CAT ADOPTION TEAM. Reviewed Financial Statements

Transcription

1 Reviewed Financial Statements For the Year Ended

2 INDEPENDENT ACCOUNTANT S REVIEW REPORT Mark A. Clift, CPA Shareholder Karin S. Wandtke, CPA Shareholder Sang Ahn, CPA Shareholder Gerard DeBlois Jr., CPA Shareholder Mary Strasdin, CPA Shareholder Jill Oswald Shareholder Anthony Almer, CPA Principal Tyee Carr, CPA Principal Jake Jacobs, CPA of counsel Susan J. Marks, CPA of counsel Dennis C. Johnson, CPA of counsel To the Board of Directors Cat Adoption Team We have reviewed the accompanying statement of financial position of Cat Adoption Team (CAT or the Organization), a nonprofit corporation, as of December 31, 2014, and the related statements of activities, functional expenses, and cash flows for the year then ended. A review includes primarily applying analytical procedures to management s financial data and making inquiries of CAT s management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion. Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements. Our responsibility is to conduct the review in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Those standards require us to perform procedures to obtain limited assurance that there are no material modifications that should be made to the financial statements. We believe that the results of our procedures provide a reasonable basis for our report. Based on our review, we are not aware of any material modifications that should be made to the accompanying 2014 financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America. The prior year summarized comparative information has been derived from the Organization s 2013 financial statements and based on our report dated July 1, 2014, we were not aware of any material modifications that should have been made to the financial statements in order to be in conformity with accounting principles generally accepted in the United States of America. Portland, Oregon April 10, McDonald Jacobs, PC 520 SW Yamhill Suite 500 Portland, Oregon P: F: mail@mcdonaldjacobs.com

3 STATEMENT OF FINANCIAL POSITION (With comparative totals for 2013) ASSETS Current Assets: Cash and cash equivalents $ 235,001 $ 136,241 Pledges and accounts receivable 225,524 79,622 Prepaid expenses 19,306 18,244 Inventory 51,380 44,548 Total current assets 531, ,655 Investments 817, ,193 Property and equipment, net 1,788,142 1,836,339 TOTAL ASSETS $ 3,136,586 $ 2,346,187 LIABILITIES AND NET ASSETS Current Liabilities: Accounts payable and accrued expenses $ 68,894 $ 55,399 Accrued payroll and vacation 38,990 47,580 Long-term debt, current portion 26,107 25,092 Total current liabilities 133, ,071 Deferred rent 13,194 17,123 Long-term debt, less current portion 608, ,140 Total liabilities 755, ,334 Net Assets: Unrestricted: Undesignated 1,211, ,174 Net property and equipment 1,154,000 1,177,107 Total unrestricted 2,365,852 1,544,281 Temporarily restricted 15,514 22,572 Total net assets 2,381,366 1,566,853 TOTAL LIABILITIES AND NET ASSETS $ 3,136,586 $ 2,346,187 See independent accountant's review report and notes to financial statements

4 STATEMENT OF ACTIVITIES For the year ended (With comparative totals for 2013) 2014 Temporarily 2013 Unrestricted Restricted Total Total Support and revenue: Contributions and grants $ 1,321,860 $ 73,500 $ 1,395,360 $ 765,914 Special event revenue, net of direct costs of $27,181 for 2014 and $30,013 for ,414-81,414 77,826 Program service revenue 322, , ,432 Donated materials and services 51,560-51,560 41,822 Retail sales, less cost of sales of $61,779 for 2014 and $52,641 for ,838-51,838 44,455 Interest and dividend income 3,407-3,407 5,043 Net realized and unrealized gains 13,202-13,202 22,631 Rental income, net of property taxes 41,618-41,618 33,205 Net assets released from restrictions: Satisfaction of purpose restrictions 80,558 (80,558) - - 1,968,142 (7,058) 1,961,084 1,297,328 Thrift Store: Sales of donated merchandise 140, , ,596 Donated goods for thrift store 145, , ,071 Less inventory sold (140,513) - (140,513) (125,596) Net thrift store 145, , ,071 Total support and revenue 2,113,492 (7,058) 2,106,434 1,432,399 Expenses: Animal services 935, ,661 1,004,200 Thrift store 123, , ,873 Management and general 89,052-89,052 77,563 Fundraising 143, , ,453 Total expenses 1,291,921-1,291,921 1,311,089 Change in net assets 821,571 (7,058) 814, ,310 Net assets: Beginning of year 1,544,281 22,572 1,566,853 1,445,543 End of year $ 2,365,852 $ 15,514 $ 2,381,366 $ 1,566,853 See independent accountant's review report and notes to financial statements

