CAT ADOPTION TEAM. Reviewed Financial Statements

Transcription

1 Reviewed Financial Statements For the Year Ended

2 INDEPENDENT ACCOUNTANT S REVIEW REPORT Jake Jacobs, CPA Shareholder Susan J. Marks, CPA Shareholder Mark A. Clift, CPA Shareholder Karin S. Wandtke, CPA Shareholder Sang Ahn, CPA Shareholder Gerard DeBlois Jr., CPA Shareholder Jill Oswald Shareholder Mary Strasdin, CPA Principal Dennis C. Johnson, CPA of counsel The Board of Directors Cat Adoption Team Sherwood, Oregon We have reviewed the accompanying statement of financial position of Cat Adoption Team (CAT or the Organization), a nonprofit corporation, as of December 31, 2012, 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 2012 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 2011 financial statements and based our report dated May 31, 2012, 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. May 2, 2013 Strength in Numbers ACCOUNTANTS & CONSULTANTS McDonald Jacobs, PC 520 SW Yamhill Suite 500 Portland, Oregon P: F: mail@mcdonaldjacobs.com

3 STATEMENT OF FINANCIAL POSITION (With comparative totals for 2011) ASSETS Current Assets: Cash and cash equivalents $ 61,016 $ 25,051 Pledges and accounts receivable 80,209 89,438 Prepaid expenses 15,703 9,234 Inventory 35,909 16,003 Total current assets 192, ,726 Investments 203, ,773 Property and equipment, net 1,887,771 1,887,133 TOTAL ASSETS $ 2,283,736 $ 2,263,632 LIABILITIES AND NET ASSETS Current Liabilities: Accounts payable and accrued expenses $ 68,502 61,939 Accrued payroll and vacation 66,614 6,825 Long-term debt, current portion 24,116 23,719 Total current liabilities 159,232 92,483 Deferred rent 19,730 10,400 Long-term debt, less current portion 659, ,729 Total liabilities 838, ,612 Net assets: Unrestricted: Undesignated 209, ,522 Net property and equipment 1,204,424 1,180,685 Total unrestricted 1,414,309 1,442,207 Temporarily restricted 31,234 35,813 Total net assets 1,445,543 1,478,020 TOTAL LIABILITIES AND NET ASSETS $ 2,283,736 $ 2,263,632 See independent accountant's review report and notes to financial statements

4 STATEMENT OF ACTIVITIES For the year ended (With comparative totals for 2011) 2012 Temporarily 2011 Unrestricted Restricted Total Total Support and revenue: Contributions and grants $ 517,027 $ 166,401 $ 683,428 $ 550,429 Special event revenue, net of direct costs of $46,080 for 2012 and $61,599 for ,632-89,632 90,628 Program service revenue 352, , ,611 Donated materials 48,754-48,754 78,331 Retail sales, less cost of sales of $48,778 for 2012 and $58,737 for ,616-49,616 48,671 Interest and dividend income 14,358-14,358 9,529 Net realized and unrealized gains (losses) 23,689-23,689 (7,090) Rental income net of property taxes 38,520-38,520 22,822 Other income ,127 Net assets released from restrictions: Satisfaction of purpose restrictions 170,980 (170,980) - - 1,305,012 (4,579) 1,300,433 1,149,058 Thrift Store: Sales of donated merchandise 109, ,205 19,565 Donated goods for thrift store 133, ,957 - Less inventory sold (109,205) - (109,205) - Net thrift store 133, ,957 19,565 Total support and revenue 1,438,969 (4,579) 1,434,390 1,168,623 Expenses: Animal services 1,165,118-1,165,118 1,175,427 Thrift store 140, ,153 10,400 Management and general 107, ,410 97,837 Fundraising 120, ,424 78,935 Total expenses 1,533,105-1,533,105 1,362,599 Change in net assets from operations (94,136) (4,579) (98,715) (193,976) Net insurance proceeds due to flood (Note 13) 66,238-66,238 - Change in net assets (27,898) (4,579) (32,477) (193,976) Net assets: Beginning of year 1,442,207 35,813 1,478,020 1,671,996 End of year $ 1,414,309 $ 31,234 $ 1,445,543 $ 1,478,020 See independent accountant's review report and notes to financial statements

