1. The Albany Youth Center (AYC) has an after-school contract with the city. Under the contract, MYC earns $3 per day for each child who uses the program. AYC served the number of children shown below. The city pays one-third of the amount AYC earns one quarter after the services are delivered, one-third two quarters after and one- third three quarters after.

How much can MYC expect to earn from the city during the fourth quarter?

How much can MYC expect to collect from the city during the fourth quarter?

	Q1	Q2	Q3	Q4
Average # of Children Days Per Quarter	2000	2500	3000	4000

2. Mead Meals on Wheels (MMW) has a contract with the city to feed homebound elderly people. Under the contract, MMW earns $140 per month for each person enrolled in the program. MMW expects to deliver meals to the number of seniors shown below. The city pays one-half of the amount MMW bills one month after the services are delivered, and one-half two months after billing. It costs MMW $125 for food and fuel for each person it feeds. Suppliers demand payment one month after food and fuel is used. This is MMW?s first year of operation. It started the year with $17,000 in cash.

What is MMW?s expected surplus or deficit for the first quarter based solely on contract revenue, food and fuel expenses?

What does MMW?s expect its cash balance to be at the end of the first quarter based solely on contract revenue, food and fuel expenses?

3. The State University Research Foundation (SURF) expects to have the revenue and expenses shown in the operating budget below. The state research contract pays SURF two quarters after it is billed and the Foundation pays SURF one quarter after it is billed. Salaries are paid in the quarter the expense is incurred and supplies are paid for one quarter after they are used. Assuming SURF starts the 3^rd quarter with $500, prepare a properly-formatted cash budget for the 3^rd Quarter of the year.

4. The Teaching & Learning Research Center at UAlbany needs to prepare a budget for a research proposal to do an in-depth study of Rensselaer County?s after-school programs. The County is willing to pay $17,500 for each site studied, up to 15 sites. A report must be submitted within a year of the start of the project.

Regardless of the number of sites, the Center will need a primary researcher at $60,000 per year and 2 associate researchers at $35,000 each per year to do the study. Supervising the site studies is the responsibility of the associate researchers. Each associate researcher will be able to supervise up to eight sites. Research assistants are needed to transcribe field notes and provide support for the associate researchers. These part-time research assistants are each paid $6,000 and are only able to support 3 site studies each. The center must budget 30% of the salary of the primary and associate researchers for fringe benefits.

Based on past experience, the Center estimates that it will need $2,500 for supplies. Researchers will have to travel to each research site. Each trip will cost $20 and the center expects that 40 trips will be made to each site during the study.

Prepare a budget of revenues and expenses for a study that includes 9 sites, 12 sites, and 15 sites.

Part 2. Financial Statement Analysis

Questions 1 to 12 refer to the 2010 annual report of WAMC ? a region public radio station.

1 point. Did the auditors issue a qualified, unqualified or adverse opinion of WAMC?s financial position?

• 2 point. Does WAMC comply with Generally Accepted Accounting Principles in its treatment of bad debts?
• 4 points. Was WAMC a net buyer or seller of investments (other than property and equipment) in fiscal years 2009 and 2010?

6 points. What were WAMC Current ratios for fiscal years 2009 and 2010?

Current ratio = current assets / current liabilities

8 points. What were WAMC?s total debt-to-net-assets ratios for fiscal years 2009 and 2010? Be sure to exclude all non-debt liabilities from your calculations. Check the balance sheet

Debt to Net Assets = total debt / total net assets

5 points. What was the largest single source of revenue and support for WAMC during fiscal years 2009 and 2010? What percent of WAMC?s total revenue and support did that source represent in each fiscal year? What was the percentage increase or decrease in that source between the two fiscal years? REMEMBER THE FORMULA TO GET % CHANGE IS (NEW-OLD)/OLD

6 points. How much did WAMC?s total change in net assets increase or decrease between fiscal years 2009 and 2010? What were their operating margins in each of those fiscal years?

Operating margin = total increase in unrestricted net assets

--------------------------------------------------

Total unrestricted revenue and support

5 points. How much did ?other support and revenue? increase between fiscal years 2009 and 2010? REMEMBER THE FORMULA TO GET % CHANGE IS (NEW-OLD)/OLD

3 point. What was WAMC?s program expense ratio for fiscal year 2010? Support you answer with all appropriate numbers.

