GIRL SCOUTS OF THE MISSOURI HEARTLAND, INC. FINANCIAL STATEMENTS SEPTEMBER 30, 2017 AND 2016

Transcription

1 GIRL SCOUTS OF THE MISSOURI HEARTLAND, INC. FINANCIAL STATEMENTS SEPTEMBER 30, 2017 AND S Blackman Road, Suite D Springfield, Missouri Fax

2 INDEPENDENT AUDITORS REPORT Board of Directors Girl Scouts of the Missouri Heartland, Inc. Springfield, Missouri Report on the Financial Statements We have audited the accompanying financial statements of Girl Scouts of the Missouri Heartland, Inc., a Missouri not-for-profit corporation, which comprise the statements of financial position as of September 30, 2017 and 2016, and the related statements of activities, changes in net assets, functional expenses, and cash flows for the years then ended, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant estimates made by management, as well as evaluating the overall financial statement presentation S BLACKMAN ROAD, SUITE D SPRINGFIELD, MISSOURI FAX

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4 STATEMENTS OF FINANCIAL POSITION SEPTEMBER 30, 2017 AND ASSETS Current Assets Cash and cash equivalents $ 2,086,444 2,031,995 Receivables and pledges - net allowance for doubtful accounts of $63,201 and $102, , ,201 Current portion of land lease 7,925 8,397 Inventory 180, ,714 Prepaid expenses 101,680 87,618 Short term investments 10,000 10,000 Total current assets 2,544,282 2,495,925 Fixed Assets Property and equipment, net of accumulated depreciation 2,878,187 2,985,181 Net fixed assets 2,878,187 2,985,181 Other Assets Long-term pledges receivable 7,635 20,765 Long-term land lease 17,211 25,136 Cash value of life insurance 6,793 6,536 Other assets 8,176 8,176 Long-term investments 1,826,615 1,651,762 Total other assets 1,866,430 1,712,375 Total Assets $ 7,288,899 7,193,481 LIABILITIES AND NET ASSETS Current Liabilities Accounts payable 111,627 67,197 Accrued vacation 103, ,756 Accrued program incentives 192, ,659 Accrued expenses 51,327 34,383 Deferred revenue 23,291 13,256 Total current liabilities 482, ,251 Net Assets Unrestricted 5,660,343 5,519,352 Unrestricted - board designated 450, ,156 Temporarily restricted 295, ,607 Permanently restricted 400, ,115 Total net assets 6,806,512 6,791,230 Total Liabilities and Net Assets $ 7,288,899 7,193,481 See accompanying accountant's report and notes to financial statements. 2

5 STATEMENT OF ACTIVITIES YEAR ENDED SEPTEMBER 30, 2017 Temporarily Permanently Unrestricted Restricted Restricted Total Gains and Support: Contributions $ 465,312 8, ,020 Special fundraising events 57, ,613 Realized loss on investments 29, ,178 Unrealized gain on investments 116,398 7,675 22, ,340 Investment income, net fees 41, ,882 Beneficial interest in perpetual trust - 9,850 (9,850) - Contributed products and services 220, ,350 Rental income 9, ,524 Miscellaneous revenue 150, ,630 Gain on sale of assets 3, ,500 Total revenues 1,094,387 25,733 12,917 1,133,037 Net Assets Released from Restrictions: 31,736 (27,836) (3,900) - Product Sales: Revenue 6,328, ,328,181 Cost of product (1,493,696) - - (1,493,696) Troop proceeds (904,360) - - (904,360) Net product sales 3,930, ,930,125 Merchandise Sales: Sales 416, ,732 Cost of sales (257,304) - - (257,304) Returns, allowances, and discounts (6,056) - - (6,056) Net merchandise sales 153, ,372 Program Service Revenue: 299, ,400 Total Net Revenue, Gains and Support 5,509,020 (2,103) 9,017 5,515,934 Expenses: Program services 4,673, ,673,984 Fundraising 465, ,783 General and administrative 360, ,885 Total expenses 5,500, ,500,652 Increase (Decrease) in Net Assets $ 8,368 (2,103) 9,017 15,282 See accompanying accountant's report and notes to financial statements. 3

