SPECIAL-PURPOSE FINANCIAL SCHEDULES OF POTOMAC ADVENTIST BOOK AND HEALTH FOOD CENTER
January 31, 2015, 2014, 2013, 2012, and 2011
Special-Purpose Financial Schedules POTOMAC ADVENTIST BOOK AND HEALTH FOOD CENTER January 31, 2015, 2014, 2013, 2012, and 2011
TABLE OF CONTENTS
Auditor’s Opinion on the Special-Purpose Financial Schedules .............................................................. 1 - 2 Special-Purpose Schedules of Financial Position ......................................................................................... 3 Special-Purpose Schedules of Changes in Net Assets ................................................................................ 4 Special-Purpose Schedules of Cash Flows .................................................................................................. 5 Notes to the Special-Purpose Financial Schedules ............................................................................... 6 - 13
To the Constituents Potomac Conference Corporation of Seventh-day Adventists Staunton, Virginia
We have audited the accompanying schedules of Potomac Adventist Book and Health Food Center (ABC), a department of Potomac Conference Corporation of Seventh-day Adventists (Conference), which comprise the schedules of financial position as of January 31, 2015, 2014, 2013, 2012, and 2011, and the related schedules of changes in net assets and schedules of cash flows for the years then ended, and the related notes to the schedules. Management’s Responsibility for the Schedules Management is responsible for the preparation and fair presentation of these schedules in accordance with United States of America accounting principles generally accepted by the Seventh-day Adventist denomination. This includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of schedules that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these schedules based on our audit. We conducted our audit in accordance with United States of America auditing standards generally accepted by the Seventhday Adventist denomination. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the schedules are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the schedules. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the schedules, 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 schedules 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 schedules. 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, as internal auditors of the General Conference of Seventh-day Adventists, the schedules referred to above present fairly, in all material respects, the assets, liabilities, and net assets of Potomac Adventist Book and Health Food Center, a department of Potomac Conference Corporation of Seventhday Adventists, as of January 31, 2015, 2014, 2013, 2012, and 2011, and the changes in its net assets and the cash flows of this department for the years then ended in conformity with United States of America accounting principles generally accepted by the Seventh-day Adventist denomination.
1
Emphasis of Matter We draw attention to Note 13 to the schedules, which describes the basis of special presentation. The accompanying schedules were prepared to present only the accounts and activity of the ABC, which is a department of the Conference. Our opinion is not modified with respect to this matter. Other Matter Our report is intended solely for the information and use of the officers of the Conference and the ABC, their financial audit review committee, their governing committee, the delegates to its constituency meetings, and the officers and their designees of higher denominational organizations. This report is not intended to be and should not be used by anyone other than these specified parties.
July 23, 2015
2
POTOMAC ADVENTIST BOOK AND HEALTH FOOD CENTER Special-Purpose Schedules of Financial Position January 31, 2015, 2014, 2013, 2012, and 2011
ASSETS Current Assets Cash & Cash Equivalents (Note 2) Accounts Receivable, Net (Note 3) Inventories (Note 4) Prepaid Expense Prepaid Lease Expense, Current (Note 5) Notes Receivable, Current (Note 6) Total Current Assets
2015 865,375 192,583 945,832 41,361 122,545 2,167,696
2014 359,150 206,212 1,100,216 28,548 21,025 121,025 1,836,176
2013 489,965 213,472 1,077,845 37,067 21,040 318,433 2,157,822
2012 511,425 214,130 973,530 45,516 21,029 312,518 2,078,148
2011 459,495 215,552 988,909 36,837 21,029 304,073 2,025,895
Property, Plant & Equipment, Net (Note 7)
5,666,996
5,748,127
5,800,917
5,794,007
5,866,999
Other Assets Prepaid Lease Expense, Long-term (Note 5) Total Other Assets Total Assets
7,834,692
3 3 7,584,306
21,002 21,002 7,979,741
42,041 42,041 7,914,196
63,077 63,077 7,955,971
408,726 77,770 162,000 648,495
478,051 73,718 464,236 1,016,005
