATEMENTS WITH SUPPLEMENTARY INFORMATION AND INDEPENDENT AUDITORS REPORT DECEMBER 31, 2010 AND 2009

2 TABLE OF CONTENTS Page Independent Auditors Report On the Consolidated Financial Statements 1 Consolidated Financial Statements Consolidated Statements of Financial Position 2 Consolidated Statements of Activities and Change in Net Assets 3 Consolidated Statements of Functional Expenses 4 Consolidated Statements of Cash Flows 6 Notes to Consolidated Financial Statements 7 Consolidated Supplementary Information Independent Auditors Report On Consolidated Supplementary Information 15 Consolidated Schedules of Program Services 16

3 Independent Auditors Report On the Consolidated Financial Statements To the Board of Directors Discovery Channel Global Education Partnership and Affiliate Silver Spring, Maryland We have audited the accompanying consolidated statements of financial position of Discovery Channel Global Education Partnership and Affiliate (the Partnership) as of December 31, 2010 and 2009, and the related consolidated statements of activities and change in net assets, consolidated statements of functional expenses, and consolidated statements of cash flows for the years then ended. These consolidated financial statements are the responsibility of the Partnership s management. Our responsibility is to express an opinion on these consolidated 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 audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Discovery Channel Global Education Partnership and Affiliate as of December 31, 2010 and 2009, and the changes in their consolidated net assets and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Bethesda, Maryland May 2, 2011

4 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION ASSETS December 31, CURRENT ASSETS Cash and Cash Equivalents $ 1,383,227 $ 6,092,925 Investments 6,220,337 - Accounts Receivable 12,779 - Contributions and Grants Receivable 2,836,446 4,208,085 Advances 11,950 9,343 Prepaid Expenses 21,057 7,238 Deposits 194, ,548 Total Current Assets 10,680,793 10,435,139 EQUIPMENT, at Cost Equipment 54,339 54,339 Less: Accumulated Depreciation (53,391) (42,484) ,855 LONG-TERM ASSET Contributions and Grants Receivable, Net of Current Portion 674,358 3,114,339 LIABILITIES AND NET ASSETS $ 11,356,099 $ 13,561,333 CURRENT LIABILITIES Accounts Payable and Accrued Expenses $ 201,545 $ 100,045 NET ASSETS Unrestricted 2,567,389 2,138,683 Temporarily Restricted 8,587,165 11,322,605 Total Net Assets 11,154,554 13,461,288 $ 11,356,099 $ 13,561,333 2 The Accompanying Notes Are An Integral Part Of These Consolidated Financial Statements

5 CONSOLIDATED STATEMENTS OF ACTIVITIES AND CHANGE IN NET ASSETS Year Ended December 31, Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total REVENUE AND SUPPORT Contributions and Grants $ 62,854 $ 565,360 $ 628,214 $ 29,189 $ 5,000 $ 34,189 Contracts , ,868 Discount on Multi-Year Contributions and Grants - 256, , , ,832 In-Kind Contributions 1,108,340-1,108,340 1,106,284-1,106,284 Investment and Other Income 14,218 20,456 34,674 4,722 14,400 19,122 Net Assets Released from Restrictions 3,578,190 (3,578,190) - 3,179,104 (3,179,104) - Total Revenue and Support 4,763,602 (2,735,440) 2,028,162 4,919,167 (2,718,872) 2,200,295 EXPENSES Program Services 3,453,787-3,453,787 3,839,527-3,839,527 General Administration 817, , , ,071 Fundraising 63,609-63,609 81,458-81,458 Total Expenses 4,334,896-4,334,896 4,483,056-4,483,056 CHANGE IN NET ASSETS 428,706 (2,735,440) (2,306,734) 436,111 (2,718,872) (2,282,761) NET ASSETS, Beginning of Year 2,138,683 11,322,605 13,461,288 1,702,572 14,041,477 15,744,049 NET ASSETS, End of Year $ 2,567,389 $ 8,587,165 $ 11,154,554 $ 2,138,683 $ 11,322,605 $ 13,461,288 3 The Accompanying Notes Are An Integral Part Of These Consolidated Financial Statements

