ALZHEIMER S ASSOCIATION, INC., WEST VIRGINIA CHAPTER

ALZHEIMER S ASSOCIATION, INC., WEST VIRGINIA CHAPTER FINANCIAL REPORT YEARS ENDED JUNE 30, 2014 AND 2013

CONTENTS INDEPENDENT AUDITORS REPORT... 1 FINANCIAL STATEMENTS Statements of financial position... 2 Statement of activities, June 30, 2014... 3 Statement of activities, June 30, 2013... 4 Statement of functional expenses, June 30, 2014... 5 Statement of functional expenses, June 30, 2013... 6 Statements of cash flows... 7 Notes to financial statements... 8

INDEPENDENT AUDITORS REPORT To the Board of Directors Alzheimer s Association, Inc., West Virginia Chapter Charleston, West Virginia We have audited the accompanying statements of financial statements of Alzheimer's Association, Inc., West Virginia Chapter (a nonprofit organization), which comprise the statements of financial position as of June 30, 2014 and 2013, and the related statements of activities, functional expenses 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 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 Alzheimer s Association, Inc., West Virginia Chapter as of June 30, 2014 and 2013, 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. Charleston, West Virginia October 10, 2014

ALZHEIMER'S ASSOCIATION, INC., WEST VIRGINIA CHAPTER STATEMENTS OF FINANCIAL POSITION AT JUNE 30, 2014 AND 2013 ASSETS 2014 2013 CURRENT ASSETS Cash and cash equivalents $ 39,861 $ 60,231 Marketable equity securities 562,346 706,875 Bequest in transit 65,424 - Due from National 29,035 26,057 Promises to give - unconditional 24,376 13,039 Grants receivable 22,484 18,385 Health insurance premiums credit receivable 4,024 1,961 Restricted cash 714 - Other current assets 593 555 TOTAL CURRENT ASSETS 748,857 827,103 FIXED ASSETS Property and equipment 112,191 100,277 Less: Accumulated depreciation (54,382) (43,951) TOTAL FIXED ASSETS 57,809 56,326 TOTAL ASSETS $ 806,666 $ 883,429 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable $ 28,870 $ 8,589 Due to National 60,456 36,293 Accrued expenses 15,628 10,864 Accrued and withheld payroll taxes 999 924 Funds held for others 714 - TOTAL CURRENT LIABILITIES 106,667 56,670 NET ASSETS Unrestricted 640,953 765,009 Temporarily restricted 59,046 61,750 TOTAL NET ASSETS 699,999 826,759 TOTAL LIABILITIES AND NET ASSETS $ 806,666 $ 883,429 See Independent Auditors' Report and Notes to Financial Statements. 2

ALZHEIMER'S ASSOCIATION, INC., WEST VIRGINIA CHAPTER STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2014 UNRESTRICTED TEMPORARILY RESTRICTED TOTAL REVENUE: Contributions, gifts, grants and pledges: Direct public support: Memorials and tributes $ 36,061 $ - $ 36,061 Bequest 89,741-89,741 Corporations 15,339-15,339 Individuals 17,510 20,750 38,260 Foundations 9,525-9,525 Organizations 2,349 27,024 29,373 Major gifts 3,000-3,000 Indirect public support: United Way 1,530-1,530 Government grants 16,438 45,000 61,438 Private grants 5,500 8,000 13,500 National Grants 11,500-11,500 Special fundraising events: Walk to End Alzheimer's & Wrap Around Events 386,404-386,404 Thanks for the Memories Luncheon 32,975-32,975 Dancing Through Time 43,892-43,892 Rockin' on the Rooftop 7,246-7,246 Non-cash donations 29,941-29,941 Less: Event costs benefiting donors (7,044) - (7,044) Conferences 6,492-6,492 Sales 609-609 Fees for services 16,264-16,264 Investment return 92,612-92,612 Other 1,342-1,342 Net Association share to National (173,936) - (173,936) Net assets released from restrictions 103,478 (103,478) - TOTAL REVENUE 748,768 (2,704) 746,064 EXPENSES: Program Services: Patient and family services 231,207-231,207 Public awareness and education 364,158-364,158 Public policy 59,144-59,144 Management and general 59,804-59,804 Fundraising 158,511-158,511 TOTAL EXPENSES 872,824-872,824 CHANGE IN NET ASSETS (124,056) (2,704) (126,760) NET ASSETS AT BEGINNING OF YEAR 765,009 61,750 826,759 NET ASSETS AT END OF YEAR $ 640,953 $ 59,046 $ 699,999 See Independent Auditors' Report and Notes to Financial Statements. 3