5 STATEMENT OF FUNCTIONAL EXPENSES For the year ended (With comparative totals for 2013) 2014 Management Animal Thrift and Fund - Services Store General Raising Total 2013 Salaries and related costs $ 570,692 $ 48,197 $ 36,745 $ 66,434 $ 722,068 $ 752,677 Professional fees 21,868-45,379 16,854 84,101 64,195 Supplies 124,825 2, , ,987 Medical services 38, ,733 24,966 Equipment and maintenance 14,758 1, ,282 23,291 Utilities 36,921 7, ,448 45,901 Telephone 2, ,611 4,275 Printing, postage and shipping 9, ,495 55,113 23,760 Insurance 11, ,694 10,345 Meetings and trainings 2, ,112 3,443 3,149 Bank fees 13, ,424 20,973 16,041 Advertising, marketing and outreach 13,713 10,102-2,268 26,083 23,388 Depreciation 44,616 1,232 1, ,197 55,440 Interest expense 25, ,747 26,723 Rent - 41, ,712 45,375 Grants to others ,750 Other operating expenses 4,437 10,500 5,001 3,403 23,341 7,826 Total expenses $ 935,661 $ 123,388 $ 89,052 $ 143,820 $ 1,291,921 $ 1,311,089 See independent accountant's review report and notes to financial statements

6 STATEMENT OF CASH FLOWS For the year ended (With comparative totals for 2013) Cash flows from operating activities: Change in net assets $ 814,513 $ 121,310 Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation 48,197 55,440 Net realized/unrealized gains on investments (13,202) (22,631) (Increase) decrease in: Pledges and accounts receivable (145,902) 587 Prepaid expenses (1,062) (2,551) Inventory (6,832) (8,639) Increase (decrease) in: Accounts payable and accrued expenses 13,495 (13,093) Accrued payroll and vacation (8,590) (19,034) Deferred rent (3,929) (2,607) Net cash provided by operating activities 696, ,782 Cash flows from investing activities: Purchase of property and equipment - (4,008) Proceeds from the sale of investments - 88,983 Purchase of investments (572,838) (94,417) Net cash used in investing activities (572,838) (9,442) Cash flows from financing activities: Principal payments on long-term debt (25,090) (24,115) Net cash used in financing activities (25,090) (24,115) Net increase in cash and cash equivalents 98,760 75,225 Cash and cash equivalents - beginning of year 136,241 61,016 Cash and cash equivalents - end of year $ 235,001 $ 136,241 Supplemental cash flow information: Cash paid during the year for interest $ 25,747 $ 26,723 See independent accountant's review report and notes to financial statements

