Consolidated Financial Report -...

Consolidated Financial Report

Greater New Orleans EducationalTelevision Foundation and

Subsidiary

June 30, 2007

Under provisions of state law, this report is a publicdocument. Acopy of the report has been submitted tothe entity and other appropriate public officials. The ...report is available for public inspection at the BatonRouge office of the Legislative Auditor and, where eg r"appropriate, at the office of the parish clerk of court. § £>

Release Date

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TABLE OF CONTENTS

Consolidated Financial Report

Greater New Orleans EducationalTelevision Foundation and Subsidiary

June 30,2007

PageExhibits Number

Financial Section

Independent Auditor's Report

Consolidated Statement of Financial Position

Consolidated Statement of Activities

Consolidated Statement of Functional Expenses

Consolidated Statement of Cash Flows

Notes to Consolidated Financial Statements

A

B

C

D

1 - 2

3

4

5

6

7-23

Schedules

Supplemental Information

Consolidating Statement of Financial Position

Consolidating Statement of Activities

24

25-26

Consolidated Schedule of Support and Revenues 27-28

TABLE OF CONTENTS (Continued)

PageNumber

Special Report of Certified Public Accountants

Report on Internal Control over Financial Reportingand on Compliance and Other Matters Based onan Audit of Financial Statements Performed inAccordance with Government Auditing Standards 29-31

Schedule of Findings and Responses 32 - 34

Reports by Management

Schedule of Prior Year Findings and Responses 35

Management's Corrective Action Plan 36

FINANCIAL SECTION

B o u r g e o i s B e n n e t t

INDEPENDENT AUDITOR'S REPORT

To the Board of Trustees,Greater New Orleans Educational Television Foundation,

New Orleans, Louisiana.

We have audited the accompanying consolidated statement of financial position ofGreater New Orleans Educational Television Foundation and Subsidiary as of June 30,2007, and therelated consolidated statements of activities, functional expenses, and cash flows for the year thenended. These consolidated financial statements are the responsibility of the Foundation's management.Our responsibility is to express an opinion on these consolidated financial statements based on ouraudit. The prior year summarized comparative information has been derived from the 2006consolidated financial statements, and in our report dated October 23, 2006, we expressed anunqualified opinion on those consolidated financial statements.

We conducted our audit in accordance with auditing standards generally accepted in theUnited States of America and the standards applicable to financial audits contained in GovernmentAuditing Standards, issued by the Comptroller General of the United States. Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the consolidatedfinancial statements are free of material misstatement. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in the consolidated financial statements. An auditalso includes assessing the accounting principles used and significant estimates made by management,as well as evaluating the overall consolidated financial statement presentation. We believe that ouraudit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements present fairly, in all materialrespects, the financial position of Greater New Orleans Educational Television Foundation andSubsidiary as of June 30, 2007, and the changes in their net assets and their cash flows for the yearthen ended in conformity with accounting principles generally accepted in the United States ofAmerica.

1340WescTunnel Blvd..Suite 430R O. Box 2168Houma, LA 70361-2168Phone (985) 868-0139Fax (985) 879-1949

Certified PublicAccountants | Consultants

A Limited Liability Company

R O. Box 60600New Orleans. LA 70160-0600Heritage Plaza, 17th FloorPhone (504)831-4949Fax (504) 833-9093

507-D St. Philip StreetRO. Box 1205Thibodaux, LA 70302-1205Phone (985) 447-5243

In accordance with Government Auditing Standards, we have also issued a report datedDecember 5, 2007 on our consideration of the Foundation's internal control over financial reportingand our tests of its compliance with certain provisions of laws, regulations, contracts, grantagreements, and other matters. The purpose of that report is to describe the scope of our testing ofinternal control over financial reporting and compliance and the results of that testing, and not toprovide an opinion on internal control over financial reporting or on compliance. That report is anintegral part of an audit performed in accordance with Government Auditing Standards and should beconsidered in assessing the results of our audit.

Our audit was made for the purpose of forming an opinion on the basic consolidatedfinancial statements taken as a whole. The accompanying supplemental information (Schedules 1through 3) is presented for the purposes of additional analysis and is not a required part of the basicconsolidated financial statements. Such information has been subjected to the auditing proceduresapplied in the audit of the basic consolidated financial statements and, in our opinion, is fairly stated inall material respects in relation to the basic consolidated financial statements taken as a whole.

UC.Certified Public Accountants.

New Orleans, Louisiana.December 5, 2007.

Exhibit A

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Greater New Orleans Educational Television Foundation and Subsidiary

June 30, 2007(with comparative totals for 2006)

2007 2006

AssetsCash and cash equivalents $ 3,689,405 $ 4,170,828Accounts receivable - net 1,762,133 1,178,453Unconditional promises to give - net 18,417 3,500Capital Campaign (TelePlex) pledges receivable - net 126,127 379,927Prepaid expenses and deposits 76,968 49,225Investments 6,499,570 5,654,121Property and equipment,

net of accumulated depreciation 6,849,643 2,509,926

Total assets $ 19,022,263 $ 13,945,980

LiabilitiesAccounts payable and accrued expenses $ 755,923 $ 744,552Funds held for others 1,122,559 1,385,265Notes payable to bank 4,805,164 1,793,567Deferred revenue 2,952,880 3,448,457Income taxes payable ^_ 27,100

Total liabilities 9,636,526 7,398,941

Net AssetsUnrestricted 6,143,274 3,562,696Temporarily restricted 2,294,579 2,036,459Permanently restricted 947,884 947,884

Total net assets 9,385,737 6,547,039

Total liabilities and net assets $ 19,022,263 $ 13,945,980

See notes to consolidated financial statements.

