2017 Financial Statements

GIRL SCOUTS OF CENTRAL INDIANA, INC. FINANCIAL STATEMENTS December 31, 2017 and 2016

GIRL SCOUTS OF CENTRAL INDIANA, INC. Indianapolis, Indiana FINANCIAL STATEMENTS December 31, 2017 and 2016

CONTENTS

INDEPENDENT AUDITOR’S REPORT .................................................................................................

1

FINANCIAL STATEMENTS STATEMENTS OF FINANCIAL POSITION .....................................................................................

3

STATEMENTS OF ACTIVITIES .......................................................................................................

4

STATEMENTS OF FUNCTIONAL EXPENSES ...............................................................................

5

STATEMENTS OF CASH FLOWS...................................................................................................

6

NOTES TO FINANCIAL STATEMENTS ..........................................................................................

7

SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES OF FEDERAL, STATE, AND LOCAL AWARDS ........................ 23

Crowe Horwath LLP Independent Member Crowe Horwath International

INDEPENDENT AUDITOR’S REPORT

The Board of Directors Girl Scouts of Central Indiana, Inc. Indianapolis, Indiana

Report on Financial Statements We have audited the accompanying financial statements of the Girl Scouts of Central Indiana, Inc., which comprise the statements of financial position as of December 31, 2017 and 2016, 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 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.

(Continued) 1.

Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Girl Scouts of Central Indiana, Inc. as of December 31, 2017 and 2016, 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.

Other Matter Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal, state, and local awards is presented for purpose of additional analysis and is 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 schedule of expenditures of federal, state, and local awards has been subjected to the auditing procedures applied in the audits of the financial statements and certain other 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 states as a whole.

Crowe Horwath LLP Indianapolis, Indiana May 14, 2018

2.

GIRL SCOUTS OF CENTRAL INDIANA, INC. STATEMENTS OF FINANCIAL POSITION December 31, 2017 and 2016

2017 ASSETS Cash and cash equivalents Accounts and other receivables Pledges receivable, net (Note 3) Inventories Prepaid expenses Investments (Note 4) Beneficial interest in assets held by others (Note 5) Beneficial interest in perpetual trust (Note 5) Land, buildings, and equipment, net (Note 6) Total assets

LIABILITIES AND NET ASSETS Liabilities Accounts payable and accrued expenses Due to Girl Scouts USA Annuity payment liability Capital lease payable (Note 8) Long-term debt (Note 9) Total liabilities

$

952,002 142,134 253,226 394,355 10,288 6,441,004 114,703 400,177 11,338,331

2016 $

1,680,178 57,380 319,580 357,853 32,067 7,601,680 110,106 371,012 11,809,216

$ 20,046,220

$ 22,339,072

$

$

499,947 17,008 47,750 68,887 3,991,209 4,624,801

524,644 139,664 54,250 110,137 5,011,892 5,840,587

Net assets Unrestricted Temporarily restricted (Note 11) Permanently restricted (Note 10) Total net assets

12,456,864 2,217,632 746,923 15,421,419

12,353,679 3,427,148 717,658 16,498,485

Total liabilities and net assets

$ 20,046,220

$ 22,339,072

See accompanying notes to financial statements.

3.

GIRL SCOUTS OF CENTRAL INDIANA, INC. STATEMENTS OF ACTIVITIES Years ended December 31, 2017 and 2016

--------------------------------------- 2017 -----------------------------------------Temporarily Permanently Unrestricted Restricted Restricted Total Public support and revenues Public support Contributions $ United Way allocations Revenues Program, product and Showcase sales revenue, net Program service fees Investment income Other revenue Net assets released from restrictions Total public support and revenues Expenses Program services General and administrative Fundraising Total expenses Change in net assets before other income, gains and losses Other income, gains and losses Gain on sale of fixed assets Unrealized gain on investments Realized gain (loss) on investments Change in value of beneficial interest in assets held by others Change in value of beneficial interest in perpetual trust

Change in net assets Net assets, beginning of year Net assets, end of year

711,341 281,694

$

351,758 -

$

100 -

$

1,063,199 281,694

---------------------------------------- 2016-----------------------------------------Temporarily Permanently Unrestricted Restricted Restricted Total

$

631,653 307,499

$

339,853 -

$

-

$

971,806 307,499

7,777,775 702,300 196,819 69,010 1,561,274

(1,561,274)

-

7,777,775 702,300 196,819 69,010 -

7,430,471 707,725 176,964 32,020 1,647,434

(1,647,434)

-

7,430,471 707,725 176,964 32,020 -

11,300,213

(1,209,516)

100

10,090,797

10,933,766

(1,307,581)

300

9,626,485

9,543,559 1,602,360 740,819

-

-

9,543,559 1,602,360 740,819

8,970,018 997,720 782,138

-

-

8,970,018 997,720 782,138

11,886,738

-

-

11,886,738

10,749,876

-

-

10,749,876

-

(1,795,941)

(586,525)

(1,209,516)

183,890

(1,307,581)

