THE CENTER FOR DEVELOPMENTAL DISABILITIES, INC. AND AFFILIATE Woodbury, New York

Transcription

1 Woodbury, New York COMBINED FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION Including Independent Auditors' Report As of and for the Years Ended December 31, and 2013

2 TABLE OF CONTENTS As of and for the Years Ended December 31, 2014 and 2013 Combined Financial Statements Independent Auditors' Report Combined Statements of Financial Position Combined Statements of Activities and Changes in Net Assets Combined Statements of Cash Flows Notes to Combined Financial Statements Supplementary Information Independent Auditors' Report on Supplementary Information Combining Statement of Financial Position Combining Statement of Activities and Changes in Net Assets Combined Statement of Functional Expenses

3 Combined Financial Statements

4 Baker Tilly Virchow Krause, LLP 125 Baylis Rd, Ste 300 Melville, NY rel fax bakerrilly.com INDEPENDENT AUDITORS' REPORT Board of Directors The Center for Developmental Disabilities, Inc. and Affiliate Woodbury, New York We have audited the accompanying combined financial statements of The Center for Developmental Disabilities, Inc. and Affiliate, which comprise of the combined statements of financial position as of December 31, 2014 and 2013, and the related combined statements of activities and changes in net assets and cash flows for the years then ended, and the related notes to the combined financial statements. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of the combined 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 combined financial statements that are free from material misstatements, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these combined financial statements based on our audits. We conducted our audits 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 combined financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the combined financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the combined 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 combined financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose 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 accounting estimates made by management, as well as evaluating the overall presentation of the combined financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of The Center for Developmental Disabilities, Inc. and Affiliate as of December 31, 2014 and 2013, and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. ~-<'\{~ 'J \~\)\,<).."' ~~6.ric Melville, New York May ~ anin depe r: de ~ tmembe o: BAKER TILLY INTERNATIO NAL ' llf Page 1 An Affirmative Action Equal Opportunity Employer

5 COMBINED STATEMENTS OF FINANCIAL POSITION As of December 31, 2014 and Assets Current Assets: Cash and cash equivalents 965, ,1 61 Certificate of deposit 200, ,400 Investments 102, ,301 Accounts receivable, net of allowance for doubtful accounts of 238,569 and 30,000 at December 31, 2014 and 2013, respectively 3,118,444 3,209,367 Grants receivable 109, ,392 Prepaid expenses 166, ,837 Total Current Assets 4,662,671 4,467,458 Assets Held for Specific Purpose 1,334,957 1,336,607 Land, Buildings and Improvements, and Equipment, net 11,126,312 11,508,974 Reserve for Replacements 6,652 54,748 Restricted Assets, cash 30,150 30,150 Other Assets 129,989 88,254 Total Assets 17,290,731 17,486,191 Liabilities and Net Assets Current Liabilities: Notes payable - bank 2,174,987 2,789,987 Accounts payable and accrued expenses 1,710,300 2,261,808 Accrued salaries and related costs 698, ,013 Due to government agencies 441, ,298 Current portion of long-term debt 291, ,823 Current portion of bonds payable 710, ,000 Current portion of accrued compensated absences payable 872, '166,052 Total Current Liabilities 6,899,41 3 8,011,981 Deferred Rent 3,512,500 3,111,000 Due to Government Agencies 924, ,375 Long-Term Debt 2,410,778 1,622,461 Bonds Payable 1,530,000 2,240,000 Accrued Compensated Absences Payable 321, ,798 15,598,192 15,731,615 Commitments and Contingencies Net Assets: Unrestricted 1,407,330 1,466,118 Temporarily restricted 285, ,458 Total Net Assets 1,692,539 1,754,576 Total Liabilities and Net Assets ~ 17,290,731 17,486,191 See notes to combined financial statements. Page 2

