SPCA of Texas. Auditor s Report and Financial Statements. December 31, 2013 and 2012

Transcription

1 Auditor s Report and Financial Statements

2 Contents Independent Auditor s Report... 1 Financial Statements Statements of Financial Position... 3 Statements of Activities... 4 Statements of Cash Flows Supplementary Information Statements of Functional Expenses... 20

3 Independent Auditor s Report Board of Directors SPCA of Texas Dallas, Texas We have audited the accompanying financial statements of the SPCA of Texas (SPCA) which comprise the statement of financial position as of December 31, 2013, and the related statements of activities and cash flows for the year 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. Auditor s 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 from 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 SPCA 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 purpose of expressing an opinion on the effectiveness of the SPCA 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 financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

4 Board of Directors SPCA of Texas Page 2 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of SPCA as of December 31, 2013, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Prior Year Audited by Other Auditors The 2012 financial statements were audited by other auditors and their report thereon, dated November 15, 2013, expressed an unmodified opinion. Other Matters Supplementary Information Our audit was conducted for the purpose of forming an opinion on the financial statements taken as a whole. The schedule of functional expenses listed in the table of contents is presented for purposes of additional analysis and is not a required part of the 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 financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the 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 financial statements as a whole. Dallas, Texas July 31, 2014

5 Statements of Financial Position Assets Cash and cash equivalents $ 1,933,469 $ 2,872,910 Accounts receivable 11,427 11,434 Grant reimbursements receivable 15,295 - Inventories 365, ,066 Prepaid expenses 106,388 5,261 Investments 15,284,669 15,402,608 Annuity receivable 2,004,424 - Contributions receivable, net 11, ,559 Property and equipment, net 17,342,599 17,755,381 Total assets $ 37,075,554 $ 36,613,219 Liabilities and Net Assets Liabilities Accounts payable $ 143,954 $ 307,692 Accrued expenses 418, ,013 Deferred revenue 390, ,740 Total liabilities 953,016 1,798,445 Net Assets Unrestricted Board designated 13,548,125 13,977,716 Undesignated 21,066,205 18,100,386 Temporarily restricted 328,423 1,581,887 Permanently restricted 1,179,785 1,154,785 Total net assets 36,122,538 34,814,774 Total liabilities and net assets $ 37,075,554 $ 36,613,219 See 3

6 Statement of Activities Year Ended December 31, 2013 Unrestricted Temporarily Restricted Permanently Restricted Total Revenues, Gains and Other Support Receiving $ 28,793 $ - $ - $ 28,793 Adoption 562, ,489 Surgery and patient care 2,476, ,476,916 Merchandise sales 158, ,374 Contributions 2,856,053 30,291-2,886,344 In-kind services and materials 2,391, ,391,299 Direct mail programs 1,714, ,714,400 Special events, gross 824, ,265 Memorials and bequests 3,229,811-25,000 3,254,811 Interest and dividends 431,593 22, ,374 Net realized and unrealized gain 1,376,794 (15,767) - 1,361,027 Miscellaneous revenues 72, ,329 Net assets released from restrictions 1,290,769 (1,290,769) Total revenues, gains and other support 17,413,885 (1,253,464) 25,000 16,185,421 Expenses Rees-Jones Animal Care Clinic 2,499, ,499,981 Martin Spay/Neuter & Wellness Clinic 1,274, ,274,289 Perry Animal Care Center 1,573, ,573,962 Perry Spay/Neuter Clinic 1,088, ,088,338 Village Fair Spay/Neuter & Wellness Clinic 1,369, ,369,258 Community relations (volunteer) 649, ,860 Customer care center 271, ,646 Rescue and investigations 829, ,871 Education 98, ,006 Animal behavior 275, ,651 Communications 2,729, ,729,327 Special events costs of direct benefits to donors 78, ,460 Development 1,193, ,193,453 Management and general 945, ,555 Total expenses 14,877, ,877,657 Change in Net Assets 2,536,228 (1,253,464) 25,000 1,307,764 Net Assets, Beginning of Year 32,078,102 1,581,887 1,154,785 34,814,774 Net Assets, End of Year $ 34,614,330 $ 328,423 $ 1,179,785 $ 36,122,538 See 4