6 CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED DECEMBER 31, 2010 Program General Total Expenses Administration Fundraising Expenses Consultants $ 1,032,138 $ 200,900 $ - $ 1,233,038 Production of Video Programs 584, ,474 Salaries 390, , ,196 In-Kind Program Management 332,291 84,291 63, ,791 Conferences, Meetings, and Training 386, ,087 Travel 345,155 2, ,802 Rent 75,411 70, ,768 Payroll Taxes and Benefits 72,803 44, ,890 Telephone and Internet 31,343 60,294-91,637 Accounting Fees 6,814 31,059-37,873 Legal Fees 13,213 74,941-88,154 Office Supplies and Expenses 61,864 9,934-71,798 Equipment Purchase and Maintenance 38, ,370 Printing, Publications, and Web Site 33, ,746 Bank Fees 19,013 5, ,278 Insurance 2,900 15,433-18,333 Postage and Shipping 14, ,316 Scholarships 12, ,051 Depreciation - 10,907-10,907 Board Expenses Total Expenses $ 3,453,787 $ 817,500 $ 63,609 $ 4,334,896 4 The Accompanying Notes Are An Integral Part Of These Consolidated Financial Statements

7 CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED DECEMBER 31, 2009 Program General Total Expenses Administration Fundraising Expenses Consultants $ 1,345,474 $ 910 $ 18,130 $ 1,364,514 Production of Video Programs 703, ,467 Salaries 429, , ,330 In-Kind Program Management 367, ,812 62, ,321 Conferences, Meetings, and Training 90, ,214 Travel 493,009 3, ,298 Rent 37,814 54,648-92,462 Payroll Taxes and Benefits 85,633 23, ,978 Telephone and Internet 30,619 65,309-95,928 Accounting Fees 66,023 32,824-98,847 Legal Fees ,533-67,306 Office Supplies and Expenses 66,091 21,376-87,467 Equipment Purchase and Maintenance 48, ,505 Printing, Publications, and Web Site 26,716 2, ,203 Bank Fees 11, ,085 Insurance 5,996 2,974-8,970 Postage and Shipping 20, ,446 Scholarships 9, ,699 Depreciation - 16,744-16,744 Board Expenses - 2,272-2,272 Total Expenses $ 3,839,527 $ 562,071 $ 81,458 $ 4,483,056 5 The Accompanying Notes Are An Integral Part Of These Consolidated Financial Statements

8 CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, CASH FLOWS FROM OPERATING ACTIVITIES Change in Net Assets $ (2,306,734) $ (2,282,761) Adjustments to Reconcile Change in Net Assets to Net Cash Provided by Operating Activities Depreciation 10,907 16,744 Unrealized Loss on Investments 12,236 - Realized Loss on Investments 4,844 - Decrease in Discount on Contributions and Grants Receivable (256,934) (440,832) Changes in: Accounts Receivable (12,779) 226,309 Contributions and Grants Receivable 4,068,554 2,776,793 Advances (2,607) (915) Prepaid Expenses (13,819) 20,687 Deposits (77,449) (87,673) Accounts Payable 101,500 (131,873) Net Cash Provided by Operating Activities 1,527,719 96,479 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of Investments (6,600,511) - Proceeds from Redemptions/Sales of Investments 363,094 1,502,676 Net Cash Provided by (Used in) Investing Activities (6,237,417) 1,502,676 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (4,709,698) 1,599,155 CASH AND CASH EQUIVALENTS, Beginning of Year 6,092,925 4,493,770 CASH AND CASH EQUIVALENTS, End of Year $ 1,383,227 $ 6,092,925 6 The Accompanying Notes Are An Integral Part Of These Consolidated Financial Statements

