CALVARY CHAPEL CHURCH, INC. d/b/a CALVARY CHAPEL FORT LAUDERDALE AND AFFILIATES. Consolidated Financial Statements With Independent Auditors Report

Transcription

1 CALVARY CHAPEL FORT LAUDERDALE AND AFFILIATES Consolidated Financial Statements With Independent Auditors Report June 30, 2017 and 2016

2 Table of Contents Independent Auditors Report 1 Consolidated Financial Statements Consolidated Statements of Financial Position 3 Consolidated Statements of Activities 4 Consolidated Statements of Cash Flows 6 Notes to Consolidated Financial Statements 8 Supplementary Data Independent Auditors Report on Supplementary Data 17 Consolidating Statement of Financial Position Consolidating Statement of Financial Position Consolidating Statement of Activities Consolidating Statement of Activities Schedule of Functional Expenses Schedule of Functional Expenses Page

3 INDEPENDENT AUDITORS REPORT Board of Directors Calvary Chapel Church, Inc. d/b/a Calvary Chapel Fort Lauderdale and Affiliates Fort Lauderdale, Florida We have audited the accompanying consolidated financial statements of Calvary Chapel Church, Inc. d/b/a Calvary Chapel Fort Lauderdale and Affiliates (the Organization), which comprise the consolidated statements of financial position as of June 30, 2017 and 2016, and the related consolidated statements of activities and cash flows for the years then ended, and the related notes to the consolidated financial statements. Management s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated 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 consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these consolidated 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 consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion Lakes Parkway, Suite 130 Lawrenceville, GA capincrouse.com

4 Board of Directors Calvary Chapel Church, Inc. d/b/a Calvary Chapel Fort Lauderdale and Affiliates Fort Lauderdale, Florida Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Calvary Chapel Church, Inc. d/b/a Calvary Chapel Fort Lauderdale and Affiliates as of June 30, 2017 and 2016, and the changes in its net assets and cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Lawrenceville, Georgia October 27,

5 Consolidated Statements of Financial Position June 30, ASSETS: Current assets: Cash and cash equivalents $ 12,901,699 $ 11,145,054 Accounts, notes, and other receivables net 919,029 1,130,305 Prepaid expenses and other assets 1,479,264 1,262,579 15,299,992 13,537,938 Property and equipment net 113,488, ,695,416 Total Assets $ 128,788,408 $ 131,233,354 LIABILITIES AND NET ASSETS: Current liabilities: Accounts payable and accrued expenses $ 1,032,823 $ 1,097,655 Accrued payroll and benefits payable 2,474,094 2,394,320 Deferred revenue 1,393,857 1,870,239 Current portion of long term debt 15,709,424 1,947,644 Current portion of capital lease obligations 198, ,155 20,808,345 8,029,013 Long term debt, net of current portion - 19,009,424 Capital lease obligations, net of current portion - 198,147-19,207,571 20,808,345 27,236,584 Net assets: Unrestricted: Undesignated 10,050,301 7,809,367 Equity in property and equipment 97,580,845 95,821, ,631, ,630,413 Temporarily restricted 348, , ,980, ,996,770 Total Liabilities and Net Assets $ 128,788,408 $ 131,233,354 See notes to consolidated financial statements -3-

6 Consolidated Statements of Activities Year Ended June 30, Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total SUPPORT AND REVENUE: Support: General tithes and offerings $ 30,199,996 $ - $ 30,199,996 $ 31,370,973 $ - $ 31,370,973 Offerings for: Building - 84,003 84,003-1,063,021 1,063,021 Missions 505, , , ,856 Benevolence 88,145-88, , ,595 Outreach 315, , ,479 15, ,599 Other designated - 295, , , ,190 Calvary Christian Academy 524, , , ,482 Special events 441, , , ,473 Noncash donations 1,276,408-1,276,408 1,052,393-1,052,393 33,351, ,824 33,731,800 34,588,251 1,312,331 35,900,582 Revenue: Ministry activities income 917, ,077 1,890,576-1,890,576 Sales bookstore, food services, skate park, and thrift store 4,102,112-4,102,112 4,438,363-4,438,363 Calvary Christian Academy tuition and fees net 21,876,179-21,876,179 20,343,296-20,343,296 Government grant income 2,287,487-2,287,487 2,245,307-2,245,307 Rental income 328, , , ,222 Gain on sale of fixed assets 2,861,430-2,861,430 3,809,775-3,809,775 Interest and other income 61,536-61,536 37,625-37,625 32,434,206-32,434,206 33,158,164-33,158,164 Total Support and Revenue 65,786, ,824 66,166,006 67,746,415 1,312,331 69,058,746 RECLASSIFICATIONS: Satisfaction of purpose and time restrictions 397,264 (397,264) - 1,537,516 (1,537,516) - (continued) See notes to consolidated financial statements -4-