5 STATEMENT OF FUNCTIONAL EXPENSES For the year ended (With comparative totals for 2011) 2012 Management Animal Thrift and Fund - Services Store General Raising Total 2011 Salaries and related costs $ 713,010 $ 67,776 $ 47,734 $ 64,074 $ 892,594 $ 768,159 Professional fees 16, , ,105 78,576 Supplies 164,986 2,483 1, , ,306 Medical services 31, ,946 21,229 Equipment and maintenance 34,342 1,921 1, ,720 32,229 Utilities 33,203 9,098 1, ,063 31,310 Telephone 6,817-1, ,295 13,260 Printing, postage and shipping 2, ,943 23,914 1,858 Insurance 7, ,581 9,053 Meetings and trainings 8, ,733 7,451 Bank fees 12, ,805 18,025 15,058 Advertising, marketing and outreach 45,710 15,523 1,181 24,908 87,322 70,597 Depreciation 54,564-2, ,467 52,800 Interest expense 24,832-1, ,156 42,747 Rent - 41, ,600 10,400 Bad debt 1,930-1,233-3,163 - Miscellaneous 7, ,048 9,141 7,566 Total expenses $ 1,165,118 $ 140,153 $ 107,410 $ 120,424 $ 1,533,105 $ 1,362,599 See independent accountant's review report and notes to financial statements

6 STATEMENT OF CASH FLOWS For the year ended (With comparative totals for 2011) Cash flows from operating activities: Change in net assets $ (32,477) $ (193,976) Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities: Depreciation 57,467 52,800 Net realized/unrealized (gain) loss on investments (23,689) 7,090 (Increase) decrease in: Pledges and accounts receivable 9,229 4,563 Prepaid expenses (6,469) (8,664) Inventory (19,906) 2,388 Increase (decrease) in: Accounts payable and accrued expenses 6,563 25,364 Accrued payroll and vacation 59,789 (22,590) Deferred rent 9,330 10,400 Net cash provided by (used in) operating activities 59,837 (122,625) Cash flows from investing activities: Purchase of property and equipment (58,105) (20,996) Proceeds from the sale of investments 152, ,144 Purchase of investments (94,861) (91,358) Net cash provided by (used in) investing activities (771) 94,790 Cash flows from financing activities: Principal payments on long-term debt (23,101) (18,928) Net cash used in financing activities (23,101) (18,928) Net increase (decrease) in cash and cash equivalents 35,965 (46,763) Cash and cash equivalents - beginning of year 25,051 71,814 Cash and cash equivalents - end of year $ 61,016 $ 25,051 Supplemental cash flow information: Cash paid during the year for interest $ 27,737 $ 42,747 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 work with the community to save the lives of homeless, sick and injured cats and kittens by offering shelter, adoption, foster, spay/neuter and veterinary services to end needless feline euthanasia. 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 220 cats. CAT focuses on taking in cats at high risk of euthanasia. In 2012, 77% of the cats and kittens that came to CAT were transferred from public shelters. Adoption: In 2012, CAT found homes for 2,475 cats and kittens from our shelter, offsite adoption centers, and foster homes. Frequent promotions highlight cats with special needs who might otherwise require more time to find a home. CAT s cats and kittens are available for viewing on the organization s website (catadoptionteam.org) and on Petfinder.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, an isolation ward to reduce the spread of infectious diseases, and a treatment room. 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 2012, CAT s volunteer foster homes cared for 680 kittens and 105 adult cats (including 78 mother cats). 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 2012, CAT performed 2,047 surgeries through these programs

8 1. DESCRIPTION OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Description of Organization, Continued Food Bank: The CAT Food Bank helps cat owners who are struggling financially. Food is distributed to the public on the first Sunday of every month and through several senior citizen and Meals on Wheels programs. In 2012, CAT s Food Bank distributed 33,392 pounds of food, feeding an average of 359 cats per month. Thrift Store: CAT operates a thrift store in Raleigh Hills which was opened in October of Proceeds from the thrift store 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 reduced the shelter euthanasia rate in the Portland metro area by over 65% in six years. CAT also works with other public and private shelters and animal welfare organizations in Oregon and Washington. CAT's revenue sources include donations, sponsorships, and grants from individuals, business, and foundations; adoption and hospital fees; and retail and thrift store sales. Basis of Presentation The Organization reports information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. The Organization has only unrestricted and temporarily restricted net assets at and 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

