FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
WNYC Radio
WNYC Radio
Financial Statements
and Supplemental Schedule
Years ended June 30, 2006 and 2005
Contents
Report of Independent Auditors ………………………………………………………………………………….. 1
Financial Statements
Statements of Financial Position………………………………………………………………………………… 2
Statements of Activities ………………………………………………………………………………………….… 3
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r Ernst & Young LLP
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r Phone: (212) 773-3000
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1
A Member Practice of Ernst & Young Global
Report of Independent Auditors
Board of Trustees
WNYC Radio
We have audited the accompanying statements of financial position of WNYC Radio as of
June 30, 2006 and 2005, and the related statements of activities and cash flows for the years
then ended. These financial statements are the responsibility of WNYC Radio’s management.
Our responsibility is to express an opinion on these financial statements based on our audits.
In our opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of WNYC Radio at June 30, 2006 and 2005, 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.
2
l
WNYC Radio
Statements of Financial Position
June 30
2006 2005
Assets
Current assets:
Cash and cash equivalents $ 10,844,171 $ 5,207,362
Pledges and grants receivable 2,494,909 2,153,046
Accounts receivable, less allowance for doubtful accounts of
$354,859 and $477,397 at June 30, 2006 and 2005, respectively
2,229,770
2,082,267
Investments 1,980,310 –
Prepaid expenses and other current assets 340,077 320,134
Total current assets 17,889,237 9,762,809
Noncurrent assets:
Pledges receivable, net, long-term portion, less allowance for
uncollectible pledges of $20,000 at June 30, 2006 and 2005
4,107,503
1,918,371
Investments 4,241,267 6,217,563
Liabilities and net assets
Current liabilities:
Accounts payable and accrued expenses $ 4,240,377 $ 3,327,211
Current portion of loan payable 60,000 –
Total current liabilities 4,300,377 3,327,211
Loan payable 86,595 –
Bonds payable 23,000,000 –
Commitments
3
WNYC Radio
Statements of Activities
Year ended June 30, 2006 Year ended June 30, 2005
Undesignated Board-
Designated Investment in
FCC Licenses Total
Unrestricted Temporarily
Restricted Permanently
Restricted
Total
Unrestricted Investment in
FCC Licenses Total
Unrestricted Temporarily
Restricted Permanently
Restricted
Total
Support, revenue and reclassifications
Contributions $ 22,658,475 $ – $ – $ 22,658,475 $ 5,370,899 $ – $ 28,029,374 $20,788,699 $ – $ 20,788,699 $ 667,695 $ 16,784 $21,473,178
Government grants 2,150,877 – – 2,150,877 232,733 – 2,383,610
2,085,296 – 2,085,296 29,987 – 2,115,283
Grants for donor-restricted projects – – – – 758,250 – 758,250 – – – 1,916,200 – 1,916,200
Donated services and support 2,133,220 – – 2,133,220 – – 2,133,220
1,687,912 – 1,687,912 – – 1,687,912
Production and other income 1,999,203 – – 1,999,203 – – 1,999,203
2,533,160 – 2,533,160 – – 2,533,160
Expenses
Program services:
Radio programming 14,712,532 – – 14,712,532 – – 14,712,532
14,126,642 – 14,126,642 – – 14,126,642
Technical operations 3,546,011 – – 3,546,011 – – 3,546,011
3,244,939 – 3,244,939 – – 3,244,939
Marketing 1,205,728 – – 1,205,728 – – 1,205,728
1,187,392 – 1,187,392 – – 1,187,392
Total program services 19,464,271 – – 19,464,271 – – 19,464,271
18,558,973 – 18,558,973 – – 18,558,973
Supporting services:
Fundraising (non-campaign) 7,392,280 – – 7,392,280 – – 7,392,280
6,828,932 – 6,828,932 – – 6,828,932
Fundraising (campaign) 336,620 – – 336,620 – – 336,620 – – – – – –
Management and general 2,278,902 – – 2,278,902 – – 2,278,902
2,681,798 – 2,681,798 – – 2,681,798
Total supporting services 10,007,802 – – 10,007,802 – – 10,007,802
9,510,730 – 9,510,730 – – 9,510,730
Total expenses 29,472,073 – – 29,472,073 – – 29,472,073
28,069,703 – 28,069,703 – – 28,069,703
WNYC Radio
Statements of Cash Flows
Year ended June 30
2006 2005
Cash flows from operating activities
Change in net assets $ 7,065,203 $ 2,238,539
Adjustments to reconcile change in net assets to net cash provided by
operating activities:
Depreciation and amortization of fixed assets 735,594 572,604
Amortization of deferred financing costs 20,397 –
Bad debt expense, net of recoveries (40,452) 448,717