ALZHEIMER'S ASSOCIATION, INC., WEST VIRGINIA CHAPTER STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2013 TEMPORARILY UNRESTRICTED RESTRICTED TOTAL REVENUE: Contributions, gifts, grants and pledges: Direct public support: Memorials and tributes $ 19,770 $ - $ 19,770 Bequest 245,848-245,848 Corporations 13,551-13,551 Individuals 30,705 18,500 49,205 Foundations 8,885-8,885 Organizations 4,052 50 4,102 Major gifts 10,000-10,000 Indirect public support: United Way - - - Government grants 14,413 45,000 59,413 Private grants - 37,500 37,500 National Grants - - - Special fundraising events: Walk to End Alzheimer's & Wrap Around Events 327,988-327,988 Thanks for the Memories Luncheon 34,166-34,166 Dancing through time 21,894-21,894 Non-cash donations 50,153-50,153 Less: Event costs benefiting donors (9,258) - (9,258) Conferences 6,355-6,355 Sales 1,200-1,200 Fees for services 7,486-7,486 Investment return 53,279-53,279 Other (1,599) - (1,599) Net Association share to National (161,701) - (161,701) Net assets released from restrictions 79,642 (79,642) - TOTAL REVENUE 756,829 21,408 778,237 EXPENSES: Program Services: Patient and family services 210,536-210,536 Public awareness and education 340,259-340,259 Public policy 61,682-61,682 Management and general 89,937-89,937 Fund development 105,556-105,556 TOTAL EXPENSES 807,970-807,970 CHANGE IN NET ASSETS (51,141) 21,408 (29,733) NET ASSETS AT BEGINNING OF YEAR 816,150 40,342 856,492 NET ASSETS AT END OF YEAR $ 765,009 $ 61,750 $ 826,759 See Independent Auditors' Report and Notes to Financial Statements. 4

ALZHEIMER'S ASSOCIATION, INC., WEST VIRGINIA CHAPTER STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED JUNE 30, 2014 PROGRAM MGMT AND FUND- TOTAL SERVICES GENERAL RAISING Salaries and wages $ 433,850 $ 359,152 $ 14,245 $ 60,453 Fringe benefits 45,881 35,390 1,958 8,533 Payroll taxes 38,486 32,638 1,202 4,646 Professional fees 44,711 15,000 23,369 6,342 Outside and contract labor 43,131 40,233 495 2,403 Office supplies 30,566 22,718 3,609 4,239 Program supplies 791 791 - - Telephone 9,415 8,017 322 1,076 Postage 8,564 6,090 534 1,940 Rent 34,766 26,421 1,609 6,736 Utilities 8,119 5,958 417 1,744 Insurance - liability 2,220 1,629 114 477 Repairs and maintenance 1,451 1,067 99 285 Printing, publications and subscriptions 69,890 35,893 1,200 32,797 Staff development 5,941 5,816 46 79 Advertising 2,745 2,265-480 Conferences 13,415 8,459-4,956 Volunteer development 855 582 11 262 Travel 49,940 36,576 2,758 10,606 Dues and subcriptions 1,728 1,478-250 Caregiver funds 350 350 - - Interest and bank charges 9,229-7,084 2,145 Miscellaneous 779 331 197 251 Bad debt expense (recovery) 5,570 - - 5,570 Depreciation 10,431 7,655 535 2,241 TOTAL FUNCTIONAL EXPENSES $ 872,824 $ 654,509 $ 59,804 $ 158,511 See Independent Auditors' Report and Notes to Financial Statements. 5