6 COMBINED STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS For the Years Ended December 31, 2014 and 2013 Changes in Unrestricted Net Assets Revenue and Support: Program service revenue 29,708,298 27,517,320 Government grants 655,232 1,062,976 Rent revenue 34,479 33,600 Tenant assistance payments- Section 8 26,520 26,956 Fundraising and special events 256, ,537 Costs of direct benefits to donors (79,167) (107,371) Contributions 56,348 14,097 Interest income and other 13, ,983 Net assets released from restriction 24,779 13,196 Total Revenue and Support 30,696,936 29,178,294 Expenses: Program services: Children's day and other 4,545,396 4,556,016 Children's residence 3,012,496 2,779,367 Adult day and other 4,956,948 4,946,623 Adult residences 15,142,468 14,252,367 Waiver services 259, ,966 Grants 282, ,002 Total program services 28,199,861 27,197,341 Supporting services: Management and general 2,503,945 2,413,445 Fundraising 233, ,072 Total Expenses 30,937,505 29,836,858 Decrease in Unrestricted Net Assets before Rate Adjustments (240,569) (658,564) Rate Adjustments 181,781 61,833 Decrease in Unrestricted Net Assets (58,788) (596,731) Changes in Temporarily Restricted Net Assets Contributions 21,530 47,258 Net Assets Released from Restriction {24,779} (13, 196) (Decrease) Increase in Temporarily Restricted Net Assets (3,249) 34,062 Decrease in Net Assets (62,037) (562,669) Net Assets, beginning of year 1,754,576 2,317,245 Net Assets, end of year 1,692,539 1,754,576 See notes to combined financial statements. Page 3

7 COMBIN ED STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2014 and Cash Flows from Operating Activities: Decrease in net assets Adjustments to reconcile decrease in net assets to net cash provided by operating activities: Depreciation and amortization Allowance for Doubtful Accounts Net unrealized and realized losses (gains) on investments Deferred rent Changes in operating assets and liabilities: Decrease (increase) in assets: Accounts receivable Grants receivable Prepaid expenses Other assets (Decrease) increase in liabilities: Accounts payable and accrued expenses Accrued salaries and related costs Deferred revenue Due to government agencies Accrued compensated absences Net Cash Provided by Operating Activities Cash Flows from Investing Activities: Purchase of certificate of deposit Purchases of land, buildings and improvements, and equipment Withdrawals from (deposits to) reserve for replacements Net Cash Used in Investing Activities Cash Flows from Financing Activities: Increase in assets held for specific purpose Repayments of notes payable - bank Proceeds from notes payable - bank Proceeds from long-term debt Principal payments on long-term debt Repayments of bonds payable Net Cash Used in Financing Activities Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equ ivalents, beginning of year Cash and Cash Equivalents, end of year Supplemental Disclosure of Cash Flow Information: Cash paid during the year for interest See Note 8 for noncash transaction. (62,037) (562,669) 839, , ,569 1,990 (43,985) 401, ,500 (117,646) 478, ,750 (446,642) 14,260 (53,892) (55,463) (12,550) (551,508) 52,965 41,555 (621 '148) (96,840) 758,032 41,570 (296,786) 170,209 1,659,677 46,846 (101) (198) (443,071) (863,375) 48,096 (1,665) (395,076) (865,238) 1,650 1,089 (141,382) (430,013) 441, , , ,789 (277,598) (246,904) (675,000) (640,000) (484,566) (206,365) 780,035 (1,024,757) 185,161 1,209, , , , ,049 See notes to combined financial statements. Page 4

