Bridges of America - The Jacksonville Bridge, Inc. Orlando, Florida Financial Statements and Supplemental Information Year Ended June 30, 2010
Contents Page Independent Auditor s Report 1 Financial Statements Statement of Financial Position 3 Statement of Activities 4 Statement of Functional Expenses 5 Statement of Cash Flows 6 Notes to Financial Statements 8 Supplemental Information Schedule of Expenditures of State Financial Assistance 12 Independent Auditor s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards and Chapter 10.650, Rules of the Auditor General, of the State of Florida Independent Auditor s Report on Compliance with Requirements Applicable to Contract # C2447 and on Internal Control Over Compliance in Accordance with Chapter 10.650 Rules of the Auditor General Schedule of Findings and Questioned Costs State Financial Assistance 13 15 17
Bridges of America -The Jacksonville Bridge, Inc. Statement of Financial Position June 30, 2010 Assets Current assets Cash and cash equivalents - unrestricted $ 61,942 Receivables from program contracts 167,581 Total current assets 229,523 Property and equipment Equipment 39,336 Leasehold improvements 2,233 Furniture & fixtures 84,261 Accumulated depreciation (96,764) Total property and equipment 29,066 Due from trust account 10,100 Total assets $ 268,689 Liabilities and Net Assets Current liabilities Accounts payable $ 12,516 Accrued payroll liability 38,400 Accrued compensated absence 9,791 Total current liabilities 60,707 Due to affiliates 758,606 Net assets, unrestricted (550,624) Total liabilities and net assets $ 268,689 See notes to financial statements 3
Bridges of America -The Jacksonville Bridge, Inc. Statement of Activities For the Year Ended June 30, 2010 Unrestricted revenues and other support Program contract revenues - residential work release program $ 1,011,766 Resident rent revenues - residential work release program 735,011 Other program income 61,529 Total unrestricted revenues 1,808,306 Expenses and losses Program contract expenses 1,465,587 Management and general 396,292 Total unrestricted expenses and losses 1,861,879 Decrease in unrestricted net assets before other items (53,573) Other items Contribution expense (100,000) Total other items (100,000) Decrease in unrestricted net assets (153,573) Unrestricted net assets at beginning of year (397,051) Unrestricted net assets at end of year $ (550,624) See notes to financial statements 4
Bridges of America -The Jacksonville Bridge, Inc. Statement of Functional Expenses For the Year Ended June 30, 2010 Program/Contract Management Work Release and General Total Salaries and wages $ 569,328 $ 98,111 $ 667,439 Food expense 291,510-291,510 Administrative fee - 240,000 240,000 Rent expense 236,000-236,000 Utilities 72,771-72,771 Insurance 61,829 10,911 72,740 Payroll taxes 44,922 7,927 52,849 Vehicle expense 45,149-45,149 Accounting 17,400 24,600 42,000 Consulting fees 36,000-36,000 Payroll fees 16,805 2,966 19,771 Miscellaneous 15,777-15,777 Supplies 7,305 6,096 13,401 Depreciation expense 12,923-12,923 Repairs and maintenance 12,462-12,462 Telephone 12,205-12,205 Equipment leasing and rental 9,240-9,240 Employee education and awards 469 5,681 6,150 Fire and safety 1,987-1,987 Pest control 1,505-1,505 $ 1,465,587 $ 396,292 $ 1,861,879 See notes to financial statements 5
Bridges of America -The Jacksonville Bridge, Inc. Statement of Cash Flows For the Year Ended June 30, 2010 Cash flows from operating activities Cash received from program contracts $ 927,078 Cash received from residents rent 735,011 Cash received from other program income 61,529 Cash paid to employees (668,565) Cash paid to suppliers (1,131,465) Cash paid for taxes (53,361) Contributions paid (100,000) Net cash used in operating activities (229,773) Cash flows from investing activities Purchases of property and equipment (7,402) Net cash used in investing activities (7,402) Cash flows from financing activities Net payments from affiliates 142,659 Net cash provided by financing activities 142,659 Net decrease in cash and cash equivalents (94,516) Cash and cash equivalents at beginning of year 156,458 Cash and cash equivalents at end of year $ 61,942 See notes to financial statement 6
Bridges of America -The Jacksonville Bridge, Inc. Statement of Cash Flows-Continued For the Year Ended June 30, 2010 Reconciliation of change in net assets to net cash used in operating activities Decrease in net assets $ (153,573) Adjustments to reconcile decrease in net assets to net cash used in operating activities: Depreciation 12,923 (Increase) decrease in: Receivables from program contracts (84,688) Prepaid expenses 2,000 Increase (decrease) in: Accrued payroll liabilities 1,837 Accrued compensated absences (2,963) Accounts payable (5,309) Net cash used in operating activities $ (229,773) See notes to financial statements 7
Bridges of America The Jacksonville Bridge, Inc. Notes to Financial Statements For the Year Ended June 30, 2010 Note A - General Information and Significant Accounting Policies General Information - Bridges of America The Jacksonville Bridge, Inc. (The Jacksonville Bridge) is a not-for-profit corporation organized to provide a Work Release Transition Program facility for criminal offenders in Duval County, Florida. The Jacksonville Bridge is exempt from income tax under Internal Revenue Code Section 501 (c)(3) as a public charity Donated Services and Materials - The Board of Directors serves without compensation. These services are not recorded on the financial statements since they generally are not susceptible to objective measurement or valuation. Additionally, The Jacksonville Bridge occasionally receives donated goods for use in its operations. Management has determined that such amounts are not material to the financial statements of the organization. Basis of Presentation - Financial statement presentation