FOOD BANK OF SIOUXLAND, INC. SEPTEMBER 30, 2016 I N D E X. Financial Highlights Independent Auditors Report

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1 SEPTEMBER 30, 2016 I N D E X Financial Highlights Independent Auditors Report Basic Financial Statements: Page Statement of Financial Position Statement of Activities Statement of Cash Flows Statement of Functional Expenses Notes to Financial Statements Supplementary Information: Schedule of Activities with Budget Comparison

2 FINANCIAL HIGHLIGHTS September 30, Operating Activities: Revenues and Other Support $ 4,252,165 $ 4,068,326 $ 4,247,998 $ 3,484,771 Expenses 4,301,834 4,070,754 4,437,376 3,172,157 Change in Net Assets from Operating Activities (49,669) (2,428) (189,378) 312,614 Nonoperating Activities: Investment Gains (Losses) 1,117 (2,919) 1,490 2,999 Gain (Loss) on Sale of Assets 1,641 (3,052) Interest Expense (464) (699) (948) (1,568) Rental Income (Loss), Net 2,320 2,564 (6,524) (7,656) Change in Net Assets from Nonoperating Activities 4,614 (1,054) (9,034) (6,225) Change in Net Assets (45,055) (3,482) (198,412) 306,389 Distributable Items: Received 3,307,972 3,230,099 3,280,129 2,489,471 Distributed 3,366,167 3,213,458 3,391,998 2,345,252 Cash Provided by Operating Activities 57,127 11,429 10, ,103 Net Investment in Property and Equipment 586, , , ,450 Depreciation 64,830 73,983 71,161 58,350 Purchase of Property and Equipment 23,927 45, ,695 Note Payable 4,360 7,386 10,411 15,463 Net Assets: Unrestricted 953,503 1,025,333 1,046,495 1,253,797 Temporarily Restricted 237, , , ,664 1,190,512 1,235,567 1,239,049 1,437,461 2

3 INDEPENDENT AUDITOR S REPORT Nichols, Rise & Company, L.L.P. Certified Public Accountants and Consultants S. B. Bieber, CPA C. D. Merry, CPA, ABV R. W. Grenko, CPA L. M. Shoemaker, CPA, CMA L. K. Meyer, CPA B. J. Kooiker, CPA Board of Directors Food Bank of Siouxland, Inc. Report on the Financial Statements We have audited the accompanying financial statements of Food Bank of Siouxland, Inc., which comprise the statement of financial position, September 30, 2016, and the related statements of activities, cash flows, and functional expenses for the year then ended, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. E. C. Nichols, CPA ( ) C. L. Rise, CPA ( ) W. F. Sibley, CPA D. L. Lacey, CPA L. J. Tuttle, CPA S. R. Goodwin, CPA A. E. Hill, CPA A. J. Lilly, CPA P. M. Riemer, CPA S. M. Todd, CPA D. L. Brown, CPA C. A. Moss, CPA L. M. Kubik, CPA S. E. Boden T. S. Welty M. G. Nelson D. L. Sands J. A. Perez P. K. Peters C. R. Karrer E. J. Schubert Member of AICPA Division for Certified Public Accounting Firms Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the 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 financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Food Bank of Siouxland, Inc. as of September 30, 2016, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. 3

4 Other Matter Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying financial highlights and supplementary information are presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. We also have previously audited, in accordance with auditing standards generally accepted in the United States of America, the statement of financial position of Food Bank of Siouxland, Inc. as of September 30, 2013 through 2015, and the related statements of activities, cash flows, and functional expenses for each of the two years ended September 30, 2015 (none of which is presented herein), and we expressed unmodified opinions on those financial statements. Those audits were conducted for purposes of forming an opinion on the financial statements as a whole. The financial highlights for 2013 through 2015 and the 2015 supplementary information are presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the 2013 through 2015 financial statements. The information has been subjected to the auditing procedures applied in the audit of those financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the financial highlights for 2013 through 2015 and the 2015 supplementary information are fairly stated in all material respects in relation to the basic financial statements from which they have been derived. Report on Summarized Comparative Information We have previously audited Food Bank of Siouxland, Inc. s financial statements, and our report dated January 20, 2016, expressed an unmodified opinion on those audited financial statements. In our opinion, the summarized comparative information presented herein as of and for the year ended September 30, 2015, is consistent, in all material respects, with the audited financial statements from which it has been derived. Nichols, Rise & Company, L.L.P. Sioux City, Iowa January 12,

