USC-Radio-Financial-Statements-FY
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USC Radio Combined Financial Statements For KUSC-FM, KDSC-FM, KDB-FM, KPSC-FM, KESC-FM, KDFC-FM, KOSC-FM, KDFG-FM, and KXSC-FM June 30, 2018 and 2017 USC Radio Index to Combined Financial Statements June 30, 2018 and 2017 Page (s) Independent Auditor’s Report ..................................................................................................................... 1 Combined Financial Statements Combined Statements of Financial Position ............................................................................................... 2 Combined Statements of Activities and Changes in Net Assets ................................................................ 3 Combined Statements of Cash Flows ......................................................................................................... 4 Notes to Combined Financial Statements ............................................................................................. 5-15 Report of Independent Auditors To the Board of Trustees of the University of Southern California We have audited the accompanying combined financial statements of the KUSC-FM, KDSC-FM, KDB-FM, KPSC-FM, KESC-FM, KDFC-FM, KOSC-FM and KXSC-FM radio stations operated by the University of Southern California (“USC Radio”), which comprise the combined statements of financial position as of June 30, 2018 and 2017, and the related combined statements of activities and changes in net assets for the year ended June 30, 2018 and of cash flows for the years ended June 30, 2018 and 2017. Management's Responsibility for the Combined Financial Statements Management is responsible for the preparation and fair presentation of the combined 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 combined financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on the combined financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to the financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the combined financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the combined financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the combined financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the USC Radio preparation and fair presentation of the combined 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 USC Radio’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 combined 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 combined financial statements referred to above present fairly, in all material respects, the financial position of the KUSC-FM, KDSC-FM, KDB-FM, KPSC-FM, KESC-FM, KDFC-FM, KOSC-FM and KXSC-FM radio stations operated by the University of Southern California as of June 30, 2018 and 2017, and the changes in their net assets for the year ended June 30, 2018 and of cash flows for the years ended June 30, 2018 and 2017 in accordance with accounting principles generally accepted in the United States of America. Other Matter We previously audited the combined statement of financial position as of June 30, 2017, and the related combined statement of activities and changes in net assets, and of cash flows for the year then ended, and in our report dated December 8, 2017, we expressed an unqualified opinion on those combined financial statements. In our opinion, the information set forth in the accompanying summarized financial information as of June 30, 2017 and for the year then ended is consistent, in all material respects, with the audited combined financial statements from which it has been derived Los Angeles, CA December 14, 2018 PricewaterhouseCoopers LLP, 601 South Figueroa Street, Los Angeles, CA 90017 T: (213) 356 6000, F: (813) 637 4444, www.pwc.com/us USC Radio Combined Statements of Financial Position June 30, 2018 and 2017 2018 2017 Assets Cash $ - $ 207,954 Accounts receivable - 131,888 Pledges receivable 654,463 757,295 Investments 7,550,718 5,968,185 Due from the University of Southern California 11,061,752 8,868,586 Prepaid expenses - 5,110 Intangible assets 17,107,718 17,107,718 Property and equipment, net 493,706 547,097 Total assets $ 36,868,357 $ 33,593,833 Liabilities and Net Assets Liabilities Accounts payable and accrued expenses $ 360,347 $ 400,391 Deferred revenue 997,926 723,726 Note payable to University of Southern California 3,648,399 4,385,282 Actuarial liability for annuities payable 676,521 721,821 Total liabilities 5,683,193 6,231,220 Net assets Without donor restrictions 25,778,858 23,257,197 With donor restrictions 5,406,306 4,105,416 Total net assets 31,185,164 27,362,613 Total liabilities and net assets $ 36,868,357 $ 33,593,833 The accompanying notes are an integral part of these financial statements. 