$507 MILLION TO PLAYERS AND $190 MILLION INDIANA BUSINESSES TO THE STATE OF INDIANA
Cheryl Ellison Rakesh Patel Pierceville Crown Point Winner Retailer Ted Strong Indianapolis Robert McGrath Retired Teacher Indianapolis Kenneth Corey Retired Firefighter Fishers Winner
Annual Report 2010 From the Executive Director and the State Lottery Commission Chairperson
Who What They InnovationAre ResponsibilityThey do Commitment
Although this past year was filled with economic uncertainty and a reduction in consumer spending, we stayed committed to our mission of responsibly generating funds for the State of Indiana. With our retailers as our partners, we increased the amount of money generated for Hoosiers in fiscal year 2010. We realized total sales of $740 million, an increase of $7 million over the prior year. Our players were awarded $456 million in prizes and our retail partners were paid $51 million in commissions and bonuses. More importantly, a growth in net income allowed us to transfer $190 million to the State of Indiana, $11 million more than last year.
So, how did we do it?
Analysis and research drove informed decision-making and greater efficiencies We continued our initiative to deepen our understanding of our business, Our mission our games and our players. Through research and improved use of business data, we improved the attributes of new games, gained insight on the To responsibly provide optimum number of games to launch, and improved the timing, the strategy innovative and entertaining and the promotion of games. lottery games for the benefit of the citizens of Indiana. Over the past 20 years the manner in which we do business and interact with our retailers and players has changed dramatically. With the assistance of technology, our sales force now has the ability to be considerably more mobile than they were ten years ago. This year, we revised routes, territories and responsibilities to ensure the most efficient operation possible. The decision was also made to close regional offices that were under-utilized Net income to the State due to changes in retailer support needs now covered through technological advances and increased mobility. FY’09 FY’10 $179 Million $190 Million Technology upgrades improved retailer and player experiences The hardware and software upgrades to our gaming system allowed us to leverage the best technologies available to us and to improve our player and retail partner experience within our nearly 4,000 retail locations. A new contract allowed us to bring new equipment into all of our retail locations, which included digital displays for improved and customized advertising, clerk touch screen interfacings, and scan technologies. Transaction time and clerk training needs were radically reduced, and players are now able to check their own tickets for the first time.
Major overhaul of the website allowed customized web experience Launching an updated website for the first time in many years was a major undertaking. If you have ever visited hoosierlottery.com, you can understand the magnitude of this project. The update included a new communications platform, mylottery, which offers players convenient ways, through email or texting, to get the information they want about their favorite lottery games. This customizable program also gives players opportunities to get coupons, participate in promotions and provide feedback to the Lottery.
HOOSIER LOTTERY // 2010 Annual Report Page 2 Hoosier Lottery brand refresh From the Executive Director and the State Lottery Commission Chairperson We made adjustments to our branding strategy to help our brand stay relevant to the next generation. We introduced an updated logo that connected to our strong heritage but kept our eyes firmly on the future. We also spent some time working on our “Where the Money Goes” message, as we know from our research how important this is to Hoosiers. We began airing three ads that featured real winners and real beneficiaries to tell the story of how we generate money for winners, retailers and Hoosier citizens throughout Indiana. It really is amazing!
Consistently offering innovation and variety in our products Offering licensed products along with our standard scratch-off games helps us to attract a variety of players. The highlights this year included the launch of our first Colts-themed Scratch-off, $100,000 Colts Cash. This favorite awarded the typical cash prizes of our scratch-off games, but it also offered Indianapolis Colts Season Tickets as prizes. The introduction of the $2 Indiana’s Lucky Dog garnered quite a bit of attention. This innovative game gave Hoosier dog lovers the opportunity to win big and enter photos of their dog into a contest for the chance to see their dog on the next Indiana’s Lucky Dog game.
