NEW YORK JUNIOR TENNIS LEAGUE, INC. FINANCIAL STATEMENTS AND AUDITOR S REPORT JUNE 30, 2015

Transcription

1 FINANCIAL STATEMENTS AND AUDITOR S REPORT

2 TABLE OF CONTENTS Independent Auditor s Report Exhibit A - Balance Sheet B - Statement of Activities C - Statement of Functional Expenses D - Statement of Cash Flows Notes to Financial Statements

3 Independent Auditor s Report Board of Directors New York Junior Tennis League, Inc. Report on the Financial Statements We have audited the accompanying financial statements of New York Junior Tennis League, Inc., which comprise the balance sheet as of June 30, 2015, and the related statements of activities, functional expenses and cash flows for the year 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 audit. We conducted our audit 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 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. Auditors Auditors and Consultants and Consultants Serving Serving the Health the Health Care & Care Not for & Not Profit for Sectors Profit Sectors 655 Third 655 Avenue, Third Avenue, 12th Floor, 12th New Floor, York, New NY York, NY (212) (212) / Fax (212) / Fax (212) / /

4 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 financial statements referred to above present fairly, in all material respects, the financial position of New York Junior Tennis League, Inc. as of June 30, 2015, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As disclosed in Note 11 to the financial statements, net assets as of July 1, 2014 were restated to reflect a temporarily restricted contribution receivable that was previously not recorded. Our opinion is not modified with respect to this matter. 2. September 11, 2015

5 EXHIBIT A NEW YORK JUNIOR TENNIS LEAGUE, INC. BALANCE SHEET ASSETS Cash and cash equivalents $ 97,788 Cash and cash equivalents - Cary Leeds Center for Tennis and Learning 396,450 Government grants receivable 3,078,143 Accounts receivable (net of allowance for doubtful accounts of $20,000) 49,430 Contributions receivable (Note 3) 1,226,132 Prepaid rent - Cary Leeds Center for Tennis and Learning 418,949 Prepaid expenses and other assets 157,422 Inventory 2,059,262 Fixed assets - net (Note 4) 9,493,308 Total assets $ 16,976,884 LIABILITIES AND NET ASSETS Liabilities Accounts payable and accrued expenses $ 673,259 Accounts payable - construction 87,699 Accrued payroll and related liabilities 391,482 Loan payable (Note 5) 230,000 Deferred revenues 2,248,964 Refundable advances (Note 2) 1,499,597 Total liabilities 5,131,001 Net assets (Exhibit B) Unrestricted 10,215,840 Temporarily restricted (Note 6) 1,630,043 Total net assets 11,845,883 Total liabilities and net assets $ 16,976,884 See independent auditor's report. The accompanying notes are an integral part of these statements.

6 EXHIBIT B STATEMENT OF ACTIVITIES YEAR ENDED Temporarily Unrestricted Restricted Total Revenues Government grants (Note 10) $ 10,370,119 $ 10,370,119 Foundation and corporate grants 281, ,584 Program revenue 53,250 53,250 Contributions 91,185 $ 2,220,578 2,311,763 U.S. Open revenues - gross $ 4,537,528 Less direct cost of event (3,683,516) Net event revenue 854, ,012 Special event revenues 723,947 Less direct costs of special events (94,798) 629, ,149 Tournaments 150, ,324 Interest income 2,762 2,762 Recovery of bad debt 25,000 25,000 Miscellaneous income 136, ,473 Total revenues 12,591,096 2,223,340 14,814,436 Expenses (Exhibit C) Program services Tennis 1,309,279 1,309,279 Education 9,440,809 9,440,809 Total program services 10,750,088 10,750,088 Management and general 818, ,505 Fund raising 557, ,768 Total expenses 12,126,361 12,126,361 Operating surplus before start-up costs and net assets released from restrictions 464,735 2,223,340 2,688,075 Construction-related start-up costs (201,871) (201,871) Net assets released from restrictions (Note 6) 5,419,541 (5,419,541) Change in net assets (Exhibit D) 5,682,405 (3,196,201) 2,486,204 Net assets - beginning of year, as previously stated 4,533,435 4,376,244 8,909,679 Restatement (Note 11) 450, ,000 Net assets - beginning of year, restated 4,533,435 4,826,244 9,359,679 Net assets - end of year (Exhibit A) $ 10,215,840 $ 1,630,043 $ 11,845,883 See independent auditor's report. The accompanying notes are an integral part of these statements.