7 Consolidated Statements of Activities (continued) Year Ended June 30, Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total EXPENSES: Ministry expenses: Church ministry and outreach 14,816,753-14,816,753 16,284,958-16,284,958 Missions outreach 1,356,730-1,356,730 1,923,114-1,923,114 Local outreach and benevolence 1,326,183-1,326,183 1,725,627-1,725,627 Media outreach 3,052,599-3,052,599 3,368,098-3,368,098 Bookstore, food services, skate park, and thrift store 3,953,345-3,953,345 4,450,695-4,450,695 Calvary Christian Academy 20,748,792-20,748,792 19,326,323-19,326,323 45,254,402-45,254,402 47,078,815-47,078,815 Administrative expenses: Building 3,601,473-3,601,473 4,350,509-4,350,509 Interest 468, , , ,753 Depreciation 4,752,121-4,752,121 4,683,695-4,683,695 Administrative 8,106,577-8,106,577 8,960,234-8,960,234 16,928,311-16,928,311 18,878,191-18,878,191 Total Expenses 62,182,713-62,182,713 65,957,006-65,957,006 Change in Net Assets 4,000,733 (17,440) 3,983,293 3,326,925 (225,185) 3,101,740 Net Assets, Beginning of Year 103,630, , ,996, ,303, , ,895,030 Net Assets, End of Year $ 107,631,146 $ 348,917 $ 107,980,063 $ 103,630,413 $ 366,357 $ 103,996,770 See notes to consolidated financial statements -5-

8 Consolidated Statements of Cash Flows Year Ended June 30, CASH FLOWS FROM OPERATING ACTIVITIES: Change in net assets $ 3,983,293 $ 3,101,740 Adjustments to reconcile change in net assets to net cash provided (used) by operating activities: Noncash contributions of property and equipment (58,500) (772,109) Noncash contributions of securities and assets (1,217,908) (280,284) Depreciation 4,752,121 4,683,695 Write-off of uncollectible receivables (38,230) - Gain on sales of property and equipment (2,861,430) (3,281,344) Contributions restricted for long term investment (84,003) (1,063,021) Proceeds from sales of noncash contributions 1,217, ,284 Changes in operating assets and liabilities: Accounts, notes, and other receivables 249,506 (232,660) Prepaid expenses and other assets (338,965) 582,194 Accounts payable and accrued expenses (64,832) (1,075,400) Accrued payroll and benefits payable 79,774 (111,380) Deferred revenue (476,382) 64,460 Net Cash Provided by Operating Activities 5,142,352 1,896,175 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures for property and equipment (2,735,772) (2,320,617) Proceeds from sales of property and equipment 5,110,581 7,103,529 Proceeds from sales of FCC licenses 122,280 20,696 Proceeds from sale of assets held for sale - 35,000 Net Cash Provided by Investing Activities 2,497,089 4,838,608 (continued) See notes to consolidated financial statements -6-

9 Consolidated Statements of Cash Flows (continued) Year Ended June 30, CASH FLOWS FROM FINANCING ACTIVITIES: Repayments on long term debt (5,247,644) (5,147,644) Payments on capital lease obligations (719,155) (762,289) Contributions restricted for long term investment 84,003 1,063,021 Net Cash Used by Financing Activities (5,882,796) (4,846,912) Net Change in Cash and Cash Equivalents 1,756,645 1,887,871 Cash and Cash Equivalents, Beginning of Year 11,145,054 9,257,183 Cash and Cash Equivalents, End of Year $ 12,901,699 $ 11,145,054 SUPPLEMENTAL DISCLOSURES: Cash paid for interest (none capitalized) $ 478,286 $ 928,374 See notes to consolidated financial statements -7-

10 Notes to Consolidated Financial Statements June 30, 2017 and NATURE OF ORGANIZATION: Calvary Chapel Fort Lauderdale and Affiliates (Organization) is the consolidated financial reporting entity for Calvary Chapel Church, Inc. (CCCI) and its supporting organizations: Calvary Chapel of Fort Lauderdale, Inc. (CCFL), HELPS Ministries of Broward, Inc. (HELPS), 4KIDS of South Florida, Inc. (4KIDS), and Reach Communications, Inc. (RC). CCCI was incorporated in December 1997 as a Florida not for profit corporation and is exempt from federal income tax on related activities under Section 501(c)(3) of the Internal Revenue Code (Code). CCCI is classified as a publicly supported organization, which is not a private foundation under Section 509(a)(1) of the Code, and contributions to it are tax deductible within the limitations prescribed by the Code. CCCI operates as a church and exists to proclaim the good news of salvation by faith in the Lord Jesus Christ by any suitable method or media, which includes, but is not limited to, establishing and operating a local ministry for the worship of Jesus Christ using personal evangelism, preaching, teaching, missions, and discipleship. CCCI accomplishes its objectives through the following activities: Church ministry, which consists of weekly services, including worship and Bible study, small groups, discipleship, prayer, biblical counseling, and various other church activities. The church conducts various outreach and missions activities designed to reach out not only to the local community but to the world as well. CCCI also operates a bookstore, which sells Christian books, literature, videos, CDs, DVDs, and other Christian products to disciple the believer and educate the nonbeliever. The Grill is a restaurant on the church premises offering food and beverages in support of church ministry activities and serves as a place for fellowship for church attendees. Calvary Christian Academy (CCA), a Christian school operated by CCCI, is located on the church s premises and exists to provide a biblically based education for children attending pre kindergarten through twelfth grade. CCFL was incorporated as a tax exempt organization under section 501(c)(3) in December 1988 and is an integrated auxiliary of CCCI within the meaning of Section 509(a)(3) of the Code. CCFL has also been classified as an entity that is not a private foundation within the meaning of the Section 509(a) and qualifies for tax deductible contributions as provided in Section 170(b)(1)(A)(vi). CCFL holds and operates real property on behalf of CCCI. -8-