8 NOTES TO COMBINED FINANCIAL STATEMENTS As of and for the Years Ended December 31, 2014 and Description of Organization and Summary of Significant Accounting Policies Nature of operations- The Center for Developmental Disabilities, Inc. and Affil iate (the "Organization") are not-for-profit corporations providing educational, rehabilitative, residential and other services through ch ildren's day, children's residence, adult day, intermediate care and adult residence programs. The Organization has had decreases in net assets in 2014 and 2013 and working capital deficiencies as of December 31, 2014 and In 2014 and 2013, management addressed these deficits by restructuring programs, reducing expenses and increasing enrollments. Accordingly, management believes the restructuring will support the Organization's ability to operate profitability in Basis of presentation -The accompanying combined financial statements include the accounts of The Center for Developmental Disabilities, Inc. and its affiliate, Nassau Center Residential Development Corp. (the "Corporation") (collectively referred to as the "Organization"), and have been prepared on the accrual basis. All significant intercompany accounts and transactions have been eliminated in arriving at combined totals. The affiliate's principal asset is a facility which houses adults with developmental disabilities who participate in The Center for Developmental Disabilities, Inc.'s programs. The affiliate's program services revenue is supplemented by tenant assistance payments from the United States Department of Housing and Urban Development ("HUD"), under the Additional Assistance Program for Corporations with HUD-Insured or HUD-Held Mortgages. Donor-imposed restrictions- The Organization reports gifts of cash and other assets as restricted assets if they are received with donor stipulations that limit the use of the donated assets. Contributions which are donor restricted for the purpose of establishing endowment funds are recorded as additions to permanently restricted net assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the combined statements of activities and changes in net assets as net assets released from restrictions. The Organization reports gifts of land, buildings and equipment as unrestricted support unless explicit donor stipulations specify how the donated assets must be used. Gifts of long-lived assets with explicit restrictions that specify how the assets are to be used and gifts of cash or other assets that must be used to acquire long-lived assets are reported as restricted support. Absent explicit donor stipulations about how long those long-lived assets must be maintained, the Organization reports expirations of donor restrictions when the donated or acquired long-lived assets are placed in service. The Organization records restricted donations as unrestricted if the donor stipulations have been met in the current reporting period. Net asset classification- The Organization's financial presentation distinguishes between unrestricted, temporarily restricted and permanently restricted net assets, based upon the existence or absence of donorimposed restrictions, as follows: Unrestricted- Net assets which have not been donor restricted, and are therefore, available for use in carrying out the operations of the Organization. Temporarily restricted- Net assets which have been limited by donor-imposed stipulations that either expire with the passage of time or can be fulfilled and removed by the actions of the Organization pursuant to those stipulations. Permanently restricted- Net assets subject to donor-imposed restrictions that stipulate resources be maintained in perpetuity. At December 31, 2014 and 2013, the Organization has no permanently restricted net assets. Investments- Investments in marketable equity securities with readily determinable fair values and all investments in debt securities are recorded at their fair values. Donated marketable securities are recorded at fair value at the date of acquisition. Realized and unrealized gains and losses on investments are reported in the combined statements of activities and changes in net assets as increases or decreases in unrestricted net assets unless their use is temporarily or permanently restricted by explicit donor stipulation or by law. Page 5

