enterprise florida board meeting book 11.09.12
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Enterprise Florida Board MeetingRosen Shingle Creek 9939 Universal Blvd. Orlando, FL 32819 Hotel: 866.996.6338
November 8 9, 2012
TABLE OF CONTENTS ENTERPRISE FLORIDA BOARD EVENTS
Tab 1 Agenda
EFI Board Meeting Agenda
Tab 2 Minutes
Minutes: September 13, 2012Tab 3 Action Items
Consent Agenda Audit Report
Tab 4 Florida Jobs Progress
Florida Jobs Graph Florida Economic Growth Graph
Tab 5 Appendix Board Member Directory 2012-2013 EFI Events 2013 EFI Legislative Agenda 2012 Florida Target Industry
Competitiveness Study
THURSDAY,NOVEMBER 8,2012
11:15 A.M. 12:45 P.M.New Board Member Orientation Lunch2
ndFloor St. Johns 23
11:15 A.M. 12:45 P.M.Florida International Trade Partnership Lunch2
ndFloor St. Johns 32/33
1:00 P.M. 2:00 P.M.Legislative Committee2
ndFloor St. Johns 32/33
2:00 P.M. 4:30 P.M.Joint Audit & Finance CompensationCommittees2
ndFloor St. Johns 23
2:00 P.M. 4:00 P.M.Marketing Task Force2ndFloor Wekiva 3
2:30 P.M. 4:30 P.M.Space Florida Board Meeting2
ndFloor St. Johns 28/29
5:00 P.M. - 6:00 P.M.Joint Enterprise Florida & Workforce FloridaPartner Reception1
stFloor Butler Room
6:00 P.M. - 6:15 P.M.Bus to Board DinnerLobby Level Bus Entrance
7:00 P.M. - 9:00 P.M.Board DinnerDisneys Contemporary Resort, 4600 N. World Dr., LakeBuena Vista: Grand Republic Room B, 2
ndFloor
FRIDAY,NOVEMBER 9,2012
7:00 A.M. 8:30 A.M.Enterprise Florida Breakfast1
stFloor Gatlin E 4-5
8:30 A.M. 11:00 A.M.Enterprise Florida Board Meeting1
stFloor Gatlin E 1-3
11:15 A M 12:30 P M
Airport Shuttle: $19
www.mearstransportation.com
Resort fee: $5Includes: Self-parking, Gym & Wi-Fi
Teleconference:
Dial: 877.402.9753 Code: 6423569#
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nterpr se or a oar eet ng gen aRosen Shing le Creek Orlando, FL
November 9, 2012 8:30 A.M. 11:00 A.M. EDT
8:30 a.m. Welcome & Roll Call............................................................................... .Hal Melton, Vice Chair
8:35 a.m. Action Items & Vice-Chairs Report .......................................................... Hal Melton, Vice Chair
September Board Minutes
Consent Agenda Annual Financials & Audit Report...Marshall Criser
8:40 a.m. Chairmans Report .........................................................................................Governor Rick Scott
9:00 a.m. Project Overview: Digital Risk, LLC .......................Peter Kassabov, CEO & Managing Director
9:10 a.m. Board Q&A on Project Overview......................................................................
Board Members
9:15 a.m. Presidents Update .............................Gray Swoope, Secretary of Commerce/President & CEO
9:25 a.m. Board Q&A with the President ..............................................................................Board Members
9:35 a.m. Floridas Business Branding......................Don McEachern, North Star Destination Strategies
10:00 a.m. Board Q&A Business Branding ..........................................................................Board Members
10:10 a.m. 2013 Legislative Agenda Approval ..................................................................... Fred Leonhardt
10:20 a.m. Recommendations from 2013 Fl Competitiveness Study ...................Kevin Gillen, Facilitator
10:50 a.m. Vice-Chair Appreciation...........................................................................................Gray Swoope
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DRAFT Minutes Enterprise Florida Board MeetingSeptember 13, 2012
A regular meeting of the Enterprise Florida, Inc. (EFI) Board of Directors was held on September 13,2012 in St. Pete Beach, Florida.
Members Present:CFO Jeff Atwater Dwayne IngramAlan Becker Belinda KeiserJay Beyrouti Beth Kirkland
Jesse Biter Chris KisePam Bondi Fred LeonhardtPark Brady Bob McAdamRon Campbell Hal MeltonStan Connally Joseph MeterchickAndrew Corty Deborah MillinBrett Couch Gilberto NevesMarshall Criser Susan PareigisHayden Dempsey Ernesto PerezVinny Dolan Winfred PhillipsBill Dymond Henry RodriguezBlake Gable Denise SaikiDanny Gaekwad Gene SchaeferKevin Gillen Governor Rick ScottGordon Gillette Kelly SmallridgeBill Heavener Hal ValecheKevin Hyman Mark Wilson
Present Via Telephone: Others Present:Debra Duvall David Balloff (Gary Spulaks alternate)Howard Halle Brook McKnighton (Adam Putnams designee)Marshall Heard Jeff Parrish (Dominic Calabros alternate)Cindy Kane (Harris Corporation) Mary Snow (Tony Villamils alternate)Andy Rosen Michael Sole (Eric Silagys alternate)Rick Wilson Gray Swoope
Agenda:
I. Welcome & Roll CallII. Action Items & Vice-Chairmans Report
Approval of May 10, 2012 Board of Directors Meeting MinutesApproval of Consent Agenda with 4th Quarter Financial StatementsApproval of Finance & Compensation Committee Recommendations
III. Chairmans Report
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DRAFT Minutes of a Regular Meeting of the Enterprise Florida Board
PROCEEDINGS
A quorum being present, Vice Chairman Hal Melton called the meeting to order at 8:34 a.m.
Action Items & Vice Chairmans Report
Hal Melton acknowledged current Enterprise Florida investors, and noted that 10 new private sectorinvestors have joined the board since Governor Scott took office. Previous high is four new investors inone year. He announced the newest investor, IntegraClick, and introduced new board members: StanConnally, Kelly Smallridge and Beth Kirkland.
Alan Becker pointed out that the May 10, 2012 minutes should state that the Governor increased the
education budget by $1 billion, not $1 million. The correction was noted in the record and staff instructedto amend minutes accordingly.
Park Brady made a motion to approve the minutes of the May 10, 2012 board meeting as amended,
which was seconded by Andy Corty, and approved unanimously.
Approval of Consent Agenda
1. Approve New and Renewing At-Large Board Members
Re-elect renewing at-large members for a term to end September 2013:
Vinny Dolan, Progress Energy, Inc.
Howard Halle, Wells Fargo Bank, N.A.
Kevin Hyman, Bright House Networks, LLC
Tony Villamil, Washington Economics
Elect renewing at-large investor, new representative, for a term to end September 2013:
Stan Connally, Gulf Power Company
Elect new at-large member for a term to end September 2013:
James Epstein, IntegraClick, LLC
Approve new at-large appointment for a term to end January 2013:
Kelly Smallridge, BDB of Palm Beach
Approve new ex-officio appointment for a term to end June 2013:
Beth Kirkland, FEDC Chair
2. Approve EFI Interim Financial Statements3. Approve incentive compensation funds for staff not to exceed $427,500 in private sector funds for
fiscal year 2011/12
Henry Rodriguez made a motion to approve the consent agenda, which was seconded by Fred
Leonhardt, and approved unanimously.
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DRAFT Minutes of a Regular Meeting of the Enterprise Florida Board
The Finance & Compensation Committee has completed its evaluation of Gray Swoope asPresident and CEO of Enterprise Florida for fiscal year 2011/12 and recommends an incentive
payment of $70,000, or 100% of the contract incentive payment, be awarded.
Alan Becker made a recommendation to approve the Finance & Compensation Committeerecommendation, which was seconded by Kevin Gillen, and approved unanimously.
Chairmans Report
Governor Scott reported that there is no better place in America to do business than Florida. Every
economic indicator is good; we are headed in right direction.
Scott took a moment to compliment Gray Swoope and Pam Bondi, State Attorney General, on the
outstanding job they have both been doing for the state.
Scott is currently on a listening tour for K-12 education. He said Florida has made a lot of progress, but
there are still a lot of things that can improve.
Project Overview from Tampa Bay Region
Hal Melton and Governor Scott introduced Steve Haslam, CEO of StreetLinks LLC, to talk about a recent
location announcement from the companys perspective. Haslam told the board that StreetLinks is thefastest growing appraisal management company in the country. The company is based in Indianapolis
and had about 15 employees three-and-a-half years ago.
StreetLinks located a facility in Tampa, and hired their first group of people a year ago this week. The
business grew to 200 people and they knew they needed another facility. Tampa was a natural option as
they had found a good labor pool, a good quality workforce, ease in hiring, and a low rate of turnover.