11 Notes to Consolidated Financial Statements June 30, 2017 and NATURE OF ORGANIZATION, continued: HELPS was incorporated as a tax exempt organization under section 501(c)(3) in December 1991 and is an integrated auxiliary of CCCI within the meaning of Section 509(a)(3) of the Code. HELPS has also been classified as an entity that is not a private foundation within the meaning of the Section 509(a) and qualifies for tax deductible contributions as provided in Section 170(b)(1)(A)(vi). HELPS provides vehicle fleet services to the Organization and holds and operates real property on behalf of CCCI. 4KIDS was incorporated during February 2002 as a tax exempt organization under section 501(c)(3). 4KIDS has also been classified as an entity that is not a private foundation within the meaning of Section 509(a) and qualifies for tax deductible contributions as provided in Section 170(b)(1)(A)(vi). 4KIDS exists to serve at risk children and families in collaboration with local and legal authorities by mobilizing and equipping the faith community to rescue, protect, and nurture children in the foster care system. Effective May 16, 2003, 4KIDS amended its articles of incorporation and bylaws to transfer oversight and operational control to CCCI. CCCI accepted control of 4KIDS effective July 1, Effective December 2006, 4KIDS became recognized as an integrated auxiliary of CCCI pursuant to the changes made in the provisions of its amended Articles of Incorporation and Bylaws filed in RC was incorporated in January 2004 under section 501(c)(3) and is an integrated auxiliary of CCCI. RC is a noncommercial radio station ministry that provides outreach services for CCCI through the broadcasting of religious programming in Florida and on the internet. All of the assets of RC were sold and RC was dissolved by the Organization during the fiscal year ended June 30, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: The Organization maintains its accounts and prepares its consolidated financial statements on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States. The significant accounting policies followed are described below to enhance the usefulness of the consolidated financial statements to the reader. USE OF ESTIMATES The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the operations of CCCI, CCFL, HELPS, 4KIDS, and RC. All significant inter company balances and transactions have been eliminated. -9-

12 Notes to Consolidated Financial Statements June 30, 2017 and SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued: RECLASSIFICATIONS Certain information from the prior year consolidated financial statements has been reclassified to conform to the current year presentation format. CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of cash held in checking, savings, and money market accounts. These accounts may, at times, exceed federally insured limits. The Organization has not experienced any losses in such accounts, and management believes it is not exposed to any significant credit risk on cash and cash equivalents. ACCOUNTS, NOTES, AND OTHER RECEIVABLES NET Accounts and notes receivable are reported net of any anticipated losses due to uncollectible accounts. Receivables due to CCA are considered delinquent when a student with an outstanding balance graduates, withdraws from school or does not return to school for the following year. CCA assesses a $25 late fee when a student receivable is past due 15 days. The Organization recognizes an allowance for losses on accounts receivable in an amount equal to the estimated probable losses net of recoveries. Generally, accounts are considered uncollectible when they are 90 days past due or when the student has withdrawn from school. The allowance for doubtful accounts is maintained at a level which, in management s judgment, is adequate to absorb potential losses inherent in the receivable portfolio. The amount of the allowance is based on management s evaluation of the collectability of the receivable portfolio. Such evaluation considers the nature of the portfolio, trends in historical loss experience, specific impaired notes, and economic conditions. As of June 30, 2017 and 2016, an allowance for doubtful accounts has been provided for in the amounts of $67,082 and $154,778 respectively. Allowances for impaired notes is determined based on the present value of estimated future cash flows. At June 30, 2017 and 2016, the present value of estimated future cash flows underlying notes receivable is considered sufficient. Accordingly, no allowance for impaired notes has been provided in the accompanying consolidated financial statements. However, due to uncertainties associated with regional economic conditions and future cash flows on loans, it is at least reasonably possible that management s estimate of losses inherent in the accounts and notes receivable portfolios and the related allowances may change materially in the near term. At June 30, 2017 and 2016, student accounts receivable past due 90 days or more totaled $44,377 and $98,213, respectively. -10-

13 Notes to Consolidated Financial Statements June 30, 2017 and SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued: PROPERTY AND EQUIPMENT NET Items capitalized as property and equipment are stated at cost or, if donated, at market value on the date of donation. The Organization capitalizes all property and equipment expenditures greater than $10,000. Expenditures for repairs and maintenance are charged to expense as incurred, and additions and improvements that significantly extend the lives of assets are capitalized at cost. Depreciation is computed using the straight line method over the estimated useful lives of the assets ranging from 3 to 40 years. CLASSES OF NET ASSETS The consolidated financial statements report amounts separately by class of net assets. Unrestricted amounts are currently available at the discretion of the board for use in operations. Equity in property and equipment represents amounts invested in property and equipment net of accumulated depreciation and related debt. Temporarily restricted amounts are stipulated by donors for specific operating purposes, with time restrictions, or not currently available for use until commitments regarding their use have been fulfilled. SUPPORT AND REVENUES, RECLASSIFICATIONS, AND EXPENSES Revenue is recognized when earned and support when contributions are made, which may be when cash is received, unconditional promises are made, or ownership of other assets is transferred to the Organization. Tuition revenue for CCA is reported net of financial aid and discounts of $826,654 and $826,581, for the years ended June 30, 2017 and 2016, respectively. CCA registration, re-enrollment, and tuition fees received prior to the beginning of the school year have been reported as deferred revenue. The Organization reports gifts of cash and other assets as restricted support if they are received with donor stipulations that limit the use of the donated amounts. When a stipulated time restriction ends or purpose restriction is satisfied, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the consolidated statements of activities as satisfaction of purpose or time restrictions. Temporarily restricted contributions which have been fully expended for their intended purposes within the reporting period are reported as unrestricted, except for contributions made for building and construction projects. The Organization reports donations of property and equipment as unrestricted support unless explicit donor stipulations specify how the donated assets must be used. Gifts of long lived assets with explicit restrictions that specify how the assets are to be used and gifts of cash and other assets that must be used to acquire long lived assets are reported as restricted support. Absent explicit donor stipulations about how long those long lived assets must be maintained, the Organization reports expirations of donor restrictions when the donated or acquired long lived assets are placed in service. -11-