CONSOLIDATED STATEMENT OF ACTIVITIES

Exhibit B


For the year ended June 30, 2007(with comparative totals for 2006)

Support and RevenuesSupport:

Contributions $Grants from the Corporation for

Public BroadcastingBroadcasting services for Louisiana

Educational Television AuthorityOther grantsOther supportIn-kind support

Revenues:Auction sales, netCookbook sales, netContract and production servicesInvestment incomeHurricane Katrina insurance recovery,

net of costs and expenses

Total support and revenues

Net assets released from restrictions:Expiration of time restrictions

Total support, revenues, andother support

ExpensesProgram servicesManagement and generalDevelopment

Total expenses

Increase in net assets beforeprovision for income taxes

Provision for income taxes

Increase in Net Assets

Net AssetsBeginning of year

End of year $


Unrestricted

1,518,587

482,347

360,512127,606176,022206,001

165,801

4,218,527855,351

2,181,878

10,292,632

3,500

10,296,132

6,235,467871,932608,155

7,715,554

2,580,578

2,580,578

3,562,696

6,143,274

4

Temporarily PermanentlyRestricted Restricted

$ 91,629

33,353

136,638

261,620

(3,500)

258,120

258,120

258,120

2,036,459 $ 947,884

$ 2,294,579 $ 947,884

Totals2007

$ 1,610,216

482,347

360,512160,959176,022206,001

165,801-

4,218,527991,989

2,181,878

10,554,252

-

10,554,252

6,235,467871,932608,155

7,715,554

2,838,698_

2,838,698

6,547,039

$ 9,385,737

2006

$ 1,124,361

484,666

180,253133,867103,284480,743

(967)(1,214)

2,589,803548,212

1,066,123

6,709,131

-

6,709,131

3,943,047698,369660,745

5,302,161

1,406,970

(8,500)

1,398,470

5,148,569

$ 6,547,039

CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES

Exhibit C



Supporting ServicesProgram ManagementServices and General

AdvertisingBad debt expenseBoard of trustees' expensesBuilding and grounds

maintenanceBuilding rentalDirect mail solicitationEmployee travel and other

personnel costsEquipment rental and

maintenance costInsuranceInterestMembership premiumsOffice suppliesOther expensesPostage and shippingPrintingProduction costsProfessional servicesProgram rental feesSalaries, payroll taxes and

employee benefitsStation duesTaxesTelephoneTower rentalUtilities

Depreciation andamortization

Total functionalexpenses

See notes to consolidated

$ 1,820 $

341,113

668,908157,652

35,62439,32728,78532,356

105,890103,059493,344

2,998,88378,537

52,876120,00039,853

5,298,027

937,440

$ 6,235,467 $

financial statements.

5,414

90

50,06249,001

11,645

12,33726,671

240,669

13,42846,605

4,138

57,444

312,288

31,5104,411

865,713

6,219

871,932

5

Development

$ 4,36880,000

10,959

2,298

9,48919,550

85,10518,32132,47637,05717,62716,09954,649

197,903

16,035

601,936

6,219

$ 608,155

Total Expenses2007

$ 11,60280,000

90

50,06249,00110,959

355,056

690,734203,873240,669

85,10567,373

118,40869,98049,983

121,989215,152493,344

3,509,07478,53731,51073,322

120,00039,853

6,765,676

949,878

$ 7,715,554

2006

$ 16,84699,213

12

38,50549,40125,095

210,098

577,477218,005

78,88964,34554,22260,73839,07547,32746,244

141,27332,469

2,774,913124,385

1,55253,629

120,00044,878

4,918,591

383,570

$ 5,302,161

Exhibit D

CONSOLIDATED STATEMENT OF CASH FLOWS



2007Cash Flows From Operating Activities

Increase in net assetsAdjustments to reconcile increase in net assets to

net cash provided by operating activities:Depreciation and amortizationRealized and unrealized gains on investmentsLoss/(gain) on disposal of property and equipmentDonation of equipment(Increase) decrease in operating assets:

Accounts receivable and unconditionalpromises to give

Prepaid expenses and depositsIncrease (decrease) in operating liabilities:

Accounts payable and accrued expensesFunds held for othersDeferred revenueIncome taxes payable

Revenues restricted for the acquisition of property and equipment:Contributions and investment income - capital campaignDecrease in discount on unconditional promises to give -

capital campaign

Net cash provided by operating activities

Cash Flows From Investing ActivitiesProceeds from sales and maturities of investmentsPurchases of investmentsProceeds from disposal of property and equipmentPurchases of property and equipment

Net cash provided by (used in) investing activities

Cash Flows From Financing ActivitiesNew borrowingsPayments on notes payableCollections of capital campaign supportCollections of capital campaign investment income

Net cash provided by (used in) financing activities

Net Increase (Decrease) in Cash And Cash Equivalents

Cash and Cash EquivalentsBeginning of year

End of year

$ 2,838,698

949,878(746,390)

41,451

(598,597)(27,743)

11,371

(495,577)(27,100)

(209,850)

1,736,141

1,954,257(2,053,316)

(5.331,046)

(5,430,105)

4,000,358(988,761)

64,306136,638

3,212,541

(481,423)

4,170,828

$ 3,689,405

2006

$ 1,398,470

383,570(414,485)

(1,066,123)(311,342)

16,14027,211

218,30357,730

163,6518,500

(50,430)

(7,300)

423,895

2,948,202(2,881,963)2,484,464(878,599)

1,672,104

(405,671)208,333

50,430

(146,908)

1,949,091

2,221,737

S 4,170,828


Exhibit E

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2007

Note 1 - NATURE OF ACTIVITIES

WYES-TV is a community-owned, nonprofit public television station serving metropolitanNew Orleans, southeastern Louisiana, and Mississippi Gulf Coast regions. Affiliated withthe Public Broadcasting Service, WYES-TV is licensed to the Greater New OrleansEducational Television Foundation and governed by a board of trustees comprised of civic-minded individuals and distinguished community leaders.

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Organization and Income Taxes

The Greater New Orleans Educational Television Foundation (the Foundation) is anonprofit corporation organized under the laws of the State of Louisiana to provideeducational television broadcast service to the New Orleans area. It is exempt fromFederal income tax under Section 501(c)(3) of the Internal Revenue Code, andqualifies as an organization that is not a private foundation as defined in Section509(a) of the Code. It is also exempt from Louisiana income tax under the authorityof R.S. 47:121 (5). Net operating profits from unrelated business income are subjectto Federal income tax.

Effective July 1, 1982, the Foundation incorporated a wholly-owned subsidiary,Yescom Enterprises, Inc. (Yescom). The purpose of this corporation is to engageprimarily in providing remote production services to third parties on a for-profitbasis. All revenues generated by Yescom are dedicated to the Foundation and areused to fulfill the Foundation's exempt purpose.