5 STATEMENT OF FINANCIAL POSITION September 30, 2016 With Summarized Financial Information for September 30, ASSETS Current Assets: Cash $ 317,176 $ 291,532 Receivables ,995 16,285 Prepaid Expense ,357 2,439 Inventory of Distributable Items , , , ,175 Property and Equipment ,194,821 1,190,069 Less Accumulated Depreciation , , , ,991 Investments ,810 28,515 Current Liabilities: Total Assets $ 1,217,144 $ 1,278,681 LIABILITIES AND NET ASSETS Accounts Payable $ 14,012 $ 20,677 Accrued Expenses ,260 15,051 Current Portion of Note Payable ,026 3,025 25,298 38,753 Note Payable ,334 4,361 Net Assets: Unrestricted: Available for General Operations , ,708 Distributable Items , ,119 Investment in Property and Equipment , ,991 Board Designated Investments ,810 28, ,503 1,025,333 Temporarily Restricted , ,234 1,190,512 1,235,567 Total Liabilities and Net Assets $ 1,217,144 $ 1,278,681 See accompanying notes 5

6 STATEMENT OF ACTIVITIES For the Year Ended September 30, 2016 With Summarized Financial Information for the Year Ended September 30, 2015 Operating Activities: Temporarily Total Unrestricted Restricted Revenues and Other Support: Contributions and Grants $ 150,594 $ 272,913 $ 423,507 $ 296,789 Distributable Items Received: USDA Commodities , , ,289 Food and Other Items ,995,147 2,995,147 2,998,810 Shared Maintenance and Client Services , , ,746 Interest and Dividends Special Events, Net of Costs of $104, , , ,992 Miscellaneous ,690 1,690 3,074 3,979, ,913 4,252,165 4,068,326 Net Assets Released from Restrictions: Satisfaction of Donor Restrictions ,138 (246,138) 0 0 4,225,390 26,775 4,252,165 4,068,326 Total Revenues and Other Support Expenses: Program Services ,239,905 4,239,905 4,011,015 Supporting Services: Fundraising ,723 30,723 29,576 General and Administrative ,206 31,206 30,163 4,301, ,301,834 4,070,754 Total Expenses Change in Net Assets from Operating Activities (76,444) 26,775 (49,669) (2,428) Investment Gains (Losses) ,758 2,758 (2,919) Interest Expense (464) (464) (699) Rental Income, Net ,320 2,320 2,564 Change in Net Assets from Nonoperating Activities , ,614 (1,054) Change in Net Assets (71,830) 26,775 (45,055) (3,482) Net Assets, Beginning of Year ,025, ,234 1,235,567 1,239,049 Net Assets, End of Year $ 953,503 $ 237,009 $ 1,190,512 $ 1,235,567 See accompanying notes 6

7 STATEMENT OF CASH FLOWS For the Year Ended September 30, 2016 With Summarized Financial Information for the Year Ended September 30, Cash Flows from Operating Activities: Cash Provided by Operating Activities: Contributions and Grants $ 423,507 $ 296,789 Shared Maintenance and Client Services , ,778 Special Events , ,659 Rents ,391 15,955 Interest and Other ,626 3,700 1,061, ,881 Cash Disbursed for Operating Activities: Cash Paid to Suppliers and Employees ,003, ,452 Net Cash Provided by Operating Activities ,127 11,429 Cash Flows from Investing Activities: Purchase of Property and Equipment (29,920) (23,927) Purchase of Investments (263) (895) Sale of Investments ,726 3,435 Net Cash Used by Investing Activities (28,457) (21,387) Cash Flows Used by Financing Activities: Payments on Note Payable (3,026) (3,025) Net Increase (Decrease) in Cash ,644 (12,983) Cash, Beginning of Year , ,515 Cash, End of Year $ 317,176 $ 291,532 See accompanying notes 7

