FAMILY STATIONS, INC. (A California Not-For-Profit Corporation)
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FAMILY STATIONS, INC. (A California Not-For-Profit Corporation) And Its Affiliates CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2018 AND DECEMBER 31, 2017 FAMILY STATIONS, INC. And Its Affiliates TABLE OF CONTENTS DECEMBER 31, 2018 AND 2017 Page(s) Independent auditors’ report 2 - 3 Consolidated statements of financial position 4 Consolidated statements of activities 5 Consolidated statements of functional expenses 6 - 7 Consolidated statements of cash flows 8 Notes to consolidated financial statements 9 - 18 Supplementary information: Schedule I - Consolidated support from contributions 20 - 22 1 RINA accountancy corporation 150 Post Street, Suite 200, San Francisco, CA 94108 phone: 415.777.4488 fax: 415.837.1260 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, 2018 and December 31, 2017, 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 Family Stations Inc.'s management is responsible for the preparation and fair presentation of these consolidated 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 consolidated 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 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 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 financial position of Family Stations, Inc. and affiliates as of December 31, 2018 and December 31, 2017, 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 consolidated financial statements as a whole. The accompanying supplementary information in Schedule I starting on page 20 is presented for purposes of additional analysis and is 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 audit 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. Certified Public Accountants San Francisco, California July 29, 2019 3 FAMILY STATIONS, INC. And Its Affiliates CONSOLIDATED STATEMENTS OF FINANCIAL POSITION ASSETS December 31, 2018 December 31, 2017 CURRENT: Cash and cash equivalents$ 19,835,214 $ 25,127,544 Investments 18,158 19,845 Funds held in trust 331,645 331,645 Receivables: Accounts receivable 18,989 21,007 Employee receivables 8,793 7,979 Inventory of equipment on hand 38,409 12,530 Prepaid expenses 215,613 238,133 TOTAL CURRENT ASSETS 20,466,821 25,758,683 PROPERTY AND EQUIPMENT, net 18,048,576 17,078,590 OTHER: Federal Communications Commission licenses, net 21,603,864 38,168,851 Charitable remainder trusts 100,241 107,753 Escrow deposits 65,327 58,781 Other assets held for sale, fair market value - 7,500 $ 60,284,829 $ 81,180,158 LIABILITIES AND NET ASSETS CURRENT LIABILITIES: Accounts payable$ 182,414 $ 221,144 Accrued liabilities 399,679 317,496 Tenant deposits 27,454 33,390 Listener and sponsor notes payable 331,645 331,645 TOTAL LIABILITIES (ALL CURRENT) 941,192 903,675 NET ASSETS: Without donor restriction$ 59,343,637 $ 80,276,483 With donor restriction - - TOTAL NET ASSETS 59,343,637 80,276,483 TOTAL LIABILITIES AND NET ASSETS $ 60,284,829 $ 81,180,158 See notes to consolidated financial statements. 4 FAMILY STATIONS, INC. And Its Affiliates CONSOLIDATED STATEMENTS OF ACTVITIES Year Ended Year Ended December 31, 2018 December 31, 2017 (Without Donor (Without Donor Restrictions) Restrictions) SUPPORT AND REVENUE: Support: Contributions$ 4,713,195 $ 4,812,670 Revenue: Program service fees - 440,410 Lease income and air time revenue 473,515 498,609 Gain on sale of station licenses, property and equipment 27,135 71,300,467 Investment return, net of fees 111,406 343 Miscellaneous revenue 83,538 25,786 TOTAL SUPPORT AND REVENUE 5,408,789 77,078,285 OPERATING EXPENSES: Program services 7,267,331 7,104,871 Supporting services: Management and general 1,673,297 6,277,625 Fundraising 836,290 786,298 TOTAL OPERATING EXPENSES 9,776,918 14,168,794 EXCESS OF OPERATING EXPENSES OVER SUPPORT AND REVENUE (4,368,129) 62,909,491 OTHER EXPENSE: Impairment loss 16,564,717 310,521 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS (20,932,846) 62,598,970 OTHER CHANGES IN NET ASSETS: Liquidation of net assets of Family Stations New Jersey - 391,343 INCREASE (DECREASE) IN NET ASSETS (20,932,846) 62,990,313 NET ASSETS, beginning of year 80,276,483 17,286,170 NET ASSETS, end of year $ 59,343,637 $ 80,276,483 See notes to consolidated financial statements. 5 FAMILY STATIONS, INC. And Its Affiliates CONSOLIDATED STATEMENTS OF FUNCTIONAL EXPENSES YEAR ENDED DECEMBER 31, 2018 General and Program Administrative Fundraising Total Personnel: Salaries$ 2,230,302 $ 729,980 $ 258,357 $ 3,218,639 Employee benefits 295,357 100,139 35,281 430,777 Payroll taxes 173,122 58,791 20,748 252,661 Total personnel 2,698,781 888,910 314,386 3,902,077 Rent 1,283,043 9,308 - 1,292,351 Depreciation and amortization 410,371 297,235 57,024 764,630 Utilities 560,296 8,378 5,027 573,701 Service and monitor 522,247 5,347 113 527,707 Other professional services 379,025 22,322 30,314 431,661 Telephone 376,284 6,714 4,028 387,026 Legal 127,797 197,237 - 325,034 Music licenses 258,330 - - 258,330 Printing and copying 154 1,087 248,936 250,177 Postage and shipping 11,668 9,669 154,949 176,286 Real estate taxes, fees and dues 166,250 5,260 3,156 174,666 Satellite uplink 91,301 - - 91,301 Insurance 64,678 7,700 4,620 76,998 Air time 70,021 - - 70,021 Other expense 29,319 40,006 - 69,325 Travel and meetings 20,749 48,091 - 68,840 Building and grounds maintenance 61,658 1,940 1,164 64,762 Accounting - 60,000 - 60,000 Software, print and online subscriptions 50,297 3,551 2,131 55,979 Credit card merchant fees - 26,973 - 26,973 Advertising 8,861 16,357 - 25,218 Supplies and tools 21,690 1,548 1,029 24,267 Membership dues 21,591 2,137 - 23,728 Office furniture and equipment 3,967 9,140 - 13,107 Bad debt 12,133 - - 12,133 Equipment rental and maintenance 11,357 (1,640) - 9,717 Fundraising - - 9,024 9,024 Janitorial services 5,452 649 389 6,490 Banking fees - 4,678 - 4,678 Taxes 11 700 - 711 Total other expenses 4,568,550 784,387 521,904 5,874,841 Total functional expenses$ 7,267,331 $ 1,673,297 $ 836,290 $ 9,776,918 See notes to consolidated financial statements. 6 FAMILY STATIONS, INC. And Its Affiliates CONSOLIDATED STATEMENTS OF FUNCTIONAL EXPENSES YEAR ENDED DECEMBER 31, 2017 General and Program Administrative Fundraising Total Personnel: Salaries$ 2,346,268 $ 737,493 $ 167,256 $ 3,251,017 Employee benefits 140,914 80,342 5,241 226,497 Payroll taxes 273,457 259,379 19,961 552,797 Total personnel 2,760,639 1,077,214