7 NOTES TO FINANCIAL STATEMENTS 1. DESCRIPTION OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Organization Cat Adoption Team (CAT or the Organization) is an Oregon nonprofit organization established in CAT s mission is to save the lives of homeless, unwanted, sick, and injured cats and to work with the community to provide feline expertise and quality programs and services for people and cats. CAT's revenue sources include donations, sponsorships, bequests and grants from individuals, business, and foundations; adoption and hospital fees; and retail and thrift store sales. CAT operates the following programs: Shelter: CAT is the Pacific Northwest's largest nonprofit, adoptionguarantee, limited admission cat shelter (able to take in cats as homes are found for the cats already in the shelter). Located in Sherwood, CAT s main shelter can accommodate up to 200 cats. CAT focuses on taking in cats at high risk of euthanasia. In 2014, 81% of the cats and kittens that came to CAT were transferred from public shelters, primarily in the greater Portland metro area and Salem. CAT offers enrichment, behavior modification, excellent veterinary care, and a variety of housing options to meet the individual needs of the cats and kittens in its care. Adoption: In 2014, CAT found homes for 2,440 cats and kittens from its shelter, offsite adoption centers, and foster homes. Frequent promotions highlight cats with special needs who might otherwise require more time to find a home. Cats and kittens are available for viewing on the organization s website (catadoptionteam.org), on Petfinder.com, and on adoptapet.com. Veterinary Hospital: With an on-site hospital and professional veterinary team, CAT provides preventive care, dental care, and treatment for various diseases and injuries. The hospital includes a surgical suite, equipment for on-site x-ray and laboratory services, and an isolation ward to reduce the spread of infectious diseases. Foster Care: CAT s nationally recognized kitten foster program provides care for kittens too young to be made available for adoption and too vulnerable to be safely housed in a shelter environment. Foster homes are also used for short-term care and treatment of adult cats recovering from illness or injury. In 2014, CAT s volunteer foster homes cared for 761 kittens and 76 adult cats (including 62 mother cats). -6-

8 1. DESCRIPTION OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Description of Organization, Continued Spay/Neuter: In addition to ensuring that all cats and kittens are spayed or neutered prior to adoption, CAT also provides low-cost spay/neuter services for cats whose owners are struggling financially. CAT participates in two low-cost programs: Spay & Save (a program offered by several Animal Shelter Alliance of Portland partners) and Oregon Spay/Neuter Fund. In 2014, CAT performed 1,431 surgeries through these programs. Thrift Store: CAT operates a thrift store in Raleigh Hills and the proceeds from sales support CAT s operations. The thrift store also raises awareness about CAT, houses special needs cats available for adoption, and hosts and participates in community events to engage the public in CAT activities. Collaboration: CAT is a founding partner of the Animal Shelter Alliance of Portland, a coalition of animal shelters and veterinary organizations that working together has increased the save rate for cats in the greater Portland metro area from 46% to 91% over an eight year period. CAT also works with other public and private shelters and animal welfare organizations in Oregon and Washington. Food Bank: The CAT Food Bank helps homebound cat owners by distributing cat food in partnership with Meals on Wheels programs in three Washington County cities. Basis of Presentation Net assets and all balances and transactions are presented based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the Organization and changes therein are classified and reported as unrestricted or restricted net assets. Unrestricted net assets are those that are not subject to donor-imposed stipulations. Temporarily restricted net assets are subject to donor-imposed stipulations that will be met, either by actions of the Organization and/or the passage of time. -7-

9 1. DESCRIPTION OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Cash and Cash Equivalents CAT considers all highly liquid investments available for current use with maturities of three months or less at the time of purchase to be cash equivalents. Pledges Receivable Contributions, which include unconditional promises to give (pledges), are recognized as revenues in the period CAT is notified of the commitment. Conditional promises to give are not recognized until they become unconditional, that is when the conditions on which they depend are substantially met. Bequests are recorded as revenue at the time CAT has an established right to the bequest and the proceeds are measurable. Accounts Receivable Accounts receivable are reported at the amount management expects to collect on balances outstanding at year-end. Management provides for estimated uncollectible amounts through a valuation allowance based on its assessment of the current status of individual accounts. Based on an assessment of the credit history with those having outstanding balances and current relationships with them, management has concluded that realization losses on balances outstanding at year-end will be immaterial. Inventory Inventory, consisting of retail pet food and supplies, and thrift store merchandise, is reflected at the lower of cost for purchased items and estimated fair value for donated items, or market, determined on the first-in, first-out (FIFO) basis. Fair value for donated items is estimated to be the price that can be charged in the thrift store operated by the Organization. Investments Investments are carried at fair value. Property and Equipment Acquisitions of property and equipment in excess of $1,000 are capitalized. Property and equipment purchased are recorded at cost. Donated assets are reflected as contributions at their estimated fair value on the date received. Depreciation Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets, which range from 5 to 40 years. -8-