9 NOTES TO COMBINED FINANCIAL STATEMENTS As of and for the Years Ended December 31, 2014 and 2013 Fair value measurements - Fair value refers to the price that would be received to sell an asset or paid to transfer a liability at the measurement date in an orderly transaction between market participants in the market in which the entity transacts. The Organization must determine whether its assets and liabilities recorded at fair value were based on Level 1 (valued based on quoted prices in an active market for identical assets), Level 2 (valued based on significant other observable inputs) or Level 3 (valued based on significant unobservable inputs) measurements. Land, buildings and improvements, equipment and depreciation- Land, buildings and improvements, and equipment are stated at cost when purchased and donated assets are stated at fair value on the date of donation. The Organization capitalizes property and equipment with a cost of 1,000 or higher, and a useful life of at least two years. Depreciation of buildings and improvements, and equipment is provided over the estimated useful lives of the respective assets (ranging from 3 to 40 years) on a straight-line basis. Revenue and accounts receivable- Program service revenue is principally cost and fee based. Accounts receivable and revenue for such services are recorded at rates established by governmental payors (principally Medicaid). The rates are subject to audit by governmental payors, and approvals of rate appeals made by the Organization are based upon regulations of the various funding entities. Any changes in rates resulting from rate reconciliations, audit adjustments or rate appeals are reflected in the operations of the Organization when such rates are determined or can be reasonably estimated. In 2014 and 2013, the Organization recognized retroactive rate adjustments aggregating approximately 182,000 and 62,000, respectively. Allowance for doubtful accounts - Management must make estimates of the uncollectability of all accounts receivable. Management specifically analyzes accounts receivable, historical bad debts, current funding trends and changes in payment terms and rates when evaluating the adequacy of the allowance for doubtful accounts. Property closing costs, mortgage and bond closing costs and fees - Property closing costs, mortgage and bond closing costs and fees are amortized over the lives of the related mortgage or bond obligations, and are included in other assets on the combined statements of financial position. Donated goods and services- Donated goods and donated services requiring specific expertise are recorded at fair value when received and included in contribution revenue and related expenses in the combined statements of activities and changes in net assets. In addition, individuals contribute freely of their time and talent in furtherance of the Organization's goals. The Organization has not recorded the value of these services in its financial statements because they do not meet the criteria for recognition. Income taxes- Both entities qualify as tax-exempt, not-for-profit organizations under Section 501 (c)(3) of the Internal Revenue Code, and qualify as not-for-profit organizations under the laws of New York State. Accordingly, no provision for federal or state income taxes is required. Uncertain tax positions- Management has evaluated the Organization's tax positions for the years December 31, 2014 and 2013, and concluded that the Organization has not taken any uncertain tax positions that require adjustment to the financial statements to comply with the provisions of Accounting Standards Codification 740. Generally, the Organization is no longer subject to income tax examination by U.S. federal, state or local tax authorities for years before 2011, which is the standard statute of limitations look-back period. Page 6

10 NOTES TO COMBINED FINANCIAL STATEMENTS As of and for the Years Ended December 31, 2014 and 2013 Cash and cash equivalents- The Organization considers all highly liquid investments with maturities of three months or less on the date of acquisition to be cash equivalents. Functional allocation of expenses- The costs of providing the various programs and other activities has been summarized on a functional basis in the combined statement of functional expenses. Accordingly, certain costs have been allocated among the programs and supporting services benefited. 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 the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Deferred rent- As a service provider with the New York State Education Department ("SED"), the Organization is reimbursed for principal amortization of the bonds financed through the Dormitory Authority of the State of New York ("DASNY"). The difference between amounts reimbursed by SED for amortization and amounts recorded as depreciation expense is reflected as deferred rent in the combined statements of financial position. This deferred rent represents a timing difference, which will accumulate over the term of the agreement and will reverse over the remaining life of the building. Evaluation of subsequent events- Management has evaluated subsequent events through May 27, 2015, the date the financial statements are available for issuance, for inclusion or disclosure in the financial statements. 2. Investments At December 31, 2014 and 2013, investments are valued based on Level 1 inputs and consist of the following: As of December 31, Cost 2014 Fair Value Cost 2013 Fair Value Corporate Stocks 97,108 97, , ,311 97,108 97, , ,301 The following represents unrealized losses in the fair value of investments: For the Years Ended December 31, Unrealized Gain (Loss), beginning of year Unrealized Gain (Loss) in Fair Value of Investments during the Year Unrealized Gain (Loss), end of year 7,193 (1,990) 5,203 (36,792) 43,985 7,193 For the years ended December 31, 2014 and 2013, interest and dividend income of approximately 3,200 and 2,400, respectively, are included in interest income and other. Page 7