Draw games generated $266 million in sales in the last fiscal year and continued to be our primary traffic generator with more Hoosiers playing ® Powerball than any other game, including FY10 net sales and prizes Scratch-offs. Powerball is just one of the paid by game
0000-00000000000000-00 Hoosier Lottery’s Big Jackpot Game offerings. In 2010, an industry-wide change to cross-sell (millions of dollars) 0000-00000000000000-00 Powerball and Mega Millions® brought to Indiana Sales Prizes paid 0000-00000000000000-00 more Big Jackpot Game excitement, as well as an Scratch-offs $465 $314 additional $12 million in revenue. Pull-Tabs 9 6 Powerball 115 55 We are proud of these successes which are attributed to the Hoosier Lotto 54 31 passionate team of Hoosier Lottery associates and the support of our Commissioners. It takes a dedicated team to continuously and Mega Millions 12 6 successfully deliver on our mission. This year, we saw one of those Quick Draw 17 11 amazing team members pass the baton. In December 2009, Mix & Match 6 4 Jean Northenor decided to retire as Chairperson of The State Daily 3/Daily 4/ 62 29 Lottery Commission of Indiana after having served six years and Lucky 5 William A. Zielke was appointed as her replacement. Zielke brings a Total $740 $456 wealth of retail knowledge and commitment to the State of Indiana. His leadership, like Northenor’s, is a true asset to the Hoosier Lottery team.
We thank you for the opportunity to do the work we do on behalf of the State of Indiana and its citizens. It is our pleasure to invite you to review the fiscal year 2010 accomplishments of the Hoosier Lottery.
William A. Zielke Kathryn A. Densborn Chairperson Executive Director Fort Wayne, IN Hoosier Lottery
From the Executive Director and the State Lottery Commission Chairperson P a g e 3 Where did the Hoosier Lottery money go?
$51 MILLION PAID TO OUR RETAIL PARTNERS IN COMMISSIONS AND BONUSES $456 MILLION AWARDED TO OUR PLAYERS ALL ACROSS THE STATE OF INDIANA
Julie McIntosh Jeffrey Flowers Donna Sutton Indianapolis Daleville Indianapolis 2010 Colts $100,000 Line ‘Em Up $200,000 Powerball® 2nd Chance Drawing Winner Winner Winner HOOSIER LOTTERY // 2010 Annual Report Page 4 Where did the Hoosier Lottery money go?
$30 MILLION DIRECTED TO THE PENSION AND DISABILITY FUNDS FOR HOOSIER POLICE OFFICERS AND FIREFIGHTERS AND $30 MILLION DIRECTED TO THE PENSION FUND FOR TEACHERS
$130 MILLION DIRECTED TO THE BUILD INDIANA FUND AND WAS USED TO SIGNIFICANTLY REDUCE MOTOR VEHICLE EXCISE TAX
Steve Reckley Steve Docherty Ellen Strong Click here to read more about Indianapolis Indianapolis Indianapolis where the money goes. Retired Firefighter Retired Police Officer Retired Teacher
Where did the Hoosier Lottery money go? Page 5 Financials
THE STATE LOTTERY COMMISSION OF INDIANA THE STATE LOTTERY COMMISSION OF INDIANA STATEMENTS OF NET ASSETS STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS AS OF JUNE 30, 2010 AND 2009 FOR THE YEARS ENDED JUNE 30, 2010 AND 2009
2010 2009 2010 2009 ASSETS OPERATING REVENUES: CURRENT ASSETS: Instant ticket sales — net $ 474,217,486 $ 484,630,385 Cash and cash equivalents $ 78,349,103 $ 61,393,152 On-line ticket sales 266,121,987 248,026,485 Investments — current portion 10,790,011 10,229,452 Accounts receivable — net 21,686,165 24,472,828 Total operating revenues 740,339,473 732,656,870 Prepaid expenses 3,997,913 3,531,634 Accrued interest receivable 384 111,805 OPERATING EXPENSES: Ticket inventory 450,197 402,312 Direct game expenses: Instant game prizes 320,293,579 326,291,712 Total current assets 115,273,773 100,141,183 On-line games prizes 136,002,921 126,933,453 456,296,500 453,225,165 NONCURRENT ASSETS: Indirect game expenses: Long-term investments — less current portion 111,274,579 102,347,244 Retailer commissions 51,076,592 50,499,632 Restricted assets 7,978,058 8,052,769 Ticket printing costs 7,890,401 7,424,945 Capital assets — net 1,431,761 2,209,034 Advertising and promotion 11,074,138 11,252,281 On-line professional services 8,327,371 7,195,740 Total noncurrent assets 120,684,398 112,609,047 ITVM lease and courier services 2,923,645 3,740,932 81,292,147 80,113,530 TOTAL $235,958,171 $212,750,230 Total game expenses 537,588,647 533,338,695