(1,123,391)

-

-

431 269,664 (20,630)

-

4,983

500 452,945 225,261

-

-

500 452,945 225,261

11,004

-

-

11,004

4,983

-

689,710

-

29,165 29,165

29,165 718,875

254,448

-

103,185 12,353,679 $ 12,456,864

$

431 269,664 (20,630)

300

(1,209,516)

29,265

(1,077,066)

3,427,148

717,658

16,498,485

11,915,341

746,923

$ 15,421,419

$ 12,353,679

2,217,632

$

438,338

(1,307,581) 4,734,729 $

3,427,148

$

(2,833) (2,833)

(2,833) 251,615

(2,533)

(871,776)

720,191

17,370,261

717,658

$ 16,498,485

See accompanying notes to financial statements.

4.

GIRL SCOUTS OF CENTRAL INDIANA, INC. STATEMENTS OF FUNCTIONAL EXPENSES Years ended December 31, 2017 and 2016

Salaries and benefits Professional fees and services Supplies and program expenses Telecommunications Postage and shipping Occupancy Equipment expense Printing and publications Travel and meetings Awards, grants and assistance Interest expense Insurance Other Total expenses before depreciation Depreciation Total expenses

--------------------------------- 2017------------------------------General Program and Services Administrative Fundraising Total

--------------------------------- 2016 ----------------------------General Program and Services Administrative Fundraising Total

$ 4,785,095 $ 1,183,298 $ 177,922 132,975 723,590 37,961 109,692 21,572 60,300 10,294 688,898 26,582 220,959 46,618 230,387 8,494 532,007 49,250 937,278 6,497 124,184 3,871 160,214 25,962 203,384 14,944

$ 4,769,051 $ 139,859 601,835 114,402 57,254 766,181 263,227 205,969 345,633 723,931 45,813 161,281 291,269

480,082 $ 6,448,475 32,755 343,652 3,850 765,401 4,296 135,560 8,703 79,298 9,228 724,708 39,935 307,511 17,721 256,603 74,269 655,526 487 944,262 128,055 9,481 195,657 41,934 260,263

535,587 $ 142,640 26,458 19,962 14,071 87,368 30,794 14,112 70,339 9,061 4,011 28,838 3,824

537,315 $ 5,841,953 44,309 326,808 2,349 630,642 6,948 141,312 7,385 78,710 22,770 876,319 31,668 325,689 21,504 241,585 55,296 471,268 7,251 740,243 49,824 8,736 198,855 33,655 328,748

8,953,910

1,568,319

722,741

11,244,970

8,485,705

987,065

779,186

10,251,956

589,649

34,041

18,078

641,768

484,313

10,655

2,952

497,920

740,819 $11,886,738

$ 8,970,018

997,720

782,138

10,749,876

$ 9,543,559 $ 1,602,360 $

See accompanying notes to financial statements.

5.

GIRL SCOUTS OF CENTRAL INDIANA, INC. STATEMENTS OF CASH FLOWS Years ended December 31, 2017 and 2016

2017 Cash flows from operating activities Change in net assets Adjustments to reconcile change in net assets to net cash from operating activities Depreciation and amortization Gain on disposal of property and equipment Bad debt expense related to pledges Net realized/unrealized gain on investments Change in value of beneficial interest in funds held by others Change in value of beneficial interest in perpetual trust Contributions restricted for long-term investment Change in assets and liabilities Accounts and other receivable Pledges receivable Inventories Prepaid expenses Accounts payable and accrued expenses Due to Girl Scouts USA Net cash from operating activities

$ (1,077,066)

Cash flows from investing activities Purchases of property and equipment Withdrawals from beneficial interests in assets held by others Purchases of investments Proceeds from sales and maturities of investments Net cash from investing activities Cash flows from financing activities Principal payments on mortgages payable Proceeds on bond issuance Uses of bond issuance costs Draws on line of credit Repayment on line of credit Repayment on capital lease obligations Proceeds/(Payment) on annuity obligation Contributions restricted for long-term investment Net cash from financing activities Net change in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year Supplemental disclosure of cash flow information Cash paid during the year for interest Donated stock Capital lease obligation Progress billings payable on construction projects

2016 $

(871,776)

653,886 (500) 14,004 (678,206)

497,920 (431) 15,211 (249,034)

(11,004)

(4,983)

(29,165) (79,250)

2,833 (166,978)

(84,754) 52,350 (36,502) 21,779 (24,697) (122,656) (1,401,781)

96,516 114,714 82,498 123,923 (283,062) 82,940 (559,709)

(170,383) 6,407 (96,527) 1,935,409 1,674,906

(5,350,577) 4,941 (2,716,754) 1,243,040 (6,819,350)

(67,436) 34,635 (1,000,000) (41,250) (6,500) 79,250 (1,001,301)

(65,636) 3,373,960 (2,575) 250,000 (43,360) 54,250 166,978 3,754,617

(728,176)

(3,624,442)

1,680,178

5,304,620

$

952,002

$ 1,680,178

$

128,055 5,000 -

$

49,824 21,000 32,861

(Continued) 6.

GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS Years ended December 31, 2017 and 2016

NOTE 1 - DESCRIPTION OF COUNCIL Girl Scouts is the preeminent leadership development organization for girls and the leading authority on girls’ healthy development. Girl Scouting builds girls of courage, confidence, and character, who make the world a better place.

Girl Scouts of Central Indiana (Council) is a non-profit organization chartered by Girl Scouts of the USA (GSUSA) to deliver local and regional program opportunities. Girl Scouts of Central Indiana serves more than 40,000 girls in 45 counties across central Indiana.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Method of Accounting: The Council maintains its accounts on the accrual basis of accounting and prepares its financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP).

Basis of Presentation: The Council reports information regarding its financial position and activities according to three classes of net assets: 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 Council and/or passage of time.

Permanently Restricted Net Assets - Net assets subject to donor-imposed stipulations that assets be maintained permanently by the Council. Generally, the donors of these assets permit the Council to use all or part of the income earned on any related investments for general or specific purposes.

Cash Equivalents: For the purpose of the statement of cash flows, the Council considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents, unless the Board has designated the funds to be reinvested and held for long-term purposes.

Girl Scouts Service Areas and Troops establish bank accounts under the Council’s tax identification number. All funds are maintained for the benefit of the girls in the respective Service Areas and Troops.

These funds are not under the financial control of the Council and have not been included in the financial statements.

Accounts Receivable: Accounts receivable includes amounts owed to the Council from individual Girl Scouts and other parties. The Council does not charge interest on past due accounts.

Pledges Receivable: Pledges receivable that are expected to be collected within one year are recorded at net realizable value. Unconditional promises to give that are expected to be collected in future years are recorded at the present value of their estimated future cash flows. The discounts on those amounts are computed using a discount rate commensurate with the risks involved. Amortization of discounts is included in contribution revenue.

(Continued) 7.

GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS Years ended December 31, 2017 and 2016

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Allowances: The Council estimates and records an allowance for uncollectible accounts and pledges receivables. The allowances are based upon prior experience and management’s analysis of specific receivables and promises to give. Losses are charged off to the reserve when management deems further collection efforts will no longer produce additional recoveries. The Council currently considers accounts and other receivables to be fully collectible. In 2015, management established an allowance for doubtful accounts related to pledges receivable. For the years ended December 31, 2017 and 2016, management has recorded an allowance for doubtful accounts of $22,629 and $8,625, respectively.

Inventories: Girl Scout supplies and merchandise for resale are stated at the lower of cost or net realizable value on a first-in, first-out basis (FIFO).

Investments: Investments in marketable securities with readily determinable fair values and all investments in debt securities are reported at their fair values in the statement of financial position. Realized and unrealized gains and losses are included in the change in net assets. Investment income and gains restricted by donors are reported as increases in unrestricted net assets if the restrictions are met (either by passage of time or use) in the reporting period in which the income and gains are recognized.

Land, Buildings and Equipment: Expenditures for land, buildings and equipment and items in excess of $5,000 which substantially increase the useful lives of existing assets are capitalized at cost or at fair value at date of gift. Repairs and maintenance costs are expensed as incurred. Depreciation has been computed on straight-line method at rates designed to depreciate the costs of assets over their estimated useful lives as follows: Buildings and improvements Furniture, fixtures and equipment Transportation equipment

10-40 years 3-10 years 5 years

Leasehold improvements and capital leased assets are depreciated over the shorter of the asset’s useful life or the lease term.

Revenue Recognition: Public support in the form of contributions, including unconditional pledges and bequests, is recognized when received, net of an allowance for uncollectible pledges. All contributions and bequests, unless specifically restricted by the donor, are considered available for unrestricted use. Donor designated United Way funds are also accounted for as contributions. For the years ended December 31, 2017 and 2016, there was approximately $62,602 and $62,360, respectively, of donor designated funds included in contribution revenue.

All donor-restricted contributions are recorded as increases in temporarily or permanently restricted net assets, depending on the restrictions. When a restriction expires (that is, when a stipulated time restriction ends or purpose restriction is accomplished), temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions.

Revenue from program product sales, consisting of Girl Scout Cookies and fall product sales, is recognized when such products are delivered. Such revenue is recorded net of gross receipts allocated to troops and product and related costs. Showcase sales, consisting of the sale of uniforms, pins, badges and other supplies, are recognized at the time of sale and are recorded net of cost of goods sold and product discounts. United Way allocations are recognized over the period designated by the local United Way. Program service fees are recognized when such program services are provided. Program fees received in advance are classified as deferred revenue.

(Continued) 8.

GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS Years ended December 31, 2017 and 2016

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) A substantial number of volunteers have donated significant amounts of their time in relation to the Council’s program services; however, no amounts have been reflected in the accompanying financial statements for the value of these donated services because they do not meet the recognition criteria.

Advertising: The Council expenses advertising costs as incurred.

