LOUISIANA SOCIETY FOR THE PREVENTION OF CRUELTY TO ANIMALS CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2011 AND 2010

Transcription

1 LOUISIANA SOCIETY FOR THE PREVENTION OF CRUELTY TO ANIMALS CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2011 AND 2010

2 A ^\ W^ 1 C A R R Carr, Riggs &Ingram LLC I _ WW I RIGGS & Will INGRAM 228 St Charles Avenue Suite1122 CPAs and Advisors NewOrleans, Louisiana (504) (504) (fax) wwwcricpacom To the Board of Directors Louisiana Society for the Prevention of Cruelty to Animals New Orleans, Louisiana We have audited the accompanying consolidated statements of financial position of Louisiana Society for the Prevention of Cruelty to Animals (LASPCA) (a nonprofit organization) as of December 31, 2011 and 2010, and the related consolidated statements of activities and cash flows for the years then ended These consolidated financial statements are the responsibility of LASPCA's management Our responsibility is to express an opinion on these 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 financial statements are free of material misstatement An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation We believe that our audits provide a reasonable basis for our opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Louisiana Society for the Prevention of Cruelty to Animals as of December 31, 2011 and 2010, and the changes in its net assets and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America (s&**~ (, cf>» r**4ipi&t^( / C May 25, 2012

3 Consolidated Statements of Financial Position December 31, 2011 and 2010 ASSETS Current assets: Cash and cash equivalents $ 1,499,508 $ 1,550,825 Certificates of deposit, including interest receivable 513, ,751 City contract receivable 160, ,273 Current unconditional promises to give,, net 142, ,568 Medical supplies 58,286 32,715 Prepaid expenses 131, ,018 Total current assets 2,505,156 2,997,150 Investments: Endowment fund 6,857,235 7,107,109 Other investments 5,844,941 5,712,710 Total investments 12,702,176 12,819,819 Property and equipment: Land 1,008,127 1,008,127 Buildings 7,437,810 7,433,257 Equipment 1,912,098 1,840,604 Furniture and fixtures 307, ,294 Construction in progress 847, ,713 11,512,803 10,906,995 Less accumulated depreciation (2,673,599) (2,211,342) Net property and equipment 8,839,204 8,695,653 Other assets: Noncurrent unconditional promises to give, net 38, ,992 Deposits 6,885 6,885 Total other assets 44, ,877 $ 24,091,426 $ 24,682,499 See accompanying notes to the financial statements 2

4 Consolidated Statements of Financial Position December 31, 2011 and LIABILITIES AND NET ASSETS Current liabilities: Accounts payable Accrued salaries and expenses $ 132,581 $ 250,045 81, ,030 Total current liabilities 382, ,154 Commitments and contingencies Net assets: Unrestricted 9,539,695 8,705,115 Unrestricted Board designated 6,857,235 7,107,109 Temporarily restricted 7,311,870 8,559,121 Total net assets 23,708,800 24,371,345 & $ 24,682,499 See accompanying notes to the financial statements 3

5 682, , , , ,170 79,674 41,075 7,964 39,188 (416,425) ,450 ( ) $ $ 41,654 Louisiana Society for the Prevention ofcruelty to Animals Consolidated Statement ofactivities Year Ended December 31, 2011 Program Services Supporting Services Animal Services Clinic Other Programs Fundraising Management and General Capital Campaign Totals Change in unrestricted net assets: Support and revenue: City contract $ 1,920,000 $ $ $ $ 1,920, ,829 Service fees 104, ,944 Donations Direct mail/membership Rabies tag revenue Promotional and retail/misc 75, ,557 Bequests Howling Success 682, , ,580 7, , , ,170 Adoptions 161, ,121 Dog WalkaThon Care Cadets/Obed train/vol Hurricane reimbursement 79, ,964 Newsletter Total support and revenue 2,261, , ,655 1,637,432 15,171 5,119,317 Net assets released from restrictions , ,261, , ,655 3,170,787 15,171 6,652,672 Costs and expenses Page 5 (2,957,940) (1,092,112) (771,659) (620,402) (295,507) (5,737,620) Bad debt expense (416,425) Gain on investments Change in unrestricted net assets (696382) (222611) (436004) (194257) (416425) Change in temporarily restricted net assets: Grants/contributions 286,104 Net assets released from restrictions ( ) Change in temporarily restricted net assets ( ) ( ) Change in net assets $ (696,382) $ (222,611) $ (436004) $ $ (194257) $ (374,771) (662,545) Net assets, beginning of year 24371,345 Net assets, end of year $ See accompanying notes to the financial statements 4