14 Notes to Consolidated Financial Statements June 30, 2017 and SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued: SUPPORT AND REVENUES, RECLASSIFICATIONS, AND EXPENSES, continued Donated goods and services (including securities, property, equipment, and retail space) are recorded at fair value at the date of the gift. Expenses are recorded when incurred in accordance with the accrual basis of accounting. The costs of providing various program services and supporting activities of the Organization have been summarized on a functional basis in the consolidated statements of activities. Accordingly, certain costs have been allocated among the program services and activities benefited. RECENTALY ADOPTED ACCOUNTING STANDARD In January 2016, the FASB issued ASU No , Financial Instruments Overall (Subtopic ): Recognition and Measurement of Financial Assets and Financial Liabilities. One of the amendments in the ASU is the elimination of the requirement to apply the fair value of financial instruments disclosure guidance in the General Subsection of Section for entities that are not public business entities. The Organization adopted this amendment during the fiscal year ended June 30, ACCOUNTS, NOTES, AND OTHER RECEIVABLES NET: Accounts, notes, and other receivables net consist of: June 30, Academy tuition receivable net $ 129,561 $ 140,029 Note receivable 253, ,249 Other receivables net 535, ,027 $ 919,029 $ 1,130,305 Effective March 2016, CCCI executed a promissory note receivable (the Note) with ACA Bridge Builders, LLC (ACA) for the principal sum of $250,000. The Note bears interest at the rate of 8% per annum until the Note is paid in full. The Note is a balloon note and the entire principal balance of this note, together with all accrued and unpaid interest, shall be due and payable at maturity in March

15 Notes to Consolidated Financial Statements June 30, 2017 and PREPAID EXPENSES AND OTHER ASSETS: Prepaid expenses and other assets consist of: June 30, Prepaid insurance $ 257,341 $ 215,171 Prepaid CCA expenses 800, ,430 Other prepaid expenses 236, ,833 Other miscellaneous inventory 165, ,735 Other assets 19, , PROPERTY AND EQUIPMENT NET: Property and equipment net consists of: $ 1,479,264 $ 1,262,579 June 30, Land and land improvements $ 37,797,459 $ 39,082,936 Buildings and building improvements 107,358, ,128,388 Vehicles 1,219,531 1,120,124 Furniture and equipment 12,935,856 13,294, ,311, ,625,476 Less accumulated depreciation (46,159,094) (43,100,604) 113,152, ,524,872 Construction in progress 335, ,544 $ 113,488,416 $ 117,695,

16 Notes to Consolidated Financial Statements June 30, 2017 and LONG TERM DEBT: Long term debt consists of: June 30, CCFL consolidated, amended, and restated mortgage note payable to Bank of America encompassing the component described as follows: $31 million note payable made in June 2013; equal monthly payments of principal in the amount of $162,303 plus interest, with a final payment of all unpaid principal and accrued interest due at maturity in June 2018; bears interest at 30-day Intercontinental Exchange (ICE) LIBOR plus 165 basis points (2.72% at June 30, 2017); secured with related real estate, buildings, and equipment. $ 15,709,424 $ 20,957,068 Less current portion (15,709,424) (1,947,644) Long term debt obligations mature as follows: $ - $ 19,009,424 Years Ending June 30, Amounts 2018 $ 15,709,424 The Organization is subject to certain restrictive financial loan covenants on its loans. As of June 30, 2017 and 2016, all restrictive financial loan covenants have been met. -14-

17 Notes to Consolidated Financial Statements June 30, 2017 and CAPITAL LEASE OBLIGATIONS: The Organization is obligated under capital lease agreements for certain equipment that expire in At June 30, 2017, the carrying value of the related equipment and the accumulated amortization recorded for the assets acquired via capital leases was: Equipment $ 894,417 Less accumulated amortization (626,092) $ 268,325 Future minimum capital lease obligation payments as of June 30, 2017, are as follows: Years Ending June 30, Amounts 2018 $ 201,752 Less amount representing interest (3,605) Present value of net minimum capital lease payments 198,147 Less current portion of capital lease obligations (198,147) Capital lease obligations, net of current portion $ - 8. TEMPORARILY RESTRICTED NET ASSETS: Temporarily restricted net assets consist of: June 30, KIDS building $ 77,492 $ 163,942 4KIDS EPIC ministry 81,913 75,000 4KIDS SOSI ministry 5,587 44,383 4KIDS other ministries 59,000 - Hurricane relief 100,367 83,032 CCCI SHS 24,558 - $ 348,917 $ 366,

