ORLANDO DAY NURSERY ASSOCIATION Orlando, Florida FINANCIAL STATEMENTS Year Ended June 30, 2011

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1 Orlando, Florida FINANCIAL STATEMENTS Year Ended

2 CONTENTS Officers and s 1 Independent Auditors Report 2 Financial Statements: Statement of Financial Position 3 Statement of Activities 4 Statement of Cash Flows 5 Statement of Functional Expenses 6 Notes to Financial Statements 7

3 Officers and s Officers President Vice-President Treasurer Secretary Steven Kirby Debra J. Vereen Amy Jo Rodeghier Amy Rigdon Appointed s Richard A. Ahl, Jr Antoine Demings Anne McDonald Culp Lorraine Notice Shane Crain Ron Steams Charles Robinson Jackie Dodson Trish Lukasik Alexander Sooley Stephen Dinon Other Directors Executive Director Mata Dennis 1

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5 Statement of Financial Position Assets Cash and Cash Equivalents $ 70,621 Grants and Contributions Receivable 14,846 Accounts Receivable 22,384 Prepaid Expenses 3,176 Investments 1,854 Deposits 4,625 Property and Equipment, net 188,543 Total assets $ 306,049 Liabilities and Net Assets Liabilities: Accounts payable and accrued expenses $ 35,938 Total liabilities 35,938 Net Assets: Unrestricted 266,600 Temporarily restricted 3,511 Total net assets 270,111 Total liabilities and net assets $ 306,049 See accompanying notes. 3

6 Statement of Activities Year Ended Temporarily Unrestricted Restricted Total Support and Revenue: Contributions: United Way $ 111,582 $ - $ 111,582 Other 52,916-52,916 In-kind, rent 219, ,520 In-kind, miscellaneous 97,965-97, , ,983 Grants: State of Florida - 129, ,848 City of Orlando - 13,005 13,005 Other grants - 120, , , ,453 Revenue: Program services fees: Parents 343, ,069 Community Coordinated Care for Children 254, ,225 Fundraising events 16,957-16,957 Interest income 3-3 Unrealized gain on investments Membership dues , ,910 Net assets released from restrictions: Satisfaction of purpose restrictions 274,073 (274,073) - Total support and revenue 1,370,966 (10,620) 1,360,346 Expenses: Program services 1,153,836-1,153,836 Management and general 115, ,014 Fundraising 12,277-12,277 Total expenses 1,281,127-1,281,127 Increase (Decrease) in Net Assets 89,839 (10,620) 79,219 Net Assets, beginning of year 176,761 14, ,892 Net Assets, end of year $ 266,600 $ 3,511 $ 270,111 See accompanying notes. 4

7 Statement of Cash Flows Year Ended Cash Flows From Operating Activities: Cash received from supporters and customers $ 1,050,403 Cash paid to suppliers and employees (1,037,998) Net cash provided by operating activities 12,405 Cash Flows From Investing Activities: Proceeds from sale of vehicle 18,000 Proceeds from sale of investments 18,210 Purchases of property and equipment (64,074) Net cash used in investing activities (27,864) Net Decrease in Cash (15,459) Cash and Cash Equivalents, beginning of year 86,080 Cash and Cash Equivalents, end of year $ 70,621 Reconciliation of Increase in Net Assets to Net Cash Provided by Operating Activities: Increase in net assets $ 79,219 Adjustment to reconcile increase in net assets to net cash provided by operating activities: i i Depreciation 14,992 Noncash contributions of property and equipment (86,653) Realized and unrealized gain on investments (294) Loss on disposal of equipment 6,847 Changes in assets and liabilities: Grants and contributions receivables (858) Accounts receivable 8,694 Prepaid expenses (221) Accounts payable and accrued expenses (9,321) Total adjustments (66,814) Net cash provided by operating activities $ 12,405 In May 2011, the Association had a noncash investing transaction related to the acquisition of equipment by receiving a noncash donation of playground equipment in the amount of $86,653. See accompanying notes. 5