ALZHEIMER'S ASSOCIATION, INC., WEST VIRGINIA CHAPTER STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED JUNE 30, 2013 PROGRAM MGMT AND FUND- TOTAL SERVICES GENERAL RAISING Salaries and wages $ 411,747 $ 340,091 $ 17,914 $ 53,742 Fringe benefits 22,453 17,642 1,610 3,201 Payroll taxes 36,450 30,339 1,524 4,587 Professional fees 43,936-43,936 - Outside and contract labor 22,460 20,729 433 1,298 Office supplies 34,457 26,721 4,121 3,615 Program supplies 242 242 - - Telephone 8,406 7,266 338 802 Postage 16,561 12,874 905 2,782 Rent 34,800 28,235 1,501 5,064 Utilities 8,136 6,435 389 1,312 Insurance - liability 2,130 1,784 79 267 Repairs and maintenance 581 459 28 94 Printing, publications and subscriptions 89,012 56,622 965 31,425 Staff development 110 110 - - Advertising 3,178 3,178 - - Conferences 11,146 5,544-5,602 Volunteer development 1,017 880 25 112 Travel 54,713 37,390 8,416 8,907 Dues and subcriptions 1,678 1,428-250 Caregiver funds 926 926 - - Interest and bank charges 9,101 3 6,870 2,228 Miscellaneous 973 94 421 458 Bad debt expense (recovery) (15,919) 5,832 - (21,751) Depreciation 9,676 7,653 462 1,561 TOTAL FUNCTIONAL EXPENSES $ 807,970 $ 612,477 $ 89,937 $ 105,556 See Independent Auditors' Report and Notes to Financial Statements. 6

ALZHEIMER'S ASSOCIATION, INC., WEST VIRGINIA CHAPTER STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 2014 AND 2013 2014 2013 CASH FLOWS FROM OPERATING ACTIVITIES: Cash from contributions $ 146,068 $ 565,695 Cash from special events 470,517 384,048 Cash from grants 82,339 103,956 Cash from program services 16,264 7,486 Cash from miscellaneous revenue 7,094 8,936 Cash from sale of marketable equity securities - 10,401 Cash from investment income 14,704 12,091 OPERATING RECEIPTS 736,986 1,092,613 Cash paid to personnel (513,378) (475,848) Cash paid to vendors (301,036) (317,497) Cash paid to National (152,751) (271,841) OPERATING DISBURSEMENTS (967,165) (1,065,186) NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (230,179) 27,427 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (11,914) (11,695) Sale of maketable equity securities 246,904 156,983 Purchase of marketable equity securities, net (25,181) (269,420) NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 209,809 (124,132) NET DECREASE IN CASH AND EQUIVALENTS (20,370) (96,705) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 60,231 156,936 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 39,861 $ 60,231 RECONCILIATION OF CHANGE IN NET ASSETS TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES: Change in Net Assets $ (126,760) $ (29,733) ADJUSTMENTS TO RECONCILE CHANGE IN NET ASSETS TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Net unrealized gain on marketable equity securities (77,908) (30,787) Net realized gain on marketable equity securities - (10,401) Loss on write off of fixed assets - 3,192 Depreciation 10,431 9,676 (Increase) decrease in promises to give (11,337) 35,217 (Increase) decrease in bequest (65,424) 179,117 (Increase) decrease in grants receivable (4,099) 7,043 (Increase) decrease in health insurance premiums credit receivable (2,063) (212) (Increase) decrease in other current assets (38) 1,200 (Increase) decrease in due to/due from National 21,185 (110,139) Increase (decrease) in accounts payable 20,281 (21,548) Increase (decrease) in accrued expenses 4,764 (4,373) Increase (decrease) in accrued and withheld payroll taxes 75 (825) Increase (decrease) in restricted funds/funds held for others 714 - NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ (230,179) $ 27,427 See Independent Auditors' Report and Notes to Financial Statements. 7