6 179, , , ,106 64,913 61,075 28,171 22,612 11,844 8,335 3,261 1, Louisiana Society for the Prevention of Cruelty to Animals Consolidated Statement of Activities Year Ended December 31, ,833 17,775 1,337 1,129 Program Services Supporting Services Animal Other Management Services Clinic Programs Fundraising and General Totals Costs and expenses on a functional basis: Salaries $ 1,277,742 $ 456,347 $ 341,329 $ 139,215 $ 18,033 $ 2,232,666 Depreciation 314, ,823 23,656 13, ,257 Feed / medical supplies 141, , ,762 Hospitalization ,185 36,736 18,274 1, ,328 Grants restricted 15, ,450 General insurance 193,950 20,476 8,056 3, ,462 Payroll taxes 111,744 32,699 24,545 10,403 1, ,739 Direct mail 179,086 Promotional activities/retail 60, ,986 6, ,680 Vet care 87,215 60,347 5, ,919 Professional services 35,719 5,525 3,138 1,774 82, ,462 Investment management fee 128,278 Utilities 106,380 7,574 1, ,299 Paws on Parade 109,106 Office and cleaning supplies 90,191 7,851 4,690 2, ,587 Maintenance/repairs equipment 51,889 10,506 8,847 4, ,286 Howling Success 64,913 Phase II 61,075 Miscellaneous 29,745 21,373 4,437 1, ,150 Telephone 31,694 6,311 5,778 2, ,009 Contract labor 26, ,604 36,627 Animal care supplies 35, Maintenance/repairs building 33, ,077 Bank charges 11,484 8,716 4,809 9, ,253 Advertising 15,329 4,521 6,990 1,350 58,190 Dog WalkaThon 28,171 Computer 19,173 2,804 2,813 1, ,439 Care Cadets / training / education 22,612 Travel and training 18, , ,371 Maintenance/repairs vehicles 20,578 20,578 Hurricane evacuation 17,775 Pension 9,402 1,344 4,764 1, ,708 Planned giving 11,844 Uniforms 8, ,953 Printing and stationery 4,014 2,853 2, ,830 Newsletter 8,335 Postage 6, ,890 Equipment rental 6, ,556 Licenses and permits 4,962 1,121 6,274 Dues and subscriptions 3, ,515 Rabies tags 3,261 Meals and meetings 1, ,312 4 Paws Small tools 1,129 Interest Love Train JP proposal NSF checks Pet photos $ 2,957,940 $ 1,092,112 $ 771,659 $ 620,402 $ 295,507 $ 5,737,620 See accompanying notes to the financial statements 5