18 Notes to Consolidated Financial Statements June 30, 2017 and EMPLOYEE BENEFIT PLANS: The Organization offers its employees the opportunity to participate in a Section 403(b) Tax Sheltered Retirement Plan (Retirement Plan). The Retirement Plan allows for employee and employer contributions, including both a matching portion as well as a discretionary portion, if approved by the Organization s board. Employer contributions consist of a 50% match of employee contributions up to a maximum limit of 3% of employee compensation for all employees except pastoral staff. The pastoral staff receives the 50% employer contribution subject to deferral limitations as prescribed by the Code. Effective December 5, 2013, CCCI established the Calvary Chapel Church, Inc. 403(b) Plan 2 (the Plan). The Plan allows for employee and employer contributions, including both a matching portion as well as a discretionary portion, if approved by CCCI s board. Employer contributions to the Retirement Plan and the Plan (collectively) were $456,999 and $428,750, for the years ended June 30, 2017 and 2016, respectively. 10. RELATED PARTY TRANSACTIONS: The following related party transactions occurred between the Organization and its board members and/or senior staff: * Year Ended June 30, Nature of service: Construction materials* $ - $ 201,190 Consulting services 2,550 16,000 Golf course services 2,000 23,885 Other services 8,177 5,798 $ 12,727 $ 246,873 Two members of 4KIDS board of directors hold key positions in companies that have provided construction materials as part of the Organization s construction projects. 11. SUBSEQUENT EVENTS: Subsequent events have been evaluated through October 27, 2017, which represents the date the consolidated financial statements were available to be issued. Subsequent events after that date have not been evaluated. -16-

19 SUPPLEMENTARY DATA

20 INDEPENDENT AUDITORS REPORT ON SUPPLEMENTARY DATA Board of Directors Calvary Chapel Church, Inc. d/b/a Calvary Chapel Fort Lauderdale and Affiliates Fort Lauderdale, Florida We have audited the consolidated financial statements of Calvary Chapel Church, Inc. d/b/a Calvary Chapel Fort Lauderdale and Affiliates (the Organization) as of and for the years ended June 30, 2017 and 2016, and our report thereon dated October 27, 2017, which expressed an unmodified opinion on those consolidated financial statements, appears on page 1. Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The consolidating statements of financial position and activities are presented for purposes of additional analysis of the consolidated financial statements rather than to present the financial position and results of operations of the individual organizations, and it is not a required part of the consolidated financial statements. The schedules of functional expenses are presented for purposes of additional analysis and are not a required part of the consolidated 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 consolidated financial statements. The information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated 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 consolidated financial statements as a whole. Lawrenceville, Georgia October 27, Lakes Parkway, Suite 130 Lawrenceville, GA capincrouse.com

21 Consolidating Statement of Financial Position June 30, 2017 CCCI CCFL HELPS 4KIDS AW RC Patmos Eliminations Total ASSETS: Current assets: Cash and cash equivalents $ 1,477,007 $ 9,798,532 $ 100,592 $ 1,525,568 $ - $ - $ - $ - $ 12,901,699 Accounts, notes, and other receivables net 389,882 2, , ,029 Amount due from affiliate 14, ,753 19,039 34, (285,428) - Prepaid expenses and other assets 1,362,831 1,611 6, , ,479,264 3,244,693 10,019, ,423 2,194, (285,428) 15,299,992 Property and equipment: Property and equipment net 2,861, ,025,175 1,087,867 6,870, (691,748) 113,152,725 Construction in progress 330, , ,691 3,192, ,025,175 1,087,867 6,875, (691,748) 113,488,416 Other assets: Intercompany loan receivable - 10,072, (10,072,454) - Total Assets $ 6,436,806 $ 123,116,955 $ 1,214,290 $ 9,069,987 $ - $ - $ - $ (11,049,630) $ 128,788,408 (continued) See independent auditors report on supplementary data -18-

22 Consolidating Statement of Financial Position (continued) June 30, 2017 CCCI CCFL HELPS 4KIDS AW RC Patmos Eliminations Total LIABILITIES AND NET ASSETS (DEFICIT): Current liabilities: Accounts payable and accrued expenses $ 861,292 $ 55,632 $ 6,846 $ 109,053 $ - $ - $ - $ - $ 1,032,823 Amount due to affiliate 270, ,570 12, (285,427) - Accrued payroll and benefits payable 2,148, , ,474,094 Deferred revenue 1,393, ,393,857 Current portion of long-term debt - 15,709, ,709,424 Current portion of capital lease obligations 198, ,147 Long-term liabilities: 4,872,555 15,765,797 8, , (285,427) 20,808,345 Deferred revenue - 691, (691,749) - Intercompany loan payable 6,800,000-1,047,000 2,225, (10,072,454) - Long-term debt, net of current portion Capital lease obligations, net of current portion ,800, ,749 1,047,000 2,225, (10,764,203) - 11,672,555 16,457,546 1,055,416 2,672, (11,049,630) 20,808,345 Net assets (deficit): Unrestricted (5,360,674) 106,659, ,874 6,173, ,631,146 Temporarily restricted 124, , ,917 (5,235,749) 106,659, ,874 6,397, ,980,063 Total Liabilities and Net Assets $ 6,436,806 $ 123,116,955 $ 1,214,290 $ 9,069,987 $ - $ - $ - $ (11,049,630) $ 128,788,408 See independent auditors report on supplementary data -19-