follows the recommendations of the Financial Accounting Standards Board (FASB) in its Statement of Financial Accounting Standards (SFAS) No. 117, Financial Statements of Not-for-Profit Organizations, which was superceded by FASB Accounting Standards Codification (ASC) Topic 958, effective September 15, 2009. The Organization is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. The Organization does not have any temporarily or permanently restricted net assets. Program Contract Revenue and Receivable - Program Contract Revenue represents amounts received for providing program services under the terms of contracts with the State of Florida Department of Corrections. Receivables from these program contracts represent amounts due under the contracts and are considered fully collectible. Under the work release contract, The Jacksonville Bridge is authorized to charge those inmates employed through the program a subsistence rental charge, which is 55% of the inmate s net pay. During the current year, The Jacksonville Bridge received subsistence charges in the amount of $735,011 from work release program participants who were employed. Property and Equipment - Purchased assets costing in excess of $1,000 individually or in the aggregate are capitalized and recorded at cost. Improvements and betterments are capitalized, while repair and maintenance expenditures are expensed in the statement of activities. Property and equipment are being depreciated over its estimated useful lives of 5 and 7 years using the straight-line method of depreciation. Leasehold improvements are being depreciated over 39 years using the straight-line method of depreciation. Depreciation expense for the year ended June 30, 2010, was $12,923. 8
Bridges of America The Jacksonville Bridge, Inc. Notes to Financial Statements For the Year Ended June 30, 2010 Note A - General Information and Significant Accounting Policies-Continued Cash Equivalents - For purposes of the statement of cash flows, The Jacksonville Bridge considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. Estimates - 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 and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Interest Expense - The Jacksonville Bridge incurred no interest expense during the year ended June 30, 2010. Income Taxes - The Jacksonville Bridge is recognized as a 501(c)(3) not-for-profit organization, and as such, is exempt from income tax on activities relating to its exempt function. Further, The Jacksonville Bridge has not engaged in any activities that would result in unrelated business taxable income. Management has evaluated these tax positions and has determined that they are more likely than not to be upheld. Fair Value of Financial Instruments At June 30, 2010, the carrying values of cash, short term investments, accounts receivable and accounts payable approximate fair value because of the short maturity of these financial instruments. Note B - Related Party Transactions The Jacksonville Bridge shares a common Board of Directors and common management with Christian Prison Ministries, Inc., a not-for-profit corporation, and other Bridges of America entities, which provide similar services in other facilities throughout the State of Florida. The Jacksonville Bridge subleases a facility through Christian Prison Ministries, Inc. in conducting its program activities. Under the terms of a month to month lease, The Jacksonville Bridge paid rental charges of $236,000 to Christian Prison Ministries, Inc. for the use of these facilities in the current year. In addition, The Jacksonville Bridge paid administrative fees of $240,000 to Bridges of America, Inc. for management services in the current year. Amounts due to affiliates represent funds The Jacksonville Bridge has borrowed for start-up and operating purposes. During the year, The Jacksonville Bridge made net borrowings of $142,659. As of June 30, 2010, The Jacksonville Bridge owes $758,606 to affiliates. This amount is not expected to be repaid within the next operating cycle. No interest is being charged on this loan. 9
Bridges of America The Jacksonville Bridge, Inc. Notes to Financial Statements For the Year Ended June 30, 2010 Note B - Related Party Transactions-Continued The Jacksonville Bridge made vehicle lease payments of $12,000 directly to Bridges of America, Inc. The Jacksonville Bridge also made a contribution to Christian Prison Ministries, Inc. of $100,000 to support the activities of that organization. Note C Commitments and Contingencies During the year ended June 30, 2006, Christian Prison Ministries, Inc., a related entity, issued Orange County Industrial Development Authority Variable Rate Demand Revenue Bonds, Series 2005, at a par value of $12,565,000. The proceeds from the bond issue went towards refinancing existing long-term debt and financing the expansion of operating facilities. The bonds are secured by an irrevocable standby letter of credit, which is guaranteed by Christian Prison Ministries, Inc. and various related entities, including The Jacksonville Bridge. During the year, Branch Banking and Trust Company granted an extended letter of credit through November 30, 2012. As of June 30, 2010, the outstanding indebtedness balance under guarantee is $10,425,000. In order to maintain compliance with the letter of credit agreement as amended during the year, Christian Prison Ministries, Inc. and the Guarantors must maintain, on a combined basis, certain financial covenants. The requirements include maintaining a fixed charge coverage ratio of 1.20 to 1.00, as well as maintaining an unrestricted net asset balance of $11,162,300 as of June 30, 2010, plus 50% of the total positive increase in combined net assets for the fiscal year ending June 30, 2010 and in each fiscal year thereafter. The combined entity is also restricted to a limited amount of capital