Program expense ratio = program expenses / total expenses

3points. How much did WAMC?s ?First Amendment Fund? balance increase or decrease between June 30 2009 and June 30, 2010? REMEMBER THE FORMULA TO GET % CHANGE IS (NEW-OLD)/OLD

5 points. What were WAMC?s times-interest-earned ratios for fiscal years 2009 and 2010?

Times Interest Earned = (change in net assets + interest expense)

------------------------------------------------

interest expense

2 points. What method of depreciation does WAMC use? What were its depreciation expenses for fiscal years 2009 and 2010?

Assignment II Template: FINANCIAL MANAGEMENT FOR NON PROFITS PROBLEM 1 ALBANY QUARTER 4 EARNINGS REVENUE CHILDREN (DAYS) $3 $0 CASH RECEIPTS QUARTER 3 CASH RECEIPTS QUARTER 2 CASH RECEIPTS QUARTER 1 CASH COLLECTED FROM CITY PROBLEM 2 SENIOR FEEDS CONTRACT REVENUE FOOD AND FUEL EXP SURPLUS (DEFICIT) CASH BALANCE BEGINNING CASH REVENUE FROM M 1 REVENUE FROM M 2 REVENUE FROM M 3 $ - MEAD MEALS MONTH 1 MONTH 2 MONTH 3 TOTAL 300 350 400 1050 MONTH 1 MONTH 2 $ 17,000 MONTH 3 F & FUEL PAID M1 F & FUEL PAID M2 F & FUEL PAID M3 EXPECTED CASH BALANCE PROBLEM 3 TOTAL $ 17,000 $ 17,000 SURF UNIVERSITY RESEARCH Q1 Q2 Q3 9 SITES UALBANY 12 SITES Q4 15 SITES BEGINNING CASH CONTRACT CASH Q1 CONTRACT CASH Q2 CONTRACT CASH Q3 CONTRACT CASH Q4 GRANT CASH Q1 GRANT CASH Q2 GRANT CASH Q3 GRANT CASH Q4 TOTAL CASH IN STAFF CASH OUT Q1 STAFF CASH OUT Q2 STAFF CASH OUT Q3 STAFF CASH OUT Q4 SUP CASH OUT Q1 SUP CASH OUT Q2 SUP CASH OUT Q3 SUP CASH OUT Q4 TOTAL CASH OUT CASH SURPLUS (DEFICIT) PROBLEM 4. SITES REVENUE RESEARCH ASSOC RESEARCH ASSISTANT RESEARCH SUPPLIES TRAVEL COST CASH SURPLUS(DEFICIT) PART 2 FINANCIAL STATEMENT ANALYSIS 1 2 GAAP dictates using an allowance method so you should be looking for an Allowance account in the balance sheet and /or the notes answer here: TOTAL 3 2009 2010 buyer or seller 2009 2010 4 current assets current liab current ratio #DIV/0! #DIV/0! 5 total debt total net assets debt to asset ratio #DIV/0! #DIV/0! 6 2009 2010 % change #DIV/0! 2009 2010 % change 2009 2010 % change 2009 2010 #DIV/0! #DIV/0! largest rev source % of revenue in each year 7 increase unres net assets total unres revenue&supp 8 other support and revenue 9 PROGRAM EXPENSE TOTAL EXPENSES prg exp ratio 10 11 12 FINANCIAL MANAGEMENT FOR NONPROFITS 1.The Albany Youth Center (AYC) has an after-school contract with the city. Under the contract, MYC earns $3 per day for each child who uses the program. AYC served the number of children shown below. The city pays one-third of the amount AYC earns one quarter after the services are delivered, one-third two quarters after and one- third three quarters after. a. How much can MYC expect to earn from the city during the fourth quarter? b. How much can MYC expect to collect from the city during the fourth quarter? Q1 Average # of Children Days Per Quarter Q2 Q3 Q4 2000 2500 3000 4000 2. Mead Meals on Wheels (MMW) has a contract with the city to feed homebound elderly people. Under the contract, MMW earns $140 per month for each person enrolled in the program. MMW expects to deliver meals to the number of seniors shown below. The city pays one-half of the amount MMW bills one month after the services are delivered, and one-half two months after billing. It costs MMW $125 for food and fuel for each person it feeds. Suppliers demand payment one month after food and fuel is used. This is MMW's first year of operation. It started the year with $17,000 in cash. a. What is MMW's expected surplus or deficit for the first quarter based solely on contract revenue, food and fuel expenses? b. What does MMW's expect its cash balance to be at the end of the first quarter based solely on contract revenue, food and fuel expenses? Month 1 Expected Num of Seniors Fed ber 300 Month 2 Month 3 350 3. The State University Research Foundation (SURF) expects to have the revenue and expenses shown in the operating budget below. The state research contract pays SURF two quarters after it is billed and the Foundation pays SURF one quarter after 400 it is billed. Salaries are paid in the quarter the expense is incurred and supplies are paid for one quarter after they are used. Assuming SURF starts the 3rd quarter with $500, prepare a properly-formatted cash budget for the 3rd Quarter of the year. Operating Budget Rev enue State Contract Foundation Grant Total rev enue Expenses Staff Supplies Total Expenses Profit/(Loss) Q1 Q2 $5,000 Q3 Q4 Full Year $10,000 $5,000 $5,000 $7,500 $15,000 $22,500 $10,000 $5,000 $27,500 $15,000 $42,500 $3,000 $2,000 $5,000 $12,500 $9,000 $21,500 $5,000 $4,000 $9,000 $3,000 $1,000 $4,000 $23,500 $16,000 $39,500 $0 $1,000 $1,000 $1,000 $3,000 4. The Teaching & Learning Research Center at UAlbany needs to prepare a budget for a research proposal to do an in-depth study of Rensselaer County's after-school programs. The County is willing to pay $17,500 for each site studied, up to 15 sites. A report must be submitted within a year of the start of the project. Regardless of the number of sites, the Center will need a primary researcher at $60,000 per year and 2 associate researchers at $35,000 each per year to do the study. Supervising the site studies is the responsibility of the associate researchers. Each associate researcher will be able to supervise up to eight sites. Research assistants are needed to transcribe field notes and provide support for the associate researchers. These part-time research assistants are each paid $6,000 and are only able to support 3 site studies each. The center must budget 30% of the salary of the primary and associate researchers for fringe benefits. Based on past experience, the Center estimates that it will need $2,500 for supplies. Researchers will have to travel to each research site. Each trip will cost $20 and the center expects that 40 trips will be made to each site during the study. Prepare a budget of revenues and expenses for a study that includes 9 sites, 12 sites, and 15 sites. Part 2. Financial Statement Analysis Questions 1 to 12 refer to the 2010 annual report of WAMC - a region public radio station. 1. 1 point. Did the auditors issue a qualified, unqualified or adverse opinion of WAMC's financial position? 2. 2 point. Does WAMC comply with Generally Accepted Accounting Principles in its treatment of bad debts? 3. 4 points. Was WAMC a net buyer or seller of investments (other than property and equipment) in fiscal years 2009 and 2010? 4. 6 points. What were WAMC Current ratios for fiscal years 2009 and 2010? Current ratio = current assets / current liabilities 5. 8 points. What were WAMC's total debt-to-net-assets ratios for fiscal years 2009 and 2010? Be sure to exclude all non-debt liabilities from your calculations. Check the balance sheet Debt to Net Assets = total debt / total net assets 6. 5 points. What was the largest single source of revenue and support for WAMC during fiscal years 2009 and 2010? What percent of WAMC's total revenue and support did that source represent in each fiscal year? What was the percentage increase or decrease in that source between the two fiscal years? REMEMBER THE FORMULA TO GET % CHANGE IS (NEW-OLD)/OLD 7. 6 points. How much did WAMC's total change in net assets increase or decrease between fiscal years 2009 and 2010? What were their operating margins in each of those fiscal years? Operating margin = total increase in unrestricted net assets -------------------------------------------------Total unrestricted revenue and support 8. 5 points. How much did \"other support and revenue\" increase between fiscal years 2009 and 2010? REMEMBER THE FORMULA TO GET % CHANGE IS (NEW-OLD)/OLD 9. 3 point. What was WAMC's program expense ratio for fiscal year 2010? Support you answer with all appropriate numbers. Program expense ratio = program expenses / total expenses 10. 3points. How much did WAMC's \"First Amendment Fund\" balance increase or decrease between June 30 2009 and June 30, 2010? REMEMBER THE FORMULA TO GET % CHANGE IS (NEW-OLD)/OLD 11. 5 points. What were WAMC's times-interest-earned ratios for fiscal years 2009 and 2010? Times Interest Earned = (change in net assets + interest expense) -----------------------------------------------interest expense 12. 2 points. What method of depreciation does WAMC use? What were its depreciation expenses for fiscal years 2009 and 2010? AUDITED FINANCIAL STATEMENTS AND OTHER INFORMATION Years ended June 30, 2010 and 2009 WAMC TABLE OF CONTENTS Page Independent Auditor's Report Financial Statements Statements of Financial Position Statements of Activities Statements of Cash Flows Notes to Financial Statements Other Information Schedule of Other Support and Revenue Schedule of Functional Expenses 1 2 3 4 5-11 12 13 INDEPENDENT AUDITOR'S REPORT To the Board of Directors WAMC We have audited the accompanying statements of financial position of WAMC (a nonprofit public telecommunications entity) as of June 30, 2010 and 2009, and the related statements of activities, and cash flows, for the years then ended. These financial statements are the responsibility of WAMC's management. 