8 STATEMENT OF CASH FLOWS (CONTINUED) For the Year Ended September 30, 2016 With Summarized Financial Information for the Year Ended September 30, RECONCILIATION OF CHANGE IN NET ASSETS TO NET CASH PROVIDED BY OPERATING ACTIVITIES Change in Net Assets $ (45,055) $ (3,482) Adjustments to Reconcile Change in Net Assets to Net Cash Provided by Operating Activities: Depreciation ,830 73,983 Investment (Gains) Losses (2,758) 2,919 Distributable Items Received (3,307,972) (3,230,099) Distributions to Other Agencies ,385,692 3,152,380 94,737 (4,299) Changes in Operating Assets and Liabilities: Receivable (4,710) (1,968) Prepaid Expense (166) Inventory (19,526) 52,586 Accounts Payable (6,665) (33,187) Accrued Expense (6,791) (1,537) Net Cash Provided by Operating Activities $ 57,127 $ 11,429 Non-Cash Transactions: Distributable Items Received $ 3,307,972 $ 3,230,099 Distributions to Other Agencies ,385,692 3,152,380 Donations of Services and Supplies See accompanying notes 8

9 STATEMENT OF FUNCTIONAL EXPENSES For the Year Ended September 30, 2016 With Summarized Financial Information for the Year Ended September 30, 2015 Distribution of Food and Other Items: General and Admin- Total Program Fundraising istrative USDA Commodities $ 312,278 $ $ $ 312,278 $ 218,897 Food and Other Items ,053,889 3,053,889 2,994,561 3,366, ,366,167 3,213,458 Shared M aintenance Fees: Shared Maintenance Fees , , ,173 Local Transportation and Delivery ,061 34,061 20, , , ,615 Payroll and Related Expenses: Salaries ,280 26,764 21, , ,701 Payroll Taxes ,119 2,093 1,674 23,886 22,227 Benefits ,938 1,866 1,493 21,297 23,990 Contract Labor ,937 30,723 24, , ,518 Occupancy ,604 33,604 32,404 Other: Professional Fees ,628 6,628 13,256 13,004 Office Supplies ,277 7,277 6,547 Warehouse Supplies ,144 11,144 11,317 Backpack Program ,356 5, Telephone ,008 4,008 3,510 Postage and Shipping ,077 4,077 3,557 Repairs and Expendable Equipment ,337 27,337 15,144 Conferences, Conventions, and Meetings.... 4,837 4,837 2,219 Membership Dues ,696 7,696 8,535 Miscellaneous ,665 1, , ,628 86,653 64,776 Depreciation ,830 64,830 73,983 Total Expenses $ 4,239,905 $ 30,723 $ 31,206 $ 4,301,834 $ 4,070,754 See accompanying notes 9

10 NOTES TO FINANCIAL STATEM ENTS ORGANIZATION Food Bank of Siouxland, Inc. is a nonprofit organization that collects food and other items and redistributes them to agencies throughout Iowa, and Nebraska. Primary sources are Feeding America (formerly known as Second Harvest National Food Bank Network), USDA commodities, and local businesses and individuals. The recipient agencies are required to be charitable organizations which take the donated foods and commodities and redistribute such items to the poor, needy, and hungry. SUM M ARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America. Net assets and activities are classified based on the existence of donor-imposed restriction. Accordingly, net assets and activities are classified as follows: Unrestricted - Not subject to donor-imposed stipulations. Temporarily Restricted - Subject to donor-imposed stipulations that will be met, either by actions of the Food Bank or the passage of time. Accounts Receivable Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based on its assessment of the current status of individual accounts, historical trends, and other information. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. Investments Investments are measured at fair value in the statement of financial position. Fair values are based on quoted market prices, if available, or are estimated using quoted market prices for similar securities. Unrealized gain and losses are included in the change in net assets. Investment Income Investment gains or losses, as well as interest and dividends, are included in the statement of activities as changes in unrestricted net assets unless restricted by donor or by law. Contributions All contributions are available for unrestricted use unless specifically restricted by the donor. Unconditional promises to give are recorded as received. Grants and other contributions are reported as temporarily 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 assets are reclassified to unrestricted net assets and are reported in the statement of activities as net assets released from restrictions. However, if a restriction is fulfilled in the same period in which the contribution is received, the Agency reports the contribution as unrestricted. 10