23 Consolidating Statement of Financial Position June 30, 2016 CCCI CCFL HELPS 4KIDS AW RC Patmos Eliminations Total ASSETS: Current assets: Cash and cash equivalents $ 920,427 $ 9,350,572 $ 185,179 $ 333,323 $ - $ 355,553 $ - $ - $ 11,145,054 Accounts, notes, and other receivables net 445,155 8, ,971-24, ,130,305 Amount due from affiliate 94,550 2,172 24,092 13, ,885 - (247,741) - Prepaid expenses and other assets 1,041,925 4,562-77, , ,262,579 2,502,057 9,365, ,271 1,075, ,958 - (247,741) 13,537,938 Property and equipment: Property and equipment net 2,736, ,888,613 1,006,959 7,024, ,228 - (691,749) 117,524,872 Construction in progress 70,830 99, ,544 2,807, ,988,327 1,006,959 7,024, ,228 - (691,749) 117,695,416 Other assets: Intercompany loan receivable 4,320,000 7,022, (11,342,454) - Total Assets $ 9,629,688 $ 123,376,317 $ 1,216,230 $ 8,099,877 $ - $ 1,193,186 $ - $ (12,281,944) $ 131,233,354 (continued) See independent auditors report on supplementary data -20-

24 Consolidating Statement of Financial Position (continued) June 30, 2016 CCCI CCFL HELPS 4KIDS AW RC Patmos Eliminations Total LIABILITIES AND NET ASSETS (DEFICIT): Current liabilities: Accounts payable and accrued expenses $ 901,563 $ 65,246 $ 6,717 $ 106,444 $ - $ 17,685 $ - $ - $ 1,097,655 Amount due to affiliate 152,790 6,750 3,639 57,664-26,898 - (247,741) - Accrued payroll and benefits payable 2,048, , ,394,320 Deferred revenue 1,734,327 59, , ,870,239 Current portion of long-term debt - 1,947, ,947,644 Current portion of capital lease obligation 719, ,155 5,555,868 2,079,552 10, , ,583 - (247,741) 8,029,013 Long-term liabilities: Deferred revenue - 691, (691,749) - Intercompany loan payable 3,750,000-1,047,000 2,225,454-4,320,000 - (11,342,454) - Long-term debt, net of current portion - 19,009, ,009,424 Capital lease obligations, net of current portion 198, ,147 3,948,147 19,701,173 1,047,000 2,225,454-4,320,000 - (12,034,203) 19,207,571 9,504,015 21,780,725 1,057,356 2,735,849-4,440,583 - (12,281,944) 27,236,584 Net assets (deficit): Unrestricted 42, ,595, ,874 5,080,703 - (3,247,397) ,630,413 Temporarily restricted 83, , , , ,595, ,874 5,364,028 - (3,247,397) ,996,770 Total Liabilities and Net Assets $ 9,629,688 $ 123,376,317 $ 1,216,230 $ 8,099,877 $ - $ 1,193,186 $ - $ (12,281,944) $ 131,233,354 See independent auditors report on supplementary data -21-

25 Consolidating Statement of Activities Year Ended June 30, 2017 CCCI CCFL HELPS 4KIDS AW RC Patmos Eliminations Total CHANGE IN UNRESTRICTED NET ASSETS: Support: General tithes and offerings $ 27,241,625 $ - $ 233,141 $ 3,251,960 $ - $ 2,329,131 $ - $ (2,855,861) $ 30,199,996 Offerings for: Building - 65, (65,803) - Missions 505, ,535 Benevolence 88, ,145 Outreach 315, ,730 Calvary Christian Academy 524, ,263 Special events , ,899 Noncash donations 204,391 40,000 1,791 1,030, ,276,408 28,879, , ,932 4,724,085-2,329,131 - (2,921,664) 33,351,976 Revenue: Ministry activities income 915, ,112-2,000 - (5,972) 917,077 Sales bookstore, food services, skate park, and thrift store 4,109, (7,451) 4,102,112 Calvary Christian Academy income 21,876, ,876,179 Government grant income ,287, ,287,487 Rental income 138,238 7,020,250 60,000 87,956-5,944 - (6,984,003) 328,385 Gain on sale of fixed assets - 1,556,411 5, ,299, ,861,430 Interest and other income 281, ,696 14,313 3, (385,484) 61,536 27,321,242 8,724,357 79,813 2,384,241-1,307,463 - (7,382,910) 32,434,206 Reclassifications: Net assets released from restriction by satisfaction of purpose/time restriction 185, , ,264 Total Support, Revenue, and Reclassifications 56,386,663 8,830, ,745 7,319,858-3,636,594 - (10,304,574) 66,183,446 (continued) See independent auditors report on supplementary data -22-

