WIPB Television Management Discussion and Analysis For the Year Ended June 30, 2014

Transcription

1 WIPB Television Management Discussion and Analysis For the Year Ended June 30, 2014 Introduction This discussion and analysis of WIPB s financial statements provides an overview of WIPB s financial activities for the year ended June 30, Management has prepared the financial statements and the related footnote disclosures along with the discussion and analysis. The discussion and analysis is designed to provide an objective analysis of WIPB s financial activities based on currently known facts, decisions, and conditions. The completeness and fairness of the financial statements, notes to the financial statements, and this discussion are the responsibility of WIPB management. Using this Report This financial report consists of a series of financial statements, prepared in accordance with the Governmental Accounting Standards Board Statement No. 35, Basic Financial Statements-and Management s Discussion and Analysis-for Public Colleges and Universities. These financial statements focus on the financial condition of the University, the results of operations, and cash flows of the station as a whole. - The three basic financial statements are: the Statement of Net Assets, Statement of Revenues, Expenses and Changes in Net Assets, and the Statement of Cash Flows. This annual financial report includes the report of independent auditors, the management s discussion and analysis, the basic financial statements referred to above, notes to the financial statements and supplemental information. Financial Highlights The grant to WIPB-TV from the Corporation for Public Broadcasting increased. Revenue from Membership increased slightly from the prior year. Underwriting revenue increased from the prior year due to a strengthening economy The University continues to provide support to WIPB-TV. Telesale revenue increased slightly over the previous year. Outreach activities continued to be successful in participation and benefited the station financially through local business sponsorships.

2 The Statement of Net Assets and the Statement of Revenues, Expenses and Changes in Net Assets In order to assess the overall health of WIPB, factors that need to be considered are the overall economic climate of the State of Indiana and the trends of PBS on a national level as it pertains to membership, underwriting and programming. These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most private-sector institutions. All of the current year s revenues and expenses are taken into account, regardless of when cash was received or paid. The following is a summary of the major components of the net assets and operating results of WIPB for the year ended June 30, 2014: Assets: Net Position June 30, 2014 and Current Assets $265,299 $337,544 Noncurrent Assets 2,363,132 2,828,703 Liabilities: Total Assets $2,628,430 $3,166,247 Current Liabilities $5 $7,081 Net Position: Invested in Capital Assets, Net of Related $2,363,132 $2,828,703 Debt Restricted for External Grants 59,715 59,715 \ Unrestricted 205, ,741 Total Net Position $2,628,425 $3,159,160 Total Liabilities and Net Position $2,628,430 $3,166,247

3 Statement of Revenues, Expenses And Changes in Net Position For the Years Ended June 30, 2014 and Operating Revenues: Grants and Contracts $1,262,580 $1,000,889 Contributed Support 2,183,841 1,743,580 M emberships and Subscriptions 192, ,425 Business/Industry Underwriting 336, ,160 Other Operating Revenues 126, ,694 Total Operating Revenues $4,102,055 $3,292,748 Operating Expenses: Programming Production $1,107,801 $988,064 Other Expense 3,491,468 3,185,069 Total Operating Expenses $4,599,270 $4,173,133 Operating Income ($497,214) ($880,384) Increase in Net Assets ($497,214) ($880,384) Operating Revenues Operating revenues increase net assets and include all transactions that result in sales and/or receipts from goods and services such as tuition and fees, housing, dining, and athletics. In addition, federal, state, and private grants are considered operating if they are not for capital purposes. The following factors significantly impacted operating revenues: The Corporation for Public Broadcasting grant increased slightly. Business/industry underwriting increased due to the overall state of the economy in the local markets served by WIPB-TV o The station had an increase in revenue from the remote truck rental. o Business/Industry Underwriting is partially due to our internal reporting and reclassification of this revenue in our university accounting system. We included revenue in other line items in previous years that we feel, after examining our revenue classifications, should most accurately be included in the Underwriting line item. There was an increase in contributed support in Operating Revenue. o This was partially due to an increase in university supported salaries for staff doing work related to WIPB-TV and the increase in equipment purchases make by the university in support of WIPB-TV