7 EXHIBIT C STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED Program Services Supporting Services Management Fund Direct Costs of Tennis Education Total and General Raising Special Events Total Total Salaries $ 804,567 $ 6,560,581 $ 7,365,148 $ 238,438 $ 217,866 $ 456,304 $ 7,821,452 Payroll taxes and employee benefits 131,365 1,071,171 1,202,536 38,931 35,572 74,503 1,277, ,932 7,631,752 8,567, , , ,807 9,098,491 Professional fees 20, , , , ,767 $ 254, , ,929 Telephone and internet charges 7,113 31,908 39,021 10,195 17,171 27,366 66,387 Equipment rental and maintenance 4,376 1,289 5,665 76,974 9,174 86,148 91,813 Occupancy (Note 7) 20,926 35,198 56, ,099 9, , ,836 Insurance 3,581 3,581 40,326 40,326 43,907 Event tickets 6, , , ,289 3,169,713 3,178,236 3,426,642 Travel and entertainment 38, , ,345 10,118 34, , , ,166 Printing, postage and shipping 21,889 54,966 76,855 8,288 42,299 50, ,442 Advertising 55,563 55,563 10,005 14,831 24,836 80,399 Interest expense, permits and bank fees 7,458 37,574 45,032 3,051 3,051 48,083 Grants 50,000 50,000 50,000 Contributions 20,223 20,223 20,223 Transportation 7, , , ,272 Scholarships 2,500 59,000 61,500 61,500 Training , ,913 2,160 2, ,073 Court time and maintenance 64,557 64,557 64,557 Supplies 96, , ,251 2,072 12,646 14, ,969 Photography ,783 6,783 7,283 Tournaments 5,550 5,550 5,550 Catering and facility rental 89,248 89,248 89,248 Depreciation and amortization 10,863 10,863 10,863 Non-capitalized equipment 66,607 66,607 8,593 2,452 11,045 77,652 Bad debt 1,750 1,750 1,750 Miscellaneous 18,844 16,259 35,103 19,407 27,130 46,537 81,640 Start-up costs 201, , ,871 Total expenses 1,511,150 9,440,809 10,951, , ,768 3,778,314 5,154,587 16,106,546 Less expenses deducted directly from revenues and start-up costs Direct costs for special events (3,778,314) (3,778,314) (3,778,314) Start-up costs (201,871) (201,871) (201,871) Total expenses as reported by function on the statement of activities (Exhibit B) $ 1,309,279 $ 9,440,809 $ 10,750,088 $ 818,505 $ 557,768 $ - $ 1,376,273 $ 12,126,361 See independent auditor's report. The accompanying notes are an integral part of these statements.

8 EXHIBIT D STATEMENT OF CASH FLOWS YEAR ENDED Cash flows from operating activities Change in net assets (Exhibit B) $ 2,486,204 Adjustments to reconcile change in net assets to net cash used by operating activities Depreciation and amortization 10,863 Contributions - Cary Leeds Center (2,220,578) Decrease (increase) in assets Government grants receivable (1,792,605) Accounts receivable 46,091 Prepaid rent 39,778 Prepaid expenses and other assets 28,086 Inventory (626) Increase in liabilities Accounts payable and accrued expenses 399,064 Accrued payroll and related liabilities 144,937 Deferred revenues 18,901 Refundable advances 1,157,668 Net cash used by operating activities 317,783 Cash flows from investing activities Fixed asset acquisitions (5,331,842) Cash flows from financing activities Proceeds from loan 230,000 Payments on loans (600,000) Contributions - Cary Leeds Center 1,723,655 Net cash provided by financing activities 1,353,655 Net change in cash and cash equivalents (3,660,404) Cash and cash equivalents - beginning of year 4,154,642 Cash and cash equivalents - end of year $ 494,238 Supplemental disclosure of cash flow information Cash paid during the year for interest $ 3,051 See independent auditor's report. The accompanying notes are an integral part of these statements.

9 NOTES TO FINANCIAL STATEMENTS NOTE 1 - NATURE OF ENTITY New York Junior Tennis League, Inc. (the Organization) is organized under the Not-for-Profit Corporation Law of the State of New York for the purpose of providing tennis and educational programs to low-income young people in and around the New York metropolitan area. The Organization is exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code. The Organization is funded primarily by government grants and contributions. Tennis - The Organization provides free tennis programs to more than 75,000 children, ages 6-18 years old each year. The range of programs encompasses all skill levels from beginner to advanced. Tennis is taught all year, including the school day and out-of-school-time programs. The Organization sponsors and manages the Mayor s Cup tennis tournament for over 600 public, private and parochial school students. Education - The Organization offers daily, weekend and summer out-of-school-time programs in over 30 public schools providing recreation and a health curriculum, to improve students life skills, competencies, attitudes, behaviors and school performance. Activities include tutoring, tennis, other sports, fitness, wellness, nutrition education, arts programs, character education, STEM (Science, Technology, Engineering and Mathematics), literacy activities and educational field trips. In addition, the Organization provides the Arthur Ashe Guidance Program, which offers a variety of educational services to help students thrive in school, while providing guidance on admission and financial aid for high school and college. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of accounting - The financial statements are prepared on the accrual basis of accounting. Use of estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and cash equivalents - Cash and cash equivalents include certain investments in highly liquid instruments with original maturities, when acquired, of three months or less. Government grants receivable - Grants receivable are recorded for expense-based grants when allowable expenses are incurred and for performance-based grants when milestones are achieved. No allowance for doubtful accounts was recorded as of June 30, continued-

