NATIONAL ALL-JERSEY INC. & SUBSIDIARY Consolidated Statements of Activities • Notes To Financial Statements Note 1. Nature of Organization and Significant Accounting Policies Nature of business. National All-Jersey Inc. (NAJ) (the “Company”) was incorporated in the State of Ohio in 1957. Its purpose is to promote the increased production and sale of Jersey milk and milk products, and to promote Jersey cattle and the interests of breeders of Jersey cattle. All-Jersey Sales Corporation (AJSC) (Subsidiary), a wholly-owned subsidiary of National All-Jersey Inc. was incorporated in the State of Ohio in 1961. It is a for-profit corporation with the original purpose of developing and selling All-Jersey milk advertising materials. In 1970, the corporation started a cattle marketing service, Jersey Marketing Service (JMS). The purpose of Jersey Marketing Service is to provide marketing assistance to buyers and sellers of Jersey cattle and embryos. The objectives of both National All-Jersey Inc. and All-Jersey Sales Corporation are to increase the value of and demand for Jersey milk and cattle. Principles of consolidation. The consolidated financial statements include the accounts of NAJ and its wholly-owned subsidiary, AJSC. All significant intercompany accounts and transactions have been eliminated. Basis of accounting. The consolidated financial statements of the Company have been prepared on the accrual basis of accounting. Basis of presentation. The financial statement presentation follows the recommendations of the Financial Accounting Standards Board (FASB). The Company is required to report information regarding its financial position, and activities according to three classes of net assets: unrestricted, temporarily restricted and permanently restricted. Unrestricted net assets: Net assets that are not subject to donor-imposed stipulations. The Board of Directors has designated assets for research and development which totaled $143,142 and $164,739 for 2011 and 2010, respectively. Temporarily restricted net assets: Temporarily restricted net assets result from timing differences between the receipt of funds or pledges of funds and the incurrence of the related expenditures. The Company reports gifts of cash and other assets as restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. If the donor restriction expires in the same fiscal year the gift is received, the Company reports the gift as a temporarily restricted contribution and as net assets released from restriction in the statement of activities. As of December 31, 2011 and 2010, there were no temporarily restricted net assets. Permanently restricted net assets: Net assets subject to donor-imposed stipulations must be maintained permanently by the Company. Generally, the donors of these assets permit the Company to use all or part of the income earned on related investments for general or specific purposes. As of December 31, 2011 and 2010, there were no permanently restricted net assets. Use of estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Investments. Investments consist of money market and mutual funds. Money market funds are carried at cost. Mutual funds are carried at fair value on the statement of financial position, with the change in fair value included in the statement of activities and changes in net assets. Cash and cash equivalents. For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. Custodial cash. The Company maintains cash due consignors in a separate custodial cash account. Revenue recognition. Equity project fees are contributions from individual producers or producer organizations. The money is used to develop markets and to promote multiple component pricing. Equity project revenue is recognized in the period received, however, equity fees received as annual Registration, Equity, Appraisal, Performance (REAP) payments are recognized over a 12 month period using straight-line amortization. Jersey Marketing Service recognizes public sale commissions in the period in which the sale is held and private sale commissions in the period in which the
CONSOLIDATED STATEMENTS OF ACTIVITIES Years Ended December 31, 2011 and 2010 REVENUES Equity project fees Commissions Interest and dividend income Other Total revenues
$ 705,966 384,944 10,088 9,930 1,110,928
$ 655,512 217,822 10,101 21,392 904,827
COST OF OPERATIONS Salaries, service, and administrative Field services Bad debt expense Depreciation and amortization Total costs of operations
878,529 92,598 55,840 8,895 1,035,862
942,495 79,047 21,726 10,042 1,053,310
CHANGE IN NET ASSETS FROM OPERATIONS
2011
2010
75,066 (148,483)
OTHER INCOME (EXPENSE) Net realized and unrealized gain (loss) on investments Pension expense Total other income
CHANGE IN NET ASSETS BEFORE EXPENDITURES FROM DESIGNATED NET ASSETS
13,383 (114,721)
(3,631) (58,052) (61,683)
41,228 (7,466) 33,762
EXPENDITURES FROM DESIGNATED NET ASSETS Research and development Total expenditures from designated net assets
21,597
8,316
21,597
8,316
CHANGE IN NET ASSETS
(8,214) (123,037)
NET ASSETS, beginning
680,757 803,794
NET ASSETS, ending
$ 672,543 $ 680,757
See Notes to the Consolidated Financial Statements. Statements of Cash Flows have not been included with these reports. A copy is available upon request.
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