expenditures in the amount of $750,000 annually. For the year ended June 30, 2010, Christian Prison Ministries, Inc. and its affiliates met these financial covenants. During the year, Christian Prison Ministries, Inc. was granted an extension of its revolving line of credit, increasing the amount of credit from $1,000,000 to $1,500,000 of which $1,100,000 was unused at June 30, 2010. Bank advances on the credit line mature and are due in full on January 14, 2013. Interest on the principal amount outstanding is paid monthly in arrears and carries an interest rate equal to the One Month LIBOR Rate plus 2.5% per annum. The credit line is secured by substantially all corporate assets, and is guaranteed by Christian Prison Ministries, Inc. and various related entities, including The Jacksonville Bridge. Note D Major Sources of Support The Jacksonville Bridge has a contract with the Florida Department of Corrections to provide comprehensive drug and alcohol counseling and rehabilitation programs and employment programs for criminal offenders. The Jacksonville Bridge earned $1,011,766 under contract #C2447 during the current year. 10
Bridges of America The Jacksonville Bridge, Inc. Notes to Financial Statements For the Year Ended June 30, 2010 Note D Major Sources of Support-Continued The contract, which is terminable by the Florida Department of Corrections under certain conditions, is renewable on a periodic basis. The current contract is effective through June 30, 2013. The Jacksonville Bridge provides services to clients and is compensated for the provision of these services by the Florida Department of Corrections on a monthly basis. As of June 30, 2010, outstanding receivables from the program contract were $167,581. Note E Operating Leases During the year ended June 30, 2010, The Jacksonville Bridge had two office equipment leases, which are accounted for as operating leases. The total rent expense for the current year was $9,240. Future minimum lease payments under terms of non-cancelable operating leases are not considered material. Note F Concentration of Credit Risk The Jacksonville Bridge maintains cash balances at several financial institutions which are insured by the Federal Deposit Insurance Corporation. At various times during the year ended June 30, 2010, the Jacksonville Bridge may have had balances in these accounts which exceeded insured amounts. Additionally, The Jacksonville Bridge has a concentration of credit risk for program contract revenues and receivables. If there were a significant decrease or termination of the contracts, there would be an adverse effect on The Jacksonville Bridge s program services and operations. These revenues and receivables represent amounts earned and collectible, respectively, for providing drug and alcohol counseling and rehabilitation programs for criminal offenders. All of the program contract revenue and receivables are received from the State of Florida Department of Corrections. Note G Subsequent Events In preparing these financial statements, management has evaluated events and transactions for potential recognition or disclosure through October 5, 2010, the date the financial statements were available to be issued. Subsequent to year end, The Jacksonville Bridge and several of its affiliates were named as defendants in a lawsuit alleging breach of contract with a vendor. The alleged breach had not occurred as of the date of the financial statements. The parties to the lawsuit went through a mediation process that resulted in a mutually agreed-upon settlement of $300,000 to be paid to the plaintiff. The amount is expected to be paid during the fiscal year ended June 30, 2011. 11
Supplemental Information
Bridges of America - The Jacksonville Bridge, Inc. Schedule of Expenditures of State Financial Assistance For the Year Ended June 30, 2010 Catalog State Federal of State Expenditures - State Through Agency and Contract Financial Grants/ Aids Expenditures - State Total Program Title Number Assistance Appropriations Other Funds Expenditures Expenditures Florida Department of Corrections: Work Release Transition Program C2447 70.013 $ - $ 927,078 $ - $ 927,078 $ - $ 927,078 $ - $ 927,078 State expenditures are reported on the cash basis of accounting. See notes to financial statements 12
A. Summary of Auditor s Results Schedule of Findings and Questioned Costs- State Financial Assistance For the Year Ended June 30, 2010 1. The auditor s report expresses an unqualified opinion on the general purpose financial statements of Bridges of America The Jacksonville Bridge, Inc. 2. There were no significant deficiencies disclosed during the audit of the financial statements of Bridges of America The Jacksonville Bridge, Inc. 3. No instances of noncompliance material to the financial statements of Bridges of America The Jacksonville Bridge, Inc. were disclosed during the audit. 4. There were no significant deficiencies relating to the audit of the State financial assistance project. 5. The auditor s report on compliance for the State financial assistance projects for Bridges of America The Jacksonville Bridge, Inc. expresses an unqualified opinion. 6. Our audit disclosed no findings required to be reported related to the State financial assistance projects under Chapter 10.650. 7. The programs/projects tested as major programs/ projects included the following: State Project State CSFA No. Work Release Transition Program Contracts #C2447 In Duval County, Florida 8. The threshold for distinguishing Type A and Type B programs was $100,000 for major State financial assistance projects. 9. No Summary of Schedule of Prior Audit Findings is required because there were no prior audit findings related to the State Project listed above. 10. No management letter is required because there were no findings required to be reported to management pursuant to Chapter 10.650. 17