10 1. DESCRIPTION OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Income Tax Status Cat Adoption Team is a nonprofit corporation exempt from federal and state income tax under section 501(c)(3) of the Internal Revenue Code and applicable state law. No provision for income taxes is made in the accompanying financial statements in that net unrelated business income tax to which CAT may be subject is estimated to be immaterial. CAT is not a private foundation. The Organization follows the provisions of FASB ASC Topic Accounting for Uncertainty in Income Taxes. Management has evaluated the Organization's tax positions and concluded that there are no uncertain tax positions that require adjustment to the financial statements to comply with provisions of this Topic. The Organization s information returns for years ended December 31, 2010 and prior are generally no longer subject to examination by taxing authorities in its major tax jurisdictions. Restricted and Unrestricted Revenue and Support Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support, depending on the existence and/or nature of any donor restrictions. Donor-restricted support is reported as an increase in temporarily or permanently restricted net assets, depending on the nature of the restriction. When a 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 statement of activities as net assets released from restrictions. Donated Assets and Services Donations of property, equipment, materials and other assets are recorded as support at their estimated fair value at the date of donation. Such donations are reported as unrestricted support unless the donor has restricted the donated asset to a specific purpose. Donated supplies used in program services totaled approximately $42,000 for both the years ended and Donated goods for sale in the thrift store totaled approximately $145,000 and $135,000 for the years ended and 2013, respectively. CAT recognizes donated services that creates or enhances nonfinancial assets or that require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. Approximately $9,600 of in-kind services was recorded for the year ended. Amounts of in-kind services for 2013 were deemed immaterial to the financial statements and not recorded. -9-

11 1. DESCRIPTION OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Donated Assets and Services, Continued CAT has agreements with various organizations that provide adoption outreach centers for CAT's adoptable animals. These centers provide space, food, litter, and supplies for the animals at the centers. No amounts are recorded for these donations as it is not practical to estimate their value. Expense Allocation The costs of providing various programs and other activities have been summarized on a functional basis in the statements of activities and functional expenses. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Advertising Costs CAT uses advertising to promote its programs and services. Advertising costs are expensed as incurred and approximated $21,000 and $17,000 for the years ended and 2013, respectively. Grants to Others During 2013, CAT received a $165,000 grant as part of a larger award to the Animal Shelter Alliance of Portland (ASAP), a coalition of local animal organizations of which CAT is a founding partner. The coalition members agreed that each partner that was a recipient of funds from this award would contribute 35% of their grant back to ASAP for coalition-wide activities. This award of $57,750 was recorded as a grant to others in the financial statements. CAT has not historically been a grantmaking organization and future distributions of grants from CAT are not anticipated. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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. Summarized Financial Information for 2013 The financial information as of December 31, 2013 and for the year then ended is presented for comparative purposes and is not intended to be a complete financial statement presentation. -10-

12 1. DESCRIPTION OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Reclassifications Certain amounts in the prior year financial statements were reclassified to conform to the current year presentation. Subsequent Events CAT has evaluated all subsequent events through April 10, 2015, the date the financial statements were available to be issued. 2. PLEDGES AND ACCOUNTS RECEIVABLE Pledges and accounts receivable are unsecured and consist of the following at December 31: Pledges receivable within one year $ 209,176 $ 78,511 Program service fees 16,348 1,111 Total pledges and accounts receivable $ 225,524 $ 79, INVENTORY Inventory consists of the following at December 31: Pet food and supplies $ 21,954 $ 11,550 Thrift store goods 29,426 32,998 Total inventory $ 51,380 $ 44,

