Educational Media Foundation - K-Love

1 Educational Media Foundation Rocklin, California consolidated FINANCIAL STATEMENTS WITH INDEPENDENT AUDITORS REPORT December 31, 2016 Educational Media Foundation TABLE OF CONTENTS December 31, 2016 Page Number Independent Auditors Report 1 consolidated Statement of Financial Position 3 consolidated Statement of Activities 4 consolidated Statement of Natural Expenses 5 consolidated Statement of Cash Flows 6 Notes to the consolidated Financial Statements 8 Page 1 INDEPENDENT AUDITORS REPORT To the Board of Directors Educational Media Foundation Rocklin, California We have audited the accompanying consolidated financial statements of Educational Media Foundation and subsidiaries (EMF)

2 , which comprise the consolidated statement of financial position as of December 31, 2016; the related consolidated statements of activities, natural expenses, and cash flows for the year then ended; and the related notes to the consolidated financial statements. Management s Responsibility for the consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated 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 consolidated financial statements that are free from material misstatement, whether due to fraud or error.

3 Auditors Responsibility Our responsibility is to express an opinion on these consolidated 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 consolidated fina ncial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.

4 The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to EMF s preparation and fair presentation of the consolidated 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 EMF s internal control. Accordingly, we express no such opinion.

5 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 consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Page 2 INDEPENDENT AUDITORS REPORT (Continued) Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Educational Media Foundation and subsidiaries as of December 31, 2016, 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.

6 April 26, 2017 Chico, California Educational Media Foundation consolidated STATEMENT OF FINANCIAL POSITION Page 3 December 31, 2016 ASSETSC urrent Assets Cash and cash equivalents24,973,101$ Unconditional promises to give 3,032,245 Prepaid expenses2,362,097 Current portion of notes receivable183,019 Short term investments10,000,000 Inventories1,846,867 Other receivables1,395,299 Total Current Assets43,792,628 Property and Equipment Net of accumulated depreciation55,232,580 Other Assets Deposits and other 604,394 Notes receivable net of current portion106,559 Long term investments47,465,844 FCC licenses, permits, and application costs 373,460,533 Trademarks676,766 Total Other Assets422,314,096 TOTAL ASSETS521,339,304$ LIABILITIES AND NET ASSETSC urrent Liabilities Accounts payable and accrued expenses6,912,353$ Current portion of long term debt21,803,063 Total Current Liabilities28,715.

7 416 Long Term DebtNet of current portion19,242,438 Total Liabilities47,957,854 Net Assets Unrestricted net assets:Board designated7,128,426 Undesignated465,590,315 Temporarily restricted net assets662,709 Total Net Assets473,381,450 TOTAL LIABILITIES AND NET ASSETS521,339,304$ The accompanying notes are an integral part of these consolidated financial Media Foundation consolidated STATEMENT OF ACTIVITIES Page 4 Year Ended December 31, 2016 UNRESTRICTED NET ASSETSR evenue, Support, and Gains Contributions162,105,599$ Business underwriting grants7,879,717 Interest and dividend income536.

8 364 Miscellaneous income6,851,872 Net gain on disposal of assets625,997 Net assets released from restrictions1,014,958 Total Revenue, Support, and Gains179,014,507 Expenses and Losses Program services95,373,250 Supporting services:General administration11,165,949 Fundraising6,462,005 Total Expenses113,001,204 Net loss on extinguishment of debt97,266 Total Expenses and Losses113,098,470 Increase in Unrestricted Net Assets65,916,037 TEMPORARILY RESTRICTED NET ASSETSR evenue and Support Contributions213,404 Net assets released from restrictions(1,014,958) Decrease in Temporarily Restricted Net Assets(801,554)

9 Increase in Net Assets65,114,483 Net Assets Beginning of Year408,266,967 Net Assets End of Year473,381,450$ The accompanying notes are an integral part of these consolidated financial Media Foundation consolidated STATEMENT OF NATURAL EXPENSES Page 5 Year Ended December 31, 2016 Payroll and related36,053,003$ Occupancy1,024,742 Listener servicing2,663,443 Office4,243,897 Programming450,441 Website1,925,782 Promotion and advertising5,929,795 Travel and entertainment2,799,299 Engineering14,264,629 Donations116,982 Interest2,192,794 Administrative1,973,925 Computers and software2,976,669 Professional consulting2,743,293 Depreciation9,470,016 Station operations24,172,494 Total Expenses113,001,204$ The accompanying notes are an integral part of these consolidated financial statements.

10 Educational Media Foundation consolidated STATEMENT OF CASH FLOWS Page 6 Year Ended December 31, 2016 CASH FLOWS FROM OPERATING ACTIVITIES Increase in net assets65,114,483$ Adjustments to reconcile increase in net assets to net cash provided by operating activities:Depreciation9,470,016 Amortization of debt issuance costs281,287 Impairment charge on indefinite lived assets12,258,888 Noncash contributions(57,872) Net gain on disposal of assets(625,997) Net loss on e xtinguishment of debt97,266 Net change in operating assets and liabilities.