RICHMOND, KENTUCKY * * * * * AUDITED FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR S REPORT FOR THE YEARS ENDED DECEMBER 31, 2013, AND 2012
TABLE OF CONTENTS Page INDEPENDENT AUDITOR S REPORT 1 FINANCIAL STATEMENTS Statements of Financial Position 2 3 Statements of Activities 4 5 Statements of Cash Flows 6 Notes to Financial Statements 7 10
INDEPENDENT AUDITOR S REPORT To the Board of Directors Telford Community Center Y.M.C.A., Inc. Richmond, Kentucky We have audited the accompanying financial statements of Telford Community Center Y.M.C.A., Inc. (a nonprofit organization), which comprise the statements of financial position as of December 31, 2013 and 2012, and the related statements of activities and cash flows for the years 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. Auditor s Responsibility 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 from 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 Telford Community Center Y.M.C.A., Inc., as of December 31, 2013, and 2012, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Craft, Noble & Company, PLLC Craft, Noble & Company, PLLC Richmond, Kentucky May 30, 2014
STATEMENTS OF FINANCIAL POSITION DECEMBER 31, 2013 AND 2012 CURRENT ASSETS ASSETS 2013 2012 Cash and cash equivalents $ 187,065 $ 289,251 Cash surrender value of life insurance 2,990 66,130 Accounts receivable 8,494 9,967 Pledges receivable 0 405 Prepaid expenses 1,237 1,136 TOTAL CURRENT ASSETS 199,786 366,889 PROPERTY AND EQUIPMENT Land improvements 18,618 18,618 Buildings 73,000 73,000 Multi-purpose center 1,491,676 1,491,676 Furniture and fixtures 103,756 103,756 Equipment 728,702 701,745 Leasehold improvements 1,605,520 1,596,326 Office equipment 3,664 3,664 Accumulated depreciation (2,303,575) (2,150,342) TOTAL PROPERTY AND EQUIPMENT 1,721,361 1,838,443 OTHER ASSETS Bond costs (Net) 6,466 7,054 TOTAL OTHER ASSETS 6,466 7,054 TOTAL ASSETS $ 1,927,613 $ 2,212,386 The accompanying notes are an integral part of these financial statements. 2
STATEMENTS OF FINANCIAL POSITION DECEMBER 31, 2013 AND 2012 CURRENT LIABILITIES LIABILITIES AND NET ASSETS 2013 2012 Accounts payable $ 2,942 $ 5,107 Other payables 1,721 2,078 Deferred Revenue 21,107 2,021 Notes payable - current portion 14,051 13,391 Bonds payable - current portion 42,500 42,500 TOTAL CURRENT LIABILITIES 82,321 65,097 NON-CURRENT LIABILITIES Notes payable 235,834 249,893 Bonds payable 410,000 452,500 TOTAL NON-CURRENT LIABILITIES 645,834 702,393 TOTAL LIABILITIES 728,155 767,490 NET ASSETS Board designated 100,000 100,000 Unrestricted 982,351 1,234,849 Temporarily restricted 117,107 110,047 TOTAL NET ASSETS 1,199,458 1,444,896 TOTAL LIABILITIES AND NET ASSETS $ 1,927,613 $ 2,212,386 The accompanying notes are an integral part of these financial statements. 3
STATEMENTS OF ACTIVITIES FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012 UNRESTRICTED NET ASSETS 2013 2012 Revenues and Other Support United Way of the Bluegrass $ 4,083 $ 24,737 Y.M.C.A. memberships 583,332 656,071 Contributions 33,236 36,125 Child Care Food Program 16,275 31,350 Day care fees 148,115 192,373 Program fees 87,159 92,948 Investment income 322 847 Rental income 20,044 16,203 Government grants 8,390 3,404 Concessions 4,187 5,116 Miscellaneous 11,786 3,837 Total 916,929 1,063,011 Net assets released from restriction 66,565 109,302 TOTAL UNRESTRICTED SUPPORT 983,494 1,172,313 EXPENSES Salaries and wages 591,392 649,613 Employee benefits 52,464 67,183 Payroll taxes 44,908 49,290 Professional services 10,407 5,860 Advertising and promotion 6,480 1,009 Y.M.C.A fee 16,485 21,317 Office expenses 8,389 9,088 Travel, conference & conventions 11,159 4,517 Interest expense 35,450 37,058 Depreciation and amortization 153,821 147,006 Insurance 17,779 17,369 Utilities 121,221 100,646 Supplies 84,098 95,518 Equipment repairs & maintenance 64,707 72,473 Postage 1,213 1,095 Miscellaneous 16,019 15,338 TOTAL EXPENSES 1,235,992 1,294,380 The accompanying notes are an integral part of these financial statements. 4
STATEMENTS OF ACTIVITIES FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012 2013 2012 DECREASE IN UNRESTRICTED NET ASSETS (252,498) (122,067) TEMPORARILY RESTRICTED NET ASSETS Contributions 73,625 73,625 Net assets released from restriction (66,565) (109,302) INCREASE (DECREASE) IN TEMPORARILY RESTRICTED NET ASSETS 7,060 (35,677) INCREASE (DECREASE) IN NET ASSETS (245,438) (157,744) NET ASSETS AT BEGINNING OF YEAR 1,444,896 1,602,640 NET ASSETS AT END OF YEAR $ 1,199,458 $ 1,444,896 The accompanying notes are an integral part of these financial statements. 5
STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012 CASH FLOWS FROM OPERATING ACTIVITIES 2013 2012 Increase (decrease) in net assets $ (244,850) $ (157,744) Adjustments to reconcile change in net assets to net cash provided by operating activities: Decrease in accounts receivable 1,473 13,899 (Increase) decrease in pledges receivable 405 (365) (Increase) decrease in prepaid expenses (101) 636 Depreciation and amortization 153,233 147,006 (Decrease) in accounts payable (2,165) (19,974) Increase (decrease) in deferred revenue 19,086 - Increase (decrease) in other payables (357) 910 Net cash (used) provided by operating activities (73,276) (15,632) CASH FLOWS FROM INVESTING ACTIVITIES Decrease (increase) in short-term investments 63,140 (5,309) Purchase of property and equipment (36,151) (210,330) Net cash (used) by investing activities 26,989 (215,639) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings - 275,000 Payments on notes payable (13,399) (11,716) Payments on bonds payable (42,500) (42,500) Net cash (used) provide by financing activities (55,899) 220,784 NET INCREASE (DECREASE) IN CASH (102,186) (10,487) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 289,251 299,738 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 187,065 $ 289,251 SUPPLEMENTAL DISCLOSURES Cash paid during the year for: Interest $ 35,450 $ 37,058 The accompanying notes are an integral part of these financial statements. 6
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2013 AND 2012 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Organization The Telford Community Center Y.M.C.A., Inc. (the Organization) is a non-profit corporation dedicated to promoting Christian values and principals in the community it serves. The Organization provides health and wellness programs and day care services which allow families or individuals the opportunity to participate regardless of their ability to pay. Basis of Accounting The financial statements of the Organization have been prepared on the accrual basis of accounting and, accordingly, reflect all significant receivables, payables, and other liabilities. Basis of Presentation The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles. Net assets and revenues, expenses, gains, and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, net assets of the Organization and changes therein are classified and reported as follows: Expense Allocation Unrestricted net assets Net assets that are not subject to donor-imposed stipulations. Temporarily restricted net assets Net assets subject to donor-imposed stipulations that may or will be met, either by actions of the Organization and/or the passage of time. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the Statement of Activities as net assets released from restriction. Permanently restricted net assets Net assets subject to donor-imposed stipulations that they be maintained permanently by the Organization. Generally, the donors of these assets permit the Organization to use all or part of the income earned on any related investments for general or specific purposes. Expenses are charged to programs and supporting services based on the use of expenditures. Management and general expenses include those expenses that are not directly identifiable with any other specific function but provide for the overall support and direction of the Organization. Expenses charged to programs for year ended December 31, 2013, and December 31, 2012, were $963,120 and $1,009,180, respectively. Management and general expenses charged to supporting services for the years ended December 31, 2013, and December 31, 2012, were $272,284 and $285,200, respectively. There were no fundraising expenses for the years ended December 31, 2013 and December 31, 2012. Income Tax Status The Organization is a not-for-profit organization that is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code. The Organization has also been classified as an entity that is a private operating foundation within the meaning of Section 509(a) and qualifies for deductible contributions as provided in Section 170 (b)(1)(a)(vi). However, income from certain activities not directly related to the Organization s tax-exempt purpose is subject to taxation as unrelated business income. The Organization is not aware of any unrelated business income as of May 30, 2014. FASB ASC 740-10-50, Income Taxes (formerly FIN 48, Accounting for Uncertainty in Income Taxes), requires entities to disclose known or anticipated positions of income tax uncertainty. The Organization has never been audited by the Internal Revenue Service (IRS), however, the tax years 2010 forward could be subject to examination by the IRS or other applicable tax jurisdictions. 7
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2013 AND 2012 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Contributed Services Services contributed to the Organization are recorded at fair market value by the donor. The contributed services are recorded as income and expensed in the same period. For the year ended December 31, 2013, and December 31, 2012, the Organization had no contributed services. Contributions and Promises to Give Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the existence of any donor restrictions. Contributions are recognized when the donor makes a promise to give to the Organization that is, in substance, unconditional. Contributions that are restricted by the donor are reported as increases in unrestricted net assets if the restrictions expire in the year in which the contributions are recognized. All other donor-restricted contributions are reported as increases in temporarily or permanently restricted net assets depending on the nature of the restrictions. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets. The Organization uses the allowance method to determine uncollectible, unconditional promises receivable. The allowance is based on prior years experience and management s analysis of specific promises made. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Cash and Cash Equivalents For purposes of the Statement of Financial Position and the Statement of Cash Flows, the Organization considers all highly liquid investments with an initial maturity of six months or less to be cash equivalents. The following is a list of cash and cash equivalents of Telford Community Center Y.M.C.A., Inc. at December 31, 2013, and December 31, 2012, respectively. Property and Equipment 2013 2012 General Account $ 19,799 $ 54,578 Money Market 76,009 135,799 Construction Account 69,772 61,624 Fundraiser Account - 37,250 Cash on Hand 150 - Certificate of Deposit 21,335 - Total Cash and Cash Equivalents $ 187,065 $ 289,251 It is the Organization s policy to capitalize property and equipment over $500. Lesser amounts are expensed. Property and equipment are depreciated using the straight line method. 8
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2013 AND 2012 NOTE 2 CASH SURRENDER VALUE OF LIFE INSURANCE Telford Community Center Y.M.C.A., Inc. is the beneficiary of a life insurance policy through New York Life Insurance Company, with former executive Howard Loveland as the named insured. The policy was established in July 1984, with a face amount of $50,000. During the year ended December 31, 2013 the Organization used funds from the life insurance policy to help cover expenses and cover the decrease in cash and cash equivalents. This loan has been netted against the remaining cash surrender value on the balance sheet. The cash surrender value at December 31, 2013, and December 31, 2012, was $2,990 and $66,130, respectively. NOTE 3 BONDS PAYABLE On December 16, 2004, $850,000 of City of Richmond, Kentucky Economic Development Refunding and Improvement Revenue Bonds (Telford Project) Series 2004, were issued to (a) refund $261,000 principal remaining on $650,000 of Economic Development Revenue Bonds, Issue of 1994 and (b) finance a building addition to be used for fitness and wellness activities. The interest rate on the issue is fixed at 4.6% per annum. The terms of repayment include 4 quarterly interest only installments beginning December 28, 2004, through September 28, 2005, and thereafter 77 quarterly installments beginning December 28, 2005, through December 28, 2024. Principal on the note will be paid in 20 equal annual installments of $42,500, on each December 28 beginning December 28, 2005, through December 28, 2024. A schedule of maturities of long-term bond debt is as follows for the years ending December 31, 2013, and December 31, 2012: Period Ending Bonds as of 12/31/13 Period Ending Bonds as of 12/31/12 2014 $ 42,500 2013 $ 42,500 2015 42,500 2014 42,500 2016 42,500 2015 42,500 2017 42,500 2016 42,500 2018 42,500 2017 42,500 2019 2024 240,000 2018 2024 282,500 Total $ 452,500 Total $ 495,000 NOTE 4 NOTES PAYABLE On January 24, 2012, Telford Community Center Y.M.C.A., Inc. entered into a loan agreement with PNC Bank in the amount of $275,000 at an interest rate of 4.75%. The maturity date of the loan is January 24, 2022. The terms of the agreement are for 119 monthly payments of $2,149 and an irregular balloon payment of approximately $116,528. At December 31, 2012, the unpaid principal balance was $263,284. The specific purpose of this loan is for making renovations to the building located at 1100 East Main Street in Richmond, Kentucky. The aforementioned building serves as collateral. A schedule of long-term note debt is as follows for the year ended December 31, 2013 and December 31, 2012: Period Ending Notes as of 12/31/13 Period Ending Notes as of 12/31/12 2014 $ 14,051 2013 $ 13,391 2015 14,744 2014 14,051 2016 15,470 2015 14,744 2017 16,232 2016 15,470 2018 17,032 2017 16,232 2019 2022 172,356 2018 2022 189,396 Total $ 249,885 Total $ 263,284 9
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2013 AND 2012 NOTE 5 TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets are available for the following purposes: Purpose 2013 2012 Repayment of bond principal and interest $ 91,548 $ 83,488 Developing Pioneering Healthy Communities program 21,335 22,335 Afterschool program 4,224 4,224 Total Temporarily Restricted Net Assets $ 117,107 $ 110,047 NOTE 6 DEFINED CONTRIBUTION PLAN Each employee of the Telford Community Center Y.M.C.A., Inc. is required to take part in the Y.M.C.A. Retirement Fund program. This program is a defined contribution plan that is run through the National Y.M.C.A., Inc. The total cost for this program recognized by the Telford Community Center Y.M.C.A., Inc. for the years ended December 31, 2013, and December 31, 2012 were $11,249 and $13,611, respectively. NOTE 7 SUBSEQUENT EVENTS Management of the Organization has considered subsequent events through May 30, 2014, the date this report becomes available for issuance. 10