616,294 67,283 408,057 1,091,634
476,844 62,347 408,057 947,248
450,969 56,312 388,208 895,489
Other Liabilities Accounts Payable, Long-term (Note 8) Notes Payable, Long-term (Note 9) Total Other Liabilities Total Liabilities
30,581 2,598,300 2,628,881 3,277,376
30,074 2,532,418 2,562,492 3,578,497
26,806 3,038,094 3,064,900 4,156,534
26,657 3,461,566 3,488,223 4,435,471
20,808 3,893,729 3,914,537 4,810,026
NET ASSETS Unrestricted: unallocated Unrestricted: allocated Unrestricted: net invested in plant Total net assets Total liabilities and net assets
1,055,093 3,502,223 4,557,316 7,834,692
(1,278,322) 240 5,283,891 4,005,809 7,584,306
(1,064,674) 697 4,887,184 3,823,207 7,979,741
(979,914) 1,837 4,456,803 3,478,726 7,914,196
(980,399) 8,864 4,117,480 3,145,945 7,955,971
LIABILITES Current Liabilities Accounts Payable, Current (Note 8) Unearned Income Notes Payable, Current (Note 9) Total Current Liabilities
The accompanying notes are an integral part of the financial statements. 3
POTOMAC ADVENTIST BOOK AND HEALTH FOOD CENTER Special-Purpose Schedules of Changes in Net Assets For the Years Ended January 31, 2015, 2014, 2013, 2012, and 2011
CHANGES IN UNRESTRICTED NET ASSETS Revenues From Operations Total Sales Less: Cost of Goods Sold Gross Profit on Sales Shipping & Handling Income Finance Charge Income Rent Income Other Income Gross Revenue from Operations OPERATING EXPENSE Program Function: Advertising & Selling Expense (Note 10) Rental Expense Supporting Services Function: General & Administrative Expense (Note 11) Total Operating Expense Net Revenue from Operations Donation Income Subsidies Contributed Services Income (Note 14) Interest Expense Net Nonoperating Activity Increase (Decrease) in Net Assets Net Assets, Beginning of Year Net Assets, End of Year
2015 6,750,009 (4,847,506) 1,902,503 51,739 3,969 407,240 3,783
2014 6,810,401 (4,854,327) 1,956,074 51,845 5,148 402,861 26,205
2013 7,061,841 (4,926,700) 2,135,141 50,014 7,810 403,566 11,113
2012 7,395,217 (5,221,383) 2,173,834 51,798 11,434 402,188 857
2011 7,257,132 (5,033,443) 2,223,689 54,229 8,710 397,705 29
2,369,234
2,442,133
2,607,644
2,640,111
2,684,362
1,506,054 151,634
1,689,897 154,441
1,679,804 165,546
1,669,383 185,667
1,570,431 206,786
401,569
440,072
448,468
433,017
412,863
2,059,258
2,284,410
2,293,818
2,288,067
2,190,080
309,977
157,723
313,826
352,044
494,282
888,992 28,710 (676,171) 241,531
113,971 30,837 (119,929) 24,879
147,071 31,232 (147,645) 30,658
155,638 24,704 (199,605) (19,263)
1,012 164,080 25,413 (223,664) (33,159)
344,481
332,781
461,123
3,478,726 3,823,207
3,145,945 3,478,726
2,684,822 3,145,945
551,507 4,005,809 4,557,316
182,602 L 3,823,207 4,005,809
The accompanying notes are an integral part of the financial statements. 4
POTOMAC ADVENTIST BOOK AND HEALTH FOOD CENTER Special-Purpose Schedules of Cash Flows For the Years Ended January 31, 2015, 2014, 2013, 2012, and 2011
CASH FLOWS FROM OPERATING ACTIVITIES
2015
2014
2013
2012
2011
Increase (Decrease), Net Assets Adjustments to reconcile change in net assets to net cash provided: Depreciation Expense (Note 7) Amortization Expense (Increase) Decrease, Accounts Receivable (Increase) Decrease, Inventories & Prepaid Expense Increase (Decrease), Current Accounts Payable and Unearned Income (Increase) Decrease, Agency Fund Cash Increase (Decrease), Agency Fund Liability Net Cash Provided (Used) by Operating Activities
551,507
182,602
344,481
332,781
461,123
87,282 21,039 12,109 141,571
94,386 7,260 (13,852)
95,277 658 (95,876)
83,615 1,422 6,699
78,355 279 (45,877)
(65,274) 748,234
(131,808) 138,588
144,386 488,926
31,910 456,427
105,971 848 (848) 599,851
(6,163) (6,163)
20,999 197,408 (41,594) 176,813
21,039 (5,915) (102,187) (87,063)
21,036 (8,445) (10,623) 1,968
21,036 (304,080) (80,910) (363,954)
507 2,211,681 (2,448,034) (235,847)
3,268 29,249 (478,733) (446,216)
149 55,261 (478,733) (423,323)
5,849 93,952 (506,266) (406,465)
4,174 129,600 (623,246) (489,472)
(130,815) 489,965 359,150
(21,460) 511,425 489,965
51,930 459,495 511,425
(253,574) 713,069 459,495
CASH FLOWS FROM INVESTING ACTIVITIES Long-term Operating Lease New Notes Receivable Issued Purchases of Plant Assets Net Cash Provided (Used) by Investing Activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds (Payments), Long-Term Accounts Payable Proceeds from External Borrowing (Interest Paid) Principal Payments on Notes Payable Net Cash Provided (Used) by Financing Activities Increase (Decrease) Cash for the Year Cash & Cash Equivalents, Beginning of Year Cash & Cash Equivalents, End of Year
506,225 359,150 865,375
Supplemental Cash Flow Data: Cash paid during 2015, 2014, 2013, 2012, and 2011 for interest was $327,693, $478,733, $147,645, $199,605, and $223,664 respectively.