7 Statement of Activities Year Ended December 31, 2012 Unrestricted Temporarily Restricted Permanently Restricted Total Revenues, Gains and Other Support Receiving $ 25,550 $ - $ - $ 25,550 Adoption 514, ,740 Surgery and patient care 2,806, ,806,813 Merchandise sales 127, ,182 Contributions 1,954, ,603-2,538,256 In-kind services and materials 2,898, ,898,745 Direct mail programs 1,764, ,764,089 Special events, gross 624, ,915 Memorials and bequests 5,749, ,785 6,139,438 Interest and dividends 288,744 26, ,745 Net realized and unrealized (loss) 530,644 (19,029) - 511,615 Miscellaneous revenues 89, ,585 Net assets released from restrictions 933,441 (933,441) Total revenues, gains and other support 18,308,754 (342,866) 389,785 18,355,673 Expenses Rees-Jones Animal Care Clinic 2,669, ,669,745 Martin Spay/Neuter & Wellness Clinic 1,329, ,329,518 Perry Animal Care Center 1,649, ,649,241 Perry Spay/Neuter Clinic 1,102, ,102,649 Village Fair Spay/Neuter & Wellness Clinic 1,508, ,508,397 Community relations (volunteer) 393, ,439 Customer care center 242, ,302 Rescue and investigations 774, ,790 Education 126, ,591 Animal behavior 179, ,933 Communications 2,665, ,665,253 Special events costs of direct benefits to donors 74, ,555 Development 1,444, ,444,943 Management and general 955, ,198 Total expenses 15,116, ,116,554 Other Income Gain on sale of land 527, ,434 Change in Net Assets 3,719,634 (342,866) 389,785 3,766,553 Net Assets, Beginning of Year 28,358,468 1,924, ,000 31,048,221 Net Assets, End of Year $ 32,078,102 $ 1,581,887 $ 1,154,785 $ 34,814,774 See 5

8 Statements of Cash Flows Years Ended Operating Activities Change in net assets $ 1,307,764 $ 3,766,553 Items not requiring (providing) cash Depreciation and amortization 902, ,275 Realized gain on sale of land - (527,434) Net realized and unrealized gain on investments (1,361,027) (511,615) Net interest and dividends reinvested (454,374) (314,745) Bad debt expense 15,330 72,972 Contributions received restricted for long-term investment (25,000) (389,785) Changes in Contributions and accounts receivable 358,466 8,345 Annuity receivable (2,004,424) - Inventories (200,742) 40,493 Prepaid expenses and other assets (101,127) 6,334 Accounts payable (163,738) (531,493) Accrued expenses (119,803) 220,059 Deferred revenue (561,888) 936,740 Net cash provided by (used in) operating activities (2,407,883) 3,568,699 Investing Activities Purchase of property and equipment (489,898) (171,258) Proceeds from sale of land - 527,434 Proceeds from sale of investments 2,578,870 8,145,689 Purchase of investments (645,530) (11,793,802) Net cash provided by (used in) investing activities 1,443,442 (3,291,937) Financing Activities Contributions received restricted for long-term investment 25, ,785 Net cash provided by financing activities 25, ,785 Increase (Decrease) in Cash and Cash Equivalents (939,441) 666,547 Cash and Cash Equivalents, Beginning of Year 2,872,910 2,206,363 Cash and Cash Equivalents, End of Year $ 1,933,469 $ 2,872,910 Supplemental Information Noncash Activity Contributions of in-kind goods and contributed services $ 2,391,299 $ 2,898,745 See 6