Exhibit E(Continued)

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

b. Basis of Accounting

The consolidated financial statements of the Greater New Orleans EducationalTelevision Foundation and Subsidiary are prepared on the accrual basis ofaccounting and, accordingly, reflect all significant receivables, payables, and otherliabilities.

c. Basis of Presentation

The financial statement presentation follows the recommendations of the FinancialAccounting Standards Board in its Statement of Financial Accounting Standards(SFAS)No. 117, "Financial Statements for Not-For-Profit Organizations." UnderSFAS No. 117, net assets, revenues and expenses are classified based on theexistence or absence of donor-imposed restrictions. Accordingly, net assets of theFoundation and Subsidiary and changes therein are classified and reported asfollows:

Unrestricted Net Assets - Net assets that are not subject to donor-imposedstipulations.

Temporarily Restricted Net Assets - Net assets subject to donor-imposedstipulations that may or will be met either by actions of the Foundation and/orthe passage of time.

Permanently Restricted Net Assets - Net assets subject to donor - imposedstipulations that they be maintained permanently by the Foundation. Generally,the donors of these assets permit the Foundation to use all or part of the incomeearned on related investments for general or specific purposes.

d. Consolidation

The accompanying consolidated financial statements present the combined assets,liabilities, and transactions of the Foundation and it's Subsidiary. All intercompanytransactions and balances have been eliminated in consolidation.



e. Use of Estimates

The preparation of financial statements in conformity with accounting principlesgenerally accepted in the United States of America requires management to makeestimates and assumptions that affect certain reported amounts and disclosures.Actual results could differ from those estimates.

f. Investments

Investments are carried at fair market value, based on quoted market prices for theinvestments.

g. Promises to Give

Contributions are recognized when the donor makes a promise to give that is, insubstance, unconditional. Conditional promises to give are recognized when theconditions on which they depend are substantially met.

h. Contributions and Revenue Recognition

Contributions are recorded as unrestricted, temporarily restricted, or permanentlyrestricted support, depending on the existence or nature of any donor restrictions.Support that is restricted by a donor is reported as an increase in temporarily orpermanently restricted net assets, depending on the nature of the restrictions. Whena restriction expires (that is, when a stipulated time restriction ends or a purposerestriction is accomplished), temporarily restricted net assets are reclassified tounrestricted net assets and reported in the Statement of Activities as net assetsreleased from restrictions. Donor restricted contributions whose restrictions are metin the same reporting periods are reported as unrestricted support.

i. Allowance for Uncollectible Accounts

The Foundation and its Subsidiary provide for estimated uncollectible accountsreceivable on a specific account basis as determined by management. Theallowance for doubtful accounts was $108,480 and $40,000 at June 30, 2007 and2006, respectively.

Exhibit £(Continued)


i. Allowance for Uncollectible Accounts (Continued)

The Foundation provides for estimated uncollectible pledges receivable(unconditional promises to give) based on management's analysis of specificpromises made. There was no balance for the allowance for uncollectible CapitalCampaign (TelePlex) pledges receivable as of June 30, 2007. The balance was$80,000 as of June 30, 2006.

j. Property and Equipment

The Foundation records all property and equipment acquisitions at cost except forthose donated to the Foundation, which are recorded at estimated value as of thedate of donation. Such donations are reported as unrestricted support. Assetsdonated with explicit restrictions regarding their use and contributions of cash thatmust be used to acquire property and equipment are reported as restricted support.Absent donor stipulations regarding how long those donated assets must bemaintained, the Foundation reports expirations of donor restrictions when thedonated assets are placed in service as instructed by the donor. The Foundationreclassifies temporarily restricted net assets to unrestricted net assets at that time.

Property and equipment acquired with funds received through grants orcontributions which stipulate a time period for the asset to be maintained arereported as temporarily restricted net assets. Temporarily restricted net assets arereclassified to unrestricted net assets for expiration of time restrictions as the assetsare depreciated or the time period expires.

Repairs and maintenance are charged to expense as incurred; major renewals,replacements and betterments are capitalized. Depreciation and amortization aredetermined using the straight-line method and are intended to write-off the cost ofthe property and equipment over their estimated useful lives.

10



k. In-Kind Support

On June 8,1970, the Foundation exchanged operating frequencies with WVUE, astation owned and operated at that time by Screen Gems Broadcasting of Louisiana,Inc. Emmis Televisions Broadcasting, L.P. acquired the transmitter facilities andassumed the rights and obligations of the original exchange agreement. Theexchange agreement required certain items of compensation to be paid to theFoundation. On November 30, 2003, the existing agreement was terminated by anew agreement under which the Foundation was paid a buyout payment of$3,500,000 (described in Note 2(m)) and a new antenna and transmission line,owned by the Foundation, was constructed. The Foundation will continue to receivethe substantially free lease on the transmittal facilities, which is $1 per year fortwenty years through November 30, 2023 (as described in Note 11). TheFoundation's policy is to record the appraised rental value as revenue and recognizea corresponding amount as an expense of fulfilling its exempt purposes. Anindependent appraisal was used to establish the value of this lease.

The Foundation records the value of the substantially free use of the land occupiedby its studio and office building and recognizes a similar amount as expense.

1. Auction Revenue

The Foundation annually conducts two auctions to sell contributed and purchasedmerchandise and other items. Gross auction revenue of $170,867 includes allproceeds received from auction sales and cash contributions received by theFoundation for support of the auctions. Cost of merchandise sold of $5,066 includesthe cost of items purchased by the Foundation. For the year ended June 30, 2007,net auction revenue of $165,801 is reported on the consolidated statement ofactivities. The Foundation did not hold an auction in the year ended June 30,2006.

m. Deferred Revenue

The Foundation received $3,500,000 under the new agreement with EmmisTelevisions Broadcasting, L.P. for the exchange of operating frequencies withWVUE which covers a twenty year period ending in 2023. This amount is beingamortized on a straight line basis over the life of the agreement, which makes theFoundation responsible for the payment of the operating expenses of the transmittalfacilities. The balances as of June 30,2007 and 2006 approximated $2,867,000 and$3,043,000, respectively.