Provision for barter arrangements 313,809 65,243
Reversal of accounts payable (403,000) (828,826)
Change in fair value of interest rate swap agreement (338,189) –
Cash flows from investing activities
Net increase in cash equivalents limited as to use (22,273,323) –
Purchase of fixed assets (346,678) (238,974)
Net sale (purchase) of investments 110,666 (4,808,444)
Net cash used in investing activities (22,509,335) (5,047,418)
1. Nature of Business and Organization
WNYC Radio was incorporated in the State of New York in September 1979 as a not-for-
profit corporation, primarily for the purpose of providing monetary and operational support
for the City of New York (the “City”) Municipal Broadcasting System, later known as the
WNYC Communications Group, through fundraising activities and the rendering of services.
On January 7, 1997, the City transferred the licenses and all the assets associated with
WNYC-AM and WNYC-FM to WNYC Radio for $20 million payable over six years (see
Note 7). Under the terms of the agreement with the City, if WNYC Radio sells either one of
the licenses prior to January 2007, WNYC Radio is required to remit a portion of the sales
proceeds to the City. The Federal Communications Commission (“FCC”) granted the transfer
of the licenses in fiscal 1997.
2. Summary of Significant Accounting Policies
Net Assets
2. Summary of Significant Accounting Policies (continued)
Temporarily Restricted Net Assets: Temporarily restricted net assets include resources
expendable only for those purposes specified by the donor or grantor. The restrictions are
satisfied either by the passage of time or by actions of WNYC Radio.
Grants and Contributions
Grants and contributions (including unconditional promises to give) are recorded at fair value
when received. Contributions received with donor stipulations that limit the use of donated
assets are reported as either temporarily or permanently restricted support. Unconditional
promises to give, with payments due in future years, are reported as temporarily restricted
support, discounted to their present value. When a donor restriction expires, that is, when a
time restriction ends or a purpose restriction is fulfilled, temporarily restricted net assets are
reclassified to unrestricted net assets and reported in the statements of activities as net assets
released from restrictions. Pledges are recorded as receivables at their estimated net realizable
value.
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2. Summary of Significant Accounting Policies (continued)
Conditional contributions are recognized as revenue when the conditions on which they
depend have been substantially met. As of June 30, 2006, WNYC Radio has received
conditional, time restricted pledges of approximately $3,650,000 for future support for which
the conditions stipulated by the donors have not yet been met.
Donated Services and Support
respectively.
Cash Equivalents
WNYC Radio considers all highly liquid investments, consisting primarily of money market
funds, with a maturity of three months or less when purchased, and other than those held as
part of the investment portfolio or those restricted as to use, to be cash equivalents. Cash
equivalents were $1,590,584 and $4,369,690 at June 30, 2006 and 2005, respectively. All
cash and cash equivalents are held at four financial institutions.
Accounts Receivable
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2. Summary of Significant Accounting Policies (continued)
Capitalized Interest
Interest costs incurred on bonds payable are capitalized as construction in progress, net of
interest income earned on the bond proceeds, in accordance with Statement of Financial
Accounting Standards (“SFAS”) No. 62, “Capitalization of Interest Cost in Situations
Involving Certain Tax-Exempt Borrowings and Certain Gifts and Grants.”
FCC Licenses
Depreciation and Amortization
Furniture, fixtures, equipment and leasehold improvements are stated at cost, less
accumulated depreciation and amortization. WNYC Radio provides for depreciation of fixed
assets on the straight-line basis over the estimated useful lives of the assets ranging from
three to fifteen years. Amortization of leasehold improvements is provided on the straight-
line basis over the lesser of the terms of the related leases or estimated useful lives of the
improvements.