9 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2010 AND 2009 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization The Discovery Channel Global Education Partnership and Affiliate (the Partnership), formerly the Discovery Channel Global Education Fund, is a nonprofit organization organized in the state of Delaware in 1997 to provide technological resources and training to under-resourced schools and community centers in the developing world. The Partnership establishes Learning Centers in underresourced schools and community centers through a comprehensive project that includes televisions, DVD equipment, and satellite dishes (if possible), regionally tailored educational videos, access to information from a wide range of sources, and long-term training. The Partnership is supported principally by grants and contributions. In July 2010, the Partnership became a 49 percent owner of Ocean Spray Trading 49 (PTY) LTD (the entity), a South African Company organized in July 2010, whose purpose is to do work in the region on the Science of AIDS Project. When the Science of AIDS Project is completed, the entity will be dissolved. The investment is carried at zero on the Partnership s financial statements because no capital was paid for its interest and Ocean Spray Trading 49 had no activity for the year ended December 31, The Partnership has a controlling financial interest in the entity and, accordingly, has consolidated the entity. Principles of Consolidation The consolidated financial statements include the accounts of the Partnership and Ocean Spray Trading 49 (PTY) LTD (collectively, the Partnership). All significant intercompany accounts and transactions between the organizations have been eliminated. Basis of Presentation The accompanying consolidated financial statements have been prepared using the accrual basis of accounting and, accordingly, revenues are recognized when earned and expenses are recognized when the obligation is incurred. Cash and Cash Equivalents For consolidated financial statement purposes, the Partnership considers cash in operating bank accounts, cash on hand, and certificates of deposit with an original maturity of three months or less at the time of purchase to be cash and cash equivalents and are reported at fair value. Money market funds held in investment accounts with investment institutions are classified as cash and cash equivalents on the consolidated statements of financial position. Investments Investments are recorded at fair value. Unrealized gains and losses are included in investment and other income on the consolidated statements of activities and change in net assets. Investments are intended to be held for short-term purposes of the Partnership. Equipment Equipment in excess of $1,000 is capitalized. Equipment is depreciated on a straight-line basis over the estimated useful lives of the related assets, generally three to five years. 7

10 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2010 AND 2009 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Income Tax Status The Partnership is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code. However, income from certain activities not directly related to the Partnership s tax-exempt purpose is subject to taxation as unrelated business income. The Partnership did not receive any taxable income during the years ended December 31, 2010 and Tax years prior to 2007 are no longer subject to examination by the IRS and the tax jurisdictions of Maryland and Delaware. Ocean Spray Trading 49 (PTY) LTD is subject to tax laws of South Africa. Contributions and Grants Receivable Contributions and grants receivable represent unconditional promises to give and are recorded when the promise is made. Unconditional promises that are expected to be collected within one year are reflected as current contributions and grants receivable and recorded at their net realizable value. Unconditional promises to give that are expected to be collected in future years are reflected as longterm contributions and grants receivable and recorded at the present value of their estimated future cash flows using a discount rate of 8.25 percent. Amortization of the discount is included on the consolidated statements of activities and change in net assets. Uncollectible amounts are charged-off against the allowance for doubtful accounts once management determines a pledge, or a portion thereof, to be uncollectible. At December 31, 2010 and 2009, all receivables are considered to be fully collectible, and, as such, no allowance for doubtful accounts has been provided for in these consolidated financial statements. Revenue Recognition The Partnership records contributions as revenue when they are pledged by the donor or when received in cash if not pledged. All contributions are considered to be available for unrestricted use unless specifically restricted by the donor. Temporarily restricted net assets are contributions with temporary, donor-imposed time and/or program-specific restrictions. These temporary restrictions require that resources be used for specific purposes and/or in a certain period. Temporarily restricted net assets become unrestricted when the time restrictions expire or the funds are used for their restricted purposes and are reported in the consolidated statements of activities as net assets released from restrictions. The Partnership had no permanently restricted net assets for the years ended December 31, 2010 and Revenues from federal and other contract funding sources are recognized when the related expenses are incurred. Contract expenses incurred before the related contract revenue is received are reported as accounts receivable. Use of Estimates Management uses estimates and assumptions in preparing these consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenue and expenses. Actual results could vary from the estimates that were used. 8

11 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2010 AND 2009 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Functional Allocation of Expenses The costs of supporting the various programs and other activities have been summarized on a functional basis on the consolidated statements of activities and change in net assets. Certain costs have been allocated among program and supporting service classifications on the basis of an analysis made by the Partnership's management. In-Kind Contributions Donated goods and services are recorded at their estimated fair value at the time of donation. Donated professional services include services rendered in connection with the Partnership's programs and general administration. These services are recorded at their fair value at the time the service is performed. Subsequent Events The Partnership has evaluated events and transactions for potential recognition or disclosure through May 2, 2011, the date the consolidated financial statements were available to be issued. NOTE 2 INVESTMENTS Investments consist of fixed income securities as follows: December 31, Corporate Bonds $ 1,565,810 $ - Government and Agency Bonds 1,273,889 - Certificates of Deposit 3,380,638 - Investment income consists of: $ 6,220,337 $ - Year Ended December 31, Interest Income $ 50,697 $ 16,731 Realized Loss on Investments (4,844) - Unrealized Loss on Investments (12,236) - $ 33,617 $ 16,731 9