6 STATEMENT OF ACTIVITIES YEAR ENDED SEPTEMBER 30, 2016 Temporarily Permanently Unrestricted Restricted Restricted Total Gains and Support: Contributions $ 355, , ,184 Special fundraising events 91, ,297 Realized gain on investments (27,109) - - (27,109) Unrealized loss on investments 110,170 6,911 18, ,814 Investment income, net fees 54, ,034 Beneficial interest in perpetual trust - 21,026 (21,026) - Contributed products and services 207, ,063 Rental income 9, ,694 Miscellaneous revenue 91, ,128 Gain on insurance claims 5, ,465 Gain on sale of assets 6, ,791 Total revenues 903, ,453 (1,793) 1,090,361 Net Assets Released from Restrictions: 33,102 (30,807) (2,295) - Product Sales: Revenue 6,255, ,255,981 Cost of product (1,540,812) - - (1,540,812) Troop proceeds (856,833) - - (856,833) Net product sales 3,858, ,858,336 Merchandise Sales: Sales 452, ,413 Cost of sales (277,261) - - (277,261) Returns, allowances, and discounts (99) - - (99) Net merchandise sales 175, ,053 Program Service Revenue: 298, ,615 Total Net Revenue, Gains and Support 5,268, ,646 (4,088) 5,422,365 Expenses: Program services 4,565, ,565,499 Fundraising 475, ,072 General and administrative 334, ,315 Total expenses 5,374, ,374,886 Increase (Decrease) in Net Assets $ (106,079) 157,646 (4,088) 47,479 See accompanying accountant's report and notes to financial statements. 4

7 STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED SEPTEMBER 30, 2017 Membership Development Program Camping Programs Services Total Payroll: Salaries $ 952, , ,558 2,063,219 Employee benefits 284, , , ,619 Payroll taxes 75,700 54,609 33, ,962 Total payroll and benefits 1,312, , ,566 2,842,800 Other Expenses: Professional fees 56,202 40,543 24, ,730 Supplies 56,295 40,611 25, ,932 Product sales incentives and awards 88,844 64,091 39, ,431 Telecommunications 42,108 30,376 18,719 91,203 Postage and delivery 7,787 5,617 3,462 16,866 Occupancy 139, ,462 61, ,634 Repairs and maintenance 59,764 43,113 26, ,445 Printing, promotion and publications 94,663 68,288 42, ,034 Travel 49,632 35,804 22, ,500 Staff and volunteer development 8,587 6,195 3,817 18,599 Assistance and grants 47,501 34,266 21, ,884 Insurance 70,104 50,572 31, ,841 Depreciation 82,286 59,360 36, ,227 Other expenses 42,410 30,594 18,854 91,858 Total other expenses 845, , ,847 1,831,184 Total Expenses: $ 2,157,944 1,556, ,413 4,673,984 See accompanying accountant's report and notes to financial statements. 5

8 STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED SEPTEMBER 30, 2017 Fundraising Supporting Services General & Administrative Total Total Expenses Payroll: Salaries Employee benefits Payroll taxes Total payroll and benefits Other Expenses: Professional fees Supplies Product sales incentives and awards Telecommunications Postage and delivery Occupancy Repairs and maintenance Printing, promotion and publications Travel Staff and volunteer development Assistance and grants Insurance Depreciation Other expenses Total other expenses Total Expenses: $ 205, , ,863 2,428,082 61,366 47, , ,513 16,344 12,658 29, , , , ,759 3,345,559 12,134 9,398 21, ,262 12,154 9,414 21, ,500 19,182 14,856 34, ,469 9,091 7,041 16, ,335 1,681 1,302 2,983 19,849 30,067 23,287 53, ,988 12,903 9,994 22, ,342 20,438 15,829 36, ,301 10,716 8,299 19, ,515 1,854 1,436 3,290 21,889 10,256 7,943 18, ,083 15,136 11,723 26, ,700 17,766 13,760 31, ,753 9,157 7,092 16, , , , ,909 2,155,093 $ 465, , ,668 5,500,652 See accompanying accountant's report and notes to financial statements. 6