LIABILITIES AND NET ASSETS OTHER OPERATING EXPENSES: Salaries, wages, and benefits 14,243,704 13,879,830 CURRENT LIABILITIES: General and administrative 5,041,522 7,409,111 Accounts payable: State $ 52,628,937 $ 46,832,296 Total other operating expenses 19,285,226 21,288,941 Trade 8,016,070 5,531,900 Current portion of prize liability 64,196,564 52,175,090 Total operating expenses 556,873,873 554,627,636 Deferred revenue 441,556 920,488 Other accrued expenses 1,871,971 1,439,658 OPERATING INCOME 183,465,600 178,029,234
Total current liabilities 127,155,098 106,899,432 NON-OPERATING REVENUES: Interest income 161,451 635,959 LONG-TERM LIABILITIES — Net increase in fair value of investments 5,853,879 21,611 Prize liability less current portion 103,803,073 100,850,798 Other income - net 176,574 247,517
Total liabilities 230,958,171 207,750,230 Total non-operating revenues -net 6,191,904 905,087
NET ASSETS: NET INCOME PRIOR TO DISTRIBUTIONS 189,657,504 178,934,321 Unrestricted 3,568,239 2,790,966 Invested in capital assets 1,431,761 2,209,034 DISTRIBUTIONS: Distributions to the State (137,028,567) (132,102,025) Total net assets 5,000,000 5,000,000 Distributions to be paid to the State (52,628,937) (46,832,296)
TOTAL $235,958,171 $212,750,230 Total distributions (189,657,504) (178,934,321)
CHANGES IN NET ASSETS - -
NET ASSETS — Beginning of year 5,000,000 5,000,000
NET ASSETS — Ending of year $ 5,000,000 $ 5,000,000
HOOSIER LOTTERY // 2010 Annual Report Page 6 THE STATE LOTTERY COMMISSION OF INDIANA STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 2010 AND 2009
2010 2009
CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from ticket sales $ 742,673,222 $ 740,669,757 Payments to ticket winners (441,322,751) (443,413,975) Payments to employees (13,811,390) (14,585,205) Payments of suppliers (83,074,337) (85,048,777)
Net cash provided by operating activities 204,464,744 197,621,800
CASH FLOWS FROM NONCAPITAL AND RELATED FINANCING ACTIVITIES: Distributions to the State (183,860,863) (183,442,628) Other income 176,574 247,517 Net increase in restricted assets 74,711 21,929
Net cash used in noncapital and related financing activities (183,609,578) (183,173,182)
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Purchase of capital assets (572,662) (627,311) Proceeds from the sale of capital assets 34,590 80,962
Net cash used in capital and related financing activities (538,072) (546,349)
CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of investments (9,153,007) (25,943,583) Investment maturities 5,518,992 4,121,012 Interest income 272,872 1,239,195
Net cash used in investing activities (3,361,143) (20,583,376)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 16,955,951 (6,681,107)
CASH AND CASH EQUIVALENTS — Beginning of year 61,393,152 68,074,259
CASH AND CASH EQUIVALENTS — End of year $ 78,349,103 $ 61,393,152
RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating income $ 183,465,600 $ 178,029,234 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 1,289,327 2,148,717 Change in provision for doubtful accounts (57,300) 22,711 Change in provision for ticket returns 3,204,234 (161,447) Loss (gain) on sale of fixed assets 26,018 (74,442) Changes in certain assets and liabilities: Accounts receivable (360,271) 8,089,191 Instant ticket inventory (47,885) (172,375) Prepaid expenses (466,279) 1,684,102 Accounts payable — trade 2,484,170 (1,186,579) Deferred revenue (478,932) 136,873 Other accrued expenses 432,313 (705,375) Prize liability 14,973,749 9,811,190
Net cash provided by operating activities $ 204,464,744 $ 197,621,800
SCHEDULE OF NONCASH INVESTING, CAPITAL, AND RELATED FINANCING ACTIVITIES — Net increase in fair value of investments $ 5,853,879 $ 21,611
To read annual reports from previous years, visit hoosierlottery.com.
