Alaska Public Telecommunications, Inc. dba Alaska Public Media Financial Statements and Supplementary Information Years Ended June 30, 2017 and 2016 (With Independent Auditor’s Report Thereon) This report was issued by BDO USA, LLP, a Delaware limited liability partnership and the U.S. member of BDO International Limited, a UK company limited by guarantee. Alaska Public Telecommunications, Inc. dba Alaska Public Media Financial Statements and Supplementary Information Years Ended June 30, 2017 and 2016 (With Independent Auditor’s Report Thereon) Alaska Public Telecommunications, Inc. dba Alaska Public Media Contents Page Independent Auditor’s Report 1-2 Financial Statements Statements of Financial Position 4 Statements of Activities 5 Statement of Functional Expenses – FY17 6 Statement of Functional Expenses – FY16 7 Statements of Cash Flows 8 Notes to Financial Statements 9-18 Supplementary Information Independent Auditor’s Report on Supplementary Information 21 Schedule of Public Support and Grant Revenues 22 Schedule of Functional Expenses 23 Tel: 907-278-8878 3601 C Street, Suite 600 Fax: 907-278-5779 Anchorage, AK 99503 www.bdo.com Independent Auditor’s Report Board of Directors Alaska Public Telecommunications, Inc. dba Alaska Public Media Anchorage, Alaska Report on the Financial Statements We have audited the accompanying financial statements of Alaska Public Telecommunications, Inc. dba Alaska Public Media (the Corporation) which comprise the statements of financial position as of June 30, 2017 and 2016, and the related statements of activities, functional expenses, and cash flows for the years then ended, and the related notes to the financial statements. Management’s Responsibility for the Financial Statements 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. Auditor’s 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 audits to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the 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 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 financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. 1 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Alaska Public Telecommunications, Inc. dba Alaska Public Media as of June 30, 2017 and 2016, 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. October 27, 2017 2 Financial Statements 3 Alaska Public Telecommunications, Inc. dba Alaska Public Media Statements of Financial Position June 30, 2017 2016 Assets Current Assets Cash and cash equivalents: Unrestricted $ 1,530,601 $ 1,817,805 Temporarily restricted 213,151 224,885 Total cash and cash equivalents 1,743,752 2,042,690 Accounts and pledges receivable, net 209,599 202,839 Prepaid expenses 221,062 177,894 Total Current Assets 2,174,413 2,423,423 Investments 1,249,585 1,159,424 Beneficial interest in APTI Designated Endowment Fund 103,571 75,685 Investment in transmission facilities 286,903 268,590 Receivables from member networks - long term 26,433 39,360 Property and equipment, net 1,966,013 2,009,491 Total Assets $ 5,806,918 $ 5,975,973 Liabilities and Net Assets Current Liabilities Accounts payable $ 242,681 $ 152,403 Accrued payroll and related taxes 237,782 253,919 Deferred revenue 213,151 224,885 Total Liabilities 693,614 631,207 Commitments and Contingencies (note 14) Net Assets Unrestricted: Designated for investment in property and equipment 1,966,013 2,009,491 Designated for APTI Designated Endowment Fund 103,571 75,685 Undesignated 3,043,720 3,259,590 Total Net Assets 5,113,304 5,344,766 Total Liabilities and Net Assets $ 5,806,918 $ 5,975,973 See accompanying notes to financial statements. 