Haslam stated that of all the states, Gray Swoope and his team was the absolute best organization they
have ever worked with. Haslam reported that he has never worked with state officials that had thebusiness minds and had the business interests as does the state of Florida.
Florida gave assurances that it would do everything in its power to understand the nature of the company,
the nature of the employees, and the nature of its needs, and bring that to the Governor. A week to ten
days later the entire package was put together, customized to meet the needs of the company.
Haslam projected that he will have another 100 employees down here for a company called Advent by
December or January. A second company, Mango Moving, is going to start building its sales force down
here over the next year and will have just over 100 employees by next summer. Haslam already has 250employees in Tampa and projects that he will have 450 to 500 employees in Florida around the first
quarter. Haslam concluded his comments about Floridas business climate, You have a message: you
are business friendly. The people that we worked with knew business. The people that we worked with
worked fast, they worked understanding our needs, they worked professionally, and I really, really felt like
I was engaged with partners And I think that thats your message
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DRAFT Minutes of a Regular Meeting of the Enterprise Florida Board
Swoope gave a brief overview of key metrics that indicates Florida is moving in the right direction:
127,200 private sector jobs created
2.3% drop in the unemployment rate since June 2010(largest drop of any state in the US during this timeframe)
online job postings increased 11% since June 2011
building permits are up 36% over last year
Swoope said that what he wanted to talk about today is how far we have come in a very short time. The
Governor took office in January, Swoope came on board in March, and in July legislation was
implemented that created the Department of Economic Opportunity.
One of the biggest changes Swoope sees is how we use incentives. Instead of Enterprise Florida workinga deal with a client, making a recommendation, and then handing it over to OTTED only to have the
whole process start over, today representatives from EFI, DEO and any other player that needs to be
there, like Workforce Florida, all sit down and talk about what it takes to be competitive. The team looks at
the company, market risks, and the industry sector -- they talk about every part of the deal. And then they
come to a consensus recommendation that includes the incentive amount and the recourse if the deal
goes bad. This joint effort starts early in the business assistance process.
Swoope then reported on end of fiscal year results. In Business Development, EFI achieved 127% of goal, creating 25,339 jobs; capital investment
was 126% of goal at $1.513 million; jobs in targeted sectors were up 162%; and the number of
referrals to communities was up 258%.
In International Trade, trade leads are up 123%, trade consultations were up 124% of goal, export
sales were 118% above goal, and the team achieved 142% of goal on international event
participation. Bottom line is an increase in value of Florida origin exports from $59.9 billion to
$66.9 billion.
Last year 22 Sports Commissions hosted over 1,500 sports events, bringing over two millionvisitors to the state, a 47% increase over the previous fiscal year.
The Strategic Partnerships division is strengthening our relations with partners. There is an
excitement on the board and there are 10 new board investors for the fiscal year. Also in that
division, there has been a lot of work with the Governor and Lt. Governor on military installations
in the state. The Stakeholders Council not only meets quarterly, but also has monthly calls. There
is a lot of work going on in this area. The Stakeholders Council has been expanded to include all
primary partners and other economic development organizations.
The Minority and Small Business, Entrepreneurship & Capital Programs (MaSBEC) division is
establishing strong partnerships with existing minority focused organizations. Thye supported five
minority business workshops last year. Swoope reported the establishment of a Small Business
Capital Initiative, which has obligated approximately $50 million to date. The $36 million Clean
Energy Investment Program managed by the Florida Opportunity Fund is now fully obligated.
A di t S th M k ti & C i ti di i i h b ki h d t
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DRAFT Minutes of a Regular Meeting of the Enterprise Florida Board
Swoope advised the board that Enterprise Florida is working 321 active projects. If all of these
projects came to fruition, the result would be just less than 80,000 jobs and a capital investment of
$8.3 billion. Looking at established projects by industry, manufacturing and headquarters is by far the sector
showing the most activity. Information technology, life sciences and financial/professional services
are all about the same. Swoope reported that aviation has dropped off a little, possibly as a result
of uncertainty in the defense industry.
Swoope closed by saying that in 22 months the organization has stayed on mission, building a
professional team.
2012 Competitiveness Study
Mike Sole introduced Mark Sweeney of McCallum Sweeney Consulting, who conducted a target
competitiveness study for Enterprise Florida with funding assistance from FPL, Progress Energy, Gulf
Power, TECO, PowerSouth and Seminole Electric.
Sweeney informed the group that their partner on this project was Avalanche Consulting, a consulting firm
that works with economic development organizations. The project consisted of a five-step process which
included a review of current policies, practices and resources; talking to corporate decision makers and
site selectors; talking to regional and local economic developers in Florida; analyzing and benchmarkingagainst competitor locations; and developing a final report.
Sweeney provided a summary of the study findings, reported by target sector.
Aviation/Aerospace
Key Competitive Issues: continually growing sector, competition is also growing, right in Floridas back
yard; opportunities are across the board; aggressive, high-value incentives at state and local level will
be important to win those big projects
Enhancements for Florida: have ready sites, particularly with runway access; workforce training;
incentive enhancements
Clean Technology
Key Competitive Issues: using cutting edge, often risky technologies; opportunities in solar and wind
generation (ebbs and flows with federal tax policy, lot of uncertainty), energy storage; Florida presents
a very large local market
Enhancements for Florida: up-front costs and finance, Florida-focused capital funds, completeelimination of sales tax on machinery equipment; recruitment of specialty engineers and upper
management; electric reliability and cost
Financial/Professional Services
Key Competitive Issues: large important office sector in which Florida has and continues to have
s ccess cost sa ings relati e to major finance centers record of s ccess in spite of disaster risk
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DRAFT Minutes of a Regular Meeting of the Enterprise Florida Board
Homeland Security/Defense
Key Competitive Issues: growing industry; lots of high-tech, often risky technologies; tied to
direct/indirect federal funding; opportunities in aviation and IT; Floridas federal representatives willplay an important role
Enhancements for Florida: ready sites; large and small airport access; electric reliability; land
incentives
Information Technology
Key Competitive Issues: strong presence of IT skills in the workforce, however no concentration of
stand-alone IT firms; venture capital firms know there are good opportunities in Florida, but tend to tie
investment to hubs in CA, MA
Enhancements for Florida: enhance networking that is critical to entrepreneurs
Life Sciences
Key Competitive Issues: Florida appears poised for potential increase in activity in life sciences;
capital sources find good opportunities in Florida, but tend to tie investment to hubs in CA, MA; natural
disaster risk is front of mind for these firms
Enhancements for Florida: better direct communication between universities and young life sciencescompanies; electric reliability; development of capital sources
Manufacturing
Key Competitive Issues: geography; Florida targets are operations that will serve Florida or products
where shipping is a modest relative cost
Enhancements for Florida: broad portfolio of ready sites are critically important for this sector;
enhanced training; incentives matter in manufacturing increase funding and Governors authority
over Quick Action Closing Fund; free land to large users (often provided at local level)Corporate Headquarters
Key Competitive Issues: image (great place to have fun, not a place to move headquarters); not a
high concentration of Fortune 500 companies; good location for hemispheric headquarters
Enhancements for Florida: image and campaign; promotion of air service assets; promotion of quality
of life assets (more than just visit, what its like to live here); relocation cost incentives (ability to
mitigate those up-front costs)
Global Logistics
Key Competitive Issues: geography; targets are operations that serve Florida; locations in northern
Florida can serve much of the southeast US
Enhancements for Florida: development of ready sites; electric reliability; upgrade of the industrial
training program; communities being in a position to offer incentivized property
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DRAFT Minutes of a Regular Meeting of the Enterprise Florida Board
Companies/ Local/ State
Consultants Regional EDOs Benchmark Findings
Cost of Doing Business Negative Neutral NeutralRecommendations: modernize taxes
Real Estate and Infrastructure Negative Negative Negative
Recommendations: portfolio of sites and buildings
Talent and Training Positive Neutral Negative
Recommendations: improve QRT, funding for workforce training, recruit best program managers from
other states that have put a lot of effort into training
Incentives Neutral Negative Neutral
Recommendations: continue to streamline authorization process; implement county tier system;
improve flexibility and effectiveness of existing programs
ED Strategy/Branding Negative Negative Neutral
Recommendations: increase funding, promote business brand
ED Administration Neutral Neutral Neutral
Recommendations: EFI needs more project management resources
Stakeholders Council Update
Kelly Smallridge reiterated that there has been a dramatic improvement in economic development in the
state: there is a tremendous amount of new communication; the relationship with stakeholders has
improved dramatically. Smallridge reported on the four task forces that have been created by Enterprise
Florida.
The Community Competitiveness Task Force has developed a job readiness checklist forcommunity evaluation in order to promote job creation and economic development. Enterprise
Florida will introduce this as part of a more comprehensive program later in the fiscal year.