The accompanying notes are an integral part of the financial statements. 5
POTOMAC ADVENTIST BOOK AND HEALTH FOOD CENTER Notes to the Special-Purpose Financial Schedules Years Ended January 31, 2015, 2014, 2013, 2012, and 2011
Note 1 – Organization description and summary of significant accounting policies Potomac Adventist Book and Health Food Center (ABC) is a department of the Potomac Conference Corporation of Seventh-day Adventists (Conference) whose objectives are to sell and distribute Christian literature and related merchandise to its constituents and congregations, and to serve as a witness and outreach to the community. The ABC receives most of its revenue in the form of sales of its merchandise. The ABC is a religious not-for-profit organization, and is exempt from federal, state and local income taxes under the provisions of Section 501(c)(3) of the Internal Revenue Code, and corresponding sections of applicable state and local codes, except for taxes on unrelated business income as described in sections 511-514 of the Internal Revenue Code. Summary of significant accounting policies (a) Basis of accounting: The significant accounting policies of the ABC are essentially the same as generally accepted accounting principles for notfor-profit ABCs as promulgated by the Financial Accounting Standards Board. These significant policies are described below to enhance the usefulness of the financial schedules. The financial schedules of the ABC have been prepared on the accrual basis of accounting. In conformity with the accrual basis of accounting, the ABC has evaluated events that occurred subsequent to the financial schedule date, up to July 23, 2015, which is the date the financial schedules were available to be issued. (b) Use of estimates: The preparation of financial schedules in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial schedules and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (c) Restricted resources: The ABC reports gifts of cash and other assets as 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 net assets are reclassified to unrestricted net assets and reported in the schedule of activities as net assets released from restrictions. The ABC reports gifts of land, buildings and equipment as unrestricted support unless explicit donor stipulations specify how the donated assets must be used. Gifts of long-lived assets with explicit restrictions that specify how the assets are to be used, and gifts of cash or other assets that must be used to acquire long-lived assets, are reported as restricted support. Absent explicit donor stipulations about how long those long-lived assets must be maintained, the ABC reports expirations of donor restrictions when the donated or acquired long-lived assets are placed in service. (d) Equipment and depreciation: Uses of funds for equipment acquisitions and debt service payments are accounted for as cash flows from investing and financing activities. Restricted proceeds from the sale of equipment and restricted income from plant related investments are recorded as restricted gains. Interest payments made to retire plant indebtedness are recorded as non-operating expense. Equipment is recorded at cost when purchased or at fair market value at date of gift. Furniture and equipment purchases $1,000 and larger are capitalized. Purchases below $1,000 may be capitalized at management's discretion. Depreciation of equipment is provided over the estimated useful lives of the respective assets, building 6075 years, equipment 3-5 years, vehicles 5-10 years, and electronics 3-5 years, on a straight-line basis. Depreciation expense is recorded as operating expense in the schedule of changes in net assets. (e) Cash equivalents: Cash equivalents are highly-liquid assets held for operating, which are readily convertible to cash and have a maturity date of less than three months from date of acquisition. Cash and investments held for other than operating are not classified as cash and cash equivalents. The increase or decrease in non-operating cash and investments is reported in the schedule of cash flows as proceeds from or purchases of investments. (f) Fair value of financial instruments: The methods and assumptions used to estimate fair values are: Short-term financial instruments are valued at their carrying amounts in the financial schedules, which are reasonable estimates of fair value due to the relatively short period to maturity of the instruments. This applies to cash, cash equivalents, accounts receivable and certain current liabilities. Investment securities are valued at quoted market price or reasonable obtainable market value estimate at the reporting date for those or similar securities. The difference between aggregate market value and cost for each type of security is recorded in a valuation account. The change in this account at the close of each year is recognized as gain or loss.