9 STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED SEPTEMBER 30, 2016 Membership Development Program Camping Programs Services Total Payroll: Salaries $ 848, , ,443 1,968,765 Employee benefits 275, , , ,048 Payroll taxes 67,569 55,162 34, ,857 Total payroll and benefits 1,191, , ,821 2,765,670 Other Expenses: Professional fees 48,312 39,439 24, ,151 Supplies 61,713 50,379 31, ,261 Product sales incentives and awards 82,072 66,999 41, ,522 Telecommunications 34,804 28,412 17,578 80,794 Postage and delivery 10,353 8,452 5,229 24,034 Occupancy 111,097 90,693 56, ,900 Repairs and maintenance 50,211 40,989 25, ,559 Printing, promotion and publications 77,857 63,558 39, ,737 Travel 41,300 33,715 20,859 95,874 Staff and volunteer development 4,189 3,420 2,116 9,725 Assistance and grants 60,122 49,080 30, ,567 Insurance 63,809 52,090 32, ,126 Depreciation 83,099 67,837 41, ,906 Other expenses 46,383 37,864 23, ,673 Total other expenses 775, , ,581 1,799,829 Total Expenses: $ 1,966,727 1,605, ,402 4,565,499 See accompanying accountant's report and notes to financial statements. 7

10 STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED SEPTEMBER 30, 2016 Fundraising Supporting Services General & Administrative Total Total Expenses Payroll: Salaries $ 204, , ,984 2,317,749 Employee benefits 66,612 46, , ,529 Payroll taxes 16,324 11,486 27, ,667 Total payroll and benefits 287, , ,275 3,255,945 Other Expenses: Professional fees 11,672 8,213 19, ,036 Supplies 14,910 10,491 25, ,662 Product sales incentives and awards 19,828 13,952 33, ,302 Telecommunications 8,409 5,916 14,325 95,119 Postage and delivery 2,501 1,760 4,261 28,295 Occupancy 26,840 18,885 45, ,625 Repairs and maintenance 12,131 8,535 20, ,225 Printing, promotion and publications 18,810 13,235 32, ,782 Travel 9,978 7,021 16, ,873 Staff and volunteer development 1, ,724 11,449 Assistance and grants 14,525 10,220 24, ,312 Insurance 15,416 10,847 26, ,389 Depreciation 20,076 14,126 34, ,108 Other expenses 11,206 7,885 19, ,764 Total other expenses 187, , ,112 2,118,941 Total Expenses: $ 475, , ,387 5,374,886 See accompanying accountant's report and notes to financial statements. 8

11 STATEMENTS OF CHANGES IN NET ASSETS Temporarily Permanently Unrestricted Restricted Restricted Total Net Assets - September 30, 2015 $ 6,208, , ,203 6,743,751 Change in Net Assets (106,079) 157,646 (4,088) 47,479 Net Assets - September 30, ,102, , ,115 6,791,230 Change in Net Assets 8,368 (2,103) 9,017 15,282 Net Assets - September 30, 2017 $ 6,110, , ,132 6,806,512 See accompanying accountant's report and notes to financial statements. 9

12 STATEMENTS OF CASH FLOWS Cash flows from operating activities: Increase in net assets $ 15,282 47,479 Non-cash items included in net increase Depreciation 209, ,108 Amortization of land lease 8,397 8,896 Gain on sale of fixed assets (3,500) (6,791) Net realized (gain) loss on investments (29,178) 27,109 Net unrealized gain on investments (146,340) (135,814) (Increase) decrease in operating assets Cash value of life insurance (257) (263) Receivables and pledges 17,376 (91,007) Inventory 15,436 8,810 Prepaid expenses (14,062) (2,096) Other assets - (37,522) Increase (decrease) in operating liabilities Accounts payable 44,430 (21,844) Accrued vacation ,634 Accrued program incentives 8,598 (12,628) Accrued expenses 16,944 4,164 Deferred revenue 10,035 (16,098) Net cash provided by operating activities 153,044 12,137 Cash flows from investing activities: Purchase of fixed assets (102,760) (30,471) Proceeds from sale of fixed assets 3,500 6,791 Net sales (purchases) of investments ,265 Net cash provided (used) by investing activities (98,595) 174,585 Net Increase in Cash and Cash Equivalents 54, ,722 Cash and Cash Equivalents at Beginning of Year 2,031,995 1,845,273 Cash and Cash Equivalents at End of Year $ 2,086,444 2,031,995 Supplemental Disclosures of Cash Flow Information Noncash Activities Donated goods and services $ 220, ,063 See accompanying accountant's report and notes to financial statements. 10