12 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2010 AND 2009 NOTE 3 CONTRIBUTIONS AND GRANTS RECEIVABLE Contributions and grants receivable are collectible through 2012 and have been discounted at 8.25 percent to record the present value of the pledges to be received as of December 31, The following is a summary of contributions and grants receivable, by years, as of: December 31, Receivable in Less Than One Year $ 2,836,446 $ 4,208,085 Receivable in One to Five Years 729,992 3,426,907 Total Contributions and Grants Receivable 3,566,438 7,634,992 Less: Discount to Net Present Value (55,634) (312,568) Net Contributions and Grants Receivable 3,510,804 7,322,424 Less: Current Portion 2,836,446 4,208,085 Long-Term Contributions and Grants Receivable $ 674,358 $ 3,114,339 NOTE 4 NET ASSETS Net assets include unrestricted net assets designated by the Board of Directors for the Science of AIDS project. Unrestricted net assets consist of the following: December 31, Board Designated Science of AIDS Fund $ 241,357 $ 385,812 Unrestricted Net Assets 2,326,032 1,752,871 $ 2,567,389 $ 2,138,683 10

13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2010 AND 2009 NOTE 4 NET ASSETS (Continued) Temporarily restricted net assets consist of the unexpended portion of restricted contributions received by the Partnership. These contributions are restricted for the following: December 31, Time Restrictions $ 1,376,179 $ 1,946,303 Program Restrictions: AAI Namibia Education Initiative - 5,095 CCAF Africa Education Initiative 4,894,179 6,699,007 Coca-Cola Bottlers Uganda Education Initiative 14,970 14,970 Coca-Cola Fortune South Africa Education Initiative 47,064 46,000 Chevron Angola Education Initiative - Bengo/Huambo 4,042 6,704 Chevron Brazil/South Africa Education Initiative 1,332,454 1,913,644 Chevron Nigeria Education Initiative 391, ,402 Chevron Program Evaluation 8,675 9,041 Discovery Communications South Africa Education Initiative - 3,108 DNE Romania Education Initiative 5,962 6,066 Hendricks Foundation South Africa Education Initiative - 6,654 Hendricks Foundation Ghana Education Initiative 55, ,013 Science of Aids 456,700 - Scholarship Fund $ 8,587,165 $ 11,322,605 11

14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2010 AND 2009 NOTE 4 NET ASSETS (Continued) Net assets were released from donor restrictions by incurring expenses which satisfied the restricted purposes specified by the donors or by the passage of time as follows: Year Ended December 31, Time Restrictions $ 674,918 $ 648,960 Program Restrictions: AAI Namibia Education Initiative 5,095 1,797 CCAF Africa Education Initiative 1,969,389 1,460,521 Coca-Cola Bottlers Uganda Education Initiative - - Chevron Angola Education Initiative - Bengo/Huambo 2, Chevron Angola/South Africa/Venezuela Education Initiative - 105,251 Chevron Brazil/South Africa Education Initiative 659, ,321 Chevron Nigeria Education Initiative 143, ,490 Chevron Program Evaluation ,233 Chevron LC Video Discovery Communications Get Packing Project 37,660 - Discovery Communications South Africa Education Initiative 3, DNE Romania Education Initiative 104 1,661 Hendricks Foundation South Africa Education Initiative 6,654 42,589 Hendricks Foundation Ghana Education Initiative 75,383 64,119 Scholarship Fund ,297 $ 3,578,190 $ 3,179,104 NOTE 5 TRANSACTIONS WITH DISCOVERY COMMUNICATIONS, INC. Discovery Communications, Inc., which founded the Partnership in 1997, provides staff and related benefits, office space, and office support for the Partnership. The office support provided includes telecommunications, computer software and hardware, copying services, and other office expenses. In addition, Discovery Communications, Inc., provides production services to the Partnership. At times, contributions from Discovery Communications have been a major source of the Partnership s revenue. As of December 31, 2010, Discovery Communications, Inc., has committed to providing $1,376,179 through December 31, This amount has been recorded as part of the temporarily restricted net assets on the accompanying consolidated statements of activities and change in net assets and as contributions and grants receivable on the accompanying consolidated statements of financial position. Payments received from Discovery were $674,918 and $648,960 for the years ended December 31, 2010 and 2009, respectively. 12