11 NOTES TO COMBINED FINANCIAL STATEMENTS As of and for the Years Ended December 31, 2014 and Accounts Receivable Accounts receivable consists of the following: As of December 31, Children's Day and Other Children's Residence Adult Day and Other Adult Residences Other Total Accounts Receivable Allowance for Doubtful Accounts Total Accounts Receivable, net 4. Assets Held for Specific Purpose , , ,278 1,853,513 3,148, ,569 3,118, , , ,178 1,554, ,837 3,239,367 30,000 3,209,367 The Organization has established debt service and building and equipment reserve accounts, required by DASNY and the Suffolk County Industrial Development Agency ("IDA"), for future debt service and repairs and maintenance, respectively. These amounts are as follows: As of December 31, Debt Service Fund Building and Equipment Reserve Fund Total Assets Held for Specific Purpose 1,155, ,727 1,334,957 1 '156, ,690 1,336,607 At December 31, 2014, investments for DASNY consist of U.S Treasury notes of 1,252,500, bearing interest from.02% to 1.88%, maturing through June 30, 2015, and have been stated at fair value based on Level 1 inputs, and restricted cash of 5,276. At December 31, 2013, investments for DASNY consist of U.S. Treasury notes of 1,250,827, bearing interest from.02% to.04%, maturing through June 30, 2014, and have been stated at fair value based on Level 1 inputs, and restricted cash of 8,599. The Suffolk County IDA funds are invested in cash management funds. As of December 31, 2014 and 2013, the balance is 77, Land, Buildings and Improvements, and Equipment, Net Land, buildings and improvements, and equipment, net, consists of the following: As of December 31, Land Buildings and Improvements Furniture and Equipment Vehicles Less Accumulated Depreciation 1,595,040 23,033,972 2,198,945 1,437,275 28,265,232 17,138,920 11,126,312 1,595,040 22,664,377 2,125,474 1,538,261 27,923,152 16,414,178 11,508,974 Depreciation expense for the years ended December 31, 2014 and 2013 were approximately 826,000 and 757,000, respectively. During the year ended December 31, 2013, the Organization capitalized interest of 38,000, related to the construction of a new IRA location that was completed in Page 8

12 NOTES TO COMBINED FINANCIAL STATEMENTS As of and for the Years Ended December 31, 2014 and Reserve for Replacements The Corporation maintains a capital replacement reserve account of 6,652 and 54,7 48 at December 31, 2014 and 2013, respectively, as required by HUD, for future repairs and maintenance. All disbursements from this account must be approved by HUD. During the year ended December 31, 2014, the Corporation made an unauthorized withdrawal from the capital reserve replacement account of approximately 50,000. In February 2015, the amount withdrawn was replenished in full. 7. Other Assets Other assets consists of the following: As of December 31, Fees and Closing Costs, net 79,637 61,904 Security Deposits 14,360 14,020 Other Assets 35,992 12, ,989 88,254 Fees and closing costs represent mortgage and bond closing costs and fees related to certain loan agreements and bonds issued for the purchase of and renovation to the Organization's plant assets. At December 31, 2014 and 2013, accumulated amortization associated with these assets approximated 753,000 and 733,000, respectively. 8. Notes Payable The Organization maintains a line of credit with a financial institution which has a maximum borrowing limit of 2,200,000. The line bears interest at the financial institution's base rate, which is a variable rate adjusted by the financial institution, without notice, plus 0.5%. The base rate was 5.0% at December 31, 2014 and The line of credit is due on demand, and is secured by the Organization's receivables and a certificate of deposit. At December 31, 2014 and 2013, 2,174,987 and 1,874,987, respectively, was outstanding under this agreement. As of December 31, 2013, the Organization had a bridge loan with a financial institution available up to the amount of 915,000, which was utilized for the purchase of land and building for a new property. The loan bore interest at the financial institution's base rate, which is a variable rate adjusted by th e financial institution, without notice, plus 1.0%. The base rate was 5.5% at December 31, The loan was due on demand, and was secured by the Organization's receivables and furniture and fixtures at the Jericho House. At December 31, 2013, 915,000 was outstanding under this agreement. During the year ended December 31, 2014, this bridge loan was converted to mortgage payable. Interest expense included in the combined statements of activities and changes in net assets on the lines of credit for the years ended December 31, 2014 and 2013 approximated 110,000 and 95,000, respectively. Page 9