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of WAMC as of June 30, 2010 and 2009, and the changes in its net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The Schedules of Other Support and Revenue and Functional Expenses is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. Albany, New York September 7, 2010 UHY LLP is an independent member of Urbach Hacker Young International Limited WAMC STATEMENTS OF FINANCIAL POSITION June 30, 2010 and 2009 2010 2009 $ 636,006 109,414 422,463 51,083 $ 605,391 56,102 472,157 93,708 Total current assets 1,218,966 1,227,358 NET PROPERTY AND EQUIPMENT 6,053,205 6,195,818 739,244 777,202 $ 8,011,415 $ 8,200,378 $ 95,833 332,897 227,852 219,537 302,252 248,187 $ 120,833 297,941 92,680 333,532 309,791 272,019 1,426,558 1,426,796 LONG-TERM DEBT, net of current maturities 2,137,841 2,463,159 NET ASSETS Unrestricted net assets 4,447,016 4,310,423 $ 8,011,415 $ 8,200,378 ASSETS CURRENT ASSETS Cash and cash equivalents Pledges receivable Underwriting and other receivables Other current assets INVESTMENTS LIABILITIES AND NET ASSETS CURRENT LIABILITIES Line of credit borrowings Current maturities of long-term debt Accounts payable Accrued compensation Deferred revenue Other current liabilities Total current liabilities See notes to financial statements. Page 2 WAMC STATEMENTS OF ACTIVITIES Years Ended June 30, 2010 and 2009 2010 REVENUE AND OTHER SUPPORT Programming: Member fund drives Grants: Corporation for Public Broadcasting New York State Education Department Programming and other grants Total grants Other revenues: Underwriting Performing arts studio Other support and revenue Total revenue and other support 2009 $ 2,530,555 $ 2,760,046 491,888 82,387 200,662 774,937 463,452 80,380 296,514 840,346 2,475,904 210,733 379,867 2,485,043 158,662 246,280 6,371,996 6,490,377 EXPENSES Program services: Programming and production Broadcasting Program information Total program services Supporting services: Fund raising Management and general Total supporting services 3,118,416 1,063,359 19,141 4,200,916 3,085,569 1,116,316 11,191 4,213,076 1,316,018 785,566 2,101,584 1,388,068 828,692 2,216,760 Total expenses 6,302,500 6,429,836 CHANGE IN NET ASSETS BEFORE INVESTMENT TRANSACTIONS 69,496 60,541 REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENT TRANSACTIONS 67,097 (263,355) 136,593 (202,814) CHANGE IN NET ASSETS Net assets, beginning of year Net assets, end of year 4,310,423 4,513,237 $ 4,447,016 $ 4,310,423 See notes to financial statements. Page 3 WAMC STATEMENTS OF CASH FLOWS Years Ended June 30, 2010 and 2009 2010 CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation Realized and unrealized (gains) losses on investment transactions Changes in: Pledges receivable Underwriting and other receivables Other current assets Accounts payable Accrued compensation Deferred revenue Other currrent liabilities 2009 $ 136,593 $ (202,814) 363,389 397,180 (67,097) 263,355 (53,312) 49,694 42,625 135,172 (113,995) (7,539) (23,832) (5,972) (14,338) 103,102 (98,298) (5,689) 118,224 21,510 461,698 576,260 (608,888) 713,943 (220,776) (300,323) 328,704 (101,184) (115,721) (72,803) (25,000) (290,362) (4,167) (244,396) (315,362) (248,563) 30,615 254,894 605,391 350,497 Cash and cash equivalents, end of year $ 636,006 $ 605,391 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash payments for interest $ 169,958 $ 189,043 Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investments Proceeds from sale of investments Acquisition/construction of property and equipment Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Repayment of line of credit borrowings, net Principal payments on long-term debt Net cash used in financing activities Increase in cash and cash equivalents Cash and cash equivalents, beginning of year See notes to financial statements. Page 4 WAMC NOTES TO FINANCIAL STATEMENTS June 30, 2010 and 2009 NOTE 1: ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Organization - WAMC is a nonprofit public telecommunications entity, organized in 1981, with broadcasting coverage in New York State and western New England. As a publicly supported radio station, WAMC receives substantially all of its support and revenue from listeners, underwriters, fees for the production of programming, and under various federal and state grants. Basis of Accounting - WAMC's financial statements are prepared in accordance with generally accepted accounting principles and the principles of accounting and financial reporting for public telecommunications entities issued by the Corporation for Public Broadcasting (CPB). Under CPB accounting principles, the statement of activities is intended to present functional type expenditure classifications, which reflect both program and supporting services. The specific program and supporting services functional classifications, as