Wnet and Subsidiaries
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WNET AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS (Together with Independent Auditors’ Report) YEARS ENDED JUNE 30, 2015 AND 2014 WNET and SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS (Together with Independent Auditors’ Report) YEARS ENDED JUNE 30, 2015 AND 2014 CONTENTS Page Independent Auditors' Report.................................................................................................................................. 1-2 Consolidated Financial Statements: Consolidated Statements of Financial Position ................................................................................................... 3 Consolidated Statements of Activities ................................................................................................................... 4 Consolidated Statements of Cash Flows .............................................................................................................. 5 Notes to Consolidated Financial Statements ................................................................................................... 6-21 Supplemental Information: Consolidated Schedules of Functional Expenses ......................................................................................... 22-23 Marks Paneth LLP New York City 685 Third Avenue Washington, DC New York, NY 10017 New Jersey P 212.503.8800 Long Island F 212.370.3759 Westchester www.markspaneth.com Cayman Islands INDEPENDENT AUDITORS' REPORT To the Board of Trustees of WNET We have audited the accompanying consolidated financial statements of WNET and subsidiaries (collectively, the “Company”) which comprise the consolidated statements of financial position as of June 30, 2015 and 2014, and the related consolidated statements of activities and cash flows for the years then ended, and the related notes to the consolidated financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United State 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 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 audit to obtain reasonable assurance about whether the consolidated financial statements are free of 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 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 consolidated 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 consolidated financial position of WNET and subsidiaries as of June 30, 2015 and 2014 and the changes in their net assets and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Other Matter Our audits were conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The supplemental schedules of functional expenses and non-operating costs (shown on pages 22 and 23) are presented for purposes of additional analysis and are not a required part of the consolidated 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 consolidated financial statements. The information has been subjected to the auditing procedures applied in the audits of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated 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 consolidated financial statements as a whole. New York, NY December 8, 2015 WNET and SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF JUNE 30, 2015 AND 2014 2015 2014 ASSETS Cash and cash equivalents (Notes 2C and 19)$ 14,419,000 $ 15,738,000 Investments (Notes 2D, 4, 5, 8, 15 and 18) 111,963,000 99,771,000 Accounts receivable, net (Note 2K) 2,416,000 1,918,000 Grants and gifts receivable, net (Notes 2J, 2K and 3) 68,999,000 57,593,000 Costs incurred for programs not yet telecast (Note 2E) 12,081,000 15,483,000 Prepaid expenses and other assets (Notes 6 and 16) 9,684,000 13,008,000 Property and equipment, net (Notes 2F, 7 and 16) 26,563,000 31,085,000 Intangible assets (Note 2H) 13,554,000 13,554,000 TOTAL ASSETS $ 259,679,000 $ 248,150,000 LIABILITIES Accounts payable and accrued expenses (Notes 2I, 2L and 13A)$ 27,454,000 $ 32,735,000 Deferred revenue (Note 14) 6,417,000 7,788,000 Bank line of credit and loans payable (Note 8) 2,617,000 4,112,000 TOTAL LIABILITIES 36,488,000 44,635,000 COMMITMENTS AND CONTINGENCIES (Note 13) NET ASSETS (Note 2B) Unrestricted: Operations 17,039,000 17,304,000 Appropriated investment earnings (Note 18) 4,253,000 4,139,000 Board designated (Note 18) 14,530,000 14,530,000 Total unrestricted 35,822,000 35,973,000 Temporarily restricted (Note 9): Program restricted 94,368,000 90,129,000 Unappropriated investment earnings (Note 18) 17,481,000 20,589,000 Total temporarily restricted 111,849,000 110,718,000 Permanently restricted (Notes 10 and 18) 75,520,000 56,824,000 TOTAL NET ASSETS 223,191,000 203,515,000 TOTAL LIABILITIES AND NET ASSETS $ 259,679,000 $ 248,150,000 The accompanying notes are an intergral part of these financial statements. - 3 - WNET and SUBSIDIARIES CONSOLIDATED STATEMENTS OF ACTIVITIES FOR THE YEARS ENDED JUNE 30, 2015 AND 2014 For the Year Ended June 30, 2015 For the Year Ended June 30, 2014 Temporarily Permanently Total Temporarily Permanently Total Unrestricted Restricted Restricted 2015 Unrestricted Restricted Restricted 2014 OPERATING REVENUE AND OTHER SUPPORT (Note 2O): Contributions and underwriting for designated projects (Note 11)$ 37,414,000 $ 91,445,000 $ - $ 128,859,000 $ 38,124,000 $ 95,364,000 $ - $ 133,488,000 New York State grant 6,564,000 - - 6,564,000 6,506,000 - - 6,506,000 Nonbroadcast sales and service fees (Note 2M) 12,854,000 - - 12,854,000 11,442,000 - - 11,442,000 Investment income (Note 4) 4,155,000 - - 4,155,000 4,802,000 - - 4,802,000 Other income (Notes 2N and 14) 6,140,000 - - 6,140,000 6,957,000 - - 6,957,000 Total revenue 67,127,000 91,445,000 - 158,572,000 67,831,000 95,364,000 - 163,195,000 Net assets released from restrictions (Note 2B): Underwriting for designated projects (Note 11) 51,728,000 (51,728,000) - - 44,775,000 (44,775,000) - - CPB program grants 3,894,000 (3,894,000) - - 3,398,000 (3,398,000) - - CPB community service grant 10,230,000 (10,230,000) - - 9,200,000 (9,200,000) - - PBS program service grants 22,245,000 (22,245,000) - - 27,841,000 (27,841,000) - - Total net assets released from restrictions 88,097,000 (88,097,000) - - 85,214,000 (85,214,000) - - - - TOTAL OPERATING REVENUE AND OTHER SUPPORT 155,224,000 3,348,000 - 158,572,000 153,045,000 10,150,000 - 163,195,000 OPERATING EXPENSES: Program service (Note 11): National and local programming 77,528,000 - - 77,528,000 78,637,000 - - 78,637,000 Broadcast station 27,328,000 - - 27,328,000 27,638,000 - - 27,638,000 Education 1,658,000 - - 1,658,000 1,970,000 - - 1,970,000 WEB services 2,521,000 - - 2,521,000 2,111,000 - - 2,111,000 Total program service 109,035,000 - - 109,035,000 110,356,000 - - 110,356,000 Fundraising: Membership 11,019,000 - - 11,019,000 12,267,000 - - 12,267,000 Marketing and Development 8,482,000 - - 8,482,000 7,332,000 - - 7,332,000 Total fundraising 19,501,000 - - 19,501,000 19,599,000 - - 19,599,000 Management and administration services 24,002,000 - - 24,002,000 22,974,000 - - 22,974,000 TOTAL OPERATING EXPENSES 152,538,000 - - 152,538,000 152,929,000 - - 152,929,000 CHANGE IN NET ASSETS FROM OPERATIONS 2,686,000 3,348,000 - 6,034,000 116,000 10,150,000 - 10,266,000 NON-OPERATING ACTIVITIES AND SUPPORT (Note 2O): Endowment contributions