9 1. DESCRIPTION OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Accounts Receivable Accounts receivable are reported at the amount management expects to collect on balances outstanding at year-end. Management provides for probably uncollectible amounts through a valuation allowance based on its assessment of the current status of individual accounts. The Organization determines its allowance for uncollectible accounts by considering a number of factors, including the length of time accounts are past due, previous collection history, as well as the economy as a whole. Inventory Inventory, consisting of retail pet food and supplies, and thrift store merchandise, and 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. 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. Net unrelated business income tax to which the CAT may be subject is estimated to be immaterial. CAT is not a private foundation. The Organization s information returns for years ended December 31, 2008 and prior are generally no longer subject to examination by taxing authorities in its major tax jurisdictions

10 1. DESCRIPTION OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued 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 $49,000 and $78,000 for the years ended and 2011, respectively. The Organization also opened a thrift store at the end of Donated goods for sale in the thrift store totaled approximately $134,000 for the year ended December 31, CAT recognizes donated services that create or enhance 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. Amounts recognized in 2012 and 2011 were immaterial to the financial statements and not disclosed. 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 $58,500 and $53,300 for the years ended and 2011, respectively

11 1. DESCRIPTION OF ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued 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 2011 The financial information as of December 31, 2011 and for the year then ended is presented for comparative purposes and is not intended to be a complete financial statement presentation. 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 May 2, 2013, 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: Unconditional pledges and contributions $ 71,089 $ 81,976 Program service fees 10,925 7,462 82,014 89,438 Less allowance for doubtful accounts 1,805 - Pledges and accounts receivable, net $ 80,209 $ 89,438 All pledges and contributions are receivable within one year

12 3. INVENTORY Inventory consists of the following at December 31: Pet food and supplies $ 11,157 $ 16,003 Thrift store goods 24,752 - Total inventory $ 35,909 $ 16, INVESTMENTS Investments are carried at fair value and consist of the following at December 31: Cash equivalents $ 35,717 $ 99,662 Equity securities 87,519 66,706 Fixed income securities 79,892 70,405 Total investments $ 203,128 $ 236, PROPERTY AND EQUIPMENT Property and equipment consist of the following at December 31: Land $ 600,000 $ 600,000 Building and improvements 1,459,800 1,423,972 Furniture and equipment 178, ,964 2,238,041 2,179,936 Less accumulated depreciation 350, ,803 Property and equipment, net $ 1,887,771 $ 1,887,

13 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 at is as follows: Current portion $ 24,116 Long-term portion 659,231 Current maturities of long-term debt are as follows: $ 683,347 December 31, 2013 $ 24, , , ,031 $ 683, TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets are restricted for the following purposes at December 31: Food bank $ - $ 8,898 Cat room renovations 12,230 15,000 Medical supplies 10,766 11,915 Foster programs 8,238 - Total temporarily restricted net assets $ 31,234 $ 35, 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

14 9. OPERATING LEASE COMMITMENTS CAT leases retail space for its thrift store activities under a noncancelable operating lease from October 2011 through December There were no payments due for the first six months of the lease. Beginning April 2012, monthly rent under the lease is $3,550 subject to periodic increases. The total lease is expensed over the life of the lease on a straight-line basis with deferred rent totaling $19,730 and $10,400 as of and 2011, respectively. CAT leases office equipment under a noncancelable operating lease with a fiveyear term. Lease expense of $46,280 and $15,080 was recognized for the years ended and 2011, respectively. Future minimum payments under operating leases are as follows: Year ending December 31, 2013 $ 48, , , , ,000 $ 203,200 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 and $48,500 was recognized for the years ended and 2011, respectively. Future minimum rental income under the operating lease for 2013 is $54, 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. 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

15 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 2011 are as follows: Fair value Level 1 : Investments: Common stock $ 206 $ 206 Preferred stock 87,313 87,313 Fixed income fund 79,892 79,892 December 31, 2011: Investments: Common stock Preferred stock 66,464 66,464 Fixed income fund 70,405 70,405 Fair value of investments is determined by reference to quoted market prices and other relevant information generated by market transactions

16 12. BUILDING DAMAGE AND INSURANCE RECOVERY During the year ended, CAT s main facilities suffered water damage from a broken pipe. Approximately 60% of the shelter was damaged to some degree by the flood, including flooring and walls, and shelter operations were disrupted for three months. In addition to costs to restore the facility, the Organization s income from program services and expenses for salaries and other costs were also affected due to the interruption of operations. The building was restored and placed back into service prior to year end. Costs for repair and restoration of facilities $ 161,839 Replacement of furniture (capitalized) 2,847 Cost of business interruption 63,391 66,238 Total expenses reimbursed by insurance $ 228,