Financials P a g e 7 State Lottery Commissioners
William A. Zielke Todd A. Etzler Gregory M. Fitzloff Todd Stuart Chairperson Valparaiso, IN Georgetown, IN Indianapolis, IN Fort Wayne, IN
Hoosier Lottery Lottery Executive Staff
Kathryn A. Densborn W. Edward Benton Susan Golightly Jeff Goltz Executive Director Deputy Director and Chief Director of Marketing Director of Information Financial Officer Technology
Andrew Jones Andrew J. Klinger Tim Kuehr Irene Lange Information Security Officer General Counsel Controller Director of Sales
Tracy McNutt Jim Nash Carrie Stroud Director of Administration Director of Security Internal Auditor
Hoosier Lottery Office Locations
New address as of 2/25/2011 Headquarters Northern Region Central Region Southern Region 1302 N. Meridian 1539 N. Ironwood Dr. 5252 Decatur Blvd. 5625 E. Virginia St. Indianapolis, IN 46202 South Bend, IN 46635 Indianapolis, IN 46241 Evansville, IN 47715
For more information, please visit hoosierlottery.com or contact customer service at (317) 264-4800. $507 MILLION TO PLAYERS AND $190 MILLION INDIANA BUSINESSES TO THE STATE OF INDIANA
Cheryl Ellison Rakesh Patel Pierceville Crown Point Winner Retailer Ted Strong Indianapolis Robert McGrath Retired Teacher Indianapolis Kenneth Corey Retired Firefighter Fishers Winner
Annual Report 2010 From the Executive Director and the State Lottery Commission Chairperson
Who What They InnovationAre ResponsibilityThey do Commitment
Although this past year was filled with economic uncertainty and a reduction in consumer spending, we stayed committed to our mission of responsibly generating funds for the State of Indiana. With our retailers as our partners, we increased the amount of money generated for Hoosiers in fiscal year 2010. We realized total sales of $740 million, an increase of $7 million over the prior year. Our players were awarded $456 million in prizes and our retail partners were paid $51 million in commissions and bonuses. More importantly, a growth in net income allowed us to transfer $190 million to the State of Indiana, $11 million more than last year.
So, how did we do it?
Analysis and research drove informed decision-making and greater efficiencies We continued our initiative to deepen our understanding of our business, Our mission our games and our players. Through research and improved use of business data, we improved the attributes of new games, gained insight on the To responsibly provide optimum number of games to launch, and improved the timing, the strategy innovative and entertaining and the promotion of games. lottery games for the benefit of the citizens of Indiana. Over the past 20 years the manner in which we do business and interact with our retailers and players has changed dramatically. With the assistance of technology, our sales force now has the ability to be considerably more mobile than they were ten years ago. This year, we revised routes, territories and responsibilities to ensure the most efficient operation possible. The decision was also made to close regional offices that were under-utilized Net income to the State due to changes in retailer support needs now covered through technological advances and increased mobility. FY’09 FY’10 $179 Million $190 Million Technology upgrades improved retailer and player experiences The hardware and software upgrades to our gaming system allowed us to leverage the best technologies available to us and to improve our player and retail partner experience within our nearly 4,000 retail locations. A new contract allowed us to bring new equipment into all of our retail locations, which included digital displays for improved and customized advertising, clerk touch screen interfacings, and scan technologies. Transaction time and clerk training needs were radically reduced, and players are now able to check their own tickets for the first time.
Major overhaul of the website allowed customized web experience Launching an updated website for the first time in many years was a major undertaking. If you have ever visited hoosierlottery.com, you can understand the magnitude of this project. The update included a new communications platform, mylottery, which offers players convenient ways, through email or texting, to get the information they want about their favorite lottery games. This customizable program also gives players opportunities to get coupons, participate in promotions and provide feedback to the Lottery.
HOOSIER LOTTERY // 2010 Annual Report Page 2 Hoosier Lottery brand refresh From the Executive Director and the State Lottery Commission Chairperson We made adjustments to our branding strategy to help our brand stay relevant to the next generation. We introduced an updated logo that connected to our strong heritage but kept our eyes firmly on the future. We also spent some time working on our “Where the Money Goes” message, as we know from our research how important this is to Hoosiers. We began airing three ads that featured real winners and real beneficiaries to tell the story of how we generate money for winners, retailers and Hoosier citizens throughout Indiana. It really is amazing!
Consistently offering innovation and variety in our products Offering licensed products along with our standard scratch-off games helps us to attract a variety of players. The highlights this year included the launch of our first Colts-themed Scratch-off, $100,000 Colts Cash. This favorite awarded the typical cash prizes of our scratch-off games, but it also offered Indianapolis Colts Season Tickets as prizes. The introduction of the $2 Indiana’s Lucky Dog garnered quite a bit of attention. This innovative game gave Hoosier dog lovers the opportunity to win big and enter photos of their dog into a contest for the chance to see their dog on the next Indiana’s Lucky Dog game.