11 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Contributions A donor-imposed condition specifies a future and uncertain event (for example, a stipulation that the organization must meet a matching requirement) whose occurrence or failure to occur gives the donor the right of return of assets or releases the donor from the obligation to transfer assets in the future. Conditional promises to give are recognized when the conditions on which they depend are substantially met. Contributions that are conditional upon the Food Bank of Siouxland, Inc. incurring certain qualifying costs, are recognized as those costs are incurred. Contributions of non-cash assets are recorded at their fair values in the period received. Contributed property and equipment are recorded as unrestricted unless the donor restricts how or how long the contributed property and equipment must be used. Donated Services Donated services that create or enhance non-financial assets or that require specialized skills that would have to be purchased, if not donated, are reported in the financial statements. A substantial number of volunteers have donated significant amounts of their time to the program activities. No amounts have been reflected in the statements for those services because they do not meet the requirement for recognition. Property and Equipment Purchased property and equipment is valued at cost where historical records are available and at estimated historical cost where no historical records exist. Donated property and equipment is valued at estimated fair value at the date of gift. Donations are reported as unrestricted support unless the donor has restricted the donated asset to a specific purpose. Depreciation is provided using the straight-line method over the estimated useful lives of the assets. Functional Expenses The costs of providing program and supporting services have been summarized on a functional basis in the statement of functional expenses. Accordingly, costs have been allocated to the program and support services benefitted. Use of Estimates The financial statements are prepared in conformity with generally accepted accounting principles and, accordingly, include amounts that are based on management s estimates and judgments. Income Taxes The Food Bank is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code and is not a private foundation. Contributions to the Food Bank are deductible by the donor for income and estate tax purposes. Inventory The Food Bank maintains an inventory consisting of donated food and other distributable items. The donated products received and distributed by the Food Bank during the year have been valued and recorded in the accompanying financial statements at the estimated weighted average wholesale value per pound ($1.67 for 2016) as determined by Feeding America (formerly known as Second Harvest National Food Bank Network), a national consortium of regional food banks. The value of USDA commodities has been valued using the estimated cost per pound provided by the USDA. ACCOUNTS RECEIVABLE Member Agencies $ 15,682 USDA ,313 $ 20,995 11

12 INVESTM ENTS Investments in marketable securities are presented in the financial statements at market value. Virtually all fair value measurements are made using Level 1 inputs, which are quoted prices in active markets for identical securities. The composition of investments at September 30 is as follows: Costs Market Board Designated Investments: Pooled investments held by the Siouxland Foundation, the income may be used for operations. $ 29,986 $ 29,810 Balance, September 30, $ 28,515 Contributions ,000 Distributions (1,726) Investment Income: Interest/Dividends $ 666 Realized Gains (983) Investment Fees (303) (620) Unrealized Gains ,641 Balance, September 30, 2016 $ 29,810 PROPERTY AND EQUIPM ENT Estimated Useful Lives Cost Book Value Land, Building, and Improvements years $ 812,690 $ 483,939 Equipment years 382, ,142 $ 1,194,821 $ 586,081 INVENTORY Pounds Amount USDA Commodities ,090 $ 20,597 Food and Other Items , , ,330 $ 260,725 NOTE PAYABLE Secured by Interest Rate Due Date Monthly Payments Balance Building %* $ 252 $ 4,360 Less Current Maturities ,026 Long-Term Portion $ 1,334 *Interest is currently being waived on this loan. Current Maturities: $ 1,334 12