The Innovation and Entrepreneurship Task Force concluded its original assignment to create a
survey assessing all counties in the state of Florida to determine the resources that are available
to grow and assist entrepreneurs in Florida. All of the information gathered from these surveys is
now being put on a website, called the Florida Virtual Entrepreneurship Center that is managed by
the Florida High Tech Corridor. Since the task force has completed its original mission it is
dissolved per Council policy. A presentation was made by the Florida Research Consortium. Thetask force agreed with the recommendations to develop a seed fund and also to create a research
fund.
The Manufacturing, Supply Chain, and Logistics Task Force report focused on 2 items how
Enterprise Florida is marketing the state to manufacturers. The second focus is to look at adding
the sales and use tax exemption to the 2013 legislative agenda specifically the tax on
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DRAFT Minutes of a Regular Meeting of the Enterprise Florida Board
New Business
Gray Swoope introduced new Enterprise Florida staff members.
Closing Remarks
Chairman Scott challenged each board member to get to know at least one other person that they dont
know on the board. He also asked that everyone write a letter that talks about why Florida is the best
place to do business and get it out everybody you know. You never know where the next opportunity is
going to come from.
The next meeting of the Enterprise Florida Board of Directors will take place November 8-9, 2012 in
Orlando, Florida.Hal Melton made a motion to adjourn the Enterprise Florida board meeting, which was seconded
Alan Becker, and approved unanimously.
The Enterprise Florida Board of Directors meeting adjourned at 11:00 a.m.
Submitted by: Gray Swoope, President & CEO
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Enterprise Florida Board Meeting Consent AgendaNovember 9, 2012
Board members should notify Vice Chair of any item they wish to review before voting on the ConsentAgenda. These items will be pulled from the agenda to be discussed and voted on after the rest of theconsent agenda is approved. Board members are not allowed to vote on their own re-appointment or anyissues for which they have a conflict of interest and those present for the vote will be considered recusedfrom these votes.
The Executive Committee reviewed the following items at their October 10, 2012 meeting andrecommends their approval to the Board:
1.At-large members
Re-appointment of these at-large members for a term to November, 2013
o The St. Joe Company: Park Brady, CEO
o Walt Disney Parks & Resorts, Anthony Connelly, SVP & CFO U.S.
o TD Bank: Kevin Gillen, Regional President Florida
o JPMorgan Chase & Co. : Mark Bensabat, CEO, Middle Market Banking
o FLF, LLC: Howell Melton, Jr., Co-Chairman & CEO
2. Appointments of Rick Rosen and Ken Wright to Florida Opportunity Fund Board of Directors for
a three year term starting in November 2012.
3. Interim Financial Report: FY 2012-13 reporting period July 1, 2012 to September 30, 2012
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Enterprise Florida Financial ReportQuarter Ending September 30, 2012 - Unaudited
The following financial information for the quarter ending September 30, 2012 and 2011, is unaudited, and is derived from internally generated financialstatements. This report is provided to the Board of Directors to assist in its understanding and analysis of EFIs financial performance andaccountability. These statements have been generated by management and the fairness of their presentation is the responsibility of management.
Statement of Financial Position (Attachment A)
The Statement of Financial Position provides a comparison of the assets, liabilities and net assets of EFI as of September 30, 2012 and 2011,and is presented in a combined format on Attachment A-1. Attachment A-2 provides the detail of EFIs Financial Position by category or activity.Operations are directly related to our agreement with the Florida Department of Economic Opportunity. Administered are funds awarded bythe State to various grantees and administered by EFI. Corporate is investor activity and the use of those funds. Restricted is fundingearmarked for a specific use only for programs such as Base Protection, Florida Defense Support Task Force, Small Business TechnologyGrowth Fund, Rural Strategic Marketing, Technology related programs, and the State Small Business Credit Initiative (SSBCI).
Statement of Act ivities (Attachment B)
The Statement of Activities provides a comparison of EFI's revenues and expenses compared to the budget approved by the Board.Information for the prior year is presented for comparative purposes. Information is presented for the quarter ending September 30, 2012 and2011 on Attachment B-1. Attachment B-2 provides the detail for the three months, formatted in the same manner as EFIs Financial Position.
RevenuesRevenues include state funding, investor contributions, program fees, and interest. The revenues are either collected or billed by quarter end.For the quarter ending September 30, 2012, the first quarter revenue from the state has been recorded and is expected to be received inNovember. EFIs corporate contributions were budgeted at $1,400,000 for FY 2012/13. Contributions are budgeted on a straight-line basisthroughout the fiscal year, with collections varying based on the anniversary dates of the investors.
Revenue in total for the three months in the fiscal year is slightly lower than the budget related to the timing of the receipts of the corporatecontributions and the Sports division with collections related to the tag revenue slightly lower than the amount budgeted.
ExpensesYear-to-date, EFI has incurred expenses of $4.1 million compared to $3.3 million in 2011 but is under budget for the year largely in theOperating, General and Administrative category. Expenses were budgeted on straight-line basis similar to revenue, whereas the actualspending fluctuates throughout the year. Payroll and Related Costs have also increased over the prior year to reflect the addition of the stafffrom these entities, as well as for the increase in staff hired over the past fiscal year to fill several key program positions previously left vacant.
Additional Schedules
In addition, to assist in the analysis of EFIs financial performance, included on the last page is a schedule of the administered activity detailingthe category of programs by award year. The first column, the Contract Award, is a memo column indicating the expected total to be awarded.The next three columns track the actual flow of funds from the State to EFI, then to the Recipients. The last column total supports theAdministered category of activity included in the detail of EFIs Financial Position included on Attachment A-2 for September 30 2012
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Financial Report
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Financial Report
Enterprise Florida, Inc.Financial Statements For the Quarter Ending September 30, 2012
Statement of Financial Position, Unaudited
Attachment A-1 September 30, 2012 & 2011 Comparative
Attachment A-2 September 30, 2012 & 2011 Detail
Statement of Activities for the Three Months Ending, Unaudited
Attachment B-1 September 30, 2012 & 2011 Comparative
Attachment B-2 September 30, 2012 & 2011 Detail
Administered Activity by Program as of September 30, 2012
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Financial Report
$ %
2012 2011 Change Change
Assets
1 Cash and Cash Equivalents - unrestricted 11,153$ 12,106$ (953)$ -7.87% (A)
2 Cash and Cash Equivalents - restricted 16,092 3,648 12,444 341.12% (B)
3 Cash and Cash Equivalents - escrow 18,223 35,673 (17,450) -48.92% (C)
4 Accounts Receivable 6,420 3,605 2,815 78.09% (D)5 Other Assets 663 1,163 (500) -42.99% (E)
6 Total Assets 52,551$ 56,195$ (3,644)$ -6.48%
Liabilities and Net Assets7 Accounts Payable and Other Liabilities 1,499$ 2,083$ (584)$ -28.04% (F)
8 Deferred Revenue 4,432 5,342 (910) -17.03% (G)
9 Escrow Payable 18,214 35,663 (17,449) -48.93% (C)
10 Total Liabilities 24,145 43,088 (18,943) -43.96%
Net Assets
11 Temporarily Restricted 18,485 3,801 14,684 386.32% (B)
12 Unrestricted 9,921 9,306 615 6.61% (H)
13 Total Net Assets 28,406 13,107 15,299 116.72%
14 Total Liabilities and Net Assets 52,551$ 56,195$ (3,644)$ -6.48%
(A)
(B)
(C)Escrow funds received from the state to be paid to several companies once DEO certifies the contract deliverables are met.
The cash asset is offset by a related liability with the difference being the interest earned and payable to the State of Florida on a quarterly basis.
(D)
(E)
(F)
(G)
(H)
(I)
(J)
(K)
(L)
(M)
(N)
Revenue related to events is higher than the budget and the prior year. These fees directly offset event expenses.
Increase in payroll and benefits is from the addition of the new program staff and the merger of the Sports division.
The increase in unrestricted net assets correlates to the inclusion of the Sports and Minority Business divisions.
International offices are relatively on track with prior year-to-date numbers and the budget for the year.
Unrestricted funds for operations and administered programs.
Corporate contributions are budgeted on a straight-line basis with actual collections recorded on a cash basis.
Operating, general and administrative costs are relatively on track with the budget but higher than last year due to the inclusion of the Sports program expenses.
Accounts receivable includes the first quarter appropriation, trade accounts receivable, and program related income related to the SSBCI program.
September 30
Trade show expenses are higher than budget and prior year results but are offset with higher participation fees since all events are priced to break-even. Therewas much higher activity during the year related to the Team Florida missions.
Accounts payable decreased related to operations and FL Sports grants awarded.
Enterprise Florida, Inc.
Statement of Financial Position, Unaudited
Attachment A-1($ in Thousands)
Deferred Revenue is largely composed of funds received from the State of Florida, to be paid for EFI administered grants. The balance fluctuates throughout the
year based on when funds are received from the State, as well as, when payments are made to the grantees.