Functional and Allocated Expenses: Expenses are charged directly to activities when specifically identifiable. All other costs are allocated to the activities based upon various actual statistical bases.

Salaries and related expenses are charged based on the relative amount of time historically spent by personnel.

Business and Credit Concentrations: Financial instruments, which potentially subject the Council to concentrations of credit risk, consist principally of temporary cash investments and other marketable securities and investments. The Council places its temporary cash investments with high credit quality financial institutions and from time to time balances may exceed federally insured limits. The Council manages risk on investments by maintaining a diversified portfolio of investments and placing its investments in high quality financial institutions and funds. In addition, the Council utilizes investment consultants to assist in review of investment activity and performance.

Program product sales account for a significant portion of the Council’s revenue. Program product sales include the sale of Girl Scout Cookies.

Impairment of Long-Lived Assets: On an ongoing basis, the Council reviews its long-lived assets for impairment whenever events or circumstances indicate that the carrying amount may be overstated. The Council recognizes impairment losses if the undiscounted cash flows expected to be generated are less than the carrying value of the related asset. If impaired, the assets are adjusted to fair value based on the discounted cash flows. Management does not believe any long-lived assets are impaired as of December 31, 2017 or 2016.

Income Taxes: The Council is exempt from income taxes on income from related activities under Section 501(c)(3) of the U. S. Internal Revenue Code and corresponding state tax law. Accordingly, no provision has been made for federal or state income taxes. Additionally, the Council is not considered to be a private foundation under Section 509(a) of the Internal Revenue Code.

The Council follows guidance issued by the Financial Accounting Standards Board (FASB) with respect to accounting for uncertainty in income taxes. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit will be recorded.

The Council does not expect the total amount of unrecorded tax benefits to significantly change in the next 12 months. The Council recognizes interest and/or penalties related to income tax matters in income tax expense. The Council did not have any amounts accrued for interest and penalties at December 31, 2017 and 2016.

Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses. Actual results could differ from those estimates.

(Continued) 9.

GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS Years ended December 31, 2017 and 2016

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Reclassifications: Certain prior year amounts have been reclassified to conform with current year presentation. These reclassifications had no effect on net assets.

Subsequent Events: Management has performed an analysis of the activities and transactions subsequent to December 31, 2017, to determine the need for any adjustments or disclosures to the audited financial statements for the year ended December 31, 2017. Management has performed their analysis through May 14, 2018, the date the financial statements were available to be issued.

NOTE 3 - PLEDGES RECEIVABLE At December 31, 2017 and 2016, pledges receivable consist of unconditional promises to give from various donors. Pledges that are expected to be collected beyond one year are recorded as present value using a discount rate of 2%. Management determined an allowance for uncollectible pledges of approximately 8% and 3% was necessary for the years ended December 31, 2017 and 2016, respectively.

The following is the detail of the pledges receivable balances at December 31, 2017 and 2016: 2017 Amounts Receivable in: Less than one year One to five years Greater than five years

$

148,211 140,000 288,211 (12,356) (22,629)

$

193,919 125,000 25,000 343,919 (15,714) (8,625)

$

253,226

$

319,580

Less: unamortized present value discounts Less: allowance for doubtful accounts Pledges receivable, net

2016

The Council recognized bad debt expense of $14,004 and $15,211 related to pledges receivable for the years ended December 31, 2017 and 2016, respectively.

NOTE 4 - INVESTMENTS At December 31, 2017 and 2016, the Council’s investments consist of the following: 2017 Equity mutual funds Money market funds Corporate bonds Certificates of deposit Municipal bonds U.S. Treasury Bills

2016

$

3,942,894 906,537 1,014,256 431,820 20,487 125,000

$

3,650,142 1,342,489 1,168,308 1,409,960 19,530 11,251

$

6,441,004

$

7,601,680

Investment fees expense was $9,516 and $21,160 for the years ended December 31, 2017 and 2016, respectively.

(Continued) 10.

GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS Years ended December 31, 2017 and 2016

NOTE 5 - BENEFICIAL INTEREST IN ASSETS HELD BY OTHERS The Council maintains a quasi-endowment fund with a number of Community Foundations throughout the state. The original principal of the funds cannot be committed, granted or expended by the Community Foundations. The funds are shown as an asset on the Council’s financial statements, and an allocation of earnings is available for distribution. The fair value of these beneficial interests at December 31, 2017 and 2016 is $114,703 and $110,106, respectively. Gains of $11,004 and $4,983 on these beneficial interests are included in the statements of activities for the year ended December 31, 2017 and 2016, respectively.

The funds are included in unrestricted net assets on the statements of financial position.

The Council is also the sole income beneficiary of a perpetual trust administered by an outside party. Under the terms of the trust, the Council has the irrevocable right to receive 100% of the income earned on the trust’s assets in perpetuity, but will never receive the assets held in trust. The marketable securities in the trust are valued at quoted fair values of the underlying bonds and equity investments. The Council’s estimated value of the expected future cash flows from the trust is $400,177 and $371,012 as of December 31, 2017 and 2016, respectively. The change in value of this perpetual trust was $29,165 and $(2,833) for the years ended December 31, 2017 and 2016, which is reflected in the statements of activities.