11



m. Deferred Revenue (Continued)

The Foundation received approximately $86,000 and $405,000 at June 30,2007 and2006, respectively, for underwriting a program that will be produced in the future.These amounts were included in deferred revenue.

n. Program Rental Fees

Costs incurred for the acquisition of programs are amortized by an acceleratedmethod until subsequent broadcasts have negligible benefit.

o. Unemployment Benefits

In lieu of unemployment tax contributions, the Foundation and its Subsidiary haselected under the Louisiana Employment Security Law to reimburse the State ofLouisiana for benefits paid by the State and charged against the account of theFoundation. The Foundation recognizes this expense in the period for which thebenefits are billed by the State.

p. Allocated Expenses

The costs of providing the various programs and other activities are summarized inthe Consolidated Statement of Functional Expenses. Certain expenses have beenallocated among the programs and supporting services based on management'sestimate of the costs involved,

q. Statement of Cash Flows

The Foundation considers investments in money market funds to be cashequivalents, except for money market funds maintained in investment brokerageaccounts which are reported as investments (Note 7).

Note 3 - CONCENTRATION OF CREDIT RISK ARISING FROM CASH DEPOSITS INEXCESS OF INSURED LIMITS

The Foundation maintains cash balances at several local financial institutions. Cashdeposits in excess of Federal Deposit Insurance Corporation limits were approximately$3,943,000 and $4,025,000 at June 30, 2007 and 2006, respectively.

12


Note 4 - RESTRICTIONS ON ASSETS

Temporarily restricted and permanently restricted net assets are restricted by donors forspecific purposes or designated for subsequent periods. Cash and investments raisedthrough the Capital Campaign (1983) and the Capital Campaign (TelePlex) are restrictedfor the acquisition of property and equipment. Restrictions on such funds are considered toexpire when payment for the designated purpose is made.

In prior years, the Foundation was awarded two grants by the U.S. Department ofCommerce Public Telecommunications Facilities Program which funded certainpercentages of the cost of new equipment. The terms of these grants provide for repaymentunder certain conditions which generally relate to a change in ownership from nonprofit toproprietary or changes in uses of assets acquired with grant funds. The restrictions applyduring a ten-year period beginning on the date of the grant. All of these restricted periodshave expired.

Temporarily restricted net assets at June 30,2007 and 2006 are available for the followingpurposes or periods:

2007 2006

Capital Campaign (TelePlex), includinginvestment earnings $ 1,595,115 $ 1,385,265

Department of Commerce Teleplex Grant -equipment to be acquired with grantfunds which stipulate a ten-year periodofuse 572,076 538,723

Capital Campaign (1983) contributionsto be used for property and equipmentacquisitions 108,971 108,971

Contributions due for subsequent periods 18,417 3,500

Totals $ 2,294,579 $ 2,036,459

Permanently restricted net assets are endowment principal of $947,884, which includes cashand investments. Interest, dividends, realized and unrealized gains on such assets areavailable for future operations and are classified as unrestricted net assets.

13


Note 5 - UNCONDITIONAL PROMISES TO GIVE

Unconditional promises to give consist of amounts due from membership drives andprogram underwriting and are restricted for subsequent periods. All amounts are due withinone year. The amounts totaled $ 18,417 and $3,500 at June 30,2007 and 2006, respectively.

Note 6 - CAPITAL CAMPAIGN (TELEPLEX) PLEDGES RECEIVABLE/ FUNDS HELDFOR OTHERS

During the year ended June 20, 2002, WYES-TV entered into a Capital Campaign withWLAE-TV. The purpose of the campaign was to raise funds to purchase digitalbroadcasting equipment and to construct and furnish a digital broadcasting center (theTeleplex) on the lakefront campus of the University of New Orleans. The expectation wasthat the equipment, building and furnishings would be owned and used jointly by theFoundation and WLAE-TV with each owning fifty percent.

During fiscal year ending June 30,2007, this joint venture was cancelled. All donors wereasked to give instructions as to the disposition of their gifts. As of June 30, 2007, certaindonors asked for a portion of their donations to be returned, a portion of or all of theirdonations to be maintained by WYES-TV or have all or a portion of their donations sent toWLAE-TV. In addition, some of the donors asked for their pledge receivable balances tobe canceled. At June 30, 2007, $137,500 is due to WLAE-TV and $960,028 is to bereturned to donors. These amounts are included in funds held for others.

The expectation is that a new building will be constructed for WYES-TV. The balance ofpledges receivable, which are all deemed collectible by management, was $126,127 and$379,927 (net) at June 30, 2007 and 2006, respectively.

At June 30, 2006, funds held for others of $1,385,265 were all due to WLAE-TV.

14


Note?- INVESTMENTS

Investments include amounts held in investment accounts at Whitney National Bank,Charles Schwab & Co., and Fidelity Investments, Inc. Details of investments are asfollows:

Investments by Type

Equity securitiesCorporate bonds and

U.S. Government Agency obligationsMoney market funds

Total investments

Investments by Type

Equity securitiesCorporate bonds and

U.S. Government Agency obligationsMoney market funds

Total investments

June 30, 2007

CostMarketValue

$ 3,823,931

1,501,942104,986

$ 4,917,351

1,477,233104,986

$ 5,430,859 $ 6,499,570

June 3 0,2006

CostMarketValue

$ 3,778,406 $ 4,212,291

1,241,120231,492

1,210,338231,492

$ 5,251,018 $ 5,654,121

CostMarketValue

Balances at June 30, 2007Balances at June 30, 2006

Increase in unrealized appreciation

$ 5,430,859 $ 6,499,570$ 5,251,018 $ 5,654,121

MarketValue Over

Cost

$ 1,068,711403,103

$ 665,608

15


Note 7 - INVESTMENTS (Continued)

Investment return for the year ended June 30, 2007 is summarized as follows:

Interest and dividend income, net $ 245,599Unrealized gain for the year 665,608Realized gain, net 80,782

Total

Cost

$ 991,989

MarketValue

Balances at June 30, 2006Balances at June 30, 2005

Increase in unrealized appreciation

$ 5,251,018 $ 5,654,121$ 5,201,289 $ 5,305,875

MarketValue Over

Cost

$ 403,103104,586

$ 298,517

Investment return for the year ended June 30, 2006 is summarized as follows:

Interest and dividend income, net $ 133,727Unrealized gain for the year 298,517Realized gain, net 115,968

$ 548,212

The State of Louisiana has adopted the Uniform Management of Institutional Funds Act.Management has interpreted state law to allow the Board of Trustees to spend the portion ofrealized and unrealized gains on investments that pertain to endowment principal(permanently restricted) for the purpose for which the endowment fund was established,after considering the long and short term needs of the Foundation, price level trends, andgeneral economic conditions. Such gains are reported as increases in unrestricted netassets.