9 Note 1: Nature of Operations and Summary of Significant Accounting Policies Nature of Operations The SPCA of Texas (SPCA) was incorporated by the Texas State Charter on September 22, The SPCA is 75 years old but traces its roots to the late nineteenth century. In 1993, the Dallas SPCA, based in Dallas County, and the Humane Society of Texas, based in Collin County, merged to become the SPCA of Texas. The mission of the SPCA of Texas is to provide every animal exceptional care and a loving home. The SPCA is the leading animal welfare agency in North Texas. The SPCA is a not-for-profit organization that operates two animal shelters, located near downtown Dallas and in McKinney, which, together with community partners for offsite adoptions, finds homes for more than 6,000 animals each year. The SPCA does not euthanize animals for lack of space and does not place time limits on animals housed in SPCA shelters. The SPCA also operates three public veterinary clinics in the Dallas metropolitan area to provide high-quality pet care at affordable prices and collaborates with community partners to spay or neuter tens of thousands of animals each year. Other services include investigations of animal abuse and educational programs. The SPCA is an independent not-for-profit agency and is not affiliated with the American Society for the Prevention of Cruelty to Animals or any other humane society. 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 the financial statements and the reported amounts of revenues, expenses gains, losses and other changes in net assets during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents SPCA considers all liquid investments with original maturities of three months or less to be cash equivalents. At, cash equivalents consisted primarily of money market accounts with brokers and certificates of deposit. Pursuant to legislation enacted in 2010, the FDIC fully insured all noninterest-bearing transaction accounts beginning December 31, 2010 through December 31, 2012, at all FDIC-insured institutions. This legislation expired on December 31, Beginning January 1, 2013, noninterest-bearing transaction accounts are subject to the $250,000 limit on FDIC insurance per covered institution. At December 31, 2013, SPCA s cash accounts exceeded federally insured limits by approximately $1,500,000. 7

10 Investments and Investment Return Investments in all debt securities and equity securities having a readily determinable fair value are carried at fair value. Other investments are valued at lower of cost or fair value. Investment return includes dividends and interest and realized and unrealized gains and losses on investments carried at fair value. Contributions and Other Receivables Receivables are due primarily from foundations and individuals related to gift pledges and are stated at the amount management expects to collect from outstanding balances. The SPCA provides an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information and existing economic conditions. Receivables outstanding more than 90 days are generally considered past due. The SPCA writes off receivables when deemed uncollectible. The allowance for doubtful accounts at December 31, 2013 and 2012, were $15,000 and $16,000, respectively. Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is charged to expense using the straight-line method over the estimated useful life of each asset. Leasehold improvements are depreciated over the shorter of the lease term or their respective estimated useful lives. The estimated useful lives for each major depreciable classification of property and equipment are as follows: Buildings Leasehold improvements Equipment Motor vehicles years years 5 15 years 5 7 years Long-lived Asset Impairment The SPCA evaluates the recoverability of the carrying value of long-lived assets whenever events or circumstances indicate the carrying amount may not be recoverable. If a long-lived asset is tested for recoverability and the undiscounted estimated future cash flows expected to result from the use and eventual disposition of the asset is less than the carrying amount of the asset, the asset cost is adjusted to fair value and an impairment loss is recognized as the amount by which the carrying amount of a long-lived asset exceeds it fair value. No asset impairment was recognized during the years ended. 8

11 Temporarily and Permanently Restricted Net Assets Temporarily restricted net assets are those whose use by the SPCA has been limited by donors to a specific time period or purpose. Permanently restricted net assets have been restricted by donors to be maintained by the SPCA in perpetuity. Contributions Gifts of cash and other assets received without donor stipulations are reported as unrestricted revenue and net assets. Gifts received with a donor stipulation that limits their use are reported as temporarily or permanently restricted revenue and net assets. When a donor stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Gifts having donor stipulations which are satisfied in the period the gift is received are reported as unrestricted revenue and net assets. Gifts of land, buildings, equipment and other long-lived assets are reported as unrestricted revenue and net assets unless explicit donor stipulations specify how such assets must be used, in which case the gifts are reported as temporarily or permanently restricted revenue and net assets. Absent explicit donor stipulations for the time long-lived assets must be held, expirations of restrictions resulting in reclassification of temporarily restricted net assets as unrestricted net assets are reported when the long-lived assets are placed in service. Unconditional gifts expected to be collected within one year are reported at their net realizable value. Unconditional gifts expected to be collected in future years are initially reported at fair value determined using the discounted present value of estimated future cash flows technique. The resulting discount is amortized using the level-yield method and is reported as contribution revenue. Conditional gifts depend on the occurrence of a specified future and uncertain event to bind the potential donor and are recognized as assets and revenue when the conditions are substantially met and the gift becomes unconditional. Contributed Services Contributions of services are recognized as revenue at their estimated fair value only when the services received create or enhance nonfinancial assets or require specialized skills possessed by the individuals providing the service and the service would typically need to be purchased if not donated. For the years ended, contribution revenue recognized from contributed legal services was $131,562 and $719,922, respectively. 9