26 Consolidating Statement of Activities (continued) Year Ended June 30, 2017 CCCI CCFL HELPS 4KIDS AW RC Patmos Eliminations Total CHANGE IN UNRESTRICTED NET ASSETS, continued: Expenses: Ministry services: Calvary Chapel affiliate support 2,394, , (2,514,934) - Church ministry and outreach 12,441, ,836 4,179, (1,933,549) 14,816,753 Missions outreach 1,356, ,356,730 Local outreach and benevolence 1,326, ,326,183 Media outreach 2,736, , ,052,599 Bookstore, food services, skate park, and thrift store 3,953, ,953,345 Calvary Christian Academy 21,588, (840,000) 20,748,792 45,797, , ,836 4,179, ,749 - (5,288,483) 45,254,402 Administrative expenses: Building 3,682, , (249,461) 3,601,473 Interest 22, , , (118,392) 468,140 Depreciation 1,324,679 3,008,094 85, ,559-73, ,752,121 Administrative 10,962,712 23,800 99,568 1,668, (4,648,238) 8,106,577 15,992,016 3,646, ,909 2,047,686-73,448 - (5,016,091) 16,928,311 Total Expenses 61,789,977 3,766, ,745 6,227, ,197 - (10,304,574) 62,182,713 Change in Unrestricted Net Assets (5,403,314) 5,063,817-1,092,833-3,247, ,000,733 (continued) See independent auditors report on supplementary data -23-

27 Consolidating Statement of Activities (continued) Year Ended June 30, 2017 CCCI CCFL HELPS 4KIDS AW RC Patmos Eliminations Total CHANGES IN TEMPORARILY RESTRICTED NET ASSETS: Support and revenue: Contributions for specified purposes/projects 227, , ,824 Reclassifications: Net assets released from restrictions (185,732) - - (211,532) (397,264) Change in Temporarily Restricted Net Assets 41, (59,332) (17,440) Change in Net Assets (5,361,422) 5,063,817-1,033,501-3,247, ,983,293 Net Assets (Deficit), Beginning of Year 125, ,595, ,874 5,364,028 - (3,247,397) ,996,770 Net Assets (Deficit), End of Year $ (5,235,749) $ 106,659,409 $ 158,874 $ 6,397,529 $ - $ - $ - $ - $ 107,980,063 See independent auditors report on supplementary data -24-

28 Consolidating Statement of Activities Year Ended June 30, 2016 CCCI CCFL HELPS 4KIDS AW RC Patmos Eliminations Total CHANGE IN UNRESTRICTED NET ASSETS: Support: General tithes and offerings $ 28,718,364 $ - $ 280,591 $ 2,798,774 $ - $ 732,179 $ 55,384 $ (1,214,319) $ 31,370,973 Offerings for: Building - 432, (432,650) - Missions 752, ,856 Benevolence 128, ,595 Outreach 426,719-5, (1,605) 430,479 Calvary Christian Academy 458, ,482 Special events , ,473 Noncash donations 238,684-2, , ,052,393 30,723, , ,956 4,004, ,179 55,384 (1,648,574) 34,588,251 Revenue: Ministry activities income 1,521,289-2,000 20, ,468 55,255 (32,614) 1,890,576 Sales bookstore, food services, skate park, and thrift store 4,450, (11,794) 4,438,363 Calvary Christian Academy income 20,343, ,343,296 Government grant income ,245, ,245,307 Rental income 162,450 7,258,669 60,000 62,435-7,865 - (7,158,197) 393,222 Gain on sale of fixed assets (119) 3,743,531 - (1,162) - 85,822 (18,297) - 3,809,775 Interest and other income 243, ,324 1,019 3, (340,954) 37,625 26,720,192 11,133,524 63,019 2,329, ,155 36,958 (7,543,559) 33,158,164 Reclassifications: Net assets released from restriction by satisfaction of purpose/time restriction 534, ,002, ,537,516 Total Support, Revenue, and Reclassifications 57,978,819 11,566, ,975 7,337,420-1,150,334 92,342 (9,192,133) 69,283,931 (continued) See independent auditors report on supplementary data -25-

29 Consolidating Statement of Activities (continued) Year Ended June 30, 2016 CCCI CCFL HELPS 4KIDS AW RC Patmos Eliminations Total CHANGE IN UNRESTRICTED NET ASSETS, continued: Expenses: Ministry services: Calvary Chapel affiliate support 432, , (552,650) - Church ministry and outreach 13,549, ,709 4,358, ,035 (1,930,659) 16,284,454 Missions outreach 1,969, (45,745) 1,923,618 Local outreach and benevolence 1,726, (1,306) 1,725,627 Media outreach 3,161, ,664 - (691,575) 3,368,098 Bookstore, food services, skate park, and thrift store 4,487, (37,170) 4,450,695 Calvary Christian Academy 20,176, (849,975) 19,326,204 45,503, , ,709 4,358, ,664 76,035 (4,109,080) 47,078,696 Administrative expenses: Building 3,952, , (302,191) 4,350,747 Interest 51, , , (117,348) 883,753 Depreciation 1,293,663 2,997,113 77, , , ,683,695 Administrative 11,742,328 25,551 42,016 1,758,357-36,000 19,377 (4,663,514) 8,960,115 17,040,616 4,554, ,266 2,060, ,847 19,377 (5,083,053) 18,878,310 Total Expenses 62,544,123 4,674, ,975 6,418, ,064,511 95,412 (9,192,133) 65,957,006 Change in Unrestricted Net Assets (4,565,304) 6,891, ,700 (668) 85,823 (3,070) - 3,326,925 (continued) See independent auditors report on supplementary data -26-