13 4. INVESTMENTS Investments are carried at fair value and consist of the following at December 31: Cash equivalents $ 672,310 $ 62,610 Equity securities 115, ,611 Fixed income securities 29,615 64,972 Total investments $ 817,233 $ 231, PROPERTY AND EQUIPMENT Property and equipment consist of the following at December 31: Land $ 600,000 $ 600,000 Building and improvements 1,463,808 1,463,808 Furniture and equipment 178, ,241 2,242,049 2,242,049 Less accumulated depreciation 453, ,710 Property and equipment, net $ 1,788,142 $ 1,836,

14 6. NOTE PAYABLE The note payable is due to Umpqua Bank, secured by real estate and accruing interest at 3.92% per annum. Interest and principal payments of $4,236 are due monthly, with a balloon payment due upon maturity in July CAT's founder is the borrower and guarantor on the note, while CAT owns the property securing the note and is responsible for the payments. The balance are as follows at December 31: Current portion $ 26,107 $ 25,092 Long-term portion 608, ,140 Total note payable $ 634,142 $ 659,232 Current maturities of long-term debt are as follows: Year ending December 31, 2015 $ 26, ,035 $ 634, TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets are restricted for the following purposes at December 31: Food bank $ 2,842 $ 4,815 Cat room renovations 1,185 4,757 Housing improvements 6,487 13,000 Animal transfer 5,000 - Total temporarily restricted net assets $ 15,514 $ 22, RETIREMENT PLAN All part-time and full-time CAT employees are eligible to participate in the Organization s 403(b) retirement plan upon completing their 90-day introductory period. CAT does not match funds deposited into 403(b) accounts and, therefore, no retirement contribution expense is recognized in the financial statements. -13-

15 9. OPERATING LEASE COMMITMENTS CAT leases retail space for its thrift store activities under a noncancelable operating lease from October 2011 through March There were no payments due for the first six months of the lease. Beginning April 2012, monthly rent under the lease is currently $3,878 subject to periodic increases. The total lease is expensed over the life of the lease on a straight-line basis with deferred rent totaling $13,194 and $17,123 as of and 2013, respectively. Lease expense of approximately $41,700 and $45,400 was recognized for the years ended and 2013, respectively. Future minimum payments under operating leases are as follows: Year ending December 31, 2015 $ 46, , ,000 $ 106,800 CAT leases warehouse space to an unrelated party under a noncancelable operating lease with a five-year term through December 31, Lease income of $54,000 was recognized for both years ended and Future minimum rental income under the operating lease is $54,000 per year until the expiration of the lease on December 31, CONCENTRATIONS OF CREDIT RISK CAT maintains its cash balances in a financial institution located in Portland. Balances are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. Cash balances at and 2013 were fully insured. Balances may, at times, exceed the federally insured limit. 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 changes could materially affect the amounts reported in the statement of financial position. -14-

16 11. FAIR VALUE MEASUREMENTS Assets and liabilities recorded at fair value in the statement of financial position are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Level inputs are defined as follows: Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities. Level 2: Observable inputs other than those included in Level 1, such as quoted market prices for similar assets or liabilities in active markets, or quoted market prices for identical assets or liabilities in inactive markets. Level 3: Unobservable inputs reflecting management s own assumptions about the inputs used in pricing the asset or liability. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair values requires significant management judgment or estimation. Fair values of assets measured on a recurring basis at and 2013 are as follows: Fair Value Level 1 Investments: Equity securities $ 115,308 $ 115,308 Fixed income securities 29,615 29,615 December 31, 2013 Investments: Equity securities $ 103,611 $ 103,611 Fixed income securities 64,972 64,972 Fair value of investments is determined by reference to quoted market prices and other relevant information generated by market transactions. -15-

17 12. TRUST AGREEMENT CAT was named as a beneficiary in a charitable remainder annuity trust (CRAT) in which the donor passed away during the year ended December 31, The donor s estate is undergoing closing procedures and the CRAT was previously being contested by the heirs. The CRAT is no longer being contested, but remains under legal review to determine the validity of the formation. Management believes there will be a resolution within the next year. Distributions receivable under the CRAT have not been estimated and are not recorded in the financial statements. -16-