12 In-kind Contributions In addition to receiving cash contributions, the SPCA receives in-kind contributions from various donors. It is the policy of the SPCA to record the estimated fair value of certain in-kind donations as an expense in its financial statements, and similarly increase contribution revenue by a like amount. For the years ended, $2,259,737 and $2,178,823, respectively, were received as in-kind contributions. Deferred Revenue Revenue from reimbursable costs on contracts are deferred and recognized over the periods when the contracted services are performed. Income Taxes The SPCA is exempt from income taxes under Section 501 of the Internal Revenue Code and a similar provision of state franchise tax law. However, the SPCA is subject to federal income tax on any unrelated business taxable income. The SPCA files tax returns in the U.S. federal jurisdiction. With a few exceptions, the SPCA is no longer subject to U.S. federal examinations by tax authorities for years before Functional Allocation of Expenses The costs of supporting the various programs and other activities have been summarized on a functional basis in the accompanying statements of activities. Certain costs have been allocated among the program, management and general and fundraising categories based on the relative payroll, headcount or square footage occupied and other methods. Reclassifications Certain reclassifications have been made to the 2012 financial statements to conform to the 2013 financial statement presentation. These reclassifications had no effect on the change in net assets. 10

13 Note 2: Investments and Investment Return Investments at December 31 consisted of the following: Certificates of deposit $ 1,239,586 $ 727,073 Equities 1,460, ,048 Bond mutual funds 4,126,994 6,249,632 Equity mutual funds 8,457,932 7,717,855 Total investment return is comprised of the following: $ 15,284,669 $ 15,402, Interest and dividend income $ 533,349 $ 388,628 Management fees (78,975) (73,883) Net realized and unrealized gains on investments reported at fair value 1,361, ,615 $ 1,815,401 $ 826,360 Note 3: Annuity Receivable During 2013, SPCA became the beneficiary of two structured settlement annuities. The payment terms under the annuities are as follows: Monthly payments of approximately $12,700 through June 30, 2020 Lump-sum payment of $500,000 on July 30, 2015 Lump-sum payment of $500,000 on July 30, 2020 The annuities cannot be assigned or used as collateral on a loan. As of December 31, 2013, an annuity receivable of $2,004,424 has been recorded in the accompanying statement of financial position. 11

14 Note 4: Property and Equipment Property and equipment at December 31 consisted of: Land $ 1,464,821 $ 1,464,821 Buildings and leasehold improvements 18,005,572 17,725,843 Equipment 2,565,565 2,432,264 Motor vehicles 993, ,564 Construction in progress - 7,500 23,029,890 22,539,992 Less accumulated depreciation and amortization (5,687,291) (4,784,611) $ 17,342,599 $ 17,755,381 Note 5: Net Assets Temporarily Restricted Net Assets Temporarily restricted net assets at December 31 are available for the following purposes: Spay/neuter clinics $ - $ 584,098 Operational improvements 159, ,000 Puppy mill campaign 77, ,764 Shelter program 4, ,452 Capital campaign 20, ,648 Miscellaneous 65,720 71,925 $ 328,423 $ 1,581,887 12