4 The following is a graphic illustration of operating revenues by source: Sales $336, $192, $126, Contracts & Grants $1,262, Contributed Support Memberships & Subscriptions $2,183, Business/Industry Other Rev Operating Expenses Operating expenses reduce net assets and comprise all the costs necessary to perform and conduct the programs and primary purposes of WIPB. Due to the new reporting requirements, operating expenses were significantly impacted by the following factors: Programming expenses were higher due to fee increases imposed by PBS and other program providers. Expenses for professional development increased to reflect increasing costs associated with travel, registration fees, and hotel accommodations. There was an increase in programming/production in Operating Expenses. There was an increase in other expenses in Operating Expenses.

5 The following is a graphic illustration of operating expenses by source: Sales $1,107,801 Programming / Production $3,491,468 Other Expense Non-operating Revenues and Expenses Non-operating revenues increase net assets, and non-operating expenses reduce net assets. Nonoperating revenues and expenses are generated from transactions that are primarily nonexchange in nature, consisting mainly of state appropriations, interest expense, and investment income (interest and dividend income and realized and unrealized gains and losses). Other Revenues Other revenues increase net assets, and consist of capital appropriations, gifts and grants, as well as items that are typically non-recurring, extraordinary, or unusual to WIPB-TV. Statement of Cash Flows The Statement of Cash Flows provides relevant information about the cash receipts and cash payments of WIPB-TV during the period. Unlike the Statement of Revenues, Expenses and Changes in Net Assets, which reports revenues when they are earned and expenses when they are incurred, regardless of when cash is received or disbursed, the Statement of Cash Flows reports actual cash received and disbursed. The focus of the Statement of Cash Flows is on the increase or decrease in cash and cash equivalents. The Statement of Cash Flow helps the user assess WIPB-TV s:

6 Ability to generate future net cash flows. Ability to meet obligations as they come due. Needs for external financing. Cash Flows For the Years Ended June 30, 2014 and Cash Flows from Operating Activities Operating Activities $ (21,991) (175,768) Capital Financing Activities $ (38,400) 37,513 Net Increase in Cash and Cash Equivalents $ (60,391) (138,255) Cash and Cash Equivalents - Beginning of year $323,689 $461,944 Cash and Cash Equivalents - End of year $263,298 $323,689 The major components of cash flows provided from operating activities are grants and contracts, membership and subscriptions, direct University support, payments to suppliers, payments for utilities, payments for personnel services, payments for benefits, payments for non-budgeted University support, payments for other operating costs, Telesale proceeds, business/industry underwriting, Telesale underwriting and other operating receipts. Economic Factors That Will Affect the Future The station's prospects for revenue growth have brightened somewhat. The state's labor force grew by 70,000 in 2014 and those gains should continue through 2015, according to Ball State University's Center for Business and Economic Research. The center's Indiana Economic Outlook 2015 Forecast calls for state GDP growth to exceed the national rate by more than 0.5 percent. Personal income is also expected to grow faster in Indiana than the nation, and an income gap between Hoosiers and the rest of the country is shrinking. Management remains cautious, however, because of the overall modest pace of growth and because of the continuing shift of jobs and income from industrial production to service employment.

7 Additionally, the station is reliant on support from the state-funded university and from legislative appropriations. The state's tax revenue was flat in 2014 and projections for 2015 are down $129 million because previous estimates were overly optimistic. In response, the state budget director said Indiana's public universities could see their budgets cut another 2 percent if tax collections continue lagging behind expectations. And state agencies were told to plan on withholding 3 percent of their budgets again in Overall, then, management sees potential for underwriting and membership growth in a rising economy, but continues to use fiscal restraint in hopes of building a prudent surplus in the event that other support softens.