13 NOTES TO FINANCIAL STATEMENTS NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of the Organization Girl Scouts of the Missouri Heartland, Inc., a Missouri not-for-profit corporation, builds girls of courage, confidence and character, who make the world a better place. Programs and services are available to girls and women age five and older who subscribe to the Girl Scout Promise and Law. The Council currently has five administrative offices in Springfield, Joplin, Dexter, Cape Girardeau, and Jefferson City. Girl Scouts of the Missouri Heartland, Inc. has a membership of just over 11,000 girls and 4,250 adults across 68 counties in central and southern Missouri, southeast Kansas, and northeast Oklahoma. Girl Scouts of the Missouri Heartland, Inc. is chartered by Girl Scouts of the USA. The charter grants the Council the right to develop, manage, and maintain Girl Scouting in a specified area of jurisdiction. In order to retain the charter, the Council agrees to subscribe to the purpose, adhere to the policies and be guided by the standards of the Girl Scouts of the United States of America. Accounting Method The Organization uses the accrual method of accounting, which recognizes revenue when earned and expenses when incurred. Financial Statement Presentation The Organization is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. The Organization does not use fund accounting. Contributed Services and Facilities During the years ended September 30, 2017 and 2016, the value of contributed products and services meeting the requirements for recognition in the financial statements was material and has been recorded at fair market value. Donated contributions are recognized if the donation creates or enhances a nonfinancial asset or requires specialized skills that are provided by individuals possessing those skills and would typically need to be purchased if not provided by donation. In addition, many individuals volunteer their time and perform a variety of tasks that assist the Organization, but these services do not meet the criteria for recognition as contributed services. The value of contributed goods and services as of September 30, 2017 and 2016 was $220,350 and $207,063, respectively, and has been properly used to support program services. Cash and Cash Equivalents For purposes of the statement of cash flows, the Organization considers all highly liquid investments available for current use with an initial maturity of three months or less at the date of their acquisition to be cash equivalents. 11

14 NOTES TO FINANCIAL STATEMENTS NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Inventory Inventories are stated at the lower of cost or market based on the weighted-average method, and consists of Girl Scouting supplies, uniforms, and handbooks. Property and Depreciation Property and equipment are stated at cost. It is the Council s policy to capitalize property and equipment with a value of $1,000 or more with a life expectancy longer than three years. Donations of property and equipment are recorded as support at their estimated fair value at the date of donation. Depreciation is computed by applying the following methods and estimated lives: Category Estimated Life Method Buildings and improvements years Straight-line Leasehold improvements 5-15 years Straight-line Vehicles 5-10 years Straight-line Livestock 5-10 years Straight-line Furniture and equipment 5-10 years Straight-line Computer equipment 3-7 years Straight-line Investments Investments in marketable securities with readily determinable fair values are reported at their fair values in the statement of financial position. Unrealized gains and losses are included in the change in net assets. Investment income and gains restricted by a donor are reported as increases in unrestricted net assets if the restrictions are met (either by passage of time or by use) in the reporting period in which the income and gains are recognized. Contributions and Unconditional Promises to Give Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the existence or nature of any donor restrictions. Contributions are recognized when the donor makes a promise to give to the Council that is, in substance unconditional. Contributions that are restricted by the donor are reported as increases in unrestricted net assets if the restrictions expire in the fiscal year which the contributions are recognized. All other donor-restricted contributions are reported as increases in temporarily or permanently restricted net assets depending on the nature of the restrictions. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets. An allowance for uncollectible unconditional promises to give is based on a review of the current status of the existing promises to give. The allowance balance as of September 30, 2017 and 2016 was $5,300 and $4,867, respectively. The allowance for uncollectible accounts receivable balance as of September 30, 2017 and 2016 was $57,901 and $97,148, respectively. Therefore, the total allowance for uncollectible receivables and pledges for September 30, 2017 and 2016 was $63,201 and $102,015, respectively. Functional Allocation of Expenses The costs of providing the various programs and other activities have been summarized on a functional basis in the Statement of Activities and in the Statement of Functional Expenses. Accordingly, certain costs have been allocated among the programs and supporting services. 12