8 Statement of Functional Expenses Year Ended Program Management Services and General Fundraising Total Advertising $ - $ 570 $ - $ 570 Accounting fees - 9,725-9,725 Building and ground maintenance 48,700 5,411-54,111 Depreciation 13,493 1,499-14,992 Food 100, ,203 Fundraising Insurance property 24,331 2,703-27,034 Loss on disposal of vehicle 6, ,847 Miscellaneous - 1,063-1,063 Office supplies - 6,957-6,957 Other non-operating 2, ,621 Personnel 684,612 56,481 12, ,175 Professional fees 3,682 3,682-7,364 Program supplies 28, ,446 Rent (in-kind contribution) 197,568 21, ,520 Subscriptions and licenses 1, ,213 Telephone 4, ,423 Utilities 37,501 4,167-41,668 $ 1,153,836 $ 115,014 $ 12,277 $ 1,281,127 See accompanying notes. 6

9 Notes to Financial Statements 1. Summary of Significant Accounting Policies: General Orlando Day Nursery Association (the Association ) provides child care and early learning services, including prekindergarten, for children of working parents with limited income. Support for providing these services is obtained from both government grants and private sector contributions. The Association serves clients in the Central Florida area. Use of Estimates In preparing the financial statements, management is required to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates. Basis of Presentation The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. Net assets and revenues, expenses, gains, and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, net assets of the Association 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 Association and/or the passage of time. When a restriction is satisfied or expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Permanently restricted net assets Net assets subject to donor-imposed stipulations that they be maintained permanently by the Association. There were no permanently restricted assets at. Allocation of Supporting Services Expenses The Association s policy is to allocate that part of the supporting services expenses associated with programs to the individual programs, based on each program s direct program cost to total program costs. Cash and Cash Equivalents For the purpose of the statement of cash flows, the Association considers all short-term debt securities purchased with maturity of three months or less to be cash equivalents. Contributions Contributions, including unconditional promises to give, are recorded as made. All contributions are reported as an increase in unrestricted net assets unless specifically restricted by the donor. All donor-restricted support is reported as an increase in temporarily or permanently restricted net assets depending on the nature of the restriction. When a restriction is satisfied or expires, temporarily restricted net assets are reclassified to unrestricted net assets. Conditional promises to give are recognized when the conditions on which they depend are substantially met. Unconditional promises to give due within one year are recorded at their net realizable value. Unconditional promises to give due after one year are reported at the present value of their net realizable value, using risk-free interest rates applicable to the years in which the promises are to be received. 7

10 Notes to Financial Statements Continued 1. Summary of Significant Accounting Policies Continued: Program Service Fees Program service fees represent fees received for early care and learning programs for children. Program service fees received from parents are based on a sliding fee scale of parents income. Such fees received from Community Coordinated Care for Children are based on contract under the State of Florida School Readiness and VPK Program. Contributions of Materials, Services, and Facilities Contributions of materials used in the Association s programs are recorded as support and expense at the estimated fair value of the materials. The estimated fair rental value of facilities use contributed to the Association is reported as both support and expense in the period in which the facilities are used. A substantial number of volunteers have contributed significant amounts of their time to the Association s programs and management. Contributions of services are recognized if the services received (a) create or enhance nonfinancial assets or (b) require specialized skills that are provided by individuals possessing those skills and would typically need to be purchased if not provided by donation. No contributions of services were recognized during the year ended. Grants and Contributions Receivable and Accounts Receivable Grants and contributions receivable and accounts receivable are stated at net realizable value. In determining whether or not to record an allowance for doubtful accounts, management makes a judgmental determination based on an evaluation of the facts and circumstances related to each account. Investments Investments are carried at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Property and Equipment Property and equipment is recorded at cost. Depreciation is calculated by the straight-line method over estimated useful lives of 3 to 10 years. Contributed assets are recorded at their estimated fair value at the date of contribution. Such donations are reported as unrestricted support unless the donor has restricted the donated asset to a specific purpose. Repairs and maintenance are expensed as incurred. Advertising Advertising costs are expensed as incurred. Advertising expense amounted to $570 for the year ended. Income Taxes The Association is a nonprofit organization exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code. Accordingly, no provision for income taxes is reflected in the accompanying financial statements. 8