NOTE 6 - LAND, BUILDINGS AND EQUIPMENT At December 31, the carrying value of land, buildings and equipment consists of the following: 2017 Land Buildings and improvements Transportation vehicles Furniture, fixtures and equipment Leasehold improvements

$

Less: accumulated depreciation

509,600 15,645,262 300,900 1,391,642 56,679 17,904,083 (6,565,752)

$ 11,338,331

2016 $

509,600 15,585,624 265,545 1,352,572 56,679 17,770,020 (5,960,804)

$ 11,809,216

NOTE 7 - OPERATING LEASES The Council leases office space under non-cancelable operating leases that expire at various dates through November 2022. The Council also leases certain equipment under various non-cancelable operating leases, which expire at various dates through November 2022.

Future minimum lease payments under operating leases at December 31, 2017, are as follows: 2018 2019 2020 2021 2022

$

76,709 76,607 70,239 54,865 32,640

Total future minimum payments

$

310,880

Operating lease expenses for the year ended December 31, 2017 and 2016 were $76,438 and $363,452, respectively.

(Continued) 11.

GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS Years ended December 31, 2017 and 2016

NOTE 8 - CAPITAL LEASE PAYABLE In 2014, the Council entered into a capital lease agreement for computers, which expired in September 2017. Principal and interest payments of $2,338 are due monthly. In 2015, the Council entered into a capital lease agreement for copiers, which expires in November 2020. Principal and interest payments of $2,653 are due monthly. In 2016, the Council entered into a capital lease agreement for optic fibers, which expires in May 2021. Principal and interest payments of $449 are due monthly. The amount of equipment and related amortization recorded under the capital lease is as follows: 2017 Furniture, fixtures and equipment Accumulated amortization

2016

$

189,391 (118,937)

$

189,391 (81,665)

$

70,454

$

107,725

Amortization of assets held under capital leases is included with depreciation expense.

Future minimum lease payments under the capital lease at December 31, 2017, are as follows: 2018 2019 2020 2021 Total

$

Interest due

25,181 25,181 20,233 2,246 72,842 (3,995)

$

68,887

NOTE 9 - LONG-TERM DEBT Long-term debt consists of the following at December 31, 2017 and 2016: 2017 During 2015, the Council obtained a line of credit at a rate of 1-month LIBOR plus 1.50% (3.06% at December 31, 2017 and 2016), secured by the Council’s investments. The balance was fully paid in 2017. $

2016

-

$ 1,000,000

Series 2015A bond payable with interest only monthly payments starting on December 1, 2015 at a fixed interest rate of 3.10%, with principal payments starting on December 1, 2017, secured by real estate and maturing November 2027.

1,737,542

1,750,000

Series 2015B bond payable with interest only monthly payments starting on December 1, 2015 at a variable interest rate of 65% of the 1-month LIBOR plus 1.30% (2.31% and 1.71% at December 31, 2017 and 2016) until November 1, 2017 when the rate increases to 2.25% plus the 1-month LIBOR. Principal payments beginning on December 1, 2027, secured by real estate and maturing November 2042.

1,741,053

1,693,959

(Continued) 12.

GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS Years ended December 31, 2017 and 2016

NOTE 9 - LONG-TERM DEBT (Continued) Mortgage payable in monthly payments, including variable interest at the one year treasury weekly average plus 3.00% (4.73% at December 31, 2017 and 2016), secured by real estate and maturing August 2024.

68,648

Mortgage payable in monthly payments of $6,609, including interest at 3.28% as of December 31, 2017 and 2016, respectively, secured by real estate and maturing August 2025.

522,732 4,069,975 (78,766)

Bond issuance cost, net of accumulated amortization Total long-term debt

77,435

$ 3,991,209

581,381 5,102,776 (90,884) $ 5,011,892

On November 18, 2015, the Indiana Finance Authority (IFA) issued Educational Facilities Revenue Bonds, Series 2015A and Series 2015B, totaling $3,500,000 to the Council to fund the construction of the Leadership and Adult Learning Center at Camp Dellwood. The bonds are funded as draws as requested by the Council. The bonds are a direct purchase by a financial institution and do not require a letter of credit.

The bond issuances are subject to certain covenants, primarily financial coverage ratios, with which the Council has reported compliance.

Long-term debt is presented on the statement of financial position net of bond issuance costs related to the bonds payable of $78,766 and $90,884, respectively, for the years ended December 31, 2017 and 2016.

Estimated future principal payments due on long term debt are: 2018 2019 2020 2021 2022 Thereafter

221,745 228,921 236,289 243,979 251,877 2,887,164 $ 4,069,975

NOTE 10 - PERMANENTLY RESTRICTED NET ASSETS Permanently restricted net assets consist of the following at December 31: 2017 Land Beneficial interest in perpetual trust General endowments

2016

$

240,000 400,177 106,746

$

240,000 371,012 106,646

$

746,923

$

717,658

(Continued) 13.

GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS Years ended December 31, 2017 and 2016

NOTE 11 - TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets and related releases at December 31 are as follows: 2017 Beginning Balance Capital campaign Capital improvements Membership outreach Other Totals

Additions

Totals

Released

$

285,731 13,200 3,080,179 48,038

$

14,004 79,250 77,464 181,040

$

76,609 78,215 1,320,509 86,540

$

223,726 14,235 1,837,134 142,538

$

3,427,148

$

351,758

$

1,561,274

$

2,217,632

2016 Beginning Balance Capital campaign Capital improvements Membership outreach Other

2017 Ending Balance

Additions

2016 Ending Balance

Released

$

449,505 7,500 4,232,534 45,190

$

166,978 33,200 13,750 125,925

$

330,752 27,500 1,166,105 123,077

$

285,731 13,200 3,080,179 48,038

$

4,734,729

$

339,853

$

1,647,434

$

3,427,148

NOTE 12 - PENSION PLAN The Council currently participates in the Retirement Plan of the GSUSA, a noncontributory defined benefit multi-employer pension plan (Plan) sponsored by GSUSA. The risks of participating in this multi-employer plan are different from single-employer plans in the following respects: a) Assets contributed to the Plan by one employer may be used to provide benefits to employees of other participating employers. b) If a participating employer stops contributing to the Plan, the unfunded obligations of the plan may be borne by the remaining participating employers. c) If the Council chooses to stop participating in the Plan, the Council may be required to pay those plans an amount based on the Council’s proportionate share of unfunded vested plan benefits, referred to as a withdrawal liability.

The National Board of GSUSA voted to freeze the plan to new entrants and to freeze future benefit accruals for all current participants under the plan effective July 31, 2010. The plan covers substantially all of the employees of various Girl Scout councils who were eligible to participate in the plan prior to the plan freeze.

Accrued and vested benefits prior to July 31, 2010 are based on years of service and salary levels. The Council’s participation in the plan is outlined in the table below. “EIN/Pension Plan Number” provides the Employee Identification Number (EIN) and the three-digit plan number. “FIP/RP Status” indicates plans for which a financial improvement plan (FIP) or a rehabilitation plan (RP) is either pending or has been implemented. There have been no significant changes that affect the comparability of 2017 and 2016 contributions.

(Continued) 14.

GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS Years ended December 31, 2017 and 2016

NOTE 12 - PENSION PLAN (Continued)

Plan Pension Fund

Retirement Plan of the Girl Scouts of the USA

EIN/Pension Plan Number Council Contributions – Fiscal 2017 Fiscal 2016 Plan Year-End of Most Recent Form 5500 Filing FIP/RP Status Surcharge Imposed Council Contributed more than 5% of Total Contributions

13-1624016 $ 586,232 $ 589,734 12/31/2016 N/A No No

Due to the nature of the Plan, it is not practicable to determine the extent to which the assets of the Plan cover the actuarially computed value of vested benefits for the Council as a stand-alone operation. In addition, because the Plan is considered a multi-employer plan, it is only subject to certain minimum reporting requirements. As of December 31, 2016, the date for which the most current information is available, the Retirement Plan of the Girl Scouts of the USA had assets of $406,185,209 and liabilities of $526,320,058 for a net funded status of $(120,134,849). The Council expects to make contributions totaling $584,208 to the Plan during the year ending December 31, 2018.

NOTE 13 - RETIREMENT PLAN In 2012, the Council started a new 403(b) thrift plan that matches 3% of contributions made by employees.

In addition, the Council makes contributions of 2% and 4% based on years of service. The Council contributed $169,894 and $166,159, respectively, to the plan for the years ended December 31, 2017 and 2016.

NOTE 14 - RELATED PARTY Girl Scouts of Central Indiana is chartered by GSUSA to use the name, marks and programs of the national organization. The Council collected annual dues on behalf of GSUSA totaling $517,455 and $490,320 for 2017 and 2016, and passed through the amounts to GSUSA. In addition, the Council purchased uniforms and other sales items from GSUSA Equipment totaling $535,107 and $417,705 for 2017 and 2016.

(Continued) 15.

GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS Years ended December 31, 2017 and 2016

NOTE 15 - EMPLOYEE SELF-INSURANCE PROGRAM The Council has adopted a partially self-funded insurance plan for employee medical and prescription drug insurance. Expenses are recorded as incurred. Insurance policies in force at December 31, 2017 and 2016 limit the Council’s maximum claims cost to approximately $1,021,623 and $862,226 and the maximum claim liability per covered individual to $40,000. Actual claims costs were $689,478 and $612,414 for the years ended December 31, 2017 and 2016, respectively. The Council’s portion of the predetermined funding provision is charged to expense each month. Unpaid claims incurred prior to December 31 and filed within three months of year-end are accrued at December 31. This liability is part of accrued expenses on the statement of financial position.