presented in the financial statements, are defined by CPB. Financial Statement Presentation - The financial statements of WAMC follow generally accepted accounting principles which establish standards for financial reporting by not-for-profit organizations and require that resources be classified for accounting and reporting purposes into certain net asset categories according to externally (donor) imposed restrictions. Accordingly, when applicable, WAMC records contributions received as unrestricted, temporarily restricted, or permanently restricted support depending on the existence and/or nature of any donor restrictions. Cash and Cash Equivalents - WAMC considers all highly liquid debt instruments (such as money market accounts) to be cash equivalents. WAMC places its cash with high quality credit institutions. Cash balances, however, are generally in excess of FDIC insurance limits. Receivables - Receivables, which are principally comprised of on-air acknowledgements of corporate underwriting, are periodically evaluated by management for collectibility. Management has elected to record bad debt expense using the direct write-off method. At such time as underwriting and other receivables are determined to be uncollectible, such amounts are written-off to bad debts. Generally accepted accounting principles require that the allowance method be used to reflect bad debt expense. However, the effect of the use of the direct write-off method is not materially different from the results that would have been obtained had the allowance method been followed. Pledges receivable, as more fully disclosed under Note 2, principally arise from member fund drives. When applicable, multi-year pledges are stated at fair value, using the present value of estimated future cash flows discounted at an appropriate rate. Other Current Assets - Other current assets are principally comprised of amounts paid to National Public Radio and other program producers (for programming to be provided subsequent to the end of the fiscal year) and certain prepaid insurance costs. Property and Equipment - As more fully disclosed under Note 3, property and equipment, including broadcast licenses acquired through the acquisition of property and equipment, is recorded at cost or, if donated, at fair value determined at date of acquisition. The carrying amounts of assets, and the related accumulated depreciation, are removed from the accounts at the time of asset disposition. Depreciation of property and equipment is computed utilizing the straight-line method over the estimated useful lives of the assets, ranging from 5 to 40 years. Maintenance costs and repairs are charged to expense as incurred. Investments - Investments in marketable securities are reported at fair value. Fair value is the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. Realized and unrealized gains and losses are included in the change in net assets for the year. Page 5 WAMC NOTES TO FINANCIAL STATEMENTS June 30, 2010 and 2009 NOTE 1: ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued) Investments (Continued) - Interest, dividends and other investment income are included in the Statements of Activities as a component of other support and revenue. Accrued Compensation - The liability account \"accrued compensation\" includes salaries and related benefit costs earned by employees, but not yet paid, as of WAMC's year end. Barter Transactions - WAMC provides certain broadcast services (principally underwriting) in exchange for certain vendor equipment, merchandise and services. The estimated fair value of the vendor equipment, merchandise or services received and the corresponding obligation to provide broadcast services are both recorded in the financial statements. Deferred barter costs are expensed or capitalized as they are used, consumed or received. Deferred barter revenue, a component of deferred revenue in the Statements of Financial Position, is recognized as the related underwriting is aired. Revenue and Other Support - WAMC receives substantially all of its support and revenue from listeners, underwriters, through the production of programming, and under various federal and state grants. Member contributions, grants, production of programming and underwriting revenues are recorded as revenue in the period earned. Rental Property Activities - WAMC owns certain commercial rental property in Albany, New York. For financial statement reporting purposes, the Statements of Activities reflect rental property income (a component of other support and revenue) net of related rental expense. Rental property income approximated $106,100 and $106,600 for the years ended June 30, 2010 and 2009, respectively. Rental property expenses, inclusive of depreciation expense, approximated $65,800 and $63,700 for the years ended June 30, 2010 and 2009, respectively. Future minimum rental revenue to be received under short and long-term leases is expected to approximate $53,000 in 2011, $36,000 in 2012, $27,000 in 2013 and $3,600 in 2014. Income Taxes - WAMC is exempt from income taxes under Section 501-c (3) of the Internal Revenue Code. Effective July 1, 2009, WAMC adopted certain new guidance regarding accounting for uncertainty in income taxes. The income tax positions taken by WAMC for any years open under the various statutes of limitations are that WAMC continues to be exempt from income taxes and that WAMC earns revenues from certain activities which are considered unrelated business income under the Internal Revenue Code. In both 2010 and 2009, however, unrelated business income (net of applicable expenses) resulted in no tax expense. The adoption of this guidance did not impact WAMC's financial position or results of operations. WAMC believes that there are no other tax positions taken or expected to be taken that would significantly increase or decrease unrecognized tax benefits within 12 months of the reporting date. None of WAMC's federal or state income tax returns is currently under examination by the Internal Revenue Service (IRS) or state authorities. However fiscal years 2007 and later remain subject to examination by the IRS and various state authorities. Estimates and Assumptions - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Page 6 WAMC NOTES TO FINANCIAL STATEMENTS June 30, 2010 and 2009 NOTE 1: ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued) Subsequent Events - Subsequent events have been evaluated through September 7, 2010, the date the financial statements were available to be issued. Reclassifications - Certain 2009 financial statement line items have been reclassified to conform with the current year's presentation. NOTE 2: PLEDGES RECEIVABLE Pledges receivable principally include contributions and other commitments from various businesses, foundations, and individuals received in connection with WAMC's member fund drives. During the years ended June 30, 2010 and 2009, WAMC completed three member fund drives in each year - one in October, one in February, and one in June. The timing of the June fund drives is such that $109,414 and $56,102 was recognized as pledges receivable at June 30, 2010 and 2009, respectively, with such pledges being collected in July of the following fiscal year. NOTE 3: PROPERTY AND EQUIPMENT Property and equipment is comprised of the following: June 30 2010 Land Buildings and improvements Studio and other broadcast equipment Furniture and office equipment Transportation equipment Less accumulated depreciation Net property and equipment $ 615,780 4,763,173 4,477,579 694,215 80,929 2009 $ 615,780 4,727,842 4,428,984 676,220 80,929 10,631,676 4,578,471 10,529,755 4,333,937 $ 6,053,205 $ 6,195,818 Depreciation expense was $363,389 and $397,180 for the years ended June 30, 2010 and 2009, respectively. NOTE 4: INVESTMENTS WAMC follows Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures, which provides the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under FASB ASC 820 are described as follows: Page 7 WAMC NOTES TO FINANCIAL STATEMENTS June 30, 2010 and 2009 NOTE 4: INVESTMENTS (Continued) Level 1 inputs are unadjusted quoted market prices in active markets that are accessible at the measurement date for identical assets. Level 2 inputs are inputs (other than quoted prices included in Level 1) that are observable for the asset, either directly or indirectly. Level 3 inputs are unobservable and cannot be corroborated by observable market data. The asset's fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at June 30, 2010 and 2009. Common stocks, corporate bonds and U.S. government securities: Valued at the closing price reported on the active market on which the individual securities are traded. Mutual funds: Valued at the net asset value (NAV) of shares held by the plan at year end. All of WAMC's investments at both June 30, 2010 and 2009 were classified utilizing Level 1 inputs. The following table sets forth WAMC's investments: June 30, 2010 June 30, 2009 Fair Market Value Equity Securities Cost Basis Unrealized Gain (Loss) Fair Market Value $ Cost Basis $ 415,965 $ 496,412 $ (80,447) 555,643 $ (116,755) Debt Securities 206,751 209,074 (2,323) 243,744 264,195 (20,451) Mutual Funds 116,528 156,570 (40,042) 94,570 150,370 (55,800) $ 739,244 $ 862,056 $ (122,812) 