16


Note 8 - PROPERTY AND EQUIPMENT

At June 30, 2007 and 2006, the cost of property and equipment and accumulateddepreciation were as follows:

2007 2006

Remote production equipment $ 9,217,061 $ 4,559,975Equipment 2,881,587 2,553,574Leasehold improvements 368,623 328,943Office equipment 139,419 55,632Construction in progress 181,029 -_^

12,787,719 7,498,124Less accumulated depreciation (5,938,076) (4,988,198)

Net property and equipment $ 6,849,643 $ 2,509,926

Depreciation expense was $949,878 and $383,570 for the years ended June 30, 2007 and2006, respectively.

Note 9 - NOTES PAYABLE TO BANK

The Foundation is obligated on the following notes payable:June 30,

2007 2006Note payable to Whitney National Bank. The note

is due in sixty equal monthly installments ofprincipal and interest of $46,179 through July2008. The note bears interest at 5.75% and issecured by mobile unit equipment. $ 721,496 $ 1,256,530

Note payable to Whitney National Bank. The noteis due in fifty-nine equal monthly installmentsof principal of $5,933 plus interest throughSeptember 2009. The note bears interest at6% and is secured by funds held on depositwith the financial institution. 177,943 249,139

Line of credit to Whitney National Bank. Interestwas paid monthly under the line at 8.75%.The line of credit was paid and closed on May1,2007. - 100,106

17


Note 9 - NOTES PAYABLE TO BANK (Continued)

June 30,2007 2006

Note payable to Whitney National Bank. The noteis due in twelve equal installments ofprincipal and interest of $6,977 throughMarch 2008. The note bears interest at 7.75%and is collateralized by funds held on depositwith the financial institution. 61,056

Loan agreement with Capital One Bank (formerlyHibernia National Bank). The note bearsinterest at 4.25%. The note is due on demandbut must be repaid by June 2009. The loan iscollateralized by funds held on deposit withthe financial institution. 127,810 187,792

Note payable to Whitney National Bank. The noteis due in fifty-nine equal monthly installmentsof principal and interest of $51,661 throughOctober 2011. The note bears interest at 8.5%and is secured by high definition mobile unitequipment.

2,226,313Note payable to the U.S. Small Business

Administration. The note is due in seventy-two equal monthly installments of principaland interest of $24,034 through June 2013.The note bears interest at 4% and is securedby the structure and improvements that will bepurchased with the proceeds.

1,490,546

Totals $ 4,805,164 $ 1,793,567

18


Note 9 - NOTES PAYABLE TO BANK (Continued)

Future principal payments to be made on these notes are as follows:

Year EndingJune 30,

2008 $ 1,387,9212009 1,062,3822010 817,1182011 838,9572012 457,384

Thereafter 241,402

Total $ 4,805,164

Note 10 - RELATE PARTY TRANSACTIONS

WYES-TV paid legal fees totaling $3,602 and $4,347 during the years ended June 30,2007 and 2006, respectively, to a law firm in which a member of WYES-TV's Board ofDirectors is a partner.

Note 11 - IN-KIND SUPPORT - RENTAL VALUE OF LEASED FACILITIES AND OTHER

The television station transmission tower, antenna, and land are leased through November30, 2023, at $1 per year. An independent appraisal set a fair rental value for the tower,antenna, and land at approximately $120,000 per year.

The television studio and office building are located on land leased through January 31,203 5 at $ 1 per year. An independent appraisal established a fair rental value for the land at$49,001 per year.

The Foundation recorded the value of certain in-kind goods and services received of$37,000 and $311,342 for the years ended June 30, 2007 and 2006, respectively.

The fair rental values of the above described properties have been recorded as support andexpenses in the years ended June 30, 2007 and 2006, respectively, as follows:

19


Note 11 - IN-KIND SUPPORT - RENTAL VALUE OF LEASED FACILITIES AND OTHER(Continued)

2007 2006

SupportTransmitter in-kind rent:

Tower and facility $ 120,000 $ 120,000Studio and office building in-kind rent 49,001 49,401Other goods and services 37,000 311,342

Total in-kind support $ 206,001 $ 480,743

2007 2006

ExpendituresTower rental $ 120,000 $ 120,000Building rental 49,001 49,401Donated goods and services 37,000 -_

Total expenses 206,001 169,401

Donated equipment -___ 311,342

Total expenditures $ 206,001 $ 480,743

Numerous volunteers have donated significant amounts of time to the Foundation's fund-raising campaigns and programs. No amounts have been reflected in the financialstatements because they did not meet the criteria for recognition under Statement ofFinancial Accounting Standards No. 116, "Accounting for Contributions Received andContributions Made.

Note 12 - COMMITMENT

The television studio and office building are located on land leased from the City of NewOrleans for $ 1 per year for a fifty-year period ending January 31, 2035. The lease requiresthe Foundation to construct additional permanent leasehold improvements on the propertyby February 1, 2004, at a minimum cost of $500,000. Approximately $535,056 has beenexpended for permanent improvements and for remediation expenses through June 30,2007. No additional contracts or commitments for construction or additional improvementshave been entered into as of June 30,2007. The Foundation has a verbal agreement to notenforce the required completion date as long as the broadcast studio is located within theCity of New Orleans.

20


Note 13 - UNRELATED BUSINESS INCOME

Revenues from certain projects are considered unrelated business income of a nonprofitorganization by the Internal Revenue Service. Any net operating profits derived from suchprojects are subject to Federal unrelated business income tax.

The Foundation derives revenue from the rental of the remote production vehicle and thestudio equipment and facilities to Yescom (described in Note 14). This income is reportedas unrelated business income in the Foundation's Exempt Organization Business IncomeTax Return (Form 990T). For the year ended June 30, 2007, the Foundation reported a taxloss from its unrelated business income activities of $522,653 which will be carried forwardto offset future taxable income.