4 Alaska Public Telecommunications, Inc. dba Alaska Public Media Statements of Activities Unrestricted Years Ended June 30, 2017 2016 Public Support and Revenues Operations: Sustaining memberships $ 2,311,944 $ 2,111,450 Program sponsorships 974,779 1,076,608 CPB grants 1,077,558 1,030,944 State operating grants 400,723 431,419 APRN station dues 117,625 374,727 In-kind contributions 176,780 181,604 Auction and special events 20,314 86,182 Tower rental revenue 58,436 91,593 Other grants 69,071 79,500 Gains on investment 107,149 28,710 Other income 209,726 178,543 Total operations 5,524,105 5,671,280 Capital grants 91,808 141,206 Total Public Support and Revenues 5,615,913 5,812,486 Expenses Program services: Programming and production 2,057,681 2,220,456 Broadcasting and engineering 1,387,467 1,419,836 Support services: Development and fundraising 967,660 1,063,690 Administration 965,693 907,291 Total Expenses Before Depreciation 5,378,501 5,611,273 Change in Net Assets before Depreciation and Loss on Investment in Transmission Facilities 237,412 201,213 Other Changes in Net Assets Depreciation expense (430,077) (443,855) Loss on investment in transmission facilities (38,797) (56,261) Change in Net Assets (231,462) (298,903) Net Assets, beginning of year 5,344,766 5,643,669 Net Assets, end of year $ 5,113,304 $ 5,344,766 See accompanying notes to financial statements. 5 Alaska Public Telecommunications, Inc. dba Alaska Public Media Statement of Functional Expenses - FY17 Program Services Support Services Programming Broadcasting Development and and and Year Ended June 30, 2017 Production Engineering Fundraising Administration Totals Salaries, wages and employee benefits $ 1,142,567 $ 555,200 $ 631,043 $ 553,277 $ 2,882,087 Program acquisitions 714,196 - 1,758 - 715,954 Utilities 8,599 424,681 850 65,714 499,844 Purchased services 117,710 476 26,891 111,358 256,435 Maintenance 106 206,998 12,822 21,823 241,749 Donated services and in-kind expenses - 176,780 25,348 - 202,128 Promotion and advertising 1,016 - 106,867 108 107,991 Travel and training 32,962 12,336 12,419 32,788 90,505 Dues and subscriptions 28,841 4,878 30,402 18,411 82,532 Property rent/lease 1,265 - - 67,244 68,509 Printing 677 - 26,979 870 28,526 Shipping and postage 127 2,276 9,981 8,215 20,599 Supplies and minor equipment 6,503 751 1,936 10,573 19,763 Public and employee relations 2,485 - 9,103 6,350 17,938 Equipment and furniture 627 3,091 - 1,922 5,640 Bad debt - - 945 - 945 Taxes, insurance and other - - 70,316 67,040 137,356 Total expenses before depreciation 2,057,681 1,387,467 967,660 965,693 5,378,501 Depreciation - 264,002 - 166,075 430,077 Total Expenses $ 2,057,681 $ 1,651,469 $ 967,660 $ 1,131,768 $ 5,808,578 See accompanying notes to financial statements. 6 Alaska Public Telecommunications, Inc. dba Alaska Public Media Statement of Functional Expenses - FY16 Program Services Support Services Programming Broadcasting Development and and and Year Ended June 30, 2016 Production Engineering Fundraising Administration Totals Salaries, wages and employee benefits $ 1,221,956 $ 590,266 $ 687,913 $ 460,233 $ 2,960,368 Program acquisitions 825,711 - - - 825,711 Utilities 8,636 405,419 950 62,842 477,847 Maintenance 153 205,298 24,290 18,424 248,165 Purchased services 75,391 2,568 48,761 104,890 231,610 Promotion and advertising 374 273 131,205 74,403 206,255 Donated services and in-kind expenses - 181,604 10,729 - 192,333 Travel and training 28,006 19,796 10,805 18,595 77,202 Dues and subscriptions 31,348 3,955 29,318 6,763 71,384 Property rent/lease 245 - 1,847 67,244 69,336 Printing 87 - 30,977 939 32,003 Shipping and postage 217 2,098 9,266 7,833 19,414 Public and employee relations 4,381 - 6,466 8,595 19,442 Bad debt 18,900 - (221) - 18,679 Supplies and minor equipment 2,936 777 1,989 9,234 14,936 Equipment and furniture 2,115 7,782 1,715 1,133 12,745 Taxes, insurance and other - - 67,680 66,163 133,843 Total expenses before depreciation 2,220,456 1,419,836 1,063,690 907,291 5,611,273 Depreciation - 276,136 - 167,719 443,855 Total Expenses $ 2,220,456 $ 1,695,972 $ 1,063,690 $ 1,075,010 $ 6,055,128 See accompanying notes to financial statements.