7 $ 587, , , , , ,489 73,435 35,906 3, ,120 (508523) 10,484 $ 196,841 Louisiana Society for the Prevention ofcruelty to Animals Consolidated Statement ofactivities Year Ended December 31, 2010 Program Services Supporting Services Animal Services Clinic Other Programs Fundraising Management and General Capital Campaign Totals Change in unrestricted net assets: Support and revenue: City contract $ 2,156,253 $ Donations Service fees 94, ,197 Direct mail/membership Bequests Rabies tag revenue Hurricane reimbursement Howling Success Promotional and retail/misc 67,672 $ $ $ 2,156, , , , , , ,489 51, ,633 Adoptions 111, ,859 Dog WalkaThon Care Cadets/Obed train/vol Pet photos Newsletter ,435 35,906 3, Total support and revenue 2,362, , ,296 1,544, ,092 4,929,264 Net assets released from restrictions ,362, , ,296 2,053, ,092 5,437,787 Costs and expenses Page 7 (3,198,524) (635,729) (494,663) (754,700) (140,258) (5,223,874) Gain on investments Change in unrestricted net assets (836147) (118,860) (235367) 1, ,536, , Change in temporarily restricted net assets: Grants/contributions 712,961 Net assets released from restrictions (508523) Change in temporarily restricted net assets ,438 Change in net assets $ (836,147) $ (118860) $ (235367) $ $ 1536,693 $ ,849,210 Net assets, beginning of year Net assets, end of year $ 24, See accompanying notes to the financial statements 6

8 146, ,925 87,470 62,438 20,484 24,289 22,562 21,944 17,204 13,426 2,763 6,930 3,459 2,495 1, ,710 1,985 5,894 2,095 7, ,060 6,390 5,653 5, ,713 55,689 Louisiana Society for the Prevention ofcruelty to Animals Consolidated Statement ofactivities Year Ended December 31, 2010 Program Services Supporting Services Animal Other Management Services Clinic Programs Fundraising and General Totals Costs and expenses on a functional basis: 295, ,682 75,454 24,289 17,204 3,459 2,953 1,049 Salaries $ 1,431,125 $ 219,235 $ 177,360 $ 217,409 $ 23,172 $ 2,068,301 Depreciation 388,991 37, ,676 Grants restricted 19, ,672 Feed / medical supplies 173, ,450 Hospitalization 191,207 22,625 2, ,578 General insurance 200,867 10, , ,809 Payroll taxes 105,098 20, ,465 1, ,392 Direct mail 146,111 Utilities 116,413 3, ,771 Vet care 8, ,699 7, ,581 Promotional activities / retail 39,769 60,203 Office and cleaning supplies 101,347 3, ,256 Investment management fee 87,470 Contract labor 42,487 1,000 4,717 27,250 Maintenance / repairs equipment 54,903 1, , ,261 Howling Success 62,438 Professional services 47, ,812 Telephone 36,101 1, ,584 Maintenance / repairs building 41, ,721 Bank charges 26, ,827 Computer 25,858 2, ,060 Advertising 13,989 34,473 Hurricane evacuation 33,786 33,786 Miscellaneous 17,008 5, , ,744 Animal care supplies 24, ,079 Membership Travel and training 9,194 8, ,414 Dog WalkaThon 22,562 Proposals 21,944 Care Cadets / training / education Printing and stationery 8,444 3,656 2,812 1, ,630 Planned giving 13,426 Pension 4,018 1, ,174 Equipment rental 7,999 10,762 Postage 9, ,719 Newsletter 6,930 Licenses and permits 5, ,511 Dues and subscriptions 1,625 3, ,189 Maintenance / repairs vehicles 4,701 4,701 Rabies tags Uniforms 2, Meals and meetings 1, ,823 4 Paws 2,495 Small tools 1,485 1,485 Pet photos Foster care Interest $ 3,198,524 $ 635,729 $ 494,663 $ 754,700 $ 140,258 $ 5,223,874 See accompanying notes to the financial statements 7