13 NOTES TO COMBINED FINANCIAL STATEMENTS As of and for the Years Ended December 31, 2014 and Long-Term Debt Long-term debt consists of the following: As of December 31, Intermediate Care Facility ("ICF") mortgages, payable in semi-annual installments, at rates ranging from 7.28% to 7.58%, maturing at various installments through August 2017 (a). Individualized Residential Alternative ("IRA") mortgages, payable in variable monthly installments, at rates ranging from 6.50% to 6.92%, due through August 2024 (a). Individualized Residential Alternative ("IRA") mortgage, payable in monthly installments, at a fixed rate of 5.25%, due through January 2030 (c). Wantagh community residence mortgage, payable in monthly installments of 2,740, including interest at 9.25% per annum, through July 2024 (a) ,400 1,021,843 1,056, , ,700 1,123, ,531 Vehicle and Equipment loans, payable in various monthly installments, at rates ranging from 4.84% to 8.51% per annum, due through July 2019 (b). Less Current Maturities 204,837 2,702, ,290 2,410, ,687 1,898, ,823 1,622,461 (a) (b) (c) Collateralized by the respective land and building. Collateralized by transportation equipment and equipment. Collateralized by the respective land and building and accounts receivable of The Center for Developmental Disabilities, Inc. Long-term debt matures approximately as follows: For the Years Ending December 31, Thereafter 291, , , , ,000 1,390,000 2,702,000 Interest expense on long-term debt for the years ended December 31, 2014 and 2013 approximated 179,000 and 142,000, respectively. Page 10

14 NOTES TO COMBINED FINANCIAL STATEMENTS As of and for the Years Ended December 31, 2014 and Bonds Payable Bonds payable consists of the following: As of December 31, 2014 Insured Revenue Bonds (853 School Program) (a) 2,075,000 Suffolk County IDA Bonds (b) 165,000 2,240,000 Less Current Maturities 710,000 1,530, ,700, ,000 2,915, ,000 2,240,000 (a) In connection with the rehabilitation and expansion of facilities at its Woodbury campus, the Organization received funding in the amount of 8,940,000 from DASNY issuing Insured Revenue Bonds (853 Schools Program issue) on behalf of the Organization. The bonds are comprised of serial bonds of 3,060,000 and term bonds of 5,880,000. The serial bonds were due each July 1st in increasing annual amounts and ended with 445,000 on July 1, Interest was payable semi-annually at varying interest rates, and ended with 4.75% in The term bonds, which carry a fixed rate of interest of 5% payable on similar terms as the serial bonds, are due each July 1st in increasing annual amounts commencing with 470,000 on July 1, 2008 and ending with 725,000 on July 1, The Organization has assigned and granted a security interest in tuition revenues to be received from the various school districts to fund bond principal and interest payments. The bonds are further secured by the Debt Service Funds and the Building and Equipment Reserve Fund (Note 4). The aggregate amounts deposited in these funds meet the requirements of the agreement. (b) In 2002, the Suffolk County Industrial Development Agency issued Civic Facility Revenue Bonds totaling 600,000 on behalf of the Organization. The offering included a tax-exempt term bond of 580,000, maturing on June 1, 2017, with an interest rate of 7.125%, and a taxable term bond of 20,000, which matured on June 1, 2007, with an interest rate of 6.00%. Principal payments are due annually on June 1st. At December 31, 2014 and 2013, the tax-exempt bond is secured by Debt Service Funds of approximately 77,000 for each year. This amount is included in assets held for specific purpose at December 31, 2014 and Principal payments requ ired to be made on the bonds are as follows: Years Ending December 31, , , ,000 2,240,000 Interest expense on bonds payable approximated 134,000 and 163,000 for the years ended December 31, 201 and 2013, respectively. Page 11

15 NOTES TO COMBINED FINANCIAL STATEMENTS As of and for the Years Ended December 31, 2014 and Net Assets Temporarily restricted net assets of 285,209 and 288,458 as of December 31, 2014 and 2013, respectively, consist of purpose-restricted contributions for certain programs of the Organization. During the years ended December 31, 2014 and 2013, 24,779 and 13,196, respectively, of temporarily restricted net assets were released from restrictions by satisfying the restricted purposes specified by the donors. 12. Contingencies Government funding and possible rate adjustments- Substantial funding of programs is provided to the Organization by government agencies. Continuation of such funding is dependent on budgetary allocations from such agencies. In addition, reimbursements under contracts or rates are subject to audit by various agencies on a regular basis. Litigation -The Organization could be subject to lawsuits and claims with respect to matters arising in the normal course of business. The Organization defends its position on all actions. In the opinion of management, the ultimate liabilities, if any, from any lawsuits or claims will not materially affect the financial position of the Organization. 13. Off-Balance Sheet Risk and Concentrations of Credit Risk Financial instruments which potentially subject the Organization to concentrations of credit risk consist principally of temporary cash investments and accounts receivable from governmental agencies. The Organization places its temporary cash investments with various financial institutions. At times throughout the year, the Organization maintained cash balances, which exceeded the limits insured by the FDIC. Accounts receivable from governmental agencies are from federal, state and county agencies. Page 12