15 NOTES TO FINANCIAL STATEMENTS NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Income Taxes The Organization is a not-for-profit organization that is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code and classified by the Internal Revenue Service as other than a private foundation. The Organization has evaluated its tax positions for all open tax years. Currently, the tax years open and subject to the Internal Revenue Service are the years ended September 30, 2014, 2015 and 2016 tax years. However, the Organization is not currently under audit nor has the Organization been contacted by any jurisdiction. Based on the evaluation of the Organization s tax positions, management believes all tax positions taken would be upheld under an examination. Therefore, no provision for the effects of uncertain tax positions have been recorded for the fiscal years ended September 30, 2017 and Interest and penalties, if any, related to annual Form 990 or unrelated business income tax filings are reported within general and administrative expenses in the statement of activities. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect: 1) the reported amounts of assets and liabilities; 2) disclosure of contingent assets and liabilities at the date of the financial statements; and, 3) revenues and expenses during the reporting period. Actual results could differ from these estimates. Reclassifications Certain accounts in the prior-year financial statements have been reclassified for comparative purposes to conform to the presentation in the current-year financial statements. There was no effect on net assets. Subsequent Events Girl Scouts of the Missouri Heartland, Inc. has evaluated subsequent events through January 19, 2018, the date on which the financial statements were available to be issued. 13

16 NOTES TO FINANCIAL STATEMENTS NOTE 2: RESTRICTIONS ON NET ASSETS Temporarily restricted net assets as of September 30, 2017 and 2016 are available for the following purposes: M Camp Unplugged $ Iva Awberry Revocable Trust 5,647 7,647 DeLappe Fund 26,402 26,097 Miscellaneous Services and Programs Sacajawea West Improvements 1,277 1,277 Dennis L Cain Fund 9,170 7,928 Doris Brown Fund 53,474 54,451 Travel for Adult Volunteer Training 6,793 6,536 Disaster Relief Fund 1,241 1,994 Eleanor Peck Johnson Scholarship 27,622 20,469 Pat Renard Latonka Property Plan 26,508 14,756 Mintahama Property Plan 11,448 14,237 Central Bank 24,124 30,000 William Gordon Buckner Trust 100, ,000 GSUSA Great American Eclipse Grant - 10,000 Musgrave Foundation Total Temporarily Restricted Net Assets $ 295, ,607 Permanently restricted net assets as of September 30, 2017 and 2016 are as follows: Susie Henry $ Dogwood Trails Council Endowment 21,382 21,382 Dogwood Trails Mtn. View Endowment 12,884 12,884 Camp Suzanne Improvements 30,050 30,050 Conservation Projects 12,000 12,000 Building Maintenance Endowment 1,000 1,000 DeLappe Fund 231, ,863 Eleanor Peck Johnson Scholarship 29,979 29,479 Harryette Campbell Fund 54,377 51,335 Travel for Adult Volunteer Training 4,138 4,138 Dyer Fund for Camp Assistance 2,884 2,884 Total Permanently Restricted Net Assets $ 400, ,115 The board has designated the proceeds from the sale of the Joplin service center, Cape Girardeau building, Greenberry property and Sacajawea - East to be used for future capital improvements. As of September 30, 2017 and 2016, the Board had $450,533 and $583,156, respectively, available for use. 14