9 Consolidated Statements of Cash Flows Years Ended December 31, 2011 and 2010 Cash flows from operating activities: Change in net assets Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation Accretion of net discount on unconditional promises to give Net realized and unrealized loss (gain) on investments Donated vehicle Donated investment Bad debt expense Decrease (increase) in city contract receivable (Increase) in prepaid expenses (Increase) in certificates of deposit Decrease in unconditional promises to give (Increase) decrease in medical supplies Increase in deposits Increase in accounts payable Increase in accrued salaries and expenses Net cash provided by operating activities $ (662,545) $ 1,849, , ,676 (6,929) (13,429) 365,889 (897,474) (41,253) (1,045) (12,585) 416,425 32,273 (192,273) (21,078) (21,484) (6,614) (4,442) 177, ,734 (25,571) 31,135 (2,710) 51,457 5,141 20,015 33, ,692 1,845,108 Cash flows from investing activities: Purchases of property and equipment Purchases of investments Proceeds from the maturity and sale of investments Net change in cash and money funds (605,808) (676,518) (1,561,672) (2,535,878) 1,403, ,495 (89,195) 617,723 Net cash (used in) investing activities (853,009) (1,639,178) Net (decrease) increase in cash and cash equivalents (51,317) 205,930 Cash and cash equivalents at beginning of year 1, Cash and cash equivalents at end of year $ 1,499,508 $ 1,550,825 Supplemental disclosure ofcash flow information Interest paid 504 $ 81 See accompanying notes to the financial statements 8

10 Years Ended December 31,2011 and 2010 A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF OPERATIONS Organization Louisiana Society for the Prevention of Cruelty to Animals (LASPCA) is chartered in the State of Louisiana as a notforprofit organization with capital stock LASPCA is classified as "not a private foundation" within the meaning of Section 509(a) of the Internal Revenue Code It is an organization, as described in Section 170(b)(l)(A)(vi) of the Internal Revenue Code, that normally receives a substantial part of its support from direct or indirect contributions from the general public LASPCA operates an animal shelter, veterinary clinic, rabies program, provides humane education and public relation services to the local community, and provides animal control services for the City of New Orleans Basis of presentation In 2010, LASPCA formed two new entities; both were inactive during that year as there were no dollar transactions Louisiana SPCA Foundation, Inc (Foundation), was formed as a 509(a)(3) supporting organization and, in 2011, began transferring a portion of LASPCA's endowment fund to the Foundation LASPCA formed a whollyowned subsidiary, LA/SPCA Holdings, LLC (Holdings), a Louisiana limited liability company with a perpetual term It was formed with the intention of transferring LASPCA's real property to Holdings There was no activity in 2011 The consolidated financial statements include the accounts of LASPCA and its subsidiary (Holdings) and the accounts of Foundation (collectively LASPCA) All significant intercompany transactions have been eliminated in consolidation The financial statement presentation follows the requirements of the Financial Accounting Standards Board's Accounting Standards Codification (ASC) 958, Financial Statements ofnotforprofit Organizations Under ASC 958, LASPCA is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets There were no permanently restricted net assets at December 31, 2011 or 2010 Support from both unrestricted and restricted contributions is recognized either on receipt or upon receiving an unconditional pledge or promise to give from a donor Support from unrestricted contributions is reported as unrestricted support which increases unrestricted net assets LASPCA reports contributions of cash and other assets as temporarily or permanently restricted support if they are received with donor stipulations that limit the use of the donated 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 statement of activities as net assets released from restriction, where all related expenses are also reported Donor restricted contributions whose restrictions are met in the same reporting period that they are received are reported as unrestricted support LASPCA reports contributions of land, buildings, and equipment as unrestricted support unless explicit donor stipulations specify how the assets must be used Contributions of longlived assets with explicit restrictions that specify how the assets are to be used and contributions of cash or other assets that must be used to acquire or improve longlived assets are reported as restricted supports Absent explicit donor stipulations about how long those longlived assets must be maintained, LASPCA reports expirations of donor restrictions when the donated or acquired longlived assets are placed in service Donated services Donated services are recognized as contributions in accordance with ASC 958 if the services: (a) create or enhance nonfinancial assets or (b) require specialized skills, are performed by people with those skills, and would otherwise be purchased by LASPCA The members of the Board of Directors serve without compensation Volunteers also provide animal care and fundraising services throughout the year that are not recognized as contributions in the financial statements since recognition criteria under ASC 958 were not met