16 Supplementary Information

17 INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTARY INFORMATION Board of Directors The Center for Developmental Disabilities, Inc. and Affiliate Woodbury, New York Our audits were conducted for the purpose of forming an opinion on th e combined financial statements as a whole. The supplementary information on pages 14 to 16 is presented for the purposes of additional analysis and is not a required part of the combined financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the combined financial statements. The information has been subjected to the auditing procedures applied in the audits of the combined financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the combined financial statements or to the combined financial statements themselves, and other additional procedures 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 combined financial statements taken as a whole. ~~\(-c.i "':),~ \)\c~\t' ~(A.vk_\ llf Melville, New York May 27, 2015 Page 13

18 COMBINING STATEMENT OF FINANCIAL POSITION As of December 31, Nassau The Center for Center Developmental Residential Disabilities, Development Inc. Corp. Eliminations Combined Assets Current Assets: Cash and cash equivalents 947,093 18, ,196 Certificate of deposit 200, ,501 Investments 102, ,311 Accounts receivable, net of allowance for doubtful accounts of 238,569 and 30,000 at December 31, 2014 and 2013, respectively 3,118,444 3,118,444 Grants receivable 109, ,642 Prepaid expenses 166, ,577 Due from affiliate 266,704 (266,704) Total Current Assets 4,910,871 18,504 (266,704) 4,662,671 Assets Held for Specific Purpose 1,334,957 1,334,957 Land, Buildings and Improvements, and Equipment, net 10,910, ,292 11,126,312 Reserve for Replacements 6,652 6,652 Restricted Assets, cash 30,150 30,150 Other Assets 129, ,989 Total Assets ~ 17,315,987 ~ 241,448 ~ (266,7042 ~ 17,290,731 Liabilities and Net Assets Current Liabilities: Notes payable - bank 2,174, ,174,987 Accounts payable and accrued expenses 1,696,443 13,857 1,710,300 Accrued salaries and related costs 698, ,568 Due to government agencies 441, ,553 Due to affiliate 266,704 (266,704) Current portion of long-term debt 277,119 14, ,290 Current portion of bonds payable 710, ,000 Current portion of accrued compensated absences payable 872, ,715 Total Current Liabilities 6,871, ,732 (266,704) 6,899,413 Deferred Rent 3,512,500 3,512,500 Due to Government Agencies 924, ,152 Long-Term Debt 2,216, ,435 2,410,778 Bonds Payable 1,530,000 1,530,000 Accrued Compensated Absences Payable 321, ,349 15,375, ,167 (266,704) 15,598,192 Commitments and Contingencies Net Assets (Deficiency): Unrestricted 1,655,049 (247,719) 1,407,330 Temporarily restricted 285, ,209 Total Net Assets (Deficiency) 1,940,258 (247,719) 1,692,539 Total Liabilities and Net Assets 17,315,987 ~ 241,448 (266,7042 ~ 17,290,731 See independent auditors' report on supplementary information. Page 14