30 Consolidating Statement of Activities (continued) Year Ended June 30, 2016 CCCI CCFL HELPS 4KIDS AW RC Patmos Eliminations Total CHANGES IN TEMPORARILY RESTRICTED NET ASSETS: Support and revenue: Contributions for specified purposes/projects 531, , ,312,331 Reclassifications: Net assets released from restrictions (534,927) - - (1,002,589) (1,537,516) Change in Temporarily Restricted Net Assets (2,967) - - (222,218) (225,185) Change in Net Assets (4,568,271) 6,891, ,482 (668) 85,823 (3,070) - 3,101,740 Net Assets (Deficit), Beginning of Year 4,693,944 94,704, ,874 4,667, (3,333,220) 3, ,895,030 Net Assets (Deficit), End of Year $ 125,673 $ 101,595,592 $ 158,874 $ 5,364,028 $ - $ (3,247,397) $ - $ - $ 103,996,770 See independent auditors report on supplementary data -27-

31 Schedule of Functional Expenses Year Ended June 30, 2017 Program Services Supporting Services Church Ministry Calvary Local Food Total General Total and General Christian Outreach and Missions Resource Media Services Program and Supporting Outreach Academy Benevolence Outreach Ministry Outreach Ministries Services Administrative Fund-raising Services Total EXPENSES: Salaries and wages $ 10,696,433 $ 14,836,769 $ 618,909 $ 152,421 $ 255,514 $ 1,293,744 $ 1,332,282 $ 29,186,072 $ 2,214,933 $ 938,010 $ 3,152,943 $ 32,339,015 Payroll taxes and benefits 1,178,049 4,120, ,336 20,445 56, , ,057 5,968, ,727 58, ,500 6,530,310 Occupancy and maintenance 3,407,332 1,942, ,635 3,556 50, , ,293 6,395, ,468 30, ,403 6,641,118 Depreciation and amortization 1,963,227 1,361,004 56,061 1,906 48, , ,322 4,518, ,766 31, ,450 4,752,121 Professional fees 245, ,877 10,104 4,842 17,633 16,176 77, , ,049 4, , ,371 Printing and supplies 346,869 2,399,524 34,058 8,101 (1,793) 54, ,362 2,982, ,741 13, ,549 3,133,922 Outreach and benevolence 1,510, , , ,925 2,877 17,243 89,729 2,659,106 56, , ,752 2,948,858 Missionary support 213,106 64, , , ,145 3,928 1,373,666 17,426 2,818 20,244 1,393,910 Cost of goods sold 70, ,103-1,258,453 1,728, ,728,278 Conferences and camps 419, ,006 3, ,796 4, ,598 2, , , ,421 Media production 29, , , ,930 Travel 150, ,248 11,949 9, , , , ,319 Interest 212, ,203 7,069-6,975 30,804 19, ,967 20,317 2,856 23, ,140 Total Expenses $ 20,444,633 $ 25,752,420 $ 1,942,988 $ 1,162,897 $ 837,045 $ 3,253,160 $ 3,626,217 $ 57,019,360 $ 3,696,257 $ 1,467,096 $ 5,163,353 $ 62,182,713 See independent auditors report on supplementary data -28-

32 Schedule of Functional Expenses Year Ended June 30, 2016 Program Services Supporting Services Church Ministry Calvary Local Food Total General Total and General Christian Outreach and Missions Resource Media Services Program and Supporting Outreach Academy Benevolence Outreach Ministry Outreach Ministries Services Administrative Fund-raising Services Total EXPENSES: Salaries and wages $ 12,194,320 $ 14,302,120 $ 879,400 $ 211,822 $ 288,944 $ 757,152 $ 1,418,221 $ 30,051,979 $ 2,380,862 $ 623,751 $ 3,004,613 $ 33,056,592 Payroll taxes and benefits 1,498,165 4,008, ,184 37,368 48, , ,798 6,130, ,325 8, ,904 6,562,266 Occupancy and maintenance 3,508,855 2,027, ,704 5,034 64, , ,943 6,589, ,520 26, ,226 6,872,878 Depreciation and amortization 1,959,416 1,317,683 56,498 2,391 49, , ,987 4,450, ,067 25, ,480 4,683,695 Professional fees 323, ,030 21,697 6,549 26,320 10,165 85, , ,219 4, ,390 1,242,201 Printing and supplies 734,461 2,072,613 54,176 19,869 35,776 34, ,480 3,187, , , ,682 3,669,467 Outreach and benevolence 1,396, , ,709 39,010 9,989 47,867 31,964 2,403,751 37,503 50,001 87,504 2,491,255 Missionary support 29, , ,774 1,608, ,475 2,539 2,125,011 4, ,498 2,129,509 Cost of goods sold 98, , ,128-1,281,512 1,988, ,988,801 Conferences and camps 724, , ,646 2, ,136 2,661 1,496,820 69, , ,714 1,749,534 Media production 48,291 5, , ,947 1, , ,946 Travel 184,310 4,775 21,827 8, , ,396 1, , ,109 Interest 401, ,533 13,345-13,168 58,151 36, ,007 38,355 5,391 43, ,753 Total Expenses $ 23,101,998 $ 25,397,444 $ 2,653,765 $ 1,941,853 $ 992,578 $ 2,790,920 $ 3,829,979 $ 60,708,537 $ 3,990,643 $ 1,257,826 $ 5,248,469 $ 65,957,006 See independent auditors report on supplementary data -29-