Other assets decreased for depreciation expense recorded at 6/30/12.
Restricted funds were received and recorded as revenue in prior years with funds expended in the current year. New funds were received related to the FL
Defense Support Task Force and State Small Business Credit Support Initiative, accounting for the majority of the increase .
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Financial Report
Operations Administered Corporate Restricted Total
Assets
15 Cash and Cash Equivalents - unrestricted 4,632$ 4,364$ 2,157$ -$ 11,153$
16 Cash and Cash Equivalents - restricted - - - 16,092 16,092
17 Cash and Cash Equivalents - escrow 18,223 - - - 18,223
18 Accounts Receivable 4,027 - - 2,393 6,42019 Other Assets 663 - - - 663
20 Total Assets 27,545$ 4,364$ 2,157$ 18,485$ 52,551$
Liabilities and Net Assets
21 Accounts Payable and Other Liabilities 1,497$ 2$ -$ -$ 1,499$
22 Deferred Revenue 70 4,362 - - 4,432
23 Escrow Payable 18,214 - - - 18,214
24 Total Liabilities 19,781 4,364 - - 24,145
Net Assets
25 Temporarily Restricted - - - 18,485 18,485
26 Unrestricted 7,764 - 2,157 - 9,921
27 Total Net Assets 7,764 - 2,157 18,485 28,406
28 Total Liabilities and Net Assets 27,545$ 4,364$ 2,157$ 18,485$ 52,551$
Operations Administered Corporate Restricted Total
Assets29 Cash and Cash Equivalents - unrestricted 4,184$ 5,324$ 2,598$ -$ 12,106$
30 Cash and Cash Equivalents - restricted - - - 3,648 3,648
31 Cash and Cash Equivalents - escrow 35,673 - - - 35,673
32 Accounts Receivable 3,605 - - - 3,605
33 Other Assets 1,010 - - 153 1,163
34 Total Assets 44,472$ 5,324$ 2,598$ 3,801$ 56,195$
Liabilities and Net Assets
35 Accounts Payable and Other Liabilities 2,083$ -$ -$ -$ 2,083$
36 Deferred Revenue 18 5,324 - - 5,342
37 Escrow Payable 35,663 - - - 35,663
38 Total Liabilities 37 764 5 324 43 088
September 30, 2011
September 30, 2012
Enterprise Florida, Inc.
Statement of Financial Position, Unaudited
Attachment A-2($ in Thousands)
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Financial Report
Actual Budget Difference Actual Budget Difference
Revenues:
43 State Appropriations 3,950$ 3,962$ (12)$ (D) 2,960$ 3,400$ (440)$
44
Private Cash Contributions 210 486 (276) (I) - 300 (300)45 Other Revenues 570 463 107 (J) 318 421 (103)
46 Total Revenues 4,729 4,910 (181) 3,278 4,121 (843)
Expenses:
47 Payroll and Related Costs 1,901$ 1,920$ (19)$ (K) 1,652$ 2,076$ (424)$
48 Operating, General and Administrative 882 1,439 (557) (L) 570 777 (207)
49 Trade Shows 703 561 142 (M) 414 321 93
50 International Offices 341 339 3 (N) 327 346 (19)
51 Professional Fees 180 227 (47) (O) 238 246 (8)
52 Advertising & Marketing 11 266 (255) (P) 19 266 (247)
53 Travel 83 130 (47) (Q) 46 89 (43)
54 Total Expenses 4,102 4,882 (782) 3,266 4,121 (855)
55 Change in net assets - operations 627 28 599 12 - 12
56 Change in net assets - temp restricted 252 - 252 (R) (34) - (34)
57 Net assets, beginning of period 27,527 - 27,527 13,129 13,129 -
58 Net assets, end of period 28,406$ 28$ 28,379$ 13,107$ 13,129$ (22)$
59 Revenue - Pass Throughs & Grants 945 - 945 165 - 165
60 Expenses - Grants to Other Organizati ons 945 - 945 165 - 165
61
Revenue - Temporarily Restricted 8,350 - 8,350 (R) - - -62 Expenses -Temporary Restricted 8,098 - 8,098 (R) 34 - 34
(A)
(B)
(C) Escrow funds received from the state to be paid to several companies once DEO certifies the contract deliverables are met.
The cash asset is offset by a related liability with the difference being the interest earned and payable to the State of Florida on a quarterly basis.
(D) Accounts receivable includes the fourth quarter appropriation, trade accounts receivable, and program related income related to the SSBCI program.
(E) Other assets increased for new fixed assets purchased in FY 2011/12, as well as the new loan programs administered under the Capital programs.
(F)
(G)
(H)
(I)
(J)
(K)
($ in Thousands)
Statement of Activities
Increase in payroll and benefits is from the addition of the new program staff and the merger of the Sports and Minority Business divisions.
Restricted funds were received and recorded as revenue in prior years with funds expended in the current year. New funds were received related to the FL Defense Support Task
Force and State Small Business Credit Support Initiative, accounting for the majority of the increase .
Revenue related to events is higher than the budget and the prior year. These fees directly offset event expenses.
Accounts payable decreased related to operations and FL Sports grants awarded.
Deferred Revenue is largely composed of funds received from the State of Florida, to be paid for EFI administered grants. The balance fluctuates throughout the year based on
when funds are received from the State, as well as, when payments are made to the grantees.
The increase in unrestricted net assets correlates to the inclusion of the Sports and Minority Business divisions.
Unrestricted funds for operations and administered programs.
Corporate contributions are budgeted on a straight-line basis with actual collections recorded on a cash basis.
Enterprise Florida, Inc.
For the Three Months Ending, Unaudited
September 30, 2012 September 30, 2011
Attachment B-1
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Financial Report
Operations Administered Corporate Restricted Total
Revenues:
63 State Appropriations 3,950$ -$ -$ -$ 3,950$
64 Private Cash Contributions - - 210 - 210
65 Other Revenues 570 - - - 570
66 Total Revenues 4,520 - 210 - 4,729
Expenses:
67 Payroll and Related Costs 1,901$ -$ -$ -$ 1,901$
68 Operating, General and Administrative 819 - 63 - 882
69 Trade Shows 703 - - - 703
70 International Offices 341 - - - 341
71 Professional Fees 180 - - - 180
72 Advertising & Marketing 11 - - - 11
73 Travel 83 - - - 83
74 Total Expenses 4,039 - 63 - 4,102
75 Change in net assets - operations 481 - 147 - 627
76 Change in net assets - temp restricted - - - 252 252
77 Net assets, beginning of period 7,283 - 2,010 18,233 27,526
78 Net assets, end of period 7,764$ -$ 2,157$ 18,485$ 28,406$
79 Revenue - Pass Throughs & Grants - 945 - - 945
80 Expenses - Grants to Other Organizations - 945 - - 945
81 Revenue - Temporarily Restricted - - - 8,350 8,350
82 Expenses -Temporary Restricted - - - 8,098 8,098
Operations Administered Corporate Restricted Total
Revenues:
83 State Appropriations 2,960$ -$ -$ -$ 2,960$
84 Private Cash Contributions - - - - -
85 Other Revenues 317 - 1 - 318
86 Total Revenues 3,277 - 1 - 3,278
Expenses:
87 Payroll and Related Costs 1,652$ -$ -$ -$ 1,652$
88 Operating, General and Administrative 326 - 244 - 570
89 Trade Shows 414 - - - 414
90 International Offices 327 - - - 327
91 Professional Fees 238 - - - 238
92 Advertising & Marketing 19 - - - 19
T l
September 30, 2011
September 30, 2012
Enterprise Florida, Inc.
Statement of Activities
For the Three Months Ending, Unaudited
Attachment B-2($ in Thousands)
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Financial Report
Funds Funds
Received Funds In
Contract From Paid To House
Awarded State Recipients 9/30/12
Base Protection:102 Awarded in 11/12 18,950 18,950 - 18,950103 Awarded in 10/11 117,400 117,400 92,557 24,843
Defense Infrastructure:104 Awarded in 12/13 400,000 - - -105 Awarded in 11/12 1,181,245 445,311 200,000 245,311106 Awarded in 10/11 5,000,000 3,367,797 2,163,155 1,204,642107
Awarded in 09/10 1,367,325 1,385,457 921,321 464,136108 Awarded in 08/09 10,600,000 10,600,000 10,400,000 200,000109 Awarded in 07/08 2,782,000 2,113,344 1,375,589 737,755110 Awarded in 06/07 5,314,500 3,635,718 3,533,729 101,989111 Awarded in 05/06 3,498,165 3,203,404 3,199,713 3,691112 Awarded in 04/05 3,550,000 3,020,000 2,567,380 452,620
Defense Reinvestment:
113 Awarded in 11/12 850,000 850,000 181,773 668,227114 Awarded in 10/11 850,000 850,000 774,809 75,191
Rural Development:115 Awarded in 10/11 587,500 587,500 534,022 53,478
Rural Infrastructure:116 Awarded in 10/11 1,100,000 958,062 846,974 111,088
Interest (payable to the State of Florida)117 Earned - - - 2,424
118 Ending Balance 37,217,085 31,152,943 26,791,022 4,364,345
Detail of Administered Activities by Program
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ENTERPRISE FLORIDA, INC.