11 A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF OPERATIONS Continued Promises to give Unconditional promises to give are recognized as revenues in the period the pledge is received The pledges are recorded at the net present value of estimated future cash flows using an appropriate discount rate Additionally, LASPCA evaluates the collectability of pledges receivable and provides for an allowance when appropriate Conditional promises to give are recognized as revenues only when the conditions attached to the pledge are substantially met Investments Investments are stated at fair value There are no donorrestricted investments at December 31, 2011 or 2010 Gains and losses on investments are reported on the statement of activities as increases or decreases in unrestricted net assets Dividend, interest, and other investment income are reported in the period earned in the statement of activities as increases in unrestricted net assets LASPCA continually evaluates investments for impairment Consideration is given to the financial condition and prospects of the issuer, LASPCA's intent to sell an investment, and the intent and ability to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value If a need to recognize impairment is identified, an amount representing the difference between the fair value of the affected investment and its carrying amount is included in the change in net assets Property and equipment Buildings are being depreciated over their estimated useful lives of 40 years using the straightline method of depreciation Equipment and furniture are depreciated over their estimated useful lives which range from 2 to 7 years using the straightline method of depreciation Depreciable assets are valued at cost if purchased or fair value if contributed It is LASPCA's policy to capitalize assets costing $1,000 or more Compensation for future absences LASPCA has accrued compensation for future absences LASPCA's vacation policy is that when proper notice of resignation or termination is given the employee will be paid for accumulated vacation Sick leave may be carried over to the next year, but LASPCA does not compensate for accumulated sick leave time upon termination of employment Income taxes LASPCA and Foundation are exempt from federal income taxes pursuant to Section 501(c)(3) of the Internal Revenue Code The revenue from the clinic is unrelated business income, within the definition of that term Exempt organizations under Section 501(c)(3) that have gross income from unrelated business activity that exploits an exempt activity, within the definition in Regulations Section 1513l(d)(4)(iv), report the net includible exploited exempt activity income over the exempt activity expenses There was no income tax on unrelated business income in 2011 or 2010 Management believes that all tax positions would be sustained if audited There were no penalties or interest on income taxes incurred in 2011 or 2010, but, if incurred, they would be classified in the statement of activities as a management and general expense LASPCA's tax filings for the years ended December 31, 2008 through the current year are open to audit under statute of limitations by the Internal Revenue Service 10

12 A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF OPERATIONS Continued Subsequent events and transactions have been evaluated by LASPCA for potential recognition or disclosure through May 25, 2012, the date the financial statements were available to be issued Endowment Fund In 2008, the Financial Accounting Standards Board issued FASB Staff Position No FAS 1171 (now ASC 958), Endowments of NotforProfit Organizations: Net Asset Classification offunds Subject to an Enacted Version of the Uniform Prudent Management ofinstitutional Funds Act, and Enhanced Disclosures for All Endowment Funds ASC 958 provides guidance on the net asset classification of donorrestricted endowment funds for a nonprofit organization that is subject to an enacted version of the Uniform Prudent Management of Institutional Funds Act of 2006 (UPMIFA) It also requires additional disclosures about an organization's endowment funds (both donorrestricted endowment funds and boarddesignated endowment funds) whether or not the organization is subject to Uniform Prudent Management of Institutional Funds Act (UPMIFA) (see note C) In 2010, the State of Louisiana adopted UPMIFA LASPCA did not have any donorrestricted endowment funds during 2011 or 2010 Allocation of expenses Indirect overhead and administrative expenses are allocated to programs and supporting services by management based on the number of employees in the corresponding departments 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 support and revenues and expenses during the period Actual results could differ from those estimates Significant estimates used in preparing these financial statements are the computation of the allowance for uncollectible promises to give and the fair value of investments Because of the inherent uncertainties in determining these estimates, it is at least reasonably possible that the estimates used will change within the next year Cash and cash equivalents For purposes of the statement of cash flows, LASPCA considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents Cash equivalents do not include cash and money funds that are included with investments Advertising costs Advertising costs are expensed in the period incurred No costs are capitalized Advertising expense was $28,190 and $41,732 in 2011 and 2010 Certain reclassifications have been made to the 2010 financial information to conform to the 2011 financial statement presentation 11