Advertising
Barter Transactions
9
2. Summary of Significant Accounting Policies (continued)
$680,000, respectively.
Interest Rate Swap Agreement
WNYC Radio records the fair value of its interest rate swap agreement based on the present
value of future cash flows using prevailing interest rates.
Use of Estimates
Reclassifications
Certain reclassifications have been made to amounts previously reported in order to conform
with the current year’s presentation.
Management has obtained clarification of donor intentions with respect to the Campaign for
New York Public Radio. As a result, unrestricted net assets as of June 30, 2004 were
increased, with a corresponding decrease in temporarily restricted net assets, as follows:
3. Investments
WNYC Radio held the following investments at June 30:
2006 2005
Cost Fair Value Cost Fair Value
Fixed-income securities:
U.S. government and agency securities $ 6,045,704 $ 5,919,659 $ 6,075,227 $ 6,033,909
Corporate bonds 47,770 45,548 77,332 77,161
Common stock 52,533 46,487 91,238 83,734
4. Split-Interest Arrangements
WNYC Radio is the beneficiary of split-interest charitable gift annuity agreements with
donors. Under the terms of WNYC Radio’s charitable gift annuity agreements, WNYC
Radio controls the donated assets and may share with the donor or the donor’s designee
income generated from those assets until such time as stated in the agreement (usually upon
the death of the donor or the donor’s designee) at which time the remaining assets are
generally unrestricted for WNYC Radio’s use. The assets related to these agreements amount
to $122,555 and $120,369 at June 30, 2006 and 2005, respectively, and are included in
expenses in the accompanying statements of financial position.
WNYC Radio
Notes to Financial Statements (continued)
11
5. Pledges and Grants Receivable
Receivables consist substantially of promises to give and are due from individuals and
foundations. Pledges and grants receivable, net of allowance for uncollectible pledges, are
due to be collected as follows at June 30:
2006 2005
Less than one year $ 2,494,909 $ 2,153,046
One to five years 4,451,500 1,999,171
6. Fixed Assets
Fixed assets consist of the following at June 30:
2006 2005
Computer hardware and software $ 1,374,057 $ 1,370,057
Transmitters 3,018,593 3,018,593
Leasehold improvements 338,538 338,538
Automobile 25,298 25,298
WNYC Radio
Notes to Financial Statements (continued)
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7. Bonds Payable
In March 2006, WNYC Radio issued tax-exempt Series 2006 revenue bonds (“Series 2006
Revenue Bonds”) through the Trust for Cultural Resources of the City of New York in the
amount of $23,000,000. Proceeds from the Series 2006 Revenue Bonds, as well as any
interest income earned on the proceeds, will be used to finance issuance costs, a portion of
interest costs and all or a portion of the cost of the renovation, construction, studio technical
fit-out and furnishing of approximately 76,000 square feet of leased space in a building to be
used as WNYC Radio’s principal offices and broadcast studios. The unexpended bond
proceeds are held at a bank under a guaranteed income contract and are reported as cash
equivalents restricted as to use in the accompanying statement of financial position as of June
30, 2006. At June 30, 2006, approximately $632,000 is restricted to fund a portion of interest
costs to be incurred on the bonds payable and approximately $21,641,000 is restricted to
cover construction and other costs related to the newly leased space.
WNYC Radio
Notes to Financial Statements (continued)
7. Bonds Payable (continued)
The Series 2006 Revenue Bonds are subject to mandatory principal payments from sinking
fund installments beginning in fiscal 2009, as follows:
Year ending June 30:
2007 $ –
2008 –
8. Interest Rate Swap Agreement
In March 2006, WNYC Radio entered into an interest rate swap agreement to manage the
interest cost and risk associated with the Series 2006 bond issuance. The interest rate swap
has an effective date of March 29, 2006 and is intended to reduce the risk of rising interest
rates. The initial notional amount of the swap agreement is $15,000,000, to be reduced to
match principal payments on the bonds payable over the period from April 1, 2009 through
April 1, 2026. In accordance with the terms of the interest rate swap and related agreement,
9. Other Income
Included in production and other income for the years ended June 30, 2006 and 2005 is
approximately $403,000 and $828,000, respectively, pertaining to the reversal of certain
trade payables previously included in accounts payable and accrued expenses in the
accompanying statements of financial position. These amounts were determined to no longer
be statutorily payable and were therefore reversed into income.