970,208 $ (193,006) $ 438,888 777,202 $ Unrealized Gain (Loss) $ Realized and unrealized gains and losses on investment transactions, as presented in the Statements of Activities, are comprised of the following: Year Ended June 30 2010 2009 Realized losses $ Unrealized (gains) losses Net (gains) losses 3,097 $ 108,349 (70,194) $ 155,006 (67,097) $ 263,355 WAMC's equity and debt securities, mutual funds, and other investments are exposed to a variety of market uncertainties, including interest rate and credit risks. The level of risk is such that it is possible that changes in the values of WAMC's investments could occur in the near term and such changes could materially affect the future amounts reported in the financial statements of WAMC. Page 8 WAMC NOTES TO FINANCIAL STATEMENTS June 30, 2010 and 2009 NOTE 5: LINE OF CREDIT BORROWINGS WAMC periodically borrows working capital under a secured line of credit agreement with First Niagara Bank which provides for maximum borrowings of $200,000. The agreement, which is reviewed periodically by the bank, provides for borrowings at .25% under the prime lending rate, but In no event less than 4.0% (currently 4.0%). WAMC also periodically borrows under an acquisition line of credit agreement with First Niagara Bank which provides for maximum borrowings of $1,000,000 which may be utilized to facilitate the acquisition of broadcasting property and equipment. The agreement provides for borrowings at interest rates similar to the line of credit. Borrowings require interest only payments for the first twenty-four months and are then amortized over a five year period. Outstanding equipment obligations advanced under this credit agreement are included in Long-Term Debt, in the amount of $278,710 and $311,900 at June 30, 2010 and 2009, respectively. (See Note 6.) NOTE 6: LONG-TERM DEBT Long-term debt is comprised of the following: June 30 2010 2009 First Niagara Bank, term note dated December 2004, payable in monthly installments of $13,256, including interest at a fixed rate of 6.2%, maturing in December 2011. $ 230,815 $ 370,395 First Niagara Bank, term note dated July 2005, payable in monthly principal installments of $4,400, plus variable interest at .25% under the prime lending rate, but in no event less than 4.0% (currently 4.0%), maturing in July 2012. 110,208 163,108 First Niagara Bank, mortgage note dated December 2005, payable in monthly installments of $16,066, including interest at a fixed rate of 6.8% (subsequent to year end, in July 2010, the interest rate was reduced to 5.5% through maturity), with a balloon payment approximating $1,415,000 due in January 2016. 1,851,005 1,915,697 First Niagara Bank, various equipment acquisition notes, requiring interest only payments for the first 24 months with interest (adjusted monthly) at .25% under the monthly prime lending rate, but in no event less than 4.0% (currently 4.0%), then amortized over 60 installments, currently approximating $5,300, maturing on various dates in 2014 and 2015. 278,710 311,900 2,470,738 (332,897) 2,761,100 (297,941) Total Less current portion Long-term portion $ 2,137,841 $ 2,463,159 The First Niagara Bank term notes and other obligations are collateralized by substantially all of WAMC's buildings, equipment and other pledgible assets. Page 9 WAMC NOTES TO FINANCIAL STATEMENTS June 30, 2010 and 2009 NOTE 6: LONG-TERM DEBT (Continued) Future principal maturities of the First Niagara Bank obligations are as follows: Years Ending June 30 2011 2012 2013 2014 2015 2016 Amount $ 332,897 271,112 145,714 146,839 119,580 1,454,596 $ 2,470,738 Total interest expense approximated $167,300 and $189,800 for the years ended June 30, 2010 and 2009, respectively. NOTE 7: LEASE OBLIGATIONS WAMC leases various properties in connection with their utilization of towers and transmitters at locations in New York and Massachusetts. Leases expire at various dates between 2011 and 2018. The approximate future minimum rental obligations are as follows: Years Ending June 30 Amount 2011 2012 2013 2014 2015 Thereafter $ 140,000 96,000 76,000 43,000 42,000 44,000 $ 441,000 Total rental expense under all operating leases was approximately $187,100 and $184,900 for the years ended June 30, 2010 and 2009, respectively. NOTE 8: RETIREMENT PLAN WAMC participates in a salary reduction defined contribution retirement plan sponsored by TIAA-CREF, which covers all full-time employees. Through December 31, 2008, it was the policy of WAMC to contribute 7% of each eligible employee's salary into the plan. Beginning January 1, 2009, the plan was amended to provide that WAMC contribute 3.5% of each eligible employee's