6
POTOMAC ADVENTIST BOOK AND HEALTH FOOD CENTER Notes to the Special-Purpose Financial Schedules Years Ended January 31, 2015, 2014, 2013, 2012, and 2011
Note 1 – Summary of significant accounting policies (continued) (g) Current Assets and Liabilities: Assets and liabilities are classified as current or long-term, depending on their characteristics. This excludes from current assets the cash and claims to cash that are restricted to use for other than current operations, committee allocated for the acquisition or construction of plant assets or for the liquidation of plant fund debt, or held as agent for others. This excludes from current liabilities the long-term portion of all debt, plant fund debt payable within the next fiscal year to the extent covered by designated plant fund liquid assets, or amounts held as fiscal agent for others. Working capital (current assets less current liabilities) for the ABC usually reflects operating working capital, since usually no plant-related assets or liabilities are classified as current. (h) Concentrations of Risk: The ABC receives most of its revenue from sales of merchandise. It is subject to the effect of economic trends that may decrease the ability of customers to purchase its merchandise. Also, it purchases most of its inventory from three major suppliers: Pacific Press Publishing Association, Review & Herald Publishing Association and Sunbelt Natural Foods. There is a risk that suppliers' pricing and product decisions could conflict with the ABC's sales objectives. Cash, which at times exceeds amounts covered by FDIC insurance, is deposited in highquality financial institutions. (i) Provision for Uncollectible Accounts: An allowance for uncollectible accounts is provided through routine additions based on sales, historical bad debt experience and aging of receivables. Accounts deemed to be uncollectible are charged to the allowance. (j) Inventory: Inventory is stated at the lower of cost or fair value under the first-in, first-out method. (k) Investment Income: Investment Income is accounted for as unrestricted non-operating income.
Note 2 – Cash & Cash Equivalents Imprest Cash Checking Accounts Savings Accounts Money Market Accounts Total Cash & Cash Equivalents
2015 4,310 505,266 355,799 865,375
2014 4,310 325,856 28,984 359,150
2013 4,310 466,804 5,525 13,326 489,965
2012 4,310 501,594 5,521 511,425
2011 4,779 436,410 5,498 12,808 459,495
2015 1,318 3,867 12,115 158,694 2,272 13,510 3,545 8,861 (11,598) 192,583
2014 3,882 4,249 481 2,496 163,522 7,308 14,095 2,179 19,598 (11,598) 206,212
2013 5,417 10,023 858 1,805 171,063 3,566 13,823 1,981 16,698 (11,762) 213,472
2012 5,336 4,855 7,702 320 172,929 3,208 13,722 5,349 12,307 (11,598) 214,130
2011 7,090 1,530 3,988 6,466 180,880 3,982 9,891 996 17,769 (17,040) 215,552
2015 304,967 409,022 231,842 945,832
2014 354,173 495,757 250,286 1,100,216
2013 443,675 415,004 219,166 1,077,845
2012 372,142 366,088 235,300 973,530
2011 425,942 368,515 194,452 988,909
Note 3 – Accounts Receivable Trade Higher Organizations Potomac Conference Other Conferences Churches Schools Individuals Other Adventist Book Centers Accounts Payable Debit Balances Allowance for Doubtful Accounts Total Accounts Receivable, Net
Note 4 – Inventories Books Food Other Total Inventories
Inventory is pledged as collateral for the Columbia Union Revolving Fund note payable set forth in Note 9.