WNYC Radio
Notes to Financial Statements (continued)
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10. Pension Plans
WNYC Radio participates in a 403(b) defined contribution plan covering all employees.
WNYC Radio contributed $208,084 and $229,097 to the plan for the years ended June 30,
2006 and 2005, respectively.
11. Temporarily Restricted Net Assets
Temporarily restricted net assets are available for the following purposes at June 30:
2006 2005
Purpose restrictions:
Radio programs $ 529,825 $ 622,055
Transmitters 1,000,320 1,200,320
1,530,145 1,822,375
Time restrictions 5,756,003 2,845,418
WNYC Radio
Notes to Financial Statements (continued)
12. Commitments
WNYC Radio has agreements to license capacity on transmitters and lease space at the
transmission facilities with third parties in New York and New Jersey. These agreements
expire between March 2017 and June 2029. Total license and rent expense was $490,067 and
$483,653 for the years ended June 30, 2006 and 2005, respectively. In March 2006, WNYC
Radio entered into a noncancelable lease agreement for office space and broadcast studios in
New York City for a term of 20 years. The lease term commences when the landlord
License
Agreements Leases
Year ending June 30:
2007 $ 405,061 $ –
2008 414,689 1,333,108
13. Collective Bargaining Arrangement
As of June 30, 2006, approximately 50% of WNYC Radio’s non-temporary employees are
covered under a collective bargaining arrangement with the American Federation of
Television and Radio Artists. The collective bargaining agreement expires June 30, 2010.
WNYC Radio
Notes to Financial Statements (continued)
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14. Fair Values of Financial Instruments
The following methods and assumptions were used by WNYC Radio in estimating its fair
value disclosures for financial instruments:
Cash and cash equivalents: The carrying amounts reported in the accompanying statements
of financial position approximate fair value.
Pledges and grants receivable: These assets are reported at present value, which
approximates fair value.
Loan payable: The carrying value of the loan payable approximates fair value.
Bonds payable: The carrying amount of WNYC Radio’s variable rate bonds payable
approximates market.
The carrying values and fair values of WNYC Radio’s financial instruments are as follows at
June 30:
2006 2005
Carrying
Value Fair
Value Carrying
Value Fair
Value
Cash and cash equivalents $ 10,844,171 $ 10,844,171 $ 5,207,362 $ 5,207,362
Pledges and grants receivable 6,602,412 6,602,412
4,071,417 4,071,417
Accounts receivable 2,229,770 2,229,770
2,082,267 2,082,267
Supplemental Schedule
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WNYC Radio
Schedule of Functional Expenses
Year ended June 30, 2006 with summarized financial information
for the year ended June 30, 2005
Program Services Supporting Services
Radio Technical Fundraising Fundraising Management
Programming Operations Marketing Total (Non-Campaign) (Campaign) and General Total 2006 2005
Salaries and benefits $ 8,289,731 $ 1,382,665 $ 708,962 $ 10,381,358 $ 3,637,837 $ 67,258 $ 1,202,295 $ 4,907,390 $ 15,288,748 $ 15,209,360
Consultants’ fees 175,657 74,560 35,512 285,729 29,325 255,604 119,140 404,069 689,798 624,181
Advertising and public relations 4,994 – 220,266 225,260 242,929 320 – 243,249 468,509
528,387
Program acquisition and production 4,113,989 – – 4,113,989 – – – – 4,113,989
3,853,176
Membership services – – – – 2,159,205 – – 2,159,205 2,159,205
1,908,473
Professional services 631,081 98,306 96,993 826,380 276,638 84 464,546 741,268 1,567,648
790,429
Travel, entertainment and meetings 122,159 12,973 22,146 157,278 431,380 347 57,939 489,666 646,944
530,695