10 2. NOTES TO FINANCIAL STATEMENTS NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Accounts receivable - Accounts receivable are recorded when sales are made or services are rendered. The Organization determines whether an allowance for uncollectibles should be provided for accounts receivable. Such estimates are based on management s assessment of the aged basis of its receivables and other sources, current economic conditions, subsequent receipts and historical information. Accounts receivable are written off against the allowance for doubtful accounts when all reasonable collection efforts have been exhausted. The Organization does not charge interest on accounts receivable. Contributions receivable - Unconditional promises to give that are expected to be collected within one year are recorded at net realizable value. Unconditional promises to give that are expected to be allocated in future years are recorded at the present value of their estimated future cash flows. The discounts on those amounts are computed using risk-adjusted interest rates applicable to the years in which the promises are received. Amortization of the discounts is included in contribution revenue. Conditional promises to give are not included as support until the conditions are substantially met. The Organization determines whether an allowance for uncollectibles should be provided for contributions receivable. Such estimates are based on management s assessment of the aged basis of its receivable and other sources, current economic conditions, subsequent receipts and historical information. Contributions receivable are written off against the allowance for doubtful accounts when all reasonable collection efforts have been exhausted. No allowance for doubtful accounts was recorded as of June 30, Inventory - Inventory is recorded at lower of cost or market. Cost is determined by the first-in, first-out ( FIFO ) method. Inventory consists primarily of tickets purchased prior to the event held for resale. Fixed assets - Fixed assets are recorded at cost. Fixed assets with useful lives of greater than one year and a cost in excess of $1,000 are capitalized. Depreciation and amortization - Depreciation and amortization are recorded on the straight-line method over the estimated useful lives of the assets. Amortization of leasehold improvements is provided on the straight-line method over the shorter of the estimated useful lives of the assets or the lease term. Deferred revenue - The Organization receives monies in advance relating to the sale of U.S. Open tickets. Prior to the event, these funds are recorded as deferred revenues. Refundable advances - Refundable advances consist of advances received on government contracts that are anticipated to be earned in the future. Unrestricted net assets - Unrestricted net assets include funds having no restriction as to use or purpose imposed by donors. -continued-

11 3. NOTES TO FINANCIAL STATEMENTS NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Temporarily restricted net assets - Temporarily restricted net assets are those whose use by the Organization has been limited by donors to a specific time period or purpose. Revenues from government agencies - Revenues from government agencies are recognized when earned. Expense-based grants are recognized as allowable expenses are incurred. Performance-based grants are recognized as milestones are achieved. Contributions - Unconditional promises to give cash and other assets are reported at fair value at the date the contribution is received. The gifts are reported as either temporarily or permanently restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified as unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Ticket sales revenues - Ticket sales revenues are recorded on the accrual basis. U.S. Open tickets are purchased from corporations and individuals and resold to the public. Ticket sales may be refundable in certain circumstances if the event does not occur. Revenues are recognized at the time the U.S. Open occurs. Advertising - Advertising costs are expensed in the year incurred. Grants expense - Grants are expensed in the year granted and are subject to an annual review and renewal process. Functional allocation of expenses - The costs of providing the Organization s programs and other activities have been summarized on a functional basis. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Lease accounting - Operating leases are recorded on the straight-line basis over the term of the lease. Deferred rent is recorded when material. Uncertainty in income taxes - The Organization has determined that there are no material uncertain tax positions that require recognition or disclosure in the financial statements. Periods ending June 30, 2012 and subsequent remain subject to examination by applicable taxing authorities. Measure of operations - The Organization includes in its operating measure all revenues and expenses that are an integral part of its programs and supporting activities. -continued-

12 4. NOTES TO FINANCIAL STATEMENTS NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Subsequent events - Subsequent events have been evaluated through September 11, 2015, which is the date the financial statements were available to be issued. NOTE 3 - CONTRIBUTIONS RECEIVABLE Contributions receivable have been discounted over the payment period using a discount rate of 2%-5%. Contributions receivable are due as follows: Year Ending June 30, 2016 $ 437, , , , ,000 Thereafter 125,000 1,267,813 Less discount to present value (41,681) $ 1,226,132 NOTE 4 - FIXED ASSETS Estimated Useful Lives (in Years) Furniture and fixtures $ 112, Leasehold improvements 200, Construction in progress 9,480,256 9,793,516 Less accumulated depreciation and amortization (300,208) $ 9,493,308 -continued-