Draw games generated $266 million in sales in the last fiscal year and continued to be our primary traffic generator with more Hoosiers playing ® Powerball than any other game, including FY10 net sales and prizes Scratch-offs. Powerball is just one of the paid by game
0000-00000000000000-00 Hoosier Lottery’s Big Jackpot Game offerings. In 2010, an industry-wide change to cross-sell (millions of dollars) 0000-00000000000000-00 Powerball and Mega Millions® brought to Indiana Sales Prizes paid 0000-00000000000000-00 more Big Jackpot Game excitement, as well as an Scratch-offs $465 $314 additional $12 million in revenue. Pull-Tabs 9 6 Powerball 115 55 We are proud of these successes which are attributed to the Hoosier Lotto 54 31 passionate team of Hoosier Lottery associates and the support of our Commissioners. It takes a dedicated team to continuously and Mega Millions 12 6 successfully deliver on our mission. This year, we saw one of those Quick Draw 17 11 amazing team members pass the baton. In December 2009, Mix & Match 6 4 Jean Northenor decided to retire as Chairperson of The State Daily 3/Daily 4/ 62 29 Lottery Commission of Indiana after having served six years and Lucky 5 William A. Zielke was appointed as her replacement. Zielke brings a Total $740 $456 wealth of retail knowledge and commitment to the State of Indiana. His leadership, like Northenor’s, is a true asset to the Hoosier Lottery team.
We thank you for the opportunity to do the work we do on behalf of the State of Indiana and its citizens. It is our pleasure to invite you to review the fiscal year 2010 accomplishments of the Hoosier Lottery.
William A. Zielke Kathryn A. Densborn Chairperson Executive Director Fort Wayne, IN Hoosier Lottery
From the Executive Director and the State Lottery Commission Chairperson P a g e 3 Where did the Hoosier Lottery money go?
$51 MILLION PAID TO OUR RETAIL PARTNERS IN COMMISSIONS AND BONUSES $456 MILLION AWARDED TO OUR PLAYERS ALL ACROSS THE STATE OF INDIANA
Julie McIntosh Jeffrey Flowers Donna Sutton Indianapolis Daleville Indianapolis 2010 Colts $100,000 Line ‘Em Up $200,000 Powerball® 2nd Chance Drawing Winner Winner Winner HOOSIER LOTTERY // 2010 Annual Report Page 4 Where did the Hoosier Lottery money go?
$30 MILLION DIRECTED TO THE PENSION AND DISABILITY FUNDS FOR HOOSIER POLICE OFFICERS AND FIREFIGHTERS AND $30 MILLION DIRECTED TO THE PENSION FUND FOR TEACHERS
$130 MILLION DIRECTED TO THE BUILD INDIANA FUND AND WAS USED TO SIGNIFICANTLY REDUCE MOTOR VEHICLE EXCISE TAX
Steve Reckley Steve Docherty Ellen Strong Click here to read more about Indianapolis Indianapolis Indianapolis where the money goes. Retired Firefighter Retired Police Officer Retired Teacher
Where did the Hoosier Lottery money go? Page 5 Financials
THE STATE LOTTERY COMMISSION OF INDIANA THE STATE LOTTERY COMMISSION OF INDIANA STATEMENTS OF NET ASSETS STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS AS OF JUNE 30, 2010 AND 2009 FOR THE YEARS ENDED JUNE 30, 2010 AND 2009
2010 2009 2010 2009 ASSETS OPERATING REVENUES: CURRENT ASSETS: Instant ticket sales — net $ 474,217,486 $ 484,630,385 Cash and cash equivalents $ 78,349,103 $ 61,393,152 On-line ticket sales 266,121,987 248,026,485 Investments — current portion 10,790,011 10,229,452 Accounts receivable — net 21,686,165 24,472,828 Total operating revenues 740,339,473 732,656,870 Prepaid expenses 3,997,913 3,531,634 Accrued interest receivable 384 111,805 OPERATING EXPENSES: Ticket inventory 450,197 402,312 Direct game expenses: Instant game prizes 320,293,579 326,291,712 Total current assets 115,273,773 100,141,183 On-line games prizes 136,002,921 126,933,453 456,296,500 453,225,165 NONCURRENT ASSETS: Indirect game expenses: Long-term investments — less current portion 111,274,579 102,347,244 Retailer commissions 51,076,592 50,499,632 Restricted assets 7,978,058 8,052,769 Ticket printing costs 7,890,401 7,424,945 Capital assets — net 1,431,761 2,209,034 Advertising and promotion 11,074,138 11,252,281 On-line professional services 8,327,371 7,195,740 Total noncurrent assets 120,684,398 112,609,047 ITVM lease and courier services 2,923,645 3,740,932 81,292,147 80,113,530 TOTAL $235,958,171 $212,750,230 Total game expenses 537,588,647 533,338,695