NOTES TO FINANCIAL STATEMENTS Alzheimer s Association, Inc., West Virginia Chapter June 30, 2014 Property and equipment Property and equipment is stated at cost if purchased or estimated fair value if donated and is depreciated using the straight-line method over the estimated useful lives of the assets. Major improvements and repairs are capitalized while expenditures for minor repairs and maintenance are expensed when incurred. Income taxes The Chapter qualifies as part of the national affiliate as a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code, and is classified by the Internal Revenue Service as other than a private foundation. Therefore, no provision for income tax is provided in these financial statements. Funds Held for Others/Restricted Cash Occasionally the Association will enter into agreements with other organizations with similar goals. The Association agreed to hold funds raised by various projects and disburse monies earned. The Association earned $-0- and $876 in administrative fees in 2014 and 2013, respectively. Funds held at the end of 2014 were approximately $700. Reclassifications Amounts in prior statements may have been reclassified to conform to current presentation. NOTE 2 - OPERATING LEASES The Association rents office space in three locations throughout West Virginia. The Morgantown lease agreement is set to expire June 30, 2015 with payments of $730 monthly. The Parkersburg location is a month-to-month agreement with monthly payments totaling $7,200. In April 2012, the Charleston office entered into a five year lease at $1,600 per month. Under the terms of the new lease, the Association agreed to pay $20,000 in leasehold improvements to make the office move-in ready. The total rent expense for the years ended June 30, 2014 and 2013 was $34,766 and $34,800. The future minimum lease payments for the years ended June 30, 2015, 2016 and 2017 are $27,960, $19,200 and $14,400, respectively. NOTE 3 - JOINT COSTS For the years ended June 30, 2014 and 2013, the Association incurred joint costs related to the quarterly newsletter for printing and postage. Printing and postage costs are allocated based on the number of pages that are devoted to each area listed below. Printing Postage 2014 2013 2014 2013 Management & General $ 1,043 $ 833 $ 413 $ 525 Fundraising 2,004 1,548 793 976 Program Service 6,053 6,499 2,394 4,099 Total $ 9,100 $ 8,880 $ 3,600 $ 5,600 10

NOTES TO FINANCIAL STATEMENTS Alzheimer s Association, Inc., West Virginia Chapter June 30, 2014 NOTE 4 BEQUEST IN TRANSIT In June of 2014, the Association was informed that they had received a bequest of approximately $65,000 in the form of an IRA. At June 30, 2014, the bequest had been probated and was being transferred. NOTE 5 COMMITMENTS The Association entered into an agreement with a government relations, lobbying and organizational development firm for assistance in developing a comprehensive legislative and grassroots strategy. The agreement required monthly payments of $1,000 through June 2013 and was on a month-to-month basis. The agreement was canceled during 2014. In connection with this agreement, the total consulting expense was $9,000 and $12,000 for the year ended June 30, 2014 and 2013 respectively. NOTE 6 - PENSION PLAN The Association initiated a pension plan for employees effective September 1, 2004. The plan permits only employee salary reduction contributions made pursuant to voluntary salary reduction agreements between the Association and its eligible employees which are excluded from gross income under Code Section 403(b). All employees are eligible and the plan does not provide for any other contributions by the Association. NOTE 7 INVESTMENTS Authoritative guidance issued by the Financial Accounting Standards Board established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy consists of three broad levels: Level 1 inputs consist of unadjusted quoted prices in active markets for identical assets and have the highest priority, Level 2 inputs consist of observable inputs other than quoted prices for identical assets, and Level 3 inputs are unobservable, reflecting management s own assumptions about the inputs used in pricing the asset or liability The Association uses appropriate valuation techniques based on the available inputs to measure the fair value of its marketable equity securities. When available, the Association measures fair value using Level 1 inputs because they generally provide the most reliable evidence of fair value. Level 3 inputs are used only when Level 1 or Level 2 inputs are not available. 11