15 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2010 AND 2009 NOTE 5 TRANSACTIONS WITH DISCOVERY COMMUNICATIONS, INC. (Continued) The Partnership received the following in-kind contributions from Discovery Communications, Inc.: Year Ended December 31, Program Management $ 610,017 $ 672,042 Production of Video Programs 419, ,579 Other 1,446 1,400 $ 1,030,677 $ 1,040,021 NOTE 6 IN-KIND CONTRIBUTIONS In addition to the in-kind contributions that were received from Discovery Communications, Inc. (Note 5), the Partnership received in-kind contributions for legal services from other vendors. For the years ended December 31, 2010 and 2009, these contributions totaled approximately $78,000 and $65,000, respectively. The majority of these contributions are reflected as part of general administration for the years ended December 31, 2010 and NOTE 7 PENSION PLAN The Partnership maintains a 401(k) plan which covers all Partnership employees. The Plan provides for a discretionary profit sharing contribution, as well as an employer match equal to 100 percent of employee contributions, not to exceed 5 percent of the participant s annual compensation. The Partnership made contributions of $22,743 and $21,061 for the years ended December 31, 2010 and 2009, respectively. NOTE 8 FAIR VALUE MEASUREMENTS The Partnership has determined the fair value of certain assets through the application of the topic of the FASB Accounting Standards Codification, Fair Value Measurements and Disclosures. Fair value of assets measured on a recurring basis at December 31, 2010 and 2009, is as follows: December 31, 2010 Fair Value Measurements at Reporting Date Using Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets/Liabilities Inputs Inputs Fair Value (Level 1) (Level 2) (Level 3) Assets: Corporate Bonds $ 1,565,810 $ - $ 1,565,810 $ - Government and Agency Bonds 1,273,889-1,273,889 - Certificates of Deposit 3,380,638-3,380,638 - $ 6,220,337 $ - $ 6,220,337 $ - 13

16 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2010 AND 2009 NOTE 8 FAIR VALUE MEASUREMENTS (Continued) Corporate Bonds, Government and Agency Bonds, and Certificates of Deposit are not exchange traded investments and are valued using a market approach based on quoted prices for similar assets in an active market or quoted prices for identical or similar assets in an inactive market, from pricing sources utilized by investment managers. There were no changes in the valuation techniques during the current year. 14

17 CONSOLIDATED SUPPLEMENTARY INFORMATION YEARS ENDED DECEMBER 31, 2010 AND 2009

18 Independent Auditors Report On Consolidated Supplementary Information Board of Directors Discovery Channel Global Education Partnership and Affiliate Silver Spring, MD Our report on our audits of the basic consolidated financial statements of Discovery Channel Global Education Partnership and Affiliate as of December 31, 2010 and 2009, and for the years then ended, appears on page 1. The audits were conducted for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. The accompanying consolidated schedules of program services on page 16 are presented for purposes of additional analysis and are not a required part of the basic consolidated financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic consolidated financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic consolidated financial statements taken as a whole. Bethesda, Maryland May 2, 2011

19 CONSOLIDATED SCHEDULES OF PROGRAM SERVICES Year Ended December 31, Direct Programs USA $ 269,719 $ 820,286 Latin America Mexico - 2,498 Peru - 1,108 Venezuela 1,037 83,743 Brazil 333, ,187 Total Latin America 334, ,536 North Africa Egypt 469, ,809 Morocco 211, ,968 Total North Africa 680, ,777 Southern Africa Angola 58,390 95,254 Namibia 126, ,836 South Africa 403, ,851 Zimbabwe 384 3,106 Total Southern Africa 588, ,047 East Africa Tanzania - 17 Uganda 104,126 79,688 Kenya 263,480 78,375 Total East Africa 367, ,080 West Africa Ghana 204, ,341 Nigeria 265, ,514 Total West Africa 470, ,855 Europe Romania 104 1,661 Total Europe 104 1,661 Direct Program Totals 2,711,521 3,024,242 Indirect Programs Program Development 6,554 36,756 Video Production 735, ,529 Indirect Program Totals 742, ,285 Totals $ 3,453,787 $ 3,839, See Independent Auditors Report

20 B E T H E S D A A N N A P O L I S T Y S O N S C O R N E R H E R N D O N