17 NOTE 3: INVESTMENTS GIRL SCOUTS OF THE MISSOURI HEARTLAND, INC. NOTES TO FINANCIAL STATEMENTS Investments in equity securities with readily determinable fair values and all debt securities are reported at fair value with gains and losses included in the statement of activities. Investments as of September 30, 2017 and 2016 are summarized as follows: Certificates of deposit $ 10,000 10,000 Mutual funds 1,499,805 1,359,203 Common and preferred stocks 324, ,147 U.S. government bonds 2,444 4,412 Total Investments $ 1,836,615 1,661,762 The Organization is the beneficiary under a perpetual trust administered by an outside party. Under the terms of the trust, the Organization has the irrevocable right to receive distributions from the trust assets and earnings in perpetuity, but never receives the assets held in trust. The estimated value of the expected future cash flow as of September 30, 2017 and 2016 is $231,339 and $225,863 respectively, which represents the fair value of the trust assets, and is included in long-term investments in the Statements of Financial Position. Distributions from this trust as of September 30, 2017 and 2016 were $9,850 and $21,026 respectively. Investment return for all investments and cash accounts consisted of the following as of September 30, 2017 and 2016: Investment income $ 47,931 59,983 Investment fees (6,049) (5,949) Realized gain (loss) 29,178 (27,109) Unrealized gain 146, ,814 Net Investment Income $ 217, ,739 Investments are exposed to various risks, such as interest rates, market, and credit. Due to the level of risk associated with certain investments and the level of uncertainty related to changes in their values, it is at least reasonably possible that changes in risks in the near term would materially affect the investment balances reported in the financial statements. 15

18 NOTES TO FINANCIAL STATEMENTS NOTE 4: FAIR VALUE MEASUREMENTS Financial Accounting Standards Board ASC 820, Fair Value Measurements (formerly FASB Statement No. 157), establishes a framework for measuring fair value and expands disclosures about fair value measurements. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under ASC 820 are described below: Level 1 Level 2 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the organization has the ability to access. Inputs to the valuation methodology include: Quoted prices for similar assets and liabilities in active markets; Quoted prices for identical or similar assets or liabilities in inactive markets; Inputs other than quoted prices that are observable for the asset or liability; Inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability. Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The asset s or liability s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. Following is a description of the valuation methodology used for assets measured at fair value. There have been no changes in the methodologies used at September 30, Mutual Funds: Valued at the quoted market prices available on active market which is based on the underlying net asset value (NAV) of share hold by the organization at year-end. Common and preferred stocks: Valued at quoted market prices available on an active market. U.S. Government bonds: Valued at the closing price reported in the market in which the individual bond is traded. 16

19 NOTES TO FINANCIAL STATEMENTS NOTE 4: FAIR VALUE MEASUREMENTS (CONTINUED) Beneficial interest in perpetual trusts: Consist of the Organization s interests in trusts held by others in perpetuity for the benefit of the Organization with fair values based on present value and other techniques using unobservable inputs. The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Organization believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. The following table sets forth by level, within the fair value hierarchy, the Organization s assets at fair value as of September 30, 2017 and 2016: Assets at Fair Value as of September 30, 2017 Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Certificates of deposit $ - 10,000-10,000 Mutual funds 1,344,538 32,951-1,377,489 Common or preferred stock 186,472 28, ,343 US government bonds - 2,444-2,444 Beneficial interest in perpetual trust , ,339 Total Assets at Fair Value $ 1,531,010 74, ,339 1,836,615 The following table sets forth a summary of changes in the fair value of the Organization s Level 3 assets for the year ended September 30, 2017: Significant Unobservable Inputs (Level 3) Beginning balance, September 30, 2016 $ 225,863 Distributions (9,850) Contributions 157 Interest and dividends, current period 5,111 Taxes and fees (2,540) Realized losses 3,530 Unrealized gains 9,068 Ending balance, September 30, 2017 $ 231,339 The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to assets still held at the reporting date $ 9,068 The summary of changes of the Organization s Level 3 assets includes the cash portion of $20,