13 B INVESTMENTS The investment activity for the year ended December 31, 2011, is summarized as follows: Endowment Other Investments Total Balance beginning ofyear Investments purchased Donated stock Maturity/sale of investments Net depreciation of investments (realized and unrealized) Net change in cash and money fund accounts (including interest and dividends of $321,344) $ 7,107,109 $ 5,712,710 $ 12,819,819 1,336, ,775 1,561,672 1,045 1,045 (1,403,666) (1,403,666) (301,885) (64,004) (365,889) (28,540) 89,195 Balance end of year $ $ $ There were no appropriated expenditures in 2011 Aggregate carrying amounts by major types as of December 31, 2011, were as follows: Other Endowment Investments Total Cash and money fund accounts 602,580 $ 602,882 $ 1,205,462 Equities 3,667,923 10,185 3,678,108 Mutual funds 2,586,732 5, ,818,606 & $ $

14 (38,905) (220541) Louisiana Society for the Prevention ofcruelty to Animals B INVESTMENTS Continued The carrying amounts and estimated fair values of investments at December 31, 2011, were as follows (number in parentheses by description equals the quantity of securities): Gross Gross Amortized Unrealized Unrealized Fair Unrealized gains: Cost Gains Losses Value Mutual funds (10) $ 3,763,838 $ 86,261 $ & 3,850,099 Equities (84) 2, , , ,559 _ 6,393,062 Unrealized losses: less than 12 months: Mutual funds (2) 210,258 Equities (62) 1,093, , , (259,446) 1,044, months or more: Mutual funds (4) 3,834,143 (36,989) 3,797,154 Equities (21) 385, ) 262, ,394 (159,977) , ,559 (419423) 11,496,714 Cash and money fund accounts 1,205, $ $ & (419423) S At December 31, 2011, management believes that no investment security with a fair value below cost was otherthantemporarily impaired because declines in values were considered due to interest rate and other shortterm fluctuations 13

15 B INVESTMENTS Continued The investment activity for the year ended December 31, 2010, is summarized as follows: Endowment Other Investments Total Balance beginning ofyear Investments purchased Donated stock Maturity/sale of investments Net appreciation of investments (realized and unrealized) Net change in cash and money fund accounts (including interest and dividends of $531,566) $ 5,768,491 $ 5,178,609 $ 10,947,10C 1,199,521 1,336,357 2,535,878 12,585 12,585 (937,994) (17,502) (955,496] 830,027 67, , (852202) ( $ $_ $ 12,819,819 There were no appropriated expenditures in 2010 Aggregate carrying amounts by major types as of December 31, 2010, were as follows: Enidowment Other Investments Total Cash and money fund accounts Equities Mutual funds $ 484,844 $ 631,422 $ 1,116,266 4,055,897 10,185 4,066,082 2,566, , $ 7T107r109 $_ $