15 Permanently Restricted Net Assets Permanently restricted net assets at December 31 are restricted to: David Ivan Perry Fund $ 765,000 $ 765,000 Baggarly Fund 414, ,785 $ 1,179,785 $ 1,154,785 Net Assets Released from Restrictions Net assets were released from donor restrictions by incurring expenses satisfying the restricted purposes or by occurrence of other events specified by donors Purpose restrictions accomplished Spay/neuter clinic program expenses $ 584,098 $ - Puppy mill program expenses 222, ,271 Operational improvement program expenses 140,016 - Capital campaign program expenses 128, ,295 Miscellaneous program expenses 215, ,875 $ 1,290,769 $ 933,441 Note 6: Endowments The SPCA s endowments consist of funds established for a variety of purposes. The endowments include both donor-restricted endowment funds and funds designated by the board of directors to function as endowments (board-designated endowment funds). As required by accounting principles generally accepted in the United States of America (GAAP), net assets associated with endowment funds, including board-designated endowment funds, are classified and reported based on the existence or absence of donor-imposed restrictions. 13

16 The board of directors has interpreted the State of Texas Prudent Management of Institutional Funds Act (SPMIFA) as requiring preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the SPCA classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of donor-restricted endowment fund is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the SPCA in a manner consistent with the standard of prudence prescribed by SPMIFA. In accordance with SPMIFA, the SPCA considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: Duration and preservation of the fund Purposes of the SPCA and the fund General economic conditions Possible effect of inflation and deflation Expected total return from investment income and appreciation or depreciation of investments Other resources of the SPCA Investment policies of the SPCA The composition of net assets by type of endowment fund at, was: 2013 Temporarily Permanently Unrestricted Restricted Restricted Total Donor-restricted endowment funds $ - $ - $ 1,179,785 $ 1,179,785 Board-designated endowment funds 13,548, ,548,125 $ 13,548,125 $ - $ 1,179,785 $ 14,727,910 Temporarily Permanently Unrestricted Restricted Restricted Total Donor-restricted endowment funds $ - $ - $ 1,154,785 $ 1,154,785 Board-designated endowment funds 13,977, ,977, $ 13,977,716 $ - $ 1,154,785 $ 15,132,501 14

17 Changes in endowment net assets for the years ended December 31 was: Temporarily Permanently Unrestricted Restricted Restricted Total Endowment net assets, beginning of year $ 13,977,716 $ - $ 1,154,785 $ 15,132,501 Investment return Investment income 414,449 22, ,230 Net appreciation (depreciation) 1,334,114 (15,767) - 1,318,347 Total investment return 1,748,563 7,014-1,755,577 Contributions ,000 25,000 Appropriation of endowment assets for expenditure (2,833,338) (7,014) - (2,840,352) Board appropriations from unappropriated unrestricted net assets 655, , $ 13,548,125 $ - $ 1,179,785 $ 14,727,910 Temporarily Permanently Unrestricted Restricted Restricted Total Endowment net assets, beginning of year $ 8,208,217 $ - $ 765,000 $ 8,973,217 Investment return Investment income 288,744 26, ,745 Net appreciation (depreciation) 530,644 (19,029) - 511,615 Total investment return 819,388 6, ,360 Contributions , ,785 Appropriation of endowment assets for expenditure (1,460,166) (6,972) - (1,467,138) Board appropriations from unappropriated unrestricted net assets 6,410, ,410,277 $ 13,977,716 $ - $ 1,154,785 $ 15,132,501 From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the level the SPCA is required to retain as a fund of perpetual duration pursuant to donor stipulation or SPMIFA. There were no such deficiencies as of December 31, 2013 or