20 NOTES TO FINANCIAL STATEMENTS NOTE 4: FAIR VALUE MEASUREMENTS (CONTINUED) Assets at Fair Value as of September 30, 2016 Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Certificates of deposit $ - 10,000-10,000 Mutual funds 1,207,526 31,040-1,238,566 Common or preferred stock 156,480 26, ,921 US government bonds - 4,412-4,412 Beneficial interest in perpetual trust , ,863 Total Assets at Fair Value $ 1,364,006 71, ,863 1,661,762 The following table sets forth a summary of changes in the fair value of the Organization s Level 3 assets for the year ended September 30, 2016: Significant Unobservable Inputs (Level 3) Beginning balance, September 30, 2015 $ 234,356 Distributions (21,026) Contributions 1,104 Interest and dividends, current period 5,137 Taxes and fees (2,717) Realized losses (8,418) Unrealized gains 17,427 Ending balance, September 30, 2016 $ 225,863 The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to assets still held at the reporting date $ 17,427 The summary of changes of the Organization s Level 3 assets includes the cash portion of $20,

21 NOTE 5: PROMISES TO GIVE GIRL SCOUTS OF THE MISSOURI HEARTLAND, INC. NOTES TO FINANCIAL STATEMENTS Unconditional promises to give and receivables as of September 30, 2017 and 2016 are as follows: Pledges receivable in less than one year $ 37,757 34,968 Miscellaneous receivables and pledges 183, ,248 Allowance for doubtful accounts (63,201) (102,015) Current year receivables and pledges $ 157, ,201 Pledges receivable in one to five years $ 7,635 20,765 Total Long-Term Pledges $ 7,635 20,765 NOTE 6: PROPERTY AND EQUIPMENT Property and equipment as of September 30, 2017 and 2016 consist of the following: Land and improvements $ 1,185,527 1,185,527 Buildings and improvements 4,324,345 4,263,087 Leasehold improvements 192, ,633 Vehicles 138, ,895 Livestock 7,100 16,881 Furniture and equipment 510, ,211 Computer equipment 75,728 60,728 6,434,781 6,358,962 Less: accumulated depreciation 3,556,594 3,373,781 Net Fixed Assets $ 2,878,187 2,985,181 Two camp site locations deeded to the Council in previous years have provisions that if the Girl Scouts ceased using these locations for camping and other outdoor activities related to Girl Scout programs then certain stipulations would be imposed. The stipulation for Friendship Fields camp site requires the Council to provide a comparable camp site within Crawford County, Kansas if the present location is sold or ceases to be a Girl Scout camp site. The stipulation for Camp Suzanne camp site requires the reversion of the property to the heirs of the grantors if the present location is conveyed to another person, firm, organization or corporation or ceases to be a Girl Scout camp site. The stipulation for Camp Suzanne remains in effect until December

22 NOTE 7: RETIREMENT PLAN GIRL SCOUTS OF THE MISSOURI HEARTLAND, INC. NOTES TO FINANCIAL STATEMENTS The council participates in the National Girl Scout Council Retirement Plan (NGSCRP), a noncontributory defined benefit pension plan sponsored by Girl Scouts of the USA. The National Board of Girl Scouts of the USA voted to freeze the plan to new entrants and to freeze future benefit accruals for all current participants under the Plan effective July 31, The plan covers substantially all of the employees of various Girl Scout councils who were eligible to participate in the plan prior to the Plan freeze. Accrued and vested benefits prior to July 31, 2010 are based on years of service and salary levels. Although net Plan assets grew during the year, net Plan assets available for Plan benefits continue to be less than the actuarial present value of accumulated Plan benefits as of January 1, Based on the April 18, 2014 conditional approval by the Internal Revenue Service (IRS), all existing amortization bases in the Plan s funding standard account as of January 1, 2013 were combined into one base and the resulting amortization period for that single base was extended to 10 years. Approval applies as long as at a minimum, beginning with the January 1, 2013 calendar year, $30,000,000 is remitted. The $30,000,000 calendar year minimum applies for each succeeding calendar year until the Plan is fully funded based upon the requirements of the Pension Protection Act of 2006 (PPA). In addition, on April 8, 2014, President Obama signed H.R into law, a relief package unanimously passed by Congress that gives NGSCRP the flexibility to adopt the Pension Protection Act (PPA) funding requirements immediately or not at all. NGSCRP has elected to adopt this relief and not be subject to PPA. Aggregate annual contributions made in fiscal years 2016 and 2017 were $34,300,000 and $33,100,000, respectively. The aggregate annual contributions decreased from 2016 to 2017 due to the reduction in the Plan s total annual aggregate contributions from $34,300,000 to $32,500,000 million effective May 1, Aggregate contributions made in fiscal 2018 are expected to continue to be $32,500,000. The Council made contributions into the Plan of $306,462 and $312,690 during the years ended September 30, 2017 and 2016, respectively. NOTE 8: CONCENTRATION OF SUPPORT The annual Girl Scout cookie sales accounted for approximately 71% and 71% of total unrestricted revenues, gains, and other support for the years ended September 30, 2017 and 2016, respectively. The results of the Council s cookie sales program and other sales programs for the year ended September 30, 2017 and 2016 were are follows: Cookie sale program revenue $ 5,836,081 5,750,205 Cost of cookies (1,288,801) (1,335,088) Troop proceeds (802,286) (750,923) Total Cookie Sale Program Revenue $ 3,744,994 3,664,194 Fall product program revenue $ 492, ,776 Cost of fall product (204,895) (205,724) Troop proceeds (102,074) (105,910) Total Fall Product Program Revenue $ 185, ,142 20