16 B INVESTMENTS Continued The carrying amounts and estimated fair values of investments at December 31, 2010, were as follows (number in parentheses by description equals the quantity of securities): Gross Gross Amortized Unrealized Unrealized Fair Unrealized gains: Cost Grains Losses Value Mutual fund (8) Equities (135) $ 3,529,516 $ 194,811 $ $ 3,724,327 2,737, Unrealized losses: less than 12 months: Mutual funds (4) Equities (26) 3,951, , ,232 ~ _ (38,343) (43330) (81,673) 3,913, months or more Equity (17) 245,394 (24039) ,913, (105712) Cash and money fund accounts ,268 S $ 895T671 $ (105712) C ENDOWMENT FUND In 1987, the Board Directors approved the establishment of discretionary trusts for the preservation and management of such specific funds received by LASPCA These funds are currently being administered by investment management through Crescent Capital Consulting, LLC and Charles Schwab Institutional A resolution of the Board of Directors limits the use of endowment funds, but allows funds to be used for operating purposes, with approval of the Board of Directors These assets are unrestricted The resolutions of the Board of Directors are voluntary, selfimposed limits; therefore, the income is recorded in LASPCA's other operating revenue These assets are presented on the statement of financial position as unrestricted Board designated net assets 15

17 Louisiana Society for the Prevention of Cruelty to Animals C ENDOWMENT FUND Continued Endowment Investment Spending Policies LASPCA's investment spending policy is that all income earned on the Board designated endowment fund is to be reinvested and used for operating purposes, with the approval of the Board of Directors Endowment Investment Policies LASPCA's investment policy is that all endowed funds will be maintained and managed by management within their investment pool and in accordance with their investment policies that attempt to provide a predictable stream of funding to programs supported by its endowment while seeking to maintain the purchasing power of these endowment assets over the longterm D PROMISES TO GIVE Unconditional promises to give consisted of the following at December 31: Amounts due in less than one year Amounts due in one to five years Amounts due in greater than five years $ 211,901 41,420 $ 773, ,336 Total unconditional promises to give Less allowance for uncollectible pledges Less discount to net present value 253,321 (69,000) (3415) 947,004 (169,100) (10344) Net unconditional promises to give &_ $ Included in the accompanying statement of financial position under the following captions: Current unconditional promises to give, net $ 142,901 $ 604,568 Noncurrent unconditional promises to give, net $ $ The discount rate used on longterm promises to give was 425% at December 31, 2011 and 2010 LASPCA has received an unconditional, unrestricted, multiple year pledge in perpetuity of only the income from a $200,000 bequest from an estate to The Greater New Orleans Foundation The fair value of this income cannot be reasonably estimated as it is under the control of The Greater New Orleans Foundation, which is an unrelated nonprofit organization As such, this pledge is not included in the above total 16

18 E TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets were available for the following purposes at December 31: Building restricted $ 6,985,335 $ 8,186,318 Other various 326, ,372 $ & Included in "other" are individually temporarily restricted items ranging from approximately $400 to $70,000 at December 31, 2011, and from approximately $400 to $66,000 at December 31, 2010 F RELEASE OF TEMPORARILY RESTRICTED NET ASSETS Net assets were released from donor restrictions by incurring expenses satisfying the restricted purposes Purpose restrictions accomplished were $1,533,355 and $508,523 in 2011 and 2010 G PENSION PLAN LASPCA has a 401(k) type profit sharing plan for all eligible employees Employees are eligible to participate in the plan if they have been employed by LASPCA for one year LASPCA will make matching contributions in an amount equal to 50% of such contributing participant's elective deferral which does not exceed 6% of the participant's compensation Employer contributions for 2011 and 2010 were $17,708 and $11,173 H RELATED PARTY TRANSACTIONS In 2011 and 2010, LASPCA maintained cash and investment accounts with a financial institution which employed a Board member I COMMITMENTS AND CONTINGENCIES LASPCA received 37% and 31% of its unrestricted revenue from its animal control contract with the City of New Orleans in 2011 and 2010 The effects of a significant reduction in the level of this revenue on LASPCA's programs and activities, if this were to occur, has not been determined In 2010, LASPCA signed a contract with an architect for Phase II of their rebuilding plan The architect is contracted for the design and planning for Phase II, along with assisting in the bidding process and overseeing the construction progress The contract estimates that the architectural fee will approximate $875,000 As of December 31, 2011, LASCPA has paid approximately $800,000 related to this contract LASPCA maintained cash accounts at local banks during 2011 and 2010 The Federal Deposit Insurance Corporation provides insurance coverage under defined limits At various times in 2011 and 2010, LASPCA had funds on deposit at these entities which were in excess of the insured amount 17