LIABILITIES AND NET ASSETS OTHER OPERATING EXPENSES: Salaries, wages, and benefits 14,243,704 13,879,830 CURRENT LIABILITIES: General and administrative 5,041,522 7,409,111 Accounts payable: State $ 52,628,937 $ 46,832,296 Total other operating expenses 19,285,226 21,288,941 Trade 8,016,070 5,531,900 Current portion of prize liability 64,196,564 52,175,090 Total operating expenses 556,873,873 554,627,636 Deferred revenue 441,556 920,488 Other accrued expenses 1,871,971 1,439,658 OPERATING INCOME 183,465,600 178,029,234
Total current liabilities 127,155,098 106,899,432 NON-OPERATING REVENUES: Interest income 161,451 635,959 LONG-TERM LIABILITIES — Net increase in fair value of investments 5,853,879 21,611 Prize liability less current portion 103,803,073 100,850,798 Other income - net 176,574 247,517
Total liabilities 230,958,171 207,750,230 Total non-operating revenues -net 6,191,904 905,087
NET ASSETS: NET INCOME PRIOR TO DISTRIBUTIONS 189,657,504 178,934,321 Unrestricted 3,568,239 2,790,966 Invested in capital assets 1,431,761 2,209,034 DISTRIBUTIONS: Distributions to the State (137,028,567) (132,102,025) Total net assets 5,000,000 5,000,000 Distributions to be paid to the State (52,628,937) (46,832,296)
TOTAL $235,958,171 $212,750,230 Total distributions (189,657,504) (178,934,321)
CHANGES IN NET ASSETS - -
NET ASSETS — Beginning of year 5,000,000 5,000,000
NET ASSETS — Ending of year $ 5,000,000 $ 5,000,000
HOOSIER LOTTERY // 2010 Annual Report Page 6 THE STATE LOTTERY COMMISSION OF INDIANA STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 2010 AND 2009
2010 2009
CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from ticket sales $ 742,673,222 $ 740,669,757 Payments to ticket winners (441,322,751) (443,413,975) Payments to employees (13,811,390) (14,585,205) Payments of suppliers (83,074,337) (85,048,777)
Net cash provided by operating activities 204,464,744 197,621,800
CASH FLOWS FROM NONCAPITAL AND RELATED FINANCING ACTIVITIES: Distributions to the State (183,860,863) (183,442,628) Other income 176,574 247,517 Net increase in restricted assets 74,711 21,929
Net cash used in noncapital and related financing activities (183,609,578) (183,173,182)
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Purchase of capital assets (572,662) (627,311) Proceeds from the sale of capital assets 34,590 80,962
Net cash used in capital and related financing activities (538,072) (546,349)
CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of investments (9,153,007) (25,943,583) Investment maturities 5,518,992 4,121,012 Interest income 272,872 1,239,195
Net cash used in investing activities (3,361,143) (20,583,376)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 16,955,951 (6,681,107)
CASH AND CASH EQUIVALENTS — Beginning of year 61,393,152 68,074,259
CASH AND CASH EQUIVALENTS — End of year $ 78,349,103 $ 61,393,152
RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating income $ 183,465,600 $ 178,029,234 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 1,289,327 2,148,717 Change in provision for doubtful accounts (57,300) 22,711 Change in provision for ticket returns 3,204,234 (161,447) Loss (gain) on sale of fixed assets 26,018 (74,442) Changes in certain assets and liabilities: Accounts receivable (360,271) 8,089,191 Instant ticket inventory (47,885) (172,375) Prepaid expenses (466,279) 1,684,102 Accounts payable — trade 2,484,170 (1,186,579) Deferred revenue (478,932) 136,873 Other accrued expenses 432,313 (705,375) Prize liability 14,973,749 9,811,190
Net cash provided by operating activities $ 204,464,744 $ 197,621,800
SCHEDULE OF NONCASH INVESTING, CAPITAL, AND RELATED FINANCING ACTIVITIES — Net increase in fair value of investments $ 5,853,879 $ 21,611
To read annual reports from previous years, visit hoosierlottery.com.