13 NET ASSETS Temporarily restricted net assets are available for the following purposes: Beginning Balance 2016 Additions Released from Restrictions Ending Balance Backpack Program $ 76,080 $ 232,607 $ 200,805 $ 107,882 Equipment ,000 15,000 0 Computer ,590 7,635 5,955 Mobile Pantry ,820 25,306 19,086 58,040 Truck and Associated Fees ,716 3,612 64,104 Shared Maintenance Fees ,028 1,028 RENTAL OPERATIONS $ 210,234 $ 272,913 $ 246,138 $ 237,009 The Food Bank rents out part of its warehouse on a short-term basis. The leases expire during Rental income for the year consists of the following: Rental Income $ 17,391 Expenses: Salaries ,353 Payroll Taxes Employee Benefits Utilities ,262 Taxes and Licenses ,202 Repairs and Maintenance ,056 Insurance ,407 Total Operating Expense 15,071 Net Rental Income $ 2,320 SHARED M AINTENANCE AND CLIENT SERVICE FEES The Food Bank charges a fee to the recipient charities who receive the food and personal care items. This fee offsets a portion of the handling and redistribution costs incurred by the Food Bank. The service fees charged by the Food Bank during 2016 were 18 cents per pound for the majority of products. This rate is determined by Feeding America. SUM M ARIZED FINANCIAL INFORM ATION FOR 2015 The financial statements include certain prior-year summarized financial information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the Agency s financial statements for the year ended September 30, 2015, from which the summarized information was derived. SUBSEQUENT EVENTS Subsequent events have been evaluated through January 12, 2017, the date the statements are available to be issued. 13

14 SCHEDULE OF ACTIVITIES WITH BUDGET COMPARISON For the Year Ended September 30, 2016 With Summarized Financial Information for the Year Ended September 30, 2015 Operating Activities: Budget* Actual Revenues and Other Support: Contributions and Grants $ 425,000 $ 408,000 $ 423,507 $ 296,090 Shared Maintenance and Client Service Fees , , , ,746 Interest and Dividends ,000 1, Special Events , , , ,659 Miscellaneous ,000 3,000 1,690 3,074 Total Revenues and Other Support 1,150,000 1,081,875 1,048, ,195 Expenses: Distribution of Food and Other Items , ,359 26,759 Shared Maintenance Fees , , , ,173 Local Transportation and Delivery ,250 25,200 34,061 20,442 Salaries , , , ,701 Payroll Taxes ,562 24,576 23,886 22,227 Employee Benefits ,300 26,220 21,297 23,990 Contract Labor Occupancy ,000 34,000 33,604 32,404 Professional Fees ,000 13,000 13,256 13,004 Fundraising Expenses for Special Events , , ,238 98,667 Office Supplies ,000 6,600 7,277 6,547 Warehouse Supplies ,500 12,500 11,144 11,317 Backpack Program ,000 4,500 5, Telephone ,800 3,800 4,008 3,510 Postage and Shipping ,600 3,600 4,077 3,557 Repairs and Expendable Equipment ,500 18,100 27,337 15,144 Conferences, Conventions, and Meetings ,900 1,400 4,837 2,219 Printing and Publications Membership Dues ,800 9,585 7,696 8,535 Miscellaneous ,450 1,950 1, Total Expenses 1,282,173 1,042,986 1,104, ,739 Change in Net Assets from Operating Activities (132,173) 38,889 (56,003) 27,456 Rental Activities: Rental Income ,626 17,391 15,955 Salary and Related Expenses (6,144) (5,915) Real Estate Taxes (3,278) (2,202) (1,767) Repairs and Other Expenses (8,950) (6,725) (5,709) Change in Net Assets from Rental Activities ,398 2,320 2,564 *Unaudited See independent auditor s report 14

15 SCHEDULE OF ACTIVITIES WITH BUDGET COMPARISON (CONTINUED) For the Year Ended September 30, 2016 With Summarized Financial Information for the Year Ended September 30, 2015 Other Activities: Budget* Actual Non-Cash: Non-Cash Contributions Other than Distributable Items... $ $ $ 464 $ 699 In-Kind Expenses (464) (699) Investment Gains (Losses) ,758 (2,919) Change in Inventory of Distributable Items ,685 70,700 43,400 Depreciation (62,179) (57,630) (64,830) (73,983) Change in Net Assets from Other Activities ,506 (57,630) 8,628 (33,502) Change in Net Assets $ 7,333 $ (13,343) $ (45,055) $ (3,482) *Unaudited See independent auditor s report 15