19 Notes to ConsolidatedFinancial Statements J FAIR VALUE MEASUREMENTS LASPCA discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value Investments are recorded at fair value on a recurring basis Nonrecurring fair value adjustments, if any, would typically involve donated property, plant, and equipment There were no material nonrecurring fair value adjustments in 2011 and 2010 The three levels of the fair value hierarchy are described below: Level 1 Quoted market prices in active markets for identical assets at the measurement date Level 2 Observable inputs (market data obtained from independent sources) other than quoted prices for the asset, either directly or indirectly observable, that reflect assumptions market participants would use to price the asset based on market data obtained from sources independent of LASPCA Level 3 Unobservable inputs that reflect LASPCA's own assumptions about the assumptions market participants would use to price an asset based on the best information available in the circumstances For assets that are measured at fair value on a recurring basis in periods after initial recognition, there were no transfers between Level 1 and 2, or transfers into and out of Level 3 in 2011 or 2010 If such transfers were to occur, they would be recognized as of the actual date of the event LASPCA's measurements of fair value are made on a recurring basis, and their valuation techniques (no changes in 2011 or 2010) for assets and liabilities recorded at fair value are as follows: Investments The fair value of investments is the market value based on quoted market prices, when available (Level 1), or market prices provided by recognized broker dealers (Level 2 using a market approach) If listed prices or quoted market prices are not available, fair value is based upon externally developed models that use unobservable inputs due to the limited market activity of the investment (Level 3 using a market approach) Unconditional promises to give The fair value of contributions is equal to the carrying value for contributions expected to be collected within one year Contributions expected to be collected in future periods are discounted to present value based on management's assumptions (Level 3 using a market approach) The preceding method described may produce a fair value calculation that may not be indicative of the net realizable value or reflective of future fair values Furthermore, although the LASPCA believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date 18

20 Louisiana Society for the Prevention ofcruelty to Animals J FAIR VALUE MEASUREMENTS Continued The valuation of LASPCA's assets that are measured at fair value on a December 31, 2011, were as follows: recurring basis at Level 1 Level 2 Level 3 Fair Value Unconditional promises to give $ $ 180,906 $ 180,906 Endowment Fund: Cash and money fund accounts 602,580 Equities 3,667,923 Mutual funds 2,586,732 Other investments: Cash and money fund accounts 602,882 Equities 10,185 Mutual funds 5231, ,580 3,667,923 2,586, ,882 10, $ i $ 180T906 $ The changes in unconditional promises to give measured at fair value for which LASPCA has used Level 3 inputs to determine fair value are as follows: Unconditional promises to give Beginning balance Cash receipts Decrease in discount Bad debt expense Net transfers into Level 3 Net transfers out of Level 3 Ending balance $ 767,560 (177,158) 6,929 (416,425)

21 J FAIR VALUE MEASUREMENTS Continued The valuation of LASPCA's assets that are measured at fair value on a December 31, 2010, were as follows: recurring basis at Level 1 Level 2 Level 3 Fair Value Unconditional promises to give $ Endowment Fund: Cash and money fund accounts 484,844 Equities 4,055,897 Mutual funds 2,566,368 Other investments: Cash and money fund accounts 631,422 Equities 10,185 Mutual funds 5,071,103 $ $ 767,560 $ 767, ,844 4,055,897 2,566, ,422 10, ,103 $ i $ $ The changes in unconditional promises to give measured at fair value for which LASPCA has used Level 3 inputs to determine fair value are as follows: Unconditional promises to give Beginning balance Cash receipts Decrease in discount $ 1,402,865 (648,734) 13,429 Net transfers into Level 3 Net transfers out of Level 3 Ending balance 767,560 20