NOTES TO FINANCIAL STATEMENTS Alzheimer s Association, Inc., West Virginia Chapter June 30, 2014 (continued) NOTE 7 INVESTMENTS (continued) All marketable equity securities are invested in publicly traded mutual funds and are valued using level 1 inputs. The following tables summarize the investments by asset type: 2014 2013 U.S. Equities Funds Mid Cap Blend $ 116,851 $ 140,335 Large Cap Blend 60,933 73,766 Non-U.S. Equities Funds Large Cap Blend 45,033 41,423 Fixed Income Funds Short Duration-Medium Quality 74,299 54,563 Medium Duration-Medium Quality - 79,871 Medium Duration-High Quality 91,873 91,933 Long Duration-Medium Quality 35,745 76,276 Floating Rate-Closed In 47,137 44,921 Real Estate & Tangible Funds 90,475 103,787 Total marketable equity securities at fair value $ 562,346 $ 706,875 The following schedule summarizes the investment return and its classification in the statement of activities for the years ended June 30, 2014 and 2013: 2014 2013 Interest and dividend income $ 14,704 $ 12,091 Net realized and unrealized gains 77,908 41,188 Total investment return $ 92,612 $ 53,279 12

NOTES TO FINANCIAL STATEMENTS Alzheimer s Association, Inc., West Virginia Chapter June 30, 2014 NOTE 8 - TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets are available for the following purposes: 2014 2013 Government and national grants $ 99 $ 581 Scholarships, training and respite 6,251 6,351 Lending library and support groups 14,472 13,535 Outreach 21,488 41,283 Parkinson s support group 16,736 - $ 59,046 $ 61,750 Temporarily restricted net assets are included in the Statements of Financial Position as follows: 2014 2013 Cash and cash equivalents $ 51,046 $ 54,250 Grants receivable 8,000 7,500 $ 59,046 $ 61,750 Net assets were released from donor restrictions by incurring expenses satisfying the purpose or time restrictions specified by donors as follows: 2014 2013 Government and national grants $ 45,482 $ 55,015 Scholarships, training and respite 100 9,557 Lending library and support groups 2,063 312 Outreach 48,333 14,758 Caregiver manuals 7,500 - $ 103,478 $ 79,642 NOTE 9 - REVENUE SHARING AGREEMENT The Association had a five year revenue sharing agreement with the National Alzheimer s Association (National) that expired June 30, 2012 in which the parties agreed to coordinate and unify their fundraising efforts in the Association s territory. Under this agreement the parties agreed to share certain unrestricted contributions. At June 30, 2014 the sharing split was 60% to the Association, 30% to the National, and 10% to the Mission Fund. The Mission Fund is managed by a steering committee comprised of Association and National staff, but the National Board of Directors has governance oversight of the fund. The Association 13

NOTES TO FINANCIAL STATEMENTS Alzheimer s Association, Inc., West Virginia Chapter June 30, 2014 expects a new agreement to be signed within the next year. As of the date of this report, an agreement has not been renewed and the Association is operating under the old terms. NOTE 9 - REVENUE SHARING AGREEMENT (continued) Revenue sharing between the Association and National was as follows: 2014 2013 Association s share of National income $ 47,717) $ 104,293)) National s share of Association income (221,653) (265,994) Net Association loss $ (173,936) $ (161,701) NOTE 10 UNCERTAIN INCOME TAX POSITIONS Accounting Standards prescribe a recognition threshold and measurement attribute for a tax position taken or expected to be taken in a tax return where there is uncertainty about whether a tax position will ultimately be sustained upon examination. The Association adopted the recognition and disclosure provisions of the standard. The adoption of this standard did not have an effect on the Company s financial position or changes in net assets. Management believes there have been no uncertain tax positions taken in the entity s tax filings for any reporting period open to normal jurisdictional examination (currently 2011 through 2014). Accordingly, no liability for uncertain tax positions (or associated penalties and interest) is provided in these financial statements. NOTE 11 CONTINGENCIES The Association entered into an agreement with National to purchase certain information technology services. The Association will pay National $1,565 a year for these services. The original agreement ended on June 30, 2013, but is automatically extended for a successive twelve month periods until either party informs the other party of its intent to terminate the agreement. NOTE 12 SUBSEQUENT EVENTS Subsequent events have been evaluated through October 10, 2014 the date that the financial statements were available to be issued. 14