Note 14 - SUBSIDIARY OPERATIONS AND INCOME TAXES

Yescom Enterprises, Inc. (Yescom), the Foundation's wholly-owned subsidiary, derivesincome by providing remote production services with two remote production vehicles,production services at the Foundation's facility, and other services to third parties. Thisincome is reported in Yescom's U.S. Corporation Income Tax Returns.

Yescom's operations significantly increased during the year ended June 30,2007 principallydue to the addition of a second production truck.

Yescom's operations resulted in net loss of approximately $329,000 for the year ended June30,2007. For the year ended June 30,2006, the operations of Yescom resulted in a net lossof approximately $356,000, The net operating losses will be carried forward to reduce anyfuture net operating profits subject to Federal income tax and it will begin expiring in 2026if not used.

Note 15 - BROADCAST HOURS

Broadcast hours of the television station were 8,448 (unaudited) for the year ended June 30,2007. The broadcast hours were down to 5,784 (unaudited) for the year ended June 30,2006 due to the affects of Hurricane Katrina described in Note 18,

21


Note 16 - RETIREMENT PLAN

The Foundation has a retirement program whereby its employees participate in the TIAA-CREF Retirement Annuity Program, a Tax-Sheltered Annuity. The program requires theFoundation to match the 3% contribution of an employee with a 7% contribution. As ofJune 30, 2007, twenty-one employees were participating in the program. Retirementexpenses under this plan totaled $41,634 and $63,343 for the years ended June 30,2007 and2006, respectively.

Note 17 - CASH FLOWS INFORMATION

Cash payments of interest during the years ended June 30, 2007 and 2006 were $240,669and $78,889, respectively. Noncash operating activities include $262,706 of^classifications of funds held for others and capital campaign (Teleplex) pledgesreceivable.

Note 18 - HURRICANE KATRINA

On August 29, 2005, New Orleans and the surrounding area suffered a natural disaster,Hurricane Katrina. The Foundation was devastated by Hurricane Katrina. The station'sstudios were under water for approximately two weeks, its studio equipment, officefurniture, equipment and supplies were lost to the floodwaters. Prior to the storm, WYESwas the most utilized non-profit entity in the state of Louisiana serving the New Orleansarea and the Gulf Coast. Management expects to regain that status again.

Due to heavy damage to the station's studios, the station began operating from two facilitiesfour months after the storm. The station's Technical Staff and Master Control operationswere able to operate from the second floor of the Navarre Avenue location. Temporaryoffices have been constructed on the first floor for the station's auction staff while theremaining staff is operating from a temporary location in Metairie. Repairs to the studiohave allowed for the resumption of production for the station's two weekly shows,Informed Sources and Steppin' Out. In June 2007, the station held its first art auction sincethe flood, grossing over $170,000.

22


Note 18 - HURRICANE KATRINA (Continued)

The station currently broadcasts twenty-four hours per day.

The station continues to negotiate with its insurance companies for a satisfactory settlementof the Station's losses under its property, business interruption, and flood policies. To date,insurance proceeds, related damages, and repair costs are as follows:

2007 2006 Total

Property and flood insuranceproceeds received $ 2,271,724 $ 2,964,916 $ 5,236,640

Cost of destroyed property andequipment, at net book value 41,451 1,418,341 1,459,792

Various Hurricane Katrinarelated expenses 48,395 480,452 528,847

89,846 1,898,793 1,988,639Hurricane Katrina insurance

recovery, net of costsand expenses $ 2,181,878 $ 1,066,123 $ 3,248,001

Revenue continues to exceed management's expectations. Membership and ProducersCircle have done better than expected. The mobile unit lost in the storm has been replacedwith a high definition unit, which has become a significant source of revenue.

For fiscal 2008, there are plans for three auctions and three membership drives to broadcastfrom the Navarre Site. The station plans to rebuild this facility. Management believes thatit has sufficient funding to restore the Navarre Avenue location to its full functioningcondition, and expects the operations to fully recover.

23

SUPPLEMENTAL INFORMATION

CONSOLIDATING STATEMENT OF FINANCIAL POSITION


June 30,2007

Schedule 1

AssetsCash and cash equivalentsAccounts receivable - netUnconditional promises to give - netCapital Campaign (TelePlex)

pledges receivable - netPrepaid expenses and depositsInvestmentsProperty and equipment, net

of accumulated depreciationInvestment in Yescom (subsidiary)Due from subsidiary

Total assets

LiabilitiesAccounts payable and accrued

expensesFund held for othersNotes payable to bankDeferred revenueDue to parent

Total liabilities

Net AssetsCommon stockNet assets (accumulated deficit):

UnrestrictedTemporarily restrictedPermanently restricted

Total net assets andcommon stock

Foundation

$ 3,665,611587,405

18,417

126,12776,968

6,499,570

6,849,64310,000

1,515,682

Yescom Eliminations Totals

$ 23,7941,174,728

$ (10,000)(1,515,682)

$ 3,689,4051,762,133

18,417

126,12776,968

6,499,570

6,849,643

$ 19,349,423 $ 1,198,522 $ (1,525,682) $ 19,022,263

429,0921,122,5594,805,1642,952,880

9,309,695

6,797,2652,294,579

947,884

10,039,728

Total liabilities, net assetsand common stock $ 19,349,423

$ 326,831

1,515,682

1,842,513

10,000

(653,991)

$ (1,515,682)

(1,515,682)

(10,000)

$ 755,9231,122,5594,805,1642,952,880

9,636,526

6,143,2742,294,579

947,884

(643,991) (10,000) 9,385,737

$ 1,198,522 $ (1,525,682) $ 19,022,263

24

CONSOLIDATING STATEMENT OF ACTIVITIES


For the year ended June 30, 2007

Schedule 2

$ 3,751,306 $ (830,000)

Foundation Yescom EliminationsChanges in Unrestricted Net Assets

Support and revenues:Support:

Contributions $ 1,518,587Grants from the Corporation for

Public Broadcasting 482,347Broadcasting services for Louisiana

Educational Television Authority 360,512Other grants 127,606Other support 176,022In-kind support 206,001