NOTE 16 - COMMITMENTS AND CONTINGENCIES The Council is involved, from time to time, in claims and legal actions arising in the course of operations.

At December 31, 2017 and 2016, there are no matters that have a material effect on the Council’s financial statements.

NOTE 17 - COST OF SALES Net product sales for the year ended December 31, 2017:

Sales Cost of sales Net Sales

Cookie Sales

Product Sales

Showcase Sales

Total

$ 12,295,845 (5,181,822)

$

417,824 (35,779)

$

819,091 (537,384)

$ 13,532,760 (5,754,985)

$ 7,114,023

$

382,045

$

281,707

$ 7,777,775

Net product sales for the year ended December 31, 2016:

Sales Cost of sales Net Sales

Cookie Sales

Product Sales

Showcase Sales

Total

$ 11,550,372 (4,681,311)

$

528,148 (226,877)

$

793,796 (533,657)

$ 12,872,316 (5,441,845)

$ 6,869,061

$

301,271

$

260,139

$ 7,430,471

NOTE 18 - DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the Council’s principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

(Continued) 16.

GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS Years ended December 31, 2017 and 2016

NOTE 18 - DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued) To maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value, the Council uses the fair value hierarchy. GAAP describes three levels of inputs that may be used to measure fair value: Level 1: Inputs include quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Inputs include significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Inputs include significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

In many cases, a valuation technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy. The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy.

Pursuant to the adoption of ASU 2015-07, Fair Value Measurement, those investments which are valued at net asset value are excluded from the fair value hierarchy.

The fair value of mutual funds and money market funds are based on quoted prices in active markets. This is considered a level 1 input. The fair value of the certificates of deposit, U.S. Treasury bills, corporate and municipal bonds are based on similar investments over the same period at specific rates. These are considered a level 2 input. The valuations of the level 2 investments are determined using the market or income approach.

The fair value of beneficial interest in assets held by various community foundations is based upon the Council’s proportionate share of the community foundations’ pooled investment portfolio. The Council's management reviews the valuations and returns in comparison to industry benchmarks and other information provided by the community foundations. The Council uses the net asset value (NAV) to determine beneficial interest in assets valuation using the market approach. The Council does not have the ability to redeem the beneficial interests in assets on a short-term basis. Withdrawals are limited to the terms of the Council's agreements with the various community foundations.

The fair value of beneficial interest in trust assets (or any type of beneficial interest) is based on a valuation model that calculates the present value of estimated distributed income. The valuation model incorporates assumptions that market participants would use in estimating future distributed income. The Council is able to compare the valuation model inputs and results to widely available published industry data for reasonableness. If not readily comparable to published data, then the Council would have to develop a model similar to the above for a Level 3 input. Since the Council does not have the ability to redeem these beneficial interests on a short-term basis, they are classified as Level 3 valuations.

(Continued) 17.

GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS Years ended December 31, 2017 and 2016

NOTE 18 - DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued) Assets measured at fair value on a recurring basis for 2017 are summarized below: Fair Value Measurements Level 1 Assets: Money market funds Equity mutual funds Certificates of deposit U.S. Treasury Bills Corporate bonds Municipal bonds Total investments

$

906,537 3,942,894 4,849,431

Beneficial interest in assets held by others Beneficial interest in perpetual trust Total

Level 2 $

Funds Valued at NAV

Level 3

431,820 125,000 1,014,256 20,497 1,591,573

$

-

$

-

-

-

-

114,703

-

-

400,177

-

$ 4,849,431

$ 1,591,573

$

400,177

$

114,703

The table below presents a reconciliation and income statement classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2017: Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Beneficial Interest in Perpetual Trusts Beginning balance Additions Withdrawals Change in value of beneficial interest Fees

$

371,012 (13,385) 45,360 (2,810)

Ending balance

$

400,177

(Continued) 18.

GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS Years ended December 31, 2017 and 2016

NOTE 18 - DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued) Assets measured at fair value on a recurring basis for 2016 are summarized below: Fair Value Measurements Level 1 Assets: Money market funds Equity mutual funds Certificates of deposit U.S. Treasury Bills Corporate bonds Municipal bonds Total investments

$ 1,342,489 3,650,142 4,992,631

Beneficial interest in assets held by others Beneficial interest in perpetual trust Total

Level 2 $

Funds Valued at NAV

Level 3

1,409,960 11,251 1,168,308 19,530 2,609,049

$

-

$

-

-

-

-

110,106

-

-

371,012

-

$ 4,992,631

$ 2,609,049

$

371,102

$

110,106

The table below presents a reconciliation and income statement classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2016: Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Beneficial Interest in Perpetual Trusts Beginning balance Additions Withdrawals Change in value of beneficial interest Fees

$

373,845 4,693 (17,588) 12,709 (2,647)

Ending balance

$

371,012

NOTE 19 - ENDOWMENT COMPOSITION DISCLOSURE The Council’s endowment contains funds held for the benefit of the Council at various community foundations in Indiana. It has been determined that all amounts contributed to the foundations were from the Council’s own contributions to the funds and are considered to be an unrestricted part of the endowment.