18 The SPCA has adopted investment and spending policies for endowment assets that attempt to provide a predictable stream of funding to programs and other items supported by its endowment while seeking to maintain the purchasing power of the endowment. Endowment assets include those assets of donor-restricted endowment funds the SPCA must hold in perpetuity or for donorspecified periods, as well as those of board-designated endowment funds. Under the SPCA s policies, as approved by the board of directors, endowment assets are invested in a manner that is intended to produce results that exceed the price and yield results of the S&P 500 index while assuming a moderate level of investment risk. The SPCA expects its endowment funds to provide an average rate of return of approximately 8% annually over time. Actual returns in any given year may vary from this amount. To satisfy its long-term rate of return objectives, the SPCA relies on a total return strategy in which investment returns are achieved through both current yield (investment income such as dividends and interest) and capital appreciation (both realized and unrealized). The SPCA targets a diversified asset allocation that places a greater emphasis on equity-based investments to achieve its long-term return objectives within prudent risk constraints. The SPCA s policy permits additions to or drawdowns of board-designated funds to achieve target cash balances in operating accounts. In establishing this policy, the SPCA considered the longterm expected return on its endowments. The SPCA s objective is to maintain the purchasing power of endowment assets held in perpetuity or for a specified term or purpose, as well as to provide additional real growth through new gifts and investment return. Note 7: Defined Contribution Plan The SPCA has a defined contribution plan for all employees meeting certain eligibility requirements. The SPCA will match employees contributions up to 3% of employees wages. The SPCA made contributions of $62,922 and $54,803 for the years ended December 31, 2013 and 2012, respectively. Note 8: Disclosures About Fair Value of Assets Fair value is the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair value: Level 1 Level 2 Quoted prices in active markets for identical assets Observable inputs other than Level 1 prices, such as quoted prices for similar assets; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets 16

19 Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets Recurring Measurements The following table presents the fair value measurements of assets recognized in the accompanying statements of financial position measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at : Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Fair Value (Level 1) (Level 2) (Level 3) December 31, 2013 Certificates of deposit $ 1,239,586 $ - $ 1,239,586 $ - Corporate equities 1,460,157 1,460, Bond mutual funds 4,126,994 4,126, Equity mutual funds 8,457,932 8,457, $ 15,284,669 $ 14,045,083 $ 1,239,586 $ - December 31, 2012 Certificates of deposit $ 727,073 $ - $ 727,073 $ - Corporate equities 708, , Bond mutual funds 6,249,632 6,249, Equity mutual funds 7,717,855 7,717, $ 15,402,608 $ 14,675,535 $ 727,073 $ - Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying statements of financial position, as well as the general classification of such assets pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the year ended December 31,

20 Investments Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using quoted prices of securities with similar characteristics or independent asset pricing services and pricing models, the inputs of which are market-based or independently sourced market parameters, including, but not limited to, yield curves, interest rates, volatilities, prepayments, defaults, cumulative loss projections and cash flows. Such securities are classified in Level 2 of the valuation hierarchy. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. The SPCA has no Level 3 investments at. Other Financial Instruments The following methods were used to estimate the fair value of all other financial instruments recognized in the accompanying statements of financial position at amounts other than fair value. Cash and Cash Equivalents The carrying amount approximates fair value. Annuity and Contributions Receivable The carrying amount approximates fair value. Note 9: Significant Estimates and Concentrations GAAP requires disclosure of certain significant estimates and current vulnerabilities due to certain concentrations. Those matters include the following: Litigation The SPCA is subject to claims and lawsuits that arose primarily in the ordinary course of its activities. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the financial position, change in net assets and cash flows of the SPCA. Events could occur that would change this estimate materially in the near term. 18

21 Investments The SPCA invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such change could materially affect the amounts reported in the accompanying statements of financial position. Note 10: Subsequent Events Subsequent events have been evaluated through July 31, 2014, which is the date the financial statements were available to be issued. 19