Revenues:Auction sales, net 165,801Contract and production services 1,297,221Investment income 855,351Hurricane Katrina insurance recovery

net of costs and expenses 2,181,878

Total unrestricted supportand revenues

Net assets released from restrictions

Total unrestricted support,revenues, and other support 7,374,826 3,751,306 (830,000)

Expenses:Program services 3,102,029 3,963,438 (830,000)Management and general 83 5,008 3 6,924Development 528,155 80,000

Total expenses 4,465,192 4,080.362 (830,000)

Increase (decrease) in unrestrictednet assets (before provision for

income taxes) 2,909,634 (329,056) $ -

Totals

7,371,326 3,751,306 (830,000)

3,500

1,518,587

482,347

360,512127,606176,022206,001

165,8014,218,527

855,351

2,181,878

10,292,632

3,500

10,296,132

6,235,467871,932608,155

7,715,554

2,580,578

25

Schedule 2(Continued)

Changes in Temporarily RestrictedNet Assets

Support:ContributionsCapital campaign pledgesOther grantsInterest on capital campaign pledges

Total support

Net assets released from restrictions

Increase in temporarily restrictednet assets

Changes in Permanently Restricted Net Assets

Increase (decrease) in net assets beforeprovision for income taxes

Provision for income taxes

Increase (Decrease) in Net Assets

Net Assets (Deficit)Beginning of year

End of year

Foundation

18,41773,21233,353

136,638

261,620

(3,500)

258,120

3,167,754

3,167,754

6,871,974

Yescom Eliminations Totals

(329,056)

(329,056)

(324,935)

S 10,039,728 S (653,991)

18,41773,21233,353

136,638

261,620

(3,500)

258,120

2,838,698

2,838,698

6,547,039

$ 9,385,737

26

CONSOLIDATED SCHEDULE OF SUPPORT AND REVENUES



Schedule 3

Temporarily PermanentlyUnrestricted Restricted Restricted

Support and RevenuesSupport:

Contributions:Membership and generalCapital campaignMajor giftsProgram underwritingSupport from commercial station

Total contributions

Grants from the Corporation forPublic Broadcasting

Broadcasting services for LouisianaEducational Television Authority

Other grants:Grants - foundations and agencies

Other support:Special eventsMiscellaneous

Total other support

In-kind support:Rent:

TransmitterLand

Goods and services

Total in-kind support

Total support

$ 985,099

181,965175,174176,349

1.518,587

482,347

360,512

127,606

117,29758,725

176,022

120,00049,00137,000

206,001

2,871,075

73,212

18,417

91,629

33,353

124,982

Totals

985,09973,212181,965193,591176,349

1,610,216

482,347

360,512

160,959

117,29758,725

176,022

120,00049,00137,000

206,001

2,996,057

27

Schedule 3(Continued)

Temporarily PermanentlyUnrestricted Restricted Restricted Totals

Support and RevenuesTotal support (carried forward)

Revenues:Auction sales, net

Contract and production services;Production servicesContract servicesTower rental

Total contract andproduction services

Investment incomeInterest income, net of custodian feesNet unrealized gains on investmentsNet realized gains on investments

Total investment income

Hurricane Katrina insurance recoverynet of costs and expenses

Total revenues

Total support and revenues

2,871,075

165,801

598,9273,571,879

47,721

4,218,527

108,961665,608

80,782

855,351

2,181,878

7,421,557

124,982

136,638

136,638

136,638

$ 10,292,632 S 261,620

2,996,057

165,801

598,9273,571,879

47,721

4,218,527

245,599665,608

80,782

991,989

2,181,878

7,558,195

$ 10,554,252

28

SPECIAL REPORT OF CERTIFIED PUBLIC ACCOUNTANTS

B o u r g e o i s B e n n e t t

REPORT ON INTERNAL CONTROL OVERFINANCIAL REPORTING AND ON COMPLIANCEAND OTHER MATTERS BASED ON AN AUDIT OF

FINANCIAL STATEMENTS PERFORMED INACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

To the Board of Trustees,Greater New Orleans Educational Television Foundation,

New Orleans, Louisiana.

We have audited the consolidated financial statements of Greater New OrleansEducational Television Foundation and Subsidiary as of and for the year ended June 30, 2007, andhave issued our report thereon dated December 5,2007. We conducted our audit in accordance withauditing standards generally accepted in the United States of America and the standards applicable tofinancial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States.

Internal Control Over Financial Reporting

In planning and performing our audit, we considered Greater New Orleans EducationalTelevision Foundation's internal control over financial reporting as a basis for designing our auditingprocedures for the purpose of expressing our opinion on the consolidated financial statements but notfor the purpose of expressing an opinion on the effectiveness of Greater New Orleans EducationalTelevision Foundation's internal control over financial reporting. Accordingly, we do not express anopinion on the effectiveness of Greater New Orleans Educational Television Foundation's internalcontrol over financial reporting.

Our consideration of internal control over financial reporting was for the limited purposedescribed in the preceding paragraph and would not necessarily identify all deficiencies in internalcontrols over financial reporting that may be significant deficiencies or material weaknesses.However, as discussed below, we identified deficiencies in internal control over financial reportingthat we consider to be significant deficiencies and which are described in the accompanying scheduleof findings and responses as items 07-01 and 07-02.

29

1340 West Tunnel Blvd..Suite 430P.O. Box 2168Houma,LA7036l-2l68Phone (985) 868-0139Fax (985) 879-1949

Certified PublicAccountants | Consultants

A Limited Liability Company

P. O. Box 60600New Orleans, LA 70160-0600Heritage Plaza, 17th FloorPhone (504) 831 -4949Fax (504) 833-9093

507-D St. Philip StreetP.O.Box 1205Thibodaux,LA70302-l205Phone (985) 447-5243

A control deficiency exists when the design or operation of a control does not allowmanagement or employees, in the normal course of performing their assigned functions, to prevent ordetect misstatements on a timely basis. A significant deficiency is a control deficiency, orcombination of control deficiencies, that adversely affects Greater New Orleans EducationalTelevision Foundation's ability to initiate, authorize, record, process, or report financial data reliabilityin accordance with generally accepted accounting principles such that there is more than a remotelikelihood that a misstatement of Greater New Orleans Educational Television Foundation's financialstatements that is more than inconsequential will not be prevented or detected by Greater New OrleansEducational Television Foundation's internal control. We consider the deficiencies described in theaccompanying schedule of findings and responses to be significant deficiencies in internal control overfinancial reporting.