19 COMBINING STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS For the Year Ended December 31, 2014 Changes in Unrestricted Net Assets Nassau The Center for Center Developmental Residential Disabilities, Development Inc. Corp. Eliminations Combined Revenue and Support: Program service revenue 29,708, ,708,298 Government grants 655, ,232 Rent revenue 34,479 34,479 Tenant assistance payments- Section 8 26,520 26,520 Fundraising and special events 256, ,713 Costs of direct benefits to donors (79,167) (79, 167) Contributions 56,348 56,348 Interest income and other 13, ,734 Net assets released from restriction 24,779 24,779 Total Revenue and Support 30,635,887 61,049 30,696,936 Expenses: Program services: Children's day and other 4,545,396 4,545,396 Children's residence 3,012,496 3,012,496 Adult day and other 4,956,948 4,956,948 Adult residences 15,077,046 65,422 15,142,468 Waiver services 259, ,864 Grants 282, ,689 Total program expenses 28,134,439 65,422 28,199,861 Supporting services: Management and general 2,489,784 14,161 2,503,945 Fundraising 233, ,699 Total Expenses 30,857,922 79,583 30,937,505 Decrease in Unrestricted Net Assets before Rate Adjustments (222,035) (18,534) (240,569) Rate Adjustments 181, ,781 Decrease in Unrestricted Net Assets (40,254) (18,534) (58,788) Changes in Temporarily Restricted Net Assets Contributions 21,530 21,530 Net Assets Released from Restriction (24,779) (24,779) Decrease in Temporarily Restricted Net Assets (3,249) (3,249) Decrease in Net Assets (43,503) (18,534) (62,037) Net Assets (Deficiency), beginning of year 1,983,761 (229,185) 1,754,576 Net Assets (Deficiency), end of year 1,940,258 (247,719) - 1,692,539 See independent auditors' report on supplementary information. Page 15

20 CO MBIN ED STATEMENT OF FUNCTIONAL EXPENSES For the Year Ended December 31, 2014 (with comparative totals for 2013) Program Services Supporting Services Ch ildren's Adu lt Total Total Day Children's Day Adult Waiver Program Ma nagement Supporting Total Total and Other Residence and Other Residences Services Grants Expenses and General Fundraising Services Expenses Expenses Salari es 2,621,163.1,948,294 2,820,478 8,949, , ,455 16,661,366 1 '195, ,635 1,354,435 18,015,801 17,423,878 Payroll Taxes and Employee Benefits 826, , ,230 2,896,953 54,192 47,916 5,248, ,655 50, ,853 5,712,581 5,511,929 Total Salaries, Payroll Taxes and Employee Benefits 3,447,738 2,560,156 3,631,708 11,846, , ,371 21,910,094 1,609, ,833 1,818,288 23,728,382 22,935,807 Program Consultants 471,504 3,596 44, , , , ,106 1,121, ,061 Repairs and Maintenance 49,760 42,624 55, ,740 4, ,029 6, , , ,704 Uti lities 102,688 61,967 66, ,382 12, ,370 11, , , ,665 Telephone 9,052 6,069 20,826 54,421 8, ,626 7, , , ,239 Food 11,307 79,557 2, , , , ,818 Medical Supplies 24,725 15,309 26, , ,830 1, , ,640 92,488 Supplies and Materials 24,733 36,265 32, ,656-75, , , ,313 Professional Fees , , , , , ,762 Insurance 20,715 19,052 45,818 99,830-1, , , , , ,504 Client Transportation and Staff Travel 10,353 9, , ,885 5,799 5, ,942 17, ,483 1,010,425 1,014,873 Rent , , , ,702 Office Supplies and Small Equipment 33,605 13,682 20,645 53,712 1, ,965 62,725 14,554 77, , ,176 Advertising and Recruitment 1, ,900 6, ,728 16, , ,774 10, 922 Interest 119, , , , , , , ,941 Facility Tax , , , ,877 Bond Fees , 023-3, ,023 3,233 Depreciation and Amortization 200, , , , ,833 6,628-6, , ,142 Bad Debt Expense 8,963 24, , ,842 Other 8,521 6,960 26, ,293 1, , ,354 8, , , ,631 Total Expenses 4,545,396 3,0 12,496 4,956,948 15,142, , ,689 28,199,861 2,503, ,699 2,737,644 30,937,505 29,836,858 See independent auditors' report on supplementary information. Page 16