13 5. NOTES TO FINANCIAL STATEMENTS NOTE 5 - LOAN PAYABLE In 2012, the Organization obtained a line of credit with Chase Bank. The line of credit is uncollateralized and renews annually. The interest rate is a fixed rate of 3.48% as of June 30, As of June 30, 2015, the balance of the loans is $230,000. The line of credit was repaid subsequent to year end. Interest expense for the year ended June 30, 2015 was $3,051. NOTE 6 - TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets are available for the following purpose: Cary Leeds Center for Tennis and Learning $ 1,630,043 During the year ended June 30, 2015, net assets were released from donor restrictions for the following purpose: Cary Leeds Center for Tennis and Learning $ 5,419,541 NOTE 7 - OCCUPANCY The Organization entered into a 10-year lease agreement for space located in Woodside, NY. The lease was subsequently extended for another five years through June 30, The Organization subleases space to an unrelated organization. The lease calls for an annual base rent for the next year as follows: 2016 $ 165, , , ,200 $ 686,400 Rent expense for the year ended June 30, 2015 was $148,800. -continued-

14 6. NOTES TO FINANCIAL STATEMENTS NOTE 8 - CONCENTRATIONS Financial instruments which potentially subject the Organization to a concentration of credit risk are cash accounts with financial institutions in excess of FDIC insurance limits. The Organization recognized revenue of $9,461,670 (64%) of its total revenue in year ended June 30, 2015) from grants provided by the New York City Department of Youth and Community Development (DYCD) to fund its youth programs. The Organization is dependent on these grants for its operations. In addition, 92% of the government grants receivable is due from DYCD. These receivables were not collateralized. NOTE 9 - CARY LEEDS CENTER FOR TENNIS AND LEARNING The Organization entered into a license agreement on October 9, 2012 with the City of New York Department of Parks and Recreation to develop, operate and maintain an indoor tennis facility and clubhouse in Crotona Park, Bronx, New York. The Organization s portion of the project includes a 12,750 square foot, two-story clubhouse with an outdoor viewing platform, 2 stadium courts and 10 indoor courts. Funding for this portion of the project was provided by private donors. On December 9, 2014 the Organization signed a First Amendment to its License Agreement, which requires that the Organization assume responsibility for the construction of two (2) hardsurface tennis courts, including bleachers capable of seating approximately 775 spectators ( Capital Improvements Phase 3 ) to be funded by the City in an amount not to exceed $10.5 million. The amendment also states that the parties acknowledge that the Licensee has provided documents, records and other information to confirm to the City that it has advanced a total of $418,949 in payment of Licensee s architect fees attributable to the design of the new courts, and Parks has reviewed and found the documents to be reasonable. The parties further agree that upon reaching Substantial Completion of the Capital Improvements Phase 3 work, if there remain unused funds, the City shall reimburse the Licensee the sum of $418,949 plus any additional architect fees approved by Parks. On December 19, 2014, the Organization also signed an Escrow Agreement with Locus Construction Inc., and LePatner & Associates, LLP as Escrow Agent to manage and facilitate processing of payments for the Capital Improvements Phase 3 to Lotus Construction Inc. All funds received from the City shall be deposited into a non-interest-bearing Escrow Account for distribution to the appropriate parties based on satisfactory completion of work. -continued-

15 7. NOTES TO FINANCIAL STATEMENTS NOTE 9 - CARY LEEDS CENTER FOR TENNIS AND LEARNING (continued) As of June 30, 2015, the Organization has expended $10.2 million on this project including $418,949 approved by Parks to be refunded from the Capital Improvements Phase 3 funds. The $418,949 will be reduced on a monthly basis by an equal amount totaling the annual fixed fee amounts ($15,000 Year 1, $16,000 Year 2) unless it is prepaid out of the Capital Improvement Phase 3 funds. The Organization was obligated to give a $16,000 security deposit to the City of New York Department of Parks and Recreation which will be refunded at the end of the licensing period. The Cary Leeds Center for Tennis and Learning ( The Center ) has been completed, and the Department of Parks and Recreation on February 12, 2015 informed the Organization that the concession shall commence on the first to occur (i) the first day that Licensee opens for business operations at the Licensed Premises, or (ii) June 15, 2015 ( Commencement Date ) and shall terminate twenty (20) years from the commencement date. The Center opened for business on July 2, NOTE 10 - GOVERNMENT GRANTS Included in government grants are: Department of Youth and Community Development $ 9,461,670 State Education Department 908,449 $ 10,370,119 Grants and revenues from services rendered are subject to audit by the government agencies. No provision for any disallowances is reflected in these financial statements, since management does not anticipate any material adjustments. NOTE 11 - RESTATEMENT The Organization did not accrue a $450,000 contribution receivable. A restatement was recorded to include this as part of temporarily restricted net assets as of June 30, 2014.