22 Supplementary Information

23 Statement of Functional Expenses Year Ended December 31, 2013 Special Events Rees-Jones Community Customer Care Costs of Direct Animal Care Martin S/N Perry Animal Perry S/N Village Fair S/N Relations Center (Call Rescue & Animal Benefits to Management Center Wellness Clinic Care Center Clinic Wellness Clinic (Volunteer) Center) Investigations Education Behavior Communications Donors Development and General Total Salaries and wages $ 1,122,803 $ 553,250 $ 772,553 $ 460,014 $ 578,151 $ 443,311 $ 195,281 $ 535,340 $ 48,369 $ 185,672 $ 175,123 $ - $ 280,005 $ 428,595 $ 5,778,467 Employee benefits 200,172 91, ,953 74,435 80,259 73,589 30,844 62,806 5,801 37,414 54,636-61, ,400 1,006,682 Contract labor 13,582 29,165 8,400 75,612 69, , ,337 4, ,784 Payroll taxes 83,799 39,900 56,259 32,817 42,007 31,246 13,872 39,310 3,519 14,437 11,933-19,307 28, ,610 Total salaries and related expenses 1,420, , , , , , , ,137 57, , , , ,139 7,420,543 Professional fees 18,434 13,559 12,539 14,040 16,278 4,413 1,622 5, ,902 37,061-68,089 22, ,192 Operating supplies 193, , , , ,514 1, ,945-6, ,534 10,278 1,314,560 Postage and printing 1,471 8, ,792 6,768 1, , , ,084 1,151 77,385 Occupancy costs 96,746 23,168 56,987 5,782 16,090 1, ,393 5,207-2,962-3,142 28, ,378 Telephone/communications 24,241 4,542 15, ,519 2,586 4,975 15, ,778 2,164-2,456 1,206 88,615 Equipment rental 17,341 6,077 11,693-16, , ,780-10,071 2,895 69,333 Insurance 50,047 10,524 39,323 11,330 14,705 6,990 2,711 25, ,079 3,128-6,159 26, ,087 Bank charges and service fees 32,989 18,553 22,202 18,866 22,528 7,250 3,446 8, ,521 45,009-82,389 29, ,711 Staff expenses 15,383 2,757 10,387 5,780 4,964 19,427 1,359 15, ,307 7,974-7,349 13, ,644 Repairs and maintenance 1,270 28,940 36,756 5,419 21,517 2,965 1,003 1,553 5,803-3,301-2,935 31, ,887 Vehicle expenses 5,872 1,127 10,969 2,431 3,300 2, , , ,162 38, ,110 Promotion, exhibit and other ,511 1,329 2,219,751 78, ,459 5,955 2,542,470 Training and seminars 2,917 2,896 1,097 4,228 2,865 19,501 1,000 6, ,215-6,976 2,245 52,032 Advertising 14,853 10,925 10,103 11,312 13,115 3,555 1,307 4, ,532 29,861-54,862 17, ,190 Computer costs 15,436 9,355 6,548 4,210 6,548 3,742 3,742 3, ,339-3,274 4,677 65,016 Merchandise 19,996 6,307 13, , ,587 Dues and subscriptions 1,444 4,756-4,007 4, , ,508 29,307 Supplies 21,958 5,794 13, ,815 1, , ,223 5,876 66,049 Bad debt expense ,680 2,650 15,330 Mail solicitation 58,163 42,781 39,562 44,299 51,359 13,923 5,117 17,619 1,971 6, , ,836 69, ,123 Miscellaneous 18, , ,820 (47,015) 13,428 Total expenses other than salaries and related expenses 611, , , , ,917 94,971 28, ,525 20,852 38,128 2,476,561 78, , ,012 6,554,434 Total expenses before depreciation 2,031,660 1,187,683 1,450,676 1,075,829 1,318, , , ,662 78, ,651 2,718,253 78,460 1,183, ,151 13,974,977 Depreciation 468,321 86, ,286 12,509 50,857 6,743 3,363 5,209 19,465-11,074 9, , ,680 Totals $ 2,499,981 $ 1,274,289 $ 1,573,962 $ 1,088,338 $ 1,369,258 $ 649,860 $ 271,646 $ 829,871 $ 98,006 $ 275,651 $ 2,729,327 $ 78,460 $ 1,193,453 $ 945,555 $ 14,877,657 20