Financials P a g e 7 State Lottery Commissioners
William A. Zielke Todd A. Etzler Gregory M. Fitzloff Todd Stuart Chairperson Valparaiso, IN Georgetown, IN Indianapolis, IN Fort Wayne, IN
Hoosier Lottery Lottery Executive Staff
Kathryn A. Densborn W. Edward Benton Susan Golightly Jeff Goltz Executive Director Deputy Director and Chief Director of Marketing Director of Information Financial Officer Technology
Andrew Jones Andrew J. Klinger Tim Kuehr Irene Lange Information Security Officer General Counsel Controller Director of Sales
Tracy McNutt Jim Nash Carrie Stroud Director of Administration Director of Security Internal Auditor
Hoosier Lottery Office Locations
New address as of 2/25/2011 Headquarters Northern Region Central Region Southern Region 1302 N. Meridian 1539 N. Ironwood Dr. 5252 Decatur Blvd. 5625 E. Virginia St. Indianapolis, IN 46202 South Bend, IN 46635 Indianapolis, IN 46241 Evansville, IN 47715
For more information, please visit hoosierlottery.com or contact customer service at (317) 264-4800. E=@97<56/@24=@7<27/
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[WZZW]\b]bVS>]ZWQS=T¿QS`a¸ O\R4W`S¿UVbS`a¸>S\aW]\O\R2WaOPWZWbg4c\R AW\QS '&'bVS 6]]aWS`:]bbS`gVOaQ]\b`WPcbSROb]bOZ]T]dS`'%%[WZZW]\b] bVSaSbe]W[^]`bO\bTc\Ra 4W\O\QWOZa THE STATE LOTTERY COMMISSION OF INDIANA THE STATE LOTTERY COMMISSION OF INDIANA STATEMENTS OF NET ASSETS STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS AS OF JUNE 30, 2009 AND 2008 FOR THE YEARS ENDED JUNE 30, 2009 AND 2008 2009 2008 ASSETS 2009 2008 OPERATING REVENUES: CURRENT ASSETS: Instant ticket sales — net $ 484,630,385 $ 539,321,205 Cash and cash equivalents $ 61,393,152 $ 68,074,259 On-line ticket sales 248,026,485 283,523,946 Investments — current portion 10,229,452 8,585,823 Accounts receivable — net 24,472,828 32,423,283 Total operating revenues 732,656,870 822,845,151 Prepaid expenses 3,531,634 5,215,736 Accrued interest receivable 111,805 715,041 OPERATING EXPENSES: Ticket inventory 402,312 229,937 Direct game expenses: Instant game prizes 326,291,712 360,763,282 Total current assets 100,141,183 115,244,079 On-line games prizes 126,933,453 142,531,880 453,225,165 503,295,162 NONCURRENT ASSETS: Indirect game expenses: Long-term investments — less current portion 102,347,244 82,146,691 Retailer commissions 50,499,632 59,499,591 Restricted assets 8,052,769 8,074,698 Ticket printing costs 7,424,945 8,620,546 Capital assets — net 2,209,034 3,736,960 Advertising and promotion 11,252,281 9,837,030 On-line professional services 7,195,740 8,358,404 Total noncurrent assets 112,609,047 93,958,349 ITVM lease and courier services 3,740,932 3,662,997 80,113,530 89,978,568 TOTAL $ 212,750,230 $ 209,202,428 Total game expenses 533,338,695 593,273,730 LIABILITIES AND NET ASSETS OTHER OPERATING EXPENSES: Salaries, wages, and benefits 13,879,830 14,589,704 CURRENT LIABILITIES: General and administrative 7,409,111 5,000,032 Accounts payable: State $ 46,832,296 $ 51,340,603 Total other operating expenses 21,288,941 19,589,736 Trade 5,531,900 6,718,479 Current portion of prize liability 52,175,090 62,584,910 Total operating expenses 554,627,636 612,863,466 Deferred revenue 920,488 783,615 Other accrued expenses 1,439,658 2,145,033 OPERATING INCOME 178,029,234 209,981,685 Total current liabilities 106,899,432 123,572,640 NON-OPERATING REVENUES: Interest income 635,959 3,910,889 LONG-TERM LIABILITIES — Prize liability