11 Notes to Financial Statements Continued 1. Summary of Significant Accounting Policies Continued: Income Taxes Continued Accounting principles generally accepted in the United States of America prescribe requirements for the recognition of income taxes in financial statements, and the amounts recognized are affected by income tax positions taken by the Association in its tax returns. The Association s status as a tax-exempt entity is defined as a tax position under these requirements. While management believes it has complied with the Internal Revenue Code, the sustainability of some income tax positions taken by the Association in its tax returns may be uncertain. There are minimum thresholds of likelihood that uncertain tax positions are required to meet before being recognized in the financial statements. Management does not believe that the Association has any material uncertain tax positions at. I n t h e e v e n t interest and penalties were due relating to an unsustainable tax position, they would be treated as a component of income tax expense. The Association s federal income tax returns are subject to examination by the Internal Revenue Service. At June 30, 2011, the 2010 through 2007 federal income tax returns are subject to examination. Subsequent Events Management has evaluated events through November 3 0, 2011, t h e date which the financial statements were available for issue. 2. Grants and Contributions Receivable: Grants and contributions receivable at, consists of the following: State of Florida $ 11,335 City of Orlando 3,511 Total grants and contributions receivable $ 14,846 These amounts are due within one year. 3. Accounts Receivable: Accounts receivable at, consists of the following: Parents $ 5,784 Community Coordinated Care for Children 16,600 Total accounts receivable $ 22,384 9

12 Notes to Financial Statements Continued 4. Investments: Investments at, consists of the following: Cost Fair Value Money market fund $ 1,854 $ 1,854 Total investments $ 1,854 $ 1, Property and Equipment, Net: A summary of property and equipment at, is as follows: Day care equipment $ 144,392 Furniture and fixtures 54,943 Kitchen equipment 3,424 Leasehold improvements 26,726 Office equipment 34, ,778 Less accumulated depreciation 75,235 $ 188, Note Payable: The Association has a $50,000 line of credit with SunTrust Bank N.A., which is due on demand. Interest is payable monthly at p r i m e r a t e p l u s 1 %. The note is collateralized by deposits maintained by the Association with SunTrust. There was no outstanding balance at. 7. Facilities Use and Lease: The Association conducts its operations from space leased from Lake Dot, LLC (the Lessor ). The agreement calls fo r a base rent of $1 per annum. The Association began occupancy in Upon conclusion of the initial five year term, there is an automatic renewal for subsequent terms of five years each unless either party gives notice to the other of their intention to non-renew, one year or more prior to the end of the five-year term. Prior to one year from the end of the first five-year term, there was no notice issued, thus automatically renewing the lease agreement for five years. The Association s use of the facility is conditioned upon limiting its activities in the facility to uses that qualify under the lease agreement. The current facility s estimated fair rental value was $219,520 for the year ended, a n d i s r e p o r t e d a s i n -kind support and expense. 10

13 Notes to Financial Statements Continued 7. Facilities Use and Lease Continued: If the Association continues to meet the conditions of the lease, contributions to be recognized in the future for the use of the facility, based on the estimated fair rental value used for the year ended, would be as follows: Year Ending June 30, 2012 $ 219, , , ,760 $ 768,320 The agreement also requires the Association to annually budget and fund a sinking fund with an amount reasonably estimated for future repairs and maintenance. The Kiwanis Club of Orlando Foundation, Inc., the assignor of the lease, is funding the sinking fund requirement under the lease through contributions to a local community foundation for use in future repairs and maintenance costs of the facility. 8. Temporarily Restricted Net Assets: Temporarily restricted net assets at, consists of the following: Grants and contributions which are purpose restricted (primarily for services to low-income and at-risk children and families) $ 3, Commitments and Contingencies: Economic Dependency The Association receives a substantial portion of its support f r o m t h e H e a r t o f F l o r i d a U n i t e d W a y, I n c., S t a t e o f F l o r i d a, the Kiwanis Club of Orlando Foundation, Inc., and Community Coordinated Care for Children, Inc. A significant reduction in the level of this s u p p o r t, i f t h i s w e r e t o o c c u r, m a y have an effect on the Association s programs and activities. Concentration of Credit Risk The Association has a potential concentration of credit risk in grants and contributions receivable, which are receivable primarily from governmental and not-for-profit agencies. 10. Related Party Transaction: The Association is related to the Orlando Day Nursery Foundation (the Foundation ) because it has the ability to appoint one-third of its board members. The Foundation s primary purpose is to provide support to local charitable organizations. During the year ended, the Association received $35,000 from the Orlando Day Nursery Foundation. This amount is included in other grants. 11