24 Statement of Functional Expenses Year Ended December 31, 2012 Special Events Rees-Jones Community Customer Care Costs of Direct Animal Care Martin S/N Perry Animal Perry S/N Village Fair S/N Relations Center (Call Rescue & Animal Benefits to Management Center Wellness Clinic Care Center Clinic Wellness Clinic (Volunteer) Center) Investigations Education Behavior Communications Donors Development and General Total Salaries and wages $ 1,145,857 $ 543,725 $ 827,594 $ 454,502 $ 527,274 $ 263,443 $ 177,044 $ 477,608 $ 49,513 $ 121,604 $ 193,161 $ - $ 266,287 $ 358,871 $ 5,406,483 Employee Benefits 175,776 67, ,415 63,833 73,142 45,160 21,679 58,260 12,043 15,540 44,146-59, , ,887 Contract labor 9,856 17,016 1,061 45, , , ,072 48, ,144 Payroll taxes 83,387 39,414 59,240 32,849 38,239 18,578 12,556 33,796 3,443 8,544 14,518-19,203 28, ,748 Total salaries and related expenses 1,414, ,280 1,046, , , , , ,744 64, , , , ,788 6,934,262 Professional fees 74,431 53,280 49,318 51,119 69,293 9,072 5,200 20,144 2,578 4, , , , ,381 Operating supplies 413, , , , , ,597-8, ,596 15,519 1,842,042 Postage and printing 4,922 2, ,696 8,162 2, , ,506 2,002 97,281 Occupancy costs 89,068 21,800 49,532 5,026 19,869 3,466 1,729 3,605 10,006-5,692-5,837 11, ,123 Telephone/communications 22,678 3,989 14, ,230 1,813 1,388 11, ,694 2,131-2, ,475 Equipment rental 22,698 7,205 10,997 2,046 10, ,475-13,974 3,404 79,273 Insurance 38,114 8,046 29,594 9,328 12,065 4,674 2,081 20, ,189 2,510-4,215 33, ,443 Bank charges and service fees 15,443 11,055 10,233 10,606 14,377 1,882 1,079 4, ,646-72,454 21, ,869 Staff expenses 20,157 10,348 19,224 9,447 6,373 12,625 2,369 8, ,420 6,448-8,135 4, ,655 Repairs and maintenance 29,688 16,789 7,925 9,377 14,167 1, , ,866-56,921 13, ,051 Vehicle expenses 6,362 2,374 14, ,490 1, , ,154 1,171-1,066 37, ,657 Promotion, exhibit and other 5,254 1, ,037,698 74, , ,245,192 Training and seminars 3,056 2,530 2,068 2,612 4,031 1,514-23, ,085-2,195 8,397 52,427 Advertising 10,774 7,712 7,139 7,400 10,030 1, , ,421-50,547 12, ,327 Computer costs 18,517 11,222 7,856 5,050 7,857 4,489 4,489 3, ,401 2,244-3,928 2,647 74,628 Merchandise 37,473 15,982 10,433 11,317 15, ,296 Dues and subscriptions 3,132 3,365-7,350 6, , ,696 29,390 Supplies 30,010 8,782 14, , , ,426-1,712 7,482 74,444 Bad debt expense 26,265 8, ,952 72,972 Mail solicitation 40,582 29,050 26,890 27,871 37,780 4,946 2,835 10,983 1,405 2,413 88, ,396 46, ,741 Miscellaneous 7,808 4,641 5,440 4,320 7, , ,725-28,655 8,488 82,350 Total expenses other than salaries and related expenses 920, , , , ,278 53,228 24, ,493 23,976 34,245 2,392,028 74,555 1,072, ,364 7,390,017 Total expenses before depreciation 2,334,900 1,249,332 1,498,592 1,087,364 1,446, , , ,237 88, ,933 2,643,853 74,555 1,425, ,152 14,324,279 Depreciation 334,845 80, ,649 15,285 62,144 13,030 6,499 13,553 37,616-21,400-19,022 38, ,275 Totals $ 2,669,745 $ 1,329,518 $ 1,649,241 $ 1,102,649 $ 1,508,397 $ 393,439 $ 242,302 $ 774,790 $ 126,591 $ 179,933 $ 2,665,253 $ 74,555 $ 1,444,943 $ 955,198 $ 15,116,554 21