Family Stations 2014 Annual Audited Financial

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Family Stations 2014 Annual Audited Financial FAMILY STATIONS, INC. And Its Affiliates TABLE OF CONTENTS DECEMBER 31, 2014 AND 2013 Independent auditors’ report 2 - 3 Consolidated statements of financial position 4 Consolidated statements of activities 5 Consolidated statements of cash flows 6 Notes to consolidated financial statements 7 - 17 Supplementary information: Schedule I - Consolidated support from contributions 19 - 21 Schedule II - Consolidated operating expenses – broadcasting stations and departments 22 - 23 1 RINA accountancy corporation 100 Montgomery St., Suite 2075, San Francisco, CA 94104 phone: 415.777.4488 fax: 415.777.0680 1.800.RINA.CPA web: www.rina.com Independent Auditors’ Report The Board of Directors Family Stations, Inc. We have audited the accompanying consolidated financial statements of Family Stations, Inc. (a California not-for- profit Corporation) and its affiliates, which comprise the consolidated statements of financial position as of December 31, 2014 and December 31, 2013, and the related consolidated statements of activities and cash flows for the years then ended, and the related notes to the financial statements. Management’s Responsibility for the Financial Statements Family Stations Inc.'s management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility 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 consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Family Stations, Inc. and affiliates as of December 31, 2014 and December 31, 2013, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. 2 Report on Supplementary Information Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying supplementary information in Schedule I and Schedule II starting on page 19 is presented for purposes of additional analysis and is not a required part of the 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 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 financial statements as a whole. Certified Public Accountants San Francisco, California April 22, 2015 3 FAMILY STATIONS, INC. And Its Affiliates CONSOLIDATED STATEMENTS OF FINANCIAL POSITION ASSETS December 31, 2014 December 31, 2013 CURRENT: Cash and cash equivalents$ 32,677,017 $ 54,869,815 Investments 22,207 - Funds held in trust 1,453,087 - Receivables Accounts receivable 25,373 7,773 Bequest receivable 85,000 - Officer and employees - receivable 6,453 11,157 Note receivable 18,000 19,000 Inventory for equipment on hand 12,530 12,530 Prepaid expenses 144,464 143,047 TOTAL CURRENT ASSETS 34,444,131 55,063,322 PROPERTY AND EQUIPMENT, net 6,268,931 6,675,683 OTHER: Federal Communications Commission licenses, net 37,476,824 38,966,600 Debt financing fees, net of amortization of $478,035 for 2014 and $118,277 for 2013 1,319,773 1,679,531 Charitable remainder trusts 143,767 569,339 Escrow deposits and prepaid expenses 684,382 36,882 $ 80,337,808 $ 102,991,357 LIABILITIES CURRENT: Listener and sponsor notes payable 1,453,087 16,308,309 Accounts payable 114,675 145,970 Accrued liabilities 531,362 6,645,231 TOTAL CURRENT LIABILITIES 2,099,124 23,099,510 LONG-TERM: Term loan debt financing 39,860,225 35,358,051 Revolving loan debt financing 812,855 661,675 Accrued loan fees 47,263 14,084 TOTAL LIABILITIES 42,819,467 59,133,320 NET ASSETS Unrestricted 37,518,341 43,858,037 Temporarily restricted - - Permanently restricted - 37,518,341 - 43,858,037 $ 80,337,808 $ 102,991,357 See notes to consolidated financial statements. 4 FAMILY STATIONS, INC. And Its Affiliates CONSOLIDATED STATEMENTS OF ACTIVITIES Year Ended Year Ended December 31, 2014 December 31, 2013 SUPPORT: Contributions$ 5,409,709 93.9 %$ 5,252,390 100.0 % Program service fee 350,000 6.1 - - TOTAL SUPPORT 5,759,709 100.0 5,252,390 100.0 OPERATING EXPENSES: Broadcasting stations 5,890,149 102.3 7,787,671 148.3 Departments 4,431,517 76.9 6,049,597 115.2 TOTAL OPERATING EXPENSES 10,321,666 179.2 13,837,268 263.5 EXCESS OF OPERATING EXPENSES OVER SUPPORT (4,561,957) (79.2) (8,584,878) (163.5) OTHER REVENUE (EXPENSES): Gain (loss) on sale of station licenses, property and equipment (1,317,835) (23.0) 41,805,602 795.9 Amortization of debt financing fees (359,759) (6.3) (118,277) (2.4) Lease income and air time revenue 250,096 4.5 308,229 5.9 Unrealized gain on charitable remainder trust 1,306 0.0 90,938 1.7 Miscellaneous gain (loss) (26,434) (0.5) 9,155 0.2 Dividend and interest income 19,079 0.3 6,122 0.2 Unrealized loss on securities (430) (0.0) - - Charitable remainder trust loss (84,596) (1.5) - - Bad debt expense (46,462) (0.8) (25,024) (0.5) Income and sales taxes recovery (expense) 5,434,695 94.4 (5,938,199) (113.1) Fees for sale of assets (335,580) (5.8) (1,114,242) (21.2) Interest expense (5,311,819) (92.2) (2,358,416) (44.9) INCREASE (DECREASE) IN NET ASSETS (6,339,696) (110.1) % 24,081,010 458.4 % NET ASSETS, beginning of year 43,858,037 19,777,027 NET ASSETS, end of year $ 37,518,341 $ 43,858,037 See notes to consolidated financial statements. 5 FAMILY STATIONS, INC. And Its Affiliates CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended Year Ended December 31, 2014 December 31, 2013 CASH FLOWS FROM OPERATING ACTIVITIES: Increase (decrease) in net assets $ (6,339,696) $ 24,081,010 Adjustments to reconcile changes in net assets to net cash used by operating activities: Depreciation and amortization $ 989,426 $ 1,018,774 Funds held in trust for others (1,453,087) - Loss (gain) on sale of property, equipment and station licenses 1,317,835 (41,805,602) Loss on disposition of charitable remainder trust - non-cash item 84,596 - Distribution of terminated charitable remainder trust 342,282 - Unrealized loss on marketable securities 430 Donations of non-cash assets and promissory notes (90,681) (91,181) Capitalized interest on loan proceeds - non-cash item 4,603,354 1,381,918 Unrealized gain on charitable remainder trusts (1,305) (90,939) Decrease (increase) in: Receivables (97,897) 28,749 Inventories - (12,530) Prepaid expenses (1,417) 25,476 Increase (decrease) in: Accounts payable (31,295) (169,209) Accrued liabilities (5,990,009) (327,768) 5,302,079 (34,412,465) NET CASH USED BY OPERATING ACTIVITIES (6,667,464) (10,331,455) CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of station licenses, property and equipment 297,000 50,298,401 Acquisition of property, equipment and station licenses (347,975) (284,009) Acquisition of marketable securities (22,637) Assets held for sale - 10,365 Debt financing fee - (1,797,808) Note receivable 1,000 (19,000) Increase in deposits and other prepaids (647,500) (1,647) NET CASH (USED) PROVIDED BY INVESTING ACTIVITIES (720,112) 48,206,302 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from notes payable 50,000 34,640,420 Payments on notes payable (14,855,222) (20,027,712) NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES (14,805,222) 14,612,709 NET INCREASE (DECREASE) IN CASH (22,192,798) 52,487,556 CASH AND CASH EQUIVALENTS, beginning of year 54,869,815 2,382,259 CASH AND CASH EQUIVALENTS, end of year $ 32,677,017 $ 54,869,815 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the year for: Interest $ 708,465 $ 988,128 Income taxes $ 105,286 $ 384,800 See notes to consolidated financial statements.
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