AND CONSOLIDATED ENTITIES
Consolidated Financial Statements
For the Year EndedJune 30, 2012
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ENTERPRISE FLORIDA, INC. AND CONSOLIDATED ENTITIES
Table of Contents
Page
Independent Auditors Report 1 2
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Financial Position 3
Consolidated Statement of Activities 4
Consolidated Statement of Cash Flows 5
Notes to Consolidated Financial Statements 6 23
SUPPLEMENTARY INFORMATION AND OTHER INDEPENDENT AUDITORS REPORTS
Consolidating Statement of Financial Position 24
Consolidating Statement of Activities 25
Schedule of Activities by Consolidated Entity 26
Independent Auditors Report on Internal Control Over Financial Reporting and onCompliance and Other Matters Based on an Audit of Financial Statements Performed inAccordance with Government Auditing Standards 27 28
Independent Auditors Report on Compliance with Requirements That Could Have aDirect and Material Effect on Each Major Federal Awards Program and State FinancialAssistance Project and on Internal Control over Compliance in Accordance withOMB Circular A-133 and Chapter 10.650, Rules of the Florida Auditor General 29 30
Schedule of Expenditures of Federal Awards and State Financial Assistance 31
Notes to Schedule of Expenditures of Federal Awards and State Financial Assistance 32 33
Schedule of Findings and Questioned Costs 34 36
Summary Schedule of Prior Audit Findings and Corrective Action Plan 37
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Independent Auditors' Report
To the Board of Directors,Enterprise Florida, Inc.:
We have audited the accompanying consolidated statement of financial position of Enterprise Florida,Inc. and consolidated entities (the Organization), as of June 30, 2012, and the related consolidated
statements of activities and cash flows for the year then ended. These consolidated financialstatements are the responsibility of the Organization's management. Our responsibility is to expressan opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the UnitedStates of America and the standards applicable to financial audits contained in Government AuditingStandards, issued by the Comptroller General of the United States. Those standards require that weplan and perform the audit to obtain reasonable assurance about whether the consolidated financialstatements are free of material misstatement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the consolidated financial statements. An audit alsoincludes 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 referred to above present fairly, in all materialrespects, the financial position of Enterprise Florida, Inc. and consolidated entities as of June 30,2012, and the changes in its net assets and its cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
As discussed in Note 1, Florida Sports Foundation, Inc., the Florida Sports Charitable FoundationInc., and the Florida Black Business Investment Board, Inc. were merged into Enterprise Florida, Inc.during August 2011.
As discussed in Notes 1 and 6, the financial statements include investments in venture capitalpartnerships and direct investments valued at $9,436,448 and $11,874,750, respectively, representing23% of net assets at June 30, 2012, whose values have been estimated by the Organization in the
absence of readily determinable market values. The Organizations estimates are based oninformation provided by the venture capital partnerships and the investment manager of the directinvestments. Due to the inherent uncertainty of these estimates, these values may differ significantlyfrom the values that would have been used had a readily market for these investments existed, andthe differences could be material.
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Our audit was conducted for the purpose of forming an opinion on the consolidated financialstatements as a whole. The consolidating financial statements and schedule of activities byconsolidated entity listed in the foregoing table of contents are presented for the purposes of
additional analysis and are not a required part of the consolidated financial statements. Theaccompanying schedule of expenditures of federal awards and state financial assistance is presentedfor purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and Chapter 10.650, Rulesof the Florida Auditor General, and is not a required part of the consolidated financial statements.Such information is the responsibility of management and was derived from and relates directly to theunderlying accounting and other records used to prepare theconsolidated financial statements. Theinformation has been subjected to the auditing procedures applied in the audit of the consolidatedfinancial statements and certain additional procedures, including comparing and reconciling suchinformation directly to the underlying accounting and other records used to prepare theconsolidatedfinancial statements or to the consolidated financial statements themselves, and other additionalprocedures in accordance with auditing standards generally accepted in the United States of America.In our opinion, the information is fairly stated in all material respects in relation to the consolidatedfinancial statements as a whole.
Orlando, FloridaSeptember 17, 2012
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CONSOLIDATED FINANCIAL STATEMENTS
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ENTERPRISE FLORIDA, INC. AND CONSOLIDATED ENTITIES
Consolidated Statement of Financial Position
June 30, 2012
Cash and cash equivalents:Operating 4,435,431$Limited as to use 86,586,341
Due from State of Florida 12,933,064Accounts and loans receivable 571,107
Loan receivable under the State Small Business Credit Initiative 586,427Due from Cypress Equity Fund, Ltd. 14,922Prepaid and other assets 854,437Leaseholds, furniture and equipment, net 481,960Florida Opportunity Fund Clean Energy Program loans receivable 1,530,000Florida Opportunity Fund investments in venture capital partnerships 9,436,448Florida Opportunity Fund direct investments 11,874,750Investment in limited partnership 6,214
Total Assets 129,311,101$
Liabilities:
Accounts and grants payable 1,618,208$Accrued liabilities 1,077,130Escrow payable 31,138,200
Deferred revenue 4,304,201Total Liabilities 38,137,739
Net Assets:
Unrestricted 6,959,509Temporarily restricted 84,213,853
Total Net Assets 91,173,362
Total Liabilities and Net Assets 129,311,101$
Liabilities and Net Assets
Assets
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ENTERPRISE FLORIDA, INC. AND CONSOLIDATED ENTITIES
Consolidated Statement of Activities
Year Ended June 30, 2012
Temporarily
Unrestricted Restricted Total
Revenues:
State operating assistance 15,074,302$ 7,429,000$ 22,503,302$
State Small Business Credit Initiative - 11,252,499 11,252,499
Capital grant to Florida Opportunity Fund, Inc. - 8,779,873 8,779,873
Private investment contributions 1,425,000 - 1,425,000
Trade show revenue 838,327 272,699 1,111,026Federal grant assistance - 634,407 634,407
In-kind contributions 206,237 330,000 536,237
Management and administration fees 204,822 - 204,822
Net realized gain on investments - 267,277 267,277Net unrealized gain on investments - 630,573 630,573
Other income 265,638 574,314 839,952
Net assets released from restrictions 7,007,657 (7,007,657) -Total Revenues 25,021,983 23,162,985 48,184,968
Expenses:
General and administrative 8,156,033 - 8,156,033
Payroll and related costs 7,493,330 - 7,493,330
Professional fees 4,959,510 - 4,959,510
Grants to sub-recipients 3,974,302 - 3,974,302
Depreciation 278,542 - 278,542
Miscellaneous 2,504 - 2,504Total Expenses 24,864,221 - 24,864,221
Change in Net Assets Before Acquisitions 157,762 23,162,985 23,320,747
Excess of assets acquired over liabilities
assumed in acquired entities - 2,478,340 2,478,340
Change in Net Assets 157,762 25,641,325 25,799,087
Net Assets, Beginning of Year 6,801,747 58,572,528 65,374,275
Net Assets, End of Year 6,959,509$ 84,213,853$ 91,173,362$
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ENTERPRISE FLORIDA, INC. AND CONSOLIDATED ENTITIES
Consolidated Statement of Cash Flows
Year Ended June 30, 2012
Cash Flows From Operating Activities:
Increase in net assets 25,799,087$
Adjustments to reconcile increase in net assets
to net cash provided by operating activities:Depreciation 277,093
Loss on disposal of assets 2,504
Funding of venture capital partnerships investments (2,895,631)
Net unrealized gain from investments (630,573)
Proceeds from investment distributions 484,638Net realized gain from investments (267,277)Equity in earnings of affiliate (1,499)
Changes in:
Due from State of Florida 836,372
Accounts and loans receivable (905,335)
Due from Cypress Equity Fund, Ltd. (20,621)
Prepaid and other assets (388,815)
Investment in limited partnership 10,764
Accounts and grants payable (1,407,532)Accrued liabilities (16,909)
Escrow payable 274,866
Deferred revenue 565,203Net Cash Provided by Operating Activities 21,716,335
Cash Flows From Investing Activities:
Purchases of equipment (88,289)
Funding of loans receivable (2,695,000)Funding of direct investments (9,625,000)
Repayment of loan receivable 1,165,000Distributions from Cypress Equity Fund, Ltd. 7,926
Net Cash Used in Investing Activities (11,235,363)
Net Increase in Cash and Cash Equivalents 10,480,972
Cash and Cash Equivalents, Beginning of Year 80,540,800
Cash and Cash Equivalents, End of Year 91,021,772$
Classified in Consolidated Statement of Financial Position:
Cash and cash equivalents - operating 4,435,431$
Cash and cash equivalents - limited as to use 86,586,341
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ENTERPRISE FLORIDA, INC. AND CONSOLIDATED ENTITIESNotes to Consolidated Financial Statements
Year Ended June 30, 2012
Note 1 - Summary of Significant Accounting Policies
OrganizationEnterprise Florida, Inc. ("Enterprise Florida") is a not-for-profit corporation created by Chapter 288,Florida Statutes and incorporated on February 18, 1993 as a public-private partnership responsible forleading Florida's statewide economic development efforts. Its mission is to facilitate job growth forFloridas businesses and citizens leading to a vibrant statewide economy. Enterprise Florida is adiscretely presented component unit of the State of Florida (the State), included in state-widefinancial statements, as it is legally separate but has a significant relationship with the State of Florida.All revenues in excess of expenditures remain committed to further the purpose of Enterprise Florida.