23 NOTES TO FINANCIAL STATEMENTS NOTE 8: CONCENTRATION OF SUPPORT (CONINUED) United Way cash contributions represented 39% and 36% of total cash contributions received by Girl Scouts for the fiscal years September 30, 2017 and 2016, respectively. NOTE 9: OPERATING LEASES The Council has leases for the use of office and computer equipment. Total lease expense for the lease items as of September 30, 2017 and 2016 was $93,705 and $112,189 respectively. Future minimum lease payments under these operating leases are as follows: 2018 $ 101, , ,015 Total Minimum Lease Payments $ 273,944 NOTE 10: LIFE INSURANCE POLICY Girl Scouts of the Missouri Heartland, Inc. is the owner of a $10,000 life insurance policy. As of September 30, 2017 and 2016, the cash surrender value of the life insurance policy was $6,793 and $6,536 respectively. NOTE 11: LEASED FACILITIES The Council is the lessee in a lease agreement with the Army Corp of Engineers for a 25 year period from January 1, 1996 to December 31, The lease covers land in Wappaello lake area, which is used for camping and recreational activities. The lease payment is nominal. The Council is the lessee in a lease agreement with the Cherokee County American Legion for a 99 year period from April 20, 1979 to April 19, The lease covers a small facility in Columbus, Kansas that is used for program services. The lease payment is nominal. The Council was donated a time share in Branson, Missouri. The time share is available to the Council one week every even year. The Council pays $350 in annual maintenance fees. The Council currently has the time share placed on the market to be sold. 21

24 NOTES TO FINANCIAL STATEMENTS NOTE 11: LEASED FACILITIES (CONTINUED) All of the leases listed above involved nominal payments or payments below market value. The difference between the fair rental value and the stated rent payments was recorded as a contribution at an estimated net present value of $161,669 as of October 1, As of September 30, 2017 and 2016, the estimated net present value of these land leases are as follows: Portion of land lease due in less than one year $ 7,925 8,397 Portion of land lease due in one to five years 14,909 22,717 Portion of land lease due in more than five years 2,302 2,419 Total $ 25,136 33,533 Total amortization for the long-term leases as of September 30, 2017 and 2016 was $8,397 and $8,896 respectively. The discount rate used in calculating the net present value of these land leases was the 30 year United States Treasury rate at the time the lease was established. NOTE 12: CONCENTRATIONS OF CREDIT RISK At times during the current fiscal year, the Organization s cash balances exceeded the U.S. Federal Deposit Insurance Corporation s insurance limits. NOTE 13: SUBORDINATE UNIT BANK ACCOUNTS Girl Scout troops and groups establish bank accounts under the Council s tax identification number. All troop and group funds are maintained for the benefit of the girls within the respective group. These funds are not under the financial control of the Council and have not been included in the financial statements. 22