salary and match each employee's elective deferrals up to 3.5% of total salary. WAMC's policy is to fund retirement expense accrued. Total retirement expense for the years ended June 30, 2010 and 2009 was approximately $116,100 and $121,900, respectively. Participant plan contributions are made on a tax-deferred basis in accordance with Section 403(b) of the Internal Revenue Code. Page 10 WAMC NOTES TO FINANCIAL STATEMENTS June 30, 2010 and 2009 NOTE 9: NET ASSETS Unrestricted net assets are comprised of the following: June 30 2010 Board Designated First Amendment Fund Unrestricted Total unrestricted net assets 2009 $ 381,645 $ 444,755 4,065,371 3,865,668 $ 4,447,016 $ 4,310,423 In 2005, WAMC's Board of Trustees established the First Amendment Fund to promote and preserve the First Amendment and the right of free speech that it guarantees by providing a source of funding to support WAMC if special situations or needs should arise. Use of the First Amendment Fund is at the discretion of the Board of Trustees and, as such, the net assets in the Fund are classified as unrestricted - board designated. NOTE 10: DEFERRED GIVING ARRANGEMENTS WAMC enters into deferred giving agreements with donors to accept and administer various charitable gift annuities. WAMC manages and invests these assets until the agreement expires and the assets are distributed. Split-interest agreements provide for payments to the donors or their beneficiaries based upon either the income earned on related investments or specified annuity amounts. Assets held under these arrangements approximated $374,000 and $361,000 at June 30, 2010 and 2009, respectively, and are reported as investments in the accompanying Statements of Financial Position (see Note 4). Contribution revenue is recognized at the date the trust or annuity contract is established after recording liabilities for the present value of the estimated future payments expected to be made to the donors and/or other beneficiaries. The liabilities for these arrangements, which approximated $239,200 and $263,000 at June 30, 2010 and 2009, respectively, are adjusted annually for amortization of the discount and other changes in the estimate of future payments. Such liabilities are reported as a component of other current liabilities in the accompanying Statements of Financial Position. Page 11 SUPPLEMENTARY INFORMATION WAMC SCHEDULES OF OTHER SUPPORT AND REVENUE Years Ended June 30, 2010 and 2009 2010 Interest and dividend income Administrative support Income from rental property (net) First Amendment Fund gifts Corporate matching gifts Other contributions Transmitter sublease income Other revenue 2009 $ 32,253 10,950 40,554 1,375 52,850 165,433 12,000 64,452 $ 47,647 10,800 44,243 $ 379,867 $ 246,280 4,280 58,260 42,241 12,000 26,809 Page 12 WAMC SCHEDULE OF FUNCTIONAL EXPENSES (WITH COMPARATIVE TOTALS FOR JUNE 30, 2009) Year Ended June 30, 2010 Program Services Programming and Production Salaries Other payroll related expenses Donated services Professional and consulting services Office supplies Telephone $ 1,000,534 262,056 Broadcasting $ 352,204 105,037 Supporting Services Program Information $ Total Program Services Management and General June 30 2010 Totals June 30 2009 Totals 966,038 $ 179,886 $ 2,506,296 $ 2,664,532 154,946 33,456 557,544 589,456 Fund Raising 7,634 $ 1,360,372 2,049 369,142 $ - 10,800 - 10,800 - - 10,800 10,800 100,784 59,394 - 160,178 10,856 56,316 227,350 155,468 8,673 3,096 - 11,769 14,946 18,722 45,437 36,083 37,312 40,102 - 77,414 10,698 26,411 114,523 82,133 Rentals - 139,557 - 139,557 7,526 8,457 155,540 161,268 Building supplies and expense - 7,605 - 7,605 12,888 58,764 79,257 71,364 47,210 2,245 - 49,455 24,165 17,095 90,715 49,287 1,343,910 - - 1,343,910 - - 1,343,910 1,377,221 - - 2,725 2,725 - - 2,725 2,651 34,037 81,887 - 115,924 189 47,829 163,942 207,313 Travel Program acquisition and production costs Printing and publications Utilities Insurance Depreciation (net of rental properties) Postage and shipping 54,931 14,535 1,362 70,828 20,766 11,564 103,157 92,673 141,677 145,638 - 287,314 - 29,565 316,879 350,784 3,812 1,102 1,521 6,435 32,146 8,060 46,641 44,714 21,964 Premiums - - - - 15,984 - 15,984 Repairs and maintenance - 87,034 - 87,034 - - 87,034 60,671 8,381 3,115 - 11,496 2,491 4,494 18,481 17,215 56,758 9,066 3,850 69,674 20,365 12,839 102,878 81,407 - - - - - 246,391 246,391 254,106 18,341 943 - 19,284 22,015 25,717 67,016 98,726 $ 3,118,416 $ 1,063,359 $ 19,141 $ 4,200,916 $ 1,316,018 $ 785,566 $ 6,302,500 $ 6,429,836 Dues and subscriptions Computer networking Interest and other bank charges Other expenses Page 13