On July 1, 2011, a new Florida Law became effective that required the Florida Sports Foundation,Inc., the Florida Sports Charitable Foundation, Inc., and the Florida Black Business Investment Board,Inc., which provide supporting services to the State, to be merged and/or transferred to EnterpriseFlorida. Subsequent to this legislation, mergers were consummated and Enterprise Florida becamethe sole member of the Florida Black Business Investment Board, Inc., the Florida Sports Foundationand the Florida Sports Charitable Foundation. The excess of assets acquired over liabilities assumedon the date of merger is separately presented on the consolidated statement of activities. Activities of
the merged entities are included on the consolidated statement of activities subsequent to the date ofmerger.
The accompanying consolidated financial statements include the accounts of Enterprise Florida, andthe following organizations controlled by Enterprise Florida: Cypress Equity Fund ManagementCorporation, Florida Sports Foundation and Florida Opportunity Fund, Inc. (the FOF) (collectively,the Organization). All significant intercompany accounts and transactions have been eliminated.
Cypress Equity Fund Management Corporation was incorporated on October 5, 1995 as a not-for-profit corporation for the purpose of acting as the general partner of Cypress Equity Fund LimitedPartnership, a private partnership, and serving as administrator of a private group trust. EnterpriseFlorida is the sole member of Cypress Equity Fund Management Corporation and controls its majorityvoting interest through membership of its Board of Directors.
The Florida Sports Foundation, Inc. and Florida Sports Charitable Foundation, Inc. promote anddevelop sports related industries, amateur sports activities, and physical fitness. These non-profitcorporations merged into the Organization on August 29, 2011 pursuant to new legislation contained
in Florida Statute 288.901, and now comprise the Sports Development division of Enterprise Florida.The mergers were accounted for under the acquisition method, which provides that assets acquiredand liabilities assumed be recognized at fair value on the date of the merger and that operations bepresented for the period subsequent to the merger date. For this purpose, fair value approximatedthe cost basis of assets acquired and liabilities assumed. There was no consideration transferred byEnterprise Florida in connection with the mergers. Subsequent to the mergers, the Florida Sports
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ENTERPRISE FLORIDA, INC. AND CONSOLIDATED ENTITIESNotes to Consolidated Financial Statements
Year Ended June 30, 2012
Note 1 - Summary of Significant Accounting Policies (continued)
As a result of 2011 legislation, Florida Black Business Investment Board, Inc. was merged intoEnterprise Florida on August 23, 2011, with Enterprise Florida as its sole member and transferredsimilar to the Foundation. This merger was accounted for under the acquisition method, fair valueapproximated cost basis, and no consideration was transferred by Enterprise Florida. Subsequent tothe mergers, the Minority Business Development Board was dissolved and its operations became partof the Enterprise Florida Minority and Small Business Entrepreneurship and Capital Division.
FOF was created on July 13, 2007 by Enterprise Florida pursuant to the Florida Capital Formation Actunder Florida Statutes 288.9621-288.9625. Enterprise Florida facilitated the creation of FOF, is itssole member, and controls its majority voting interest through appointment of its Board of Directors.Enterprise Florida also provided FOFs initial capital through funds received from the State of FloridaDepartment of Economic Opportunity. FOF is not a public corporation or instrumentality of the State.
FOFs initial purpose was to provide seed capital and early stage venture equity capital for emergingcompanies in the State, including, without limitation, enterprises in life sciences, informationtechnology, advanced manufacturing processes, aviation and aerospace, and homeland security and
defense, as well as other strategic technologies. During fiscal 2010, pursuant to an agreement withthe Florida Energy and Climate Commission, FOF began to receive and invest capital for the CleanEnergy Investment Program. During fiscal 2012, FOF began its role of receiving and investing capitalfor the Florida Venture Capital Program under the State Small Business Credit Initiative.
Enterprise Florida is related through common purpose, Florida Statute or management, with FloridaDevelopment Finance Corporation and Cypress Equity Fund, Ltd., entities which are not included inthese consolidated financial statements. Enterprise Florida provides management and accounting
services to these related parties, which may not always be conducted on an arm's-length basis (SeeNote 9). Due to the 2011 legislation, Enterprise Florida also has operating relationships with VisitFlorida, through contracting for tourism-related marketing services and governing boardappointments, and with Space Florida, where governmentally appointed Directors on EnterpriseFloridas Board of Directors also serve as Directors of Space Florida.
The 2011 legislation also affected Enterprise Floridas primary State partner, the Office of Tourism,Trade and Economic Development, which was dissolved and its roles and responsibilities wereassigned to a new state agency, the Department of Economic Opportunity (DEO). DEO was formed
to focus on improving the economic development process by eliminating roadblocks andredundancies that have frustrated business growth in the past. This new agency includes all or partsof the former Department of Community Affairs the Agency for Workforce Innovation and oversight ofpublic private partnerships through the Division of Strategic Business Development.
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,Notes to Consolidated Financial Statements
Year Ended June 30, 2012
Note 1 - Summary of Significant Accounting Policies (continued)
Enterprise Florida operates through divisions, each headed by a senior officer who reports to the chiefexecutive officer. These are:
Administrative Support - provides all administrative services to the Organization such as theexecutive office, human resources, information technology and accounting.
Business Development - responsible for coordinating national and international businessdevelopment by managing projects to increase capital investment and jobs in Florida. It
facilitates the most effective use of business incentives and assists existing business expandjobs and capital investment.
International Trade and Development focuses on international trade programs to expand thenumber of Florida companies exporting Florida products and services. It coordinates TeamFlorida events for marketing and promotion of Florida for trade and investment. It alsomanages key international relationships to improve Floridas international business and globalreputation in the following countries: Brazil, Canada, China, Czech Republic, Germany, Israel,Japan, Mexico, France, South Africa, Spain, Taiwan and the United Kingdom.
Marketing, Information, and Communications - responsible for establishing and building a pro-business image for the state by identifying and marketing Florida to targeted industry decisionmakers and business leaders. It develops, coordinates, and implements a statewide strategicplan for Florida brand recognition. The division also manages all corporate communications.
Minority and Small Business, Entrepreneurship and Capital - responsible for identifying resourceproviders for underserved minority and small businesses. It also administers special capitalprograms such as those of FOF, and supports the Florida Development Finance Corporation,
Cypress Equity Fund Management Corporation, Cypress Equity Fund Limited, and CypressEquity Fund Group Trust.
Sports Development works to strengthen the economic impact of sports events through grantsand identifies business expansion or development opportunities linked to sports development.It also develops, fosters and coordinates services and programs for amateur sports throughthe Sunshine State Games and the Florida Senior Games State Championships. SportsDevelopment is doing business as Florida Sports Foundation, Inc.
Strategic Partnerships maintains and enhances relationships with primary partners andstakeholders to strengthen support of economic development initiatives and increase jobgrowth. It maintains and expands investor support and Board participation. It assistscommunities to increase their competitiveness when vying for job creation projects. It retainsand maximizes opportunities to enhance the Department of Defense investment in Florida
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Notes to Consolidated Financial Statements
Year Ended June 30, 2012
Note 1 - Summary of Significant Accounting Policies (continued)
Basis of Presentation
The accompanying consolidated financial statements have been prepared on the accrual basis ofaccounting in accordance with accounting principles generally accepted in the United States ofAmerica. Net assets and revenues, expenses, gains and losses are classified based on the existenceor absence of donor-imposed restrictions. Accordingly, net assets of the Organization and changestherein are classified and reported as temporarily restricted (see Note 9) or unrestricted net assets.
Cash and Cash Equivalents
Cash and cash equivalents include the operating accounts of Enterprise Florida and cash and cashequivalents limited as to use. The Organization considers all highly liquid financial investmentspurchased with an original maturity date of three months or less to be cash equivalents. TheOrganization places its cash and cash equivalents on deposit with financial institutions in the UnitedStates. The Federal Deposit Insurance Corporation (FDIC) covers $250,000 for substantially alldepository accounts and temporarily provides unlimited coverage through December 31, 2012 forcertain qualifying and participating non-interest bearing transaction accounts.