A material weakness is a significant deficiency, or combination of significantdeficiencies, that result in more than a remote likelihood that a material misstatement of the financialstatements will not be prevented or detected by Greater New Orleans Educational TelevisionFoundation's internal control.

Our consideration of the internal control over financial reporting was for the limitedpurpose described in the first paragraph of this section and would not necessarily identify alldeficiencies in the internal control that might be significant deficiencies and, accordingly, would notnecessarily disclose all significant deficiencies that are also considered to be material weaknesses. Webelieve that the significant deficiencies described above are material weaknesses.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Greater New OrleansEducational Television Foundation's consolidated financial statements are free of materialmisstatement, we performed tests of its compliance with certain provisions of laws, regulations,contracts and grant agreements, noncompliance with which could have a direct and material effect onthe determination of financial statement amounts. However, providing an opinion on compliance withthose provisions was not an objective of our audit and, accordingly, we do not express such anopinion. The results of our tests disclosed no instances of noncompliance or other matters that arerequired to be reported under Government Auditing Standards.

30

This report is intended solely for the information of the Board of Trustees, managementand the Legislative Auditor for the State of Louisiana, and is not intended to be and should not be usedby anyone other than those specified parties. Under Louisiana Revised Statue 24:513, this report isdistributed by the Legislative Auditor as a public document.

0Certified Public Accountants.

New Orleans, Louisiana.December 5, 2007.

31

SCHEDULE OF FINDINGS AND RESPONSES



Section I - Summary of Auditor's Report

a) Financial Statements

Type of auditor's report issued: unqualified

Internal control over financial reporting:

• Material weakness(es) identified? X_ yes no• Significant deficiency(ies) identified that are

not considered to be material weakness X_ yes none reported

Noncompliance material to financial statements noted? yes X no

b) Federal Awards

Greater New Orleans Educational Television Foundation and Subsidiary did not receivefederal awards during the year ended June 30, 2007.

Section II - Financial Statement Findings

Internal Control

07-01 Production Services Billings

Criteria - Effective controls require an entity to generate invoices for services withthe date of billing and to post to general ledger upon completion of services.

Condition - Invoices are generated in Excel with incorrect dates and are later postedto the ACCPAC accounting software.

Context - Systematic, prevalent throughout the system of internal controls for theperiod tested.

32

(Continued)

Section II - Financial Statement Findings (Continued)

Internal Control (Continued)

07-01 Production Services Billings (Continued)

Effect - The Foundation has a recognized deficiency in internal controls. Inaccurateor untimely postings created timing differences, inaccurate tracking of customer'soutstanding accounts receivable balances, and potential misstatements in revenue.

Cause - There is a lack of training and supervision of employee responsibility forpreparing billings and adequate review of billings.

Recommendation - Personnel should utilize the current ACCPAC accountingsoftware to track job costing and to create invoices. Also, invoices should be datedwith the date that it is prepared and will be forwarded to customer and not with thedate of the services provided.

Views of responsible officials of the auditee when there is a disagreement withthe finding, to the extent practical - None.

07-02 Monitoring of Production Services Revenue

Criteria - Effective controls require management to monitor and reconcile revenuefor production services performed to the postings in the general ledger.

Condition - YESCOM management reviews invoices that are generated in Excelwhich are later posted to the general ledger.

Context - Systematic, prevalent throughout the system of internal controls for theperiod tested.

Effect - The Foundation has a recognized deficiency in internal controls. Inaccurateor untimely postings created timing differences, inaccurate tracking of customer'soutstanding accounts receivable balances, and misstatements in revenue.

Cause - Management has not assumed the responsibility of analyzing revenue in thegeneral ledger to verify that all production services revenues are recordedappropriately.

33

(Continued)

Section II - Financial Statement Findings (Continued)

Internal Control (Continued)

07-02 Monitoring of Production Services Revenue (Continued)

Recommendation - YESCOM management should monitor, review, reconcile, andapprove revenue postings to the general ledger on a timely basis. These proceduresshould be formulated and written to ensure proper and consistent implementation.

Views of responsible officials of the auditee when there is a disagreement withthe finding, to the extent practical - None.

Section III - Federal Award Findings and Questioned Costs

Not applicable.

34

REPORTS BY MANAGEMENT

SCHEDULE OF PRIOR YEAR FINDINGS AND RESPONSES



Section I - Internal Control and Compliance Material to the Financial Statements

Internal Control

No material weaknesses were noted during the audit of the consolidated financialstatements for the year ended June 30, 2006.

No reportable conditions were reported during the audit of the consolidated financialstatements for the year ended June 30, 2006.

Compliance

No compliance findings material to the consolidated financial statements were noted duringthe audit for the year ended June 30, 2006.

Section II -Internal Control and Compliance Material To Federal Awards

Greater New Orleans Educational Television Foundation and Subsidiary did not receive federalawards during the year ended June 30, 2006.

Section III - Management Letter

A management letter was not issued in connection with the audit for the year ended June 30,2006.

35

MANAGEMENT'S CORRECTIVE ACTION PLAN



Section I - Internal Control and Compliance Material to the Financial Statements

07-01 Recommendation - Personnel should utilize the current ACCPAC accountingsoftware to track job costing and to create invoices. Also, invoices should be datedwith the date that it is prepared and will be forwarded to customer and not with thedate of the services provided.

Management's Response - Subsequent to year end, personnel are utilizing theACCPAC accounting software for billings.

07-02 Recommendation - YESCOM management should monitor, review, reconcile, andapprove revenue postings to the general ledger on a timely basis. These proceduresshould be formulated and written to ensure proper and consistent implementation.

Management's Response - YESCOM management will implement the suggestedreview and monitoring procedures.

Section II -Internal Control and Compliance Material To Federal Awards

Greater New Orleans Educational Television Foundation and Subsidiary did not receive federalawards during the year ended June 30, 2007.

Section III - Management Letter

A management letter was issued in connection with the audit for the year ended June 30,2007.

36

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