Fitch Affirms Julia Dyckman Andrus Memorial, Inc., NY Bonds at 'A-'; Outlook Stable

NEW YORK--()--Fitch Ratings has affirmed the 'A-' rating on approximately $510,000 County of Westchester Industrial Development Agency (IDA) Civic Facility, NY revenue bonds (Julia Dyckman Andrus Memorial, Inc. Project), series 1996.

The Rating Outlook is Stable.

SECURITY

The series 1996 bonds (the bonds) are a general obligation of the Julia Dyckman Andrus Memorial, Inc. (JDAM), payable from lease payments made from JDAM to the IDA. Additional security is provided by a guaranty of and a mortgage on specific JDAM facilities.

KEY RATING DRIVERS

STABLE CREDIT CHARACTERISTICS: The 'A-' rating primarily reflects the charitable organization's balance sheet strength and modest debt position. Though operations are historically negative, fiscal 2014 results are balanced.

SOLID FINANCIAL CUSHION: JDAM's robust resource base relative to pro forma debt provides ample financial flexibility in the event of unanticipated, near-term budgetary pressures.

IMPROVED OPERATIONS: JDAM's ability to generate breakeven GAAP-based financial results (inclusive of the endowment payout) improved pro forma debt service coverage to over 2x.

NEAR-TERM DEBT MATURITY: Debt burden is expected to remain low over the near term. JDAM continues to make regular monthly payments to a sinking fund established for the outstanding series 1996 bonds maturing on April 1, 2016.

RATING SENSITIVITIES

BALANCE SHEET PRESERVATION: Julia Dyckman Andrus Memorial, Inc.'s strong financial cushion relative to pro forma debt is central to the current rating.

CREDIT PROFILE

Founded in 1928, JDAM is a charitable organization that provides residential and day treatment programs for emotionally challenged children from grades K-9 and operates mental health clinics, community-based programs, a child care center, after-school programs and other collaborative efforts. The organization also runs the Sanctuary Institute, which provides professional leadership and consultation on issues, practices and policies affecting vulnerable children and families.

A new President and CEO, Bryan Murphy, was appointed in February 2015 after serving as Acting President and CEO since September 2014.

LIQUIDITY DRIVES CREDIT

JDAM's financial resources continue to provide significant financial flexibility and serve as the organization's primary credit strength. Available funds, defined by Fitch as cash and investments not permanently restricted, totaled approximately $45.8 million as of June 30, 2014, covering fiscal 2014 operating expenses and pro forma debt by a solid 141% and 743.8%, respectively.

JDAM's exposure to alternative assets classes is moderately high in fiscal 2014 at about 27% but lower than prior years. On an adjusted basis, available funds are reduced to $34.6 million and remains robust at 562.2% relative to pro forma debt.

IMPROVED OPERATING RESULTS

JDAM registered breakeven operations, inclusive of the endowment draw, in fiscal 2014. The majority of its operating revenues are derived from the campus division's tuition and maintenance income which have pre-determined reimbursement rates for residential students. Though JDAM is limited in its ability to adjust rates, fiscal 2016 reimbursements are expected to be higher than prior years according to management. Furthermore, it remains challenged by a competitive grant-funding environment and strained fundraising efforts.

STRONG DEBT POSITION

JDAM's outstanding bond principal ($510,000) is due on April 1, 2016; monthly contributions to the established sinking fund are expected to cover outstanding principal and interest when bonds mature. The deferred maintenance backlog and expansionary projects drove a modest increase in total pro forma debt to approximately $6.2 million due an increase in bank debt in fiscal 2015; however, no significant debt issuance plans are expected.

Additional information is available at 'www.fitchratings.com'.

Related Research:

--'Fitch Affirms Julia Dyckman Andrus Memorial (New York) Bonds at 'A-'; Outlook Stable' (Nov. 13, 2013)

Applicable Criteria

Revenue-Supported Rating Criteria (pub. 16 Jun 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750012

U.S. Nonprofit Institutions Rating Criteria (pub. 05 Jun 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=866668

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=993200

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=993200

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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Contacts

Fitch Ratings
Primary Analyst
Sahil Khera
+1-212-908-0868
Analyst
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Nancy Faingar Moore
Director
+1-212-908-0725
or
Committee Chairperson
Joanne Ferrigan
Senior Director
+1-212-908-0723
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
Email: sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Sahil Khera
+1-212-908-0868
Analyst
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Nancy Faingar Moore
Director
+1-212-908-0725
or
Committee Chairperson
Joanne Ferrigan
Senior Director
+1-212-908-0723
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
Email: sandro.scenga@fitchratings.com