During the year, the Organization from time to time may have had amounts on deposit in excess ofthe insured limits. As of year-end, the Organization had a balance of $90,498,836 on deposit inexcess of insured amounts; $40,331,610 of which were FOF deposits. Bank deposits include$41,725,163 held for the State of Florida. Management believes the associated risk is minimized byplacing such assets with quality financial institutions. The Organization has not experienced anylosses on such accounts.
Cash and Cash Equivalents Limited as to Use
In order to ensure compliance with grant documents and/or performance contracts, Enterprise Floridahas limitations on funds held in escrow and for grant funds received in advance of expenditure. Inaddition, cash and cash equivalents for FOF and the Foundation are limited for specific use by eachentity in accordance with their designated purpose and contractual arrangements.
Leaseholds, Furniture and Equipment
Leaseholds, furniture and equipment are stated at cost, if purchased, or estimated market value atdate of receipt, if acquired by gift. Depreciation is provided using the straight-line method over the
estimated economic useful lives of the related assets which are as follows:
Leasehold improvements 5-7 yearsOffice furniture 5-7 yearsOffice equipment 5 yearsComputers and software 3-5 years
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Notes to Consolidated Financial Statements
Year Ended June 30, 2012
Note 1 - Summary of Significant Accounting Policies (continued)
Investments in Venture Capital Partnerships
FOF has investments in six partnerships, which invest in venture capital limited partnerships. Theseinvestments are stated at estimated fair value based on net asset value information received from thelimited partnerships.
Direct Investments
Direct investments are provided through the FOF Clean Energy Investment Program and FloridaVenture Capital Program and are presented in the accompanying financial statements at estimatedfair value, as determined by management based on information provided by the investment manager.The values assigned to direct investments are based on available information and do not necessarilyrepresent amounts that might ultimately be realized. Such amounts depend on future circumstancesand cannot reasonably be determined until the individual investments are actually liquidated. Directinvestments consist of $11,374,750 in four privately-held companies of the Clean Energy InvestmentProgram and $500,000 in one privately-held company of the Florida Venture Capital Program. The
nature of these investments provides risk of loss due to most being in early stages of operations andin the portion of the energy industry not yet well established.
Investment in Limited Partnership
Cypress Equity Fund Management Corporations ownership interest in Cypress Equity Fund, Ltd., (theLimited Partnership) is accounted for under the equity method, as more fully described in Note 7.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted inthe United States of America requires management to make estimates and assumptions that affectthe reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at thedate of the financial statements and the reported amounts of revenues and expenses during thereported time period. Actual results could differ from those estimates.
Compensated Absences
Vacation pay is accrued as earned by employees. Unused accumulated vacation pay is paid upon anemployee's separation from service up to a maximum of 120 hours.
Deferred Revenue
Enterprise Florida recognizes its pass-through grants to sub-recipients in the consolidated statementof activities as the amounts that have been requested for reimbursement by the sub-recipients.
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Notes to Consolidated Financial Statements
Year Ended June 30, 2012
Note 1 - Summary of Significant Accounting Policies (continued)
State Operating Assistance Revenue
State operating assistance revenue represents State appropriations for the Organizations operatingfunds, consisting of the following: unconditional promises to give that are available for unrestricteduse; unconditional promises to give that are temporarily restricted for program use; and pass-throughgrants administered by Enterprise Florida that are recognized as revenue and expense when pass-through sub-recipients incur associated costs.
State Small Business Credit Initiative RevenueDuring fiscal 2012, Enterprise Florida began to receive funding under an agreement with the DEO forthe State Small Business Credit Initiative (SSBCI). The SSBCI is available to qualifying Floridasmall businesses to increase available capital by providing direct investments and other instruments,so long as the proposed activities are consistent with the purpose of the funding. The SSBCI isdirectly funded by the DEO in total appropriations of $97,662,349 from a contract awarded by DEOthrough Title III of the Small Business Jobs Act of 2010. Of this amount, $85,723,033 has beenallocated to Enterprise Florida, including $42,040,133 to fund the Small Business Loan Program
administered by Enterprise Florida, $41,907,900 to be passed through to FOF for the Florida VentureCapital Program and $1,775,000 in administrative funding.
State Small Business Credit Initiative revenue represents restricted use funding received through theSSBCI funding agreement, including $10,000,000 of initial capital contribution and funding to supportinvesting and loan activity and administrative costs. In addition to revenue recognized, $2,090,000has been received by Enterprise Florida and paid in an agency capacity to Florida Export FinanceCorporation.
Private Investment ContributionsPrivate investment contributions made to Enterprise Florida are recognized as revenues in the periodreceived. Private investment contributions to Enterprise Florida are available for unrestricted use byEnterprise Florida whereas capital contributions provided to Enterprise Florida by DEO are forunrestricted use within the SSBCI. Private investment contributions that are restricted by the donorare reported as an increase in unrestricted net assets if the restriction expires in the reporting periodin which the support is recognized. Other donor restricted contributions are reported as an increase intemporarily restricted net assets, depending on the nature of the restriction. When a restriction
expires, temporarily restricted net assets are reclassified to unrestricted net assets. Conditionalpromises to give are not recognized until they become unconditional; that is, when the conditions onwhich they depend are substantially met.
In-kind Contributions
Donated goods and services are recorded at their fair market value at the date of receipt by the
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Notes to Consolidated Financial Statements
Year Ended June 30, 2012
Note 1 - Summary of Significant Accounting Policies (continued)
Advertising Costs
Advertising Costs are expensed when incurred and totaled $796,995 for the year ended June 30,2012.
Excess of Assets Acquired Over Liabilities Assumed
The excess of assets acquired over liabilities assumed from the Florida Black Business Investment
Board, Inc., Florida Sports Foundation, Inc. and Florida Sports Charitable Foundation Inc. ispresented as a $2,478,340 change on the Organizations statement of activities. The portion related tothe excess of assets acquired over liabilities assumed for the Florida Black Business InvestmentBoard Inc. was $316,665 and the portion related to the excess of assets acquired over liabilitiesassumed for the Florida Sports Foundation, Inc. and Florida Sports Charitable Foundation, Inc.collectively was $2,161,675.
Income Tax Status
The Organization has been recognized by the Internal Revenue Service (IRS) as exempt from federalincome tax on related income under Internal Revenue Code (IRC) Section 501(a), consisting oforganizations described in Section 501(c)(3). The Organization is also exempt from state incometaxes on related income pursuant to Chapter 220.13 of the Florida Statutes. Therefore, a provision forincome taxes has not been included in the accompanying consolidated financial statements.
The Organizations policy is to record a liability for any tax position taken that is beneficial to theOrganization, including any related interest and penalties, when it is more likely than not the positiontaken by management will be overturned by a taxing authority upon examination. Managementbelieves there are no such positions as of June 30, 2012 and, accordingly, no liability has beenaccrued.The Organization is no longer subject to tax examinations for years prior to 2009.
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Notes to Consolidated Financial Statements
Year Ended June 30, 2012
Note 2 - Cash and Cash Equivalents Limited as to Use
The Organizations cash and cash equivalents limited as to use consist of the following as of June 30,2012:
Enterprise Florida Escrow 31,138,200$
Programs administered by Enterprise FloridaFL Defense Support Task Force 2,645,732
State Small Business Credit Support Initiative 1,832,014
Rural Strategic Marketing 1,350,776
Small Business Technology Growth Fund 922,783
Florida International Business Expansion Initiative 656,044Military Base Protection 322,304
Minority Business Development 272,657
Technology related programs 82,724Pass through grants administered by Enterprise Florida
Funds restricted for grant programs 3,982,637
Total Enterprise Florida 43,205,871
Florida Opportunity Fund, Inc. 40,556,291
Florida Sports Foundation, Inc. 2,824,179
86,586,341$
Note 3 - Due From State of FloridaAmounts due from State of Florida consist of $12,933,064 at June 30, 2012 under various contractsadministered by the DEO, including $8,342,499 receivable under the State Small Business CreditInitiative.
Note 4 - Accounts and Loans Receivable
Accounts and loans receivable consists of private investment contributions, trade show events andunsecured loans to three borrowers with 5% interest payable upon loan maturity, in fiscal 2016. The
Organization also has loans receivable under its State Small Business Credit Initiative Program andClean Energy Investment Program. Management has determined that an allowance for doubtfulamounts is not necessary.