less current portion 100,850,798 80,629,788 Net increase in fair value of investments 21,611 2,944,523 Other income - net 247,517 230,062 Total liabilities 207,750,230 204,202,428 Total non-operating revenues -net 905,087 7,085,474 NET ASSETS: NET INCOME PRIOR TO DISTRIBUTIONS 178,934,321 217,067,159 Unrestricted 2,790,966 1,263,040 Invested in capital assets 2,209,034 3,736,960 DISTRIBUTIONS: Distributions to the State (132,102,025) (165,726,556) Total net assets 5,000,000 5,000,000 Distributions to be paid to the State (46,832,296) (51,340,603) TOTAL $ 212,750,230 $ 209,202,428 Total distributions (178,934,321) (217,067,159) CHANGE IN NET ASSETS - - NET ASSETS — Beginning of year 5,000,000 5,000,000 NET ASSETS — Ending of year $ 5,000,000 $ 5,000,000 4W\O\QWOZa THE STATE LOTTERY COMMISSION OF INDIANA STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 2009 AND 2008 2009 2008 CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from ticket sales $ 740,669,757 $ 822,069,641 Payments to ticket winners (443,413,975) (507,992,032) Payments to employees (14,585,205) (14,244,233) Payments of suppliers (85,048,777) (95,177,329) Net cash provided by operating activities 197,621,800 204,656,047 CASH FLOWS FROM NONCAPITAL AND RELATED FINANCING ACTIVITIES: Distributions to the State (183,442,628) (224,030,122) Other income 247,517 230,062 Net increase (decrease) in restricted assets 21,929 (61,436) Net cash used in noncapital and related financing activities (183,173,182) (223,861,496) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Purchase of capital assets (627,311) (3,713,319) Proceeds from the sale of capital assets 80,962 39,356 Net cash used in capital and related financing activities (546,349) (3,673,963) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of investments (25,943,583) (9,551,318) Investment maturities 4,121,012 3,939,939 Interest income 1,239,195 3,730,451 Net cash used in investing activities (20,583,376) (1,880,928) NET DECREASE IN CASH AND CASH EQUIVALENTS (6,681,107) (24,760,340) CASH AND CASH EQUIVALENTS — Beginning of year 68,074,259 92,834,599 CASH AND CASH EQUIVALENTS — End of year $ 61,393,152 $ 68,074,259 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating income $ 178,029,234 $ 209,981,685 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 2,148,717 2,065,701 Change in provision for doubtful accounts 22,711 27,577 Change in provision for ticket returns (161,447) 994,710 Loss (gain) on sale of fixed assets (74,442) 30,565 Changes in certain assets and liabilities: Accounts receivable 8,089,191 (2,173,671) Instant ticket inventory (172,375) (134,224) Prepaid expenses 1,684,102 170,663 Accounts payable — trade (1,186,579) (2,300,869) Deferred revenue 136,873 345,309 Other accrued expenses (705,375) 345,471 Prize liability 9,811,190 (4,696,870) Net cash provided by operating activities $ 197,621,800 $ 204,656,047 SCHEDULE OF NONCASH INVESTING, CAPITAL, AND RELATED FINANCING ACTIVITIES — Net increase in fair value of investments $ 21,611 $ 2,944,523 AB/B3:=BB3@G3F31CB7D3AB/44 6==A73@:=BB3@G=44713:=1/B7= 9/B6@G</ 23 83445=:BH <=@B6E3AB3@<@357=< 27@31B=@=47<4=@;/B7=<B316<=:=5G !""0@=/2E/G 5/@G7<"$" % /<2@3E8=<3A #!'< 7@= /<2@3E8 9:7<53@ <=@B63/AB3@<@357=< !% D/<5C/@22@ AC7B37 53<3@/:1=C B7;9C36@ A=CB63@<@357=< 1= 1/@@73AB@=C2 7 ;/@9B6/193@ 27@31B=@=4A/:3A 4]`[]`SW\T]`[ObW]\Q]\bOQb1cab][S`AS`dWQSOb! % $""& ]` & '##$&&$