(Continued) 19.

GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS Years ended December 31, 2017 and 2016

NOTE 19 - ENDOWMENT COMPOSITION DISCLOSURE (Continued) The endowment also includes other restricted funds which are held as part of the Council’s investments.

The allocated interest for this endowment is considered to be a temporarily restricted piece of the endowment.

A beneficial interest in a perpetual trust has been included as a permanently restricted piece of the endowment. However, the beneficial interest in perpetual trust is not legally subject to SPMIFA, because the Board does not have the ability to control the investments and spending policy of this trust.

Endowment net asset composition by type of fund as of December 31, 2017:

Unrestricted Donor-restricted endowment funds Beneficial interest in perpetual trust Unrestricted funds held by community foundations Total funds

$

$

-

Temporarily Restricted

$

Permanently Restricted

-

$

Total

106,746

$

106,746

-

-

400,177

400,177

114,703

-

-

114,703

114,703

$

-

$

506,923

$

621,626

Endowment net asset composition by type of fund as of December 31, 2016:

Unrestricted Donor-restricted endowment funds Beneficial interest in perpetual trust Unrestricted funds held by community foundations Total funds

$

$

-

Temporarily Restricted

$

Permanently Restricted

-

$

Total

106,646

$

106,646

-

-

371,012

371,012

110,106

-

-

110,106

110,106

$

-

$

477,658

$

587,764

Changes in endowment net assets for year ended December 31, 2017:

Unrestricted Net assets, beginning of year Net investment return Gifts Appropriation of endowment assets for expenditure Net assets, end of year

$

110,106 9,929 -

Temporarily Restricted $

(5,332) $

114,703

Permanently Restricted -

$

$

-

Total

477,658 29,165 100

$

$

506,923

587,764 39,094 100 (5,332)

$

621,626

(Continued) 20.

GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS Years ended December 31, 2017 and 2016

NOTE 19 - ENDOWMENT COMPOSITION DISCLOSURE (Continued) Changes in endowment net assets for year ended December 31, 2016:

Unrestricted Net assets, beginning of year Net investment return Gifts Appropriation of endowment assets for expenditure Net assets, end of year

$

110,064 4,983 -

Temporarily Restricted $

(4,941) $

110,106

Permanently Restricted -

$

480,181 (2,833) 300

$

-

Total $

$

477,658

590,255 2,150 300 (4,941)

$

587,764

Interpretation of SPMIFA: The Council has interpreted the State Prudent Management of Institutional Funds Act (SPMIFA) as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary.

As a result of this interpretation, the Council classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the Council in a manner consistent with the standard of prudence prescribed by SPMIFA. In accordance with SPMIFA, the Council considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: (1) The duration and preservation of the fund (2) The purposes of the organization and the donor-restricted endowment fund (3) General economic conditions (4) The possible effect of inflation and deflation (5) The expected total return from income and the appreciation of investments (6) Other resources of the organization (7) The investment policies of the organization Spending Policies of the Endowment Funds: The endowments held at the various community foundations have adopted a spending policy based on the guidance of the community foundations. On average, the community foundations set a suggested spending policy of 5% of the fund balance. This policy is subject to change based on market and other factors.

The endowments held as part of the pooled investments have been designated as permanently restricted.

All but one of the donor restricted funds has allowed the income from these funds to be used for unrestricted purposes. One of the donor restricted funds has a temporary restriction based on the donor guidance. The Council has adopted the policy that interest and dividends only will be allocated to the fund and held as temporarily restricted until appropriated for expenditure.

(Continued) 21.

GIRL SCOUTS OF CENTRAL INDIANA, INC. NOTES TO FINANCIAL STATEMENTS Years ended December 31, 2017 and 2016

NOTE 19 - ENDOWMENT COMPOSITION DISCLOSURE (Continued) Return Objectives and Risk Parameters: The Council has adopted investment and spending policies for endowment assets that attempt to preserve the capital, maximize the return within reasonable and prudent levels of risk, and provide a return to the restricted funds. Endowment assets are comprised of the assets of donor-restricted funds that the organization must hold in perpetuity. Under this policy, the endowment assets are invested in a manner that is intended to produce results that exceed the price and yield a return while assuming a moderate level of investment risk. Actual returns in any given year may vary from this amount.

Strategies Employed for Achieving Objectives: To satisfy its long-term rate-of-return objectives, the Council relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends).

Funds with Deficiencies: As of December 31, 2017 and 2016, the Council did not have any funds with deficiencies.

22.

SUPPLEMENTARY INFORMATION

GIRL SCOUTS OF CENTRAL INDIANA, INC. SCHEDULE OF EXPENDITURES OF FEDERAL, STATE, AND LOCAL AWARDS Year ended December 31, 2017

Grantor/ Program Title Department of Education Passed through the Indiana Department of Education: Summer Food Service Program for Children

CFDA Number

10.559

Amount

$

32,650

23.