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Notes to Consolidated Financial Statements
Year Ended June 30, 2012
Note 5 - Leaseholds, Furniture and Equipment
Leaseholds, furniture and equipment consist of the following as of June 30, 2012:
Leasehold improvements 354,055$Office furniture 407,920Office equipment 224,738Computers and software 612,556
1,599,269
Less accumulated depreciation (1,117,309)481,960$
Note 6 - Investments in Venture Capital Partnerships and Direct Investments
Investments in venture capital partnerships and direct investments are provided through threeprograms administered through FOF, including a Fund of Funds program and two direct investment
programs. The Fund of Funds program represents the investments in venture capital partnerships,initially funded by $29,500,000 of State appropriations subject to Florida Statute 288.9624 (theStatute). The Statute provides that FOF may invest this initial funding only in seed and early stageventure capital/angel funds that have experienced managers or management teams withdemonstrated experience, expertise, and a successful history in the investment of venture capitalfunds, focusing on opportunities in Florida. FOF may not invest initial Fund of Funds capital inindividual businesses. While not precluded from investing in venture capital funds that haveinvestments outside of Florida, FOF must require a venture capital fund to show a record ofsuccessful investment in Florida, to be based in Florida, or to have an office in Florida staffed with a
full-time, professional venture investment executive in order to be eligible for investment. Any venturecapital fund must agree to match dollar-for-dollar the amount contributed by FOF and invest thosemonies into Florida businesses. Should FOF be dissolved at some point, remaining assets funded byState appropriations shall revert to the DEO.
Subsequent to initial capital funding, FOF has also been empowered by the Statute to make directinvestments, including loans, in individual businesses and infrastructure projects. To the extent suchcapital is received, direct investments must be made in Florida infrastructure projects or businesses
that are Florida-based or have significant business activities in Florida and operate in technologysectors that are strategic to Florida, including, but not limited to, enterprises in life sciences,information technology, advanced manufacturing processes, aviation and aerospace, and homelandsecurity and defense, as well as other strategic technologies.
Investments in Venture Capital Partnerships
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Notes to Consolidated Financial Statements
Year Ended June 30, 2012
Note 6 - Investments in Venture Capital Partnerships and Direct Investments (continued)
The term of each Fund-of-Funds investment is stated in its limited partnership agreement, asamended, and ranges from approximately 10 to 12 years, including any provisions for extensions. Asof June 30, 2012, the Fund-of-Funds investments range in age from approximately 2 months to 39months and the estimated remaining life of such investments range from approximately 8 years to 12years. Each Fund-of-Funds investment term and estimated remaining life has been calculated basedon its limited partnership agreement, including any term extensions effective as of June 30, 2012. AFund-of-Funds investment may liquidate before its stated termination date or may require additionalterm extensions to complete its liquidation in an orderly manner. Fund-of-Funds investment termextensions are implemented in accordance with the respective limited partnership agreement for eachinvestment.
As permitted, fair value for each Fund-of-Funds investment is determined by FOF based on itsproportionate share of the underlying fair value of the net assets of the limited funds, derived fromFOFs ownership percentage and audited financial statements provided by each investee.
Direct Investments
The Clean Energy Investment Program
FOF has an agreement (the Clean Energy Agreement) with the Florida Energy and ClimateCommission (the Commission), or successor, to administer the Clean Energy Investment Program.The Clean Energy Investment Program was created in 2011 and is available to qualifying Floridabusinesses with direct investments in three primary areas of focus: 1) facility and equipmentimprovement with energy-efficient and renewable energy products, 2) acquisition or demonstration ofrenewable energy products and 3) process improvement of existing production, manufacturing,assembly or distribution of operations to increase energy efficiency or reduce consumption. Thedirect investments may consist of debt and other instruments, so long as the proposed activities areconsistent with the three areas of focus described above. The Clean Energy Investment Program isdirectly funded by State of Florida appropriations in the amount of $36,089,000 from a grant awardedby the United States Department of Energy through the American Recovery and Reinvestment Act.As of June 30, 2012, FOF has cumulative capital contributions of $34,943,665 for this program, ofwhich $34,825,152 has been received.
Program funding under the Clean Energy Agreement is required to be segregated from existingmonies provided by the State or other existing or future contributors, and initial funding is required tobe deposited in an interest bearing account. Ninety percent of the proceeds from the Commission($32,480,100) is required to be invested in accordance with provisions of the preceding paragraph.The remaining ten percent ($3,608,900) is for use in paying administrative costs and expenses.Administrative costs and expenses included an annual fund manager fee equivalent to 3% of the
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Notes to Consolidated Financial Statements
Year Ended June 30, 2012
Note 6 - Investments in Venture Capital Partnerships and Direct Investments (continued)
The Clean Energy Agreement is set to terminate on March 31, 2025; however, the Commission hasthe option to renew on the same terms and conditions for an additional five year term. Upontermination of the Clean Energy Agreement, program capital shall be returned to the Commission.
Florida Venture Capital Program
During fiscal 2011, Enterprise Florida entered into an agreement (the DEO Agreement) with theDEO for the State Small Business Credit Initiative (SSBCI). The Florida Venture Capital Programwas one of several programs created utilizing SSBCI funding. The Florida Venture Capital Program isavailable to qualifying Florida businesses by providing direct investments to increase the amount ofcapital available to small businesses. The direct investments may consist of debt and otherinstruments, so long as the proposed activities are consistent with the purpose of the funding. Theexpiration date of the DEO Agreement is March 31, 2017, upon which all direct investment funding isto be completed. There are no contractual stipulations with respect to return of the funding, should theFlorida Venture Capital Program be dissolved at some point.
The Florida Venture Capital Program has been designated to transact and account for the portion ofSSBCI funding, not to exceed $41,907,900, for the DEO Agreement. Funding for the programoriginates with the federal government through Title III of the Small Business Jobs Act of 2010 and ispassed through DEO and Enterprise Florida to FOF as direct investments are entered into by FOF.
Program funding under the DEO Agreement is required to be segregated from existing moniesprovided by the State or other existing or future contributors, and initial funding is required to be
deposited in an interest bearing account. Quarterly reimbursements of administrative costs up to$88,750 will be made by DEO upon proper submission of quarterly reports by the Organization fromOctober 1, 2011 to September 30, 2016, for a total administration fee to not exceed $1,775,000 overthe life of the program. Administrative costs and expenses include legal, accounting, insurance, othernecessary expenses and a fund manager fee of up to .075% of program funding, of which $56,250 ispayable quarterly and reimbursed through quarterly receipts from DEO through Enterprise Florida. Tothe extent investment program results provide sufficient capital, FOF is contingently obligated foradditional fund manager fees of up to $258,058 per quarter, calculated cumulatively, plus a fundmanager success fee of 30% of the amount that gross proceeds exceed contributed capital. Such
fees would be payable upon the disposition of, or distribution from, each program asset. Interestearned on the interest bearing account and return on investments may be retained by theOrganization for additional commitments, fund manager fees, and allowable expenses of the FloridaVenture Capital Program.
Fair Value Hierarchy
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Notes to Consolidated Financial Statements
Year Ended June 30, 2012
Note 6 - Investments in Venture Capital Partnerships and Direct Investments (continued)
FOF classifies its investments into a hierarchical disclosure framework as follows:
Level I - Securities traded in an active market with available quoted prices for identical assetsas of the reporting date.
Level II - Securities not traded on an active market but for which observable market inputs arereadily available or Level I securities where there is a contractual restriction as of the reportingdate.
Level III - Securities not traded in an active market and for which no significant observablemarket inputs are available as of the reporting date.
The cost basis of FOF investments in venture capital partnerships and direct investments was$8,426,415 and $11,625,000, respectively, as of June 30, 2012. The following table summarizes thefair value as of these investments as of June 30, 2012, based on the level of input utilized to measurefair value:
Fair Value
Percent of
Net Assets
Level I -$ -Level II - -Level III 21,311,198 23%
Total investments 21,311,198$ 23%
The following table presents a reconciliation of the beginning and ending balances of the fair valuemeasurements using significant unobservable inputs (Level III):
VentureCapital
PartnershipsDirect
Investments
Opening Balance at 7/1/11 6,127,605$ 1,249,750$
Total gains or losses (realized and unrealized)
included in changes in net assets 897,850 -
Purchases 2,895,631 10,625,000
Sales (484,638) -
Transfers in and / or out of Level III - -
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Year Ended June 30, 2012
Note 7 Investment in Limited Partnership
Cypress Management is the general partner of Cypress Equity Fund, Ltd. (the "Limited Partnership").Condensed financial information for the limited partnership is as follows:
Assets 1,152,679$Liabilities 91,570
Partners' capital 1,061,109$
Cypress Management's capital account balance 6,214$
Schedule of Financial Position InformationDecember 31, 2011
Cypress Management's capital account balance is included in other assets in the consolidatedstatement of financial position and includes activity occurring between the date of the LimitedPartnership's financial statements and Cypress Managements year ended June 30, 2012.
Revenues 232,429$Expenses 83,190
Net increase in partners capital 149,239$
Cypress Management's change in earnings 1,500$
Sc