2 USC Radio Combined Statement of Activities and Changes in Net Assets for the year ended June 30, 2018, with summarized comparative information for the year ended June 30, 2017 2018 2017 Without Donor With Donor Total Total Restrictions Restrictions Revenue and Support Subscription, associate and individual contributions $ 11,474,656 $ 1,404,357 $ 12,879,013 $ 11,810,237 Corporation and foundation contributions 2,139,552 - 2,139,552 3,164,217 Corporation for Public Broadcasting grants 453,352 - 453,352 703,346 Contribution from the University of Southern California 101,983 - 101,983 85,713 Net appreciation in fair value of investments 224,108 7,531 231,639 339,002 Present value adjustment to annuities payable - (446) (446) 4,007 Other 274,791 - 274,791 179,876 Loss on impairment - - (440,000) Net assets released from redesignation 110,552 (110,552) Total revenue and support 14,778,994 1,300,890 16,079,884 15,846,398 Expenses Programming and production 3,110,032 - 3,110,032 3,493,716 Broadcast operations 2,148,320 - 2,148,320 3,358,848 Fundraising 2,490,106 - 2,490,106 3,127,598 Underwriting and grant solicitation 2,041,726 - 2,041,726 1,073,507 General and administrative 2,170,397 - 2,170,397 1,070,588 Web development 296,752 - 296,752 159,774 Total expenses 12,257,333 - 12,257,333 12,284,031 Change in net assets 2,521,661 1,300,890 3,822,551 3,562,367 Net assets at beginning of year 23,257,197 4,105,416 27,362,613 23,800,246 Net assets at end of year $ 25,778,858 $ 5,406,306 $ 31,185,164 $ 27,362,613 The accompanying notes are an integral part of these financial statements. 3 USC Radio Combined Statements of Cash Flows June 30, 2018 and 2017 2018 2017 Cash flows from operating activities Change in net assets $ 3,822,551 $ 3,562,367 Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation and amortization 84,282 116,781 Net appreciation in fair value of investments (231,640) (339,002) Actuarial adjustment to annuities payable (6,468) (4,009) Loss on impairment - 440,000 Gain on the sale of investments - (64,298) Contribution of corporate sponsor - (525,000) Contributions with donor restrictions for long-term investments (1,396,639) (615,172) Changes in operating assets and liabilities: Decrease (increase) in accounts receivable 131,888 (49,700) Decrease in pledges receivable 102,832 94,241 Due from the University of Southern California (2,193,166) (4,692,207) Decrease in prepaid expenses 5,110 48,560 Decrease in accounts payable and accrued expenses (40,044) (176,600) Increase in deposits and deferred revenue 274,200 48,219 Net cash provided (used) by operating activities 552,906 (2,155,820) Cash flows from investing activities Proceeds from sale of investments 94,292 89,438 Purchase of intangibles - (475,000) Purchase of investments (1,445,185) (846,164) Purchases of property and equipment (30,891) (77,129) Net cash used in investing activities (1,381,784) (1,308,855) Cash flows from financing activities Increase in annuities payable due to new gifts 6,914 - Endowment contributions with donor restrictions 1,396,639 615,172 Decrease in note payable with University of Southern California (736,883) (695,173) Investment gain on annuities payable 48,547 48,870 Payments on annuities payable (94,293) (89,438) Net cash provided (used) in financing activities 620,924 (120,569) Net change in cash (207,954) (3,585,244) Cash at beginning of year 207,954 3,793,198 Cash at end of year $ - $ 207,954 The accompanying notes are an integral part of these financial statements. 4 USC Radio Notes to the Combined Financial Statements June 30, 2018 and 2017 1. General KUSC-FM, located in Los Angeles, and affiliated stations KDSC-FM, located in Thousand Oaks, KDB-FM, located in Santa Barbara, KPSC-FM, located in Palm Springs, KXSC-FM, located in Sunnyvale, KOSC-FM, located in Angwin, KDFC-FM, located in San Francisco, KESC-FM, located in Morro Bay, and KDFG-FM located in Seaside, (collectively referred to as “USC Radio”) are noncommercial, not-for-profit, educational radio stations which are owned and operated by the University of Southern California (the “University”).