7
POTOMAC ADVENTIST BOOK AND HEALTH FOOD CENTER Notes to the Special-Purpose Financial Schedules Years Ended January 31, 2015, 2014, 2013, 2012, and 2011
Note 5 – Prepaid Lease Expense Prepaid Lease Expense: Lease - Commission Fees Lease - Attorney Fees Total Prepaid Lease Expense Current Portion Long-term Portion
Prepaid Lease Expense Lease - Commission Fees Lease - Attorney Fees Total Prepaid Lease Expense Current Portion Long-term Portion
Prepaid Lease Expense Lease - Commission Fees Lease - Attorney Fees Total Prepaid Lease Expense Current Portion Long-term Portion
Prepaid Lease Expense Lease - Commission Fees Lease - Attorney Fees Total Prepaid Lease Expense Current Portion Long-term Portion
Prepaid Lease Expense Lease - Commission Fees Lease - Attorney Fees Total Prepaid Lease Expense Current Portion Long-term Portion
Note 6 – Notes Receivable Columbia Union Revolving Fund @1.25%, on demand
2015
2014
Gross Amount 155,846 54,439 210,285
January 31, 2015 Accumulated Amortization (155,846) (54,439) (210,285)
Gross Amount 155,846 54,439 210,285
January 31, 2014 Accumulated Amortization (140,265) (48,992) (189,257)
Gross Amount 155,846 54,439 210,285
January 31, 2013 Accumulated Amortization (124,680) (43,563) (168,243)
Gross Amount 155,846 54,439 210,285
January 31, 2012 Accumulated Amortization (109,091) (38,124) (147,215)
Gross Amount 155,846 54,439 210,285
January 31, 2011 Accumulated Amortization (93,508) (32,671) (126,179)
2013
2012
Net Amount -
Net Amount 15,581 5,447 21,028 (21,025) 3
Net Amount 31,166 10,876 42,042 (21,040) 21,002
Net Amount 46,755 16,315 63,070 (21,029) 42,041
Net Amount 62,338 21,768 84,106 (21,029) 63,077
2011
122,545
121,025
318,433
312,518
304,073
122,545
121,025
318,433
312,518
304,073
8
POTOMAC ADVENTIST BOOK AND HEALTH FOOD CENTER Notes to the Special-Purpose Financial Schedules Years Ended January 31, 2015, 2014, 2013, 2012, and 2011
Note 7 – Property, Plant & Equipment 2015 Land Building Electronics Vehicles Mountain View Campmeeting Equipment: Store, Office & Computer Silver Spring Total Plant Assets at 1/31/15 2014 Land Building Electronics Vehicles Mountain View Campmeeting Equipment: Store, Office & Computer Silver Spring Total Plant Assets at 1/31/14 2013 Land Building Electronics Vehicles Mountain View campmeeting Equipment: Store, office, and computer Silver Spring Total Plant Assets at 1/31/13 2012 Land Building Electronics Vehicles Mountain View campmeeting Equipment: Store, office, and computer Silver Spring Total Plant Assets at 1/31/12
2011 Land Building Electronics Vehicles Mountain View campmeeting Equipment: Store, office, and computer Silver Spring Total Plant Assets at 1/31/11
Total Cost 2,243,016 4,019,441 6,018 21,581 19,359
Accumulated Depreciation 737,612 6,015 21,580 18,446
Net Value 2,243,016 3,281,829 3 1 913
Depreciation Expense 54,378 910
643,794 130,403 7,083,613
502,569 130,394 1,416,616
141,225 9 5,666,996
31,994 87,282
2,243,016 4,019,441 6,018 21,581 19,359
683,234 6,015 21,580 17,535
2,243,016 3,336,207 3 1 1,824
54,378 910
637,631 130,403 7,077,449
470,564 130,394 1,329,322
167,067 9 5,748,127
39,098 94,386
2,243,016 4,019,441 6,018 21,581 19,359
628,857 6,015 21,580 16,625
2,243,016 3,390,584 3 1 2,734
54,367 910
596,036 130,403 7,035,854
431,466 130,394 1,234,937
164,570 9 5,800,917
40,000 95,277
2,243,016 4,019,441 6,018 21,581 19,359
574,490 6,015 21,580 15,715
2,243,016 3,444,951 3 1 3,644
54,384 910
493,849 130,403 6,933,667
391,466 130,394 1,139,660
102,383 9 5,794,007
28,321 83,615
2,243,016 4,019,441 6,018 21,581 19,359
520,106 6,015 21,580 14,805
2,243,016 3,499,335 3 1 4,554
54,378 4,315 -
483,226 130,403 6,923,044
363,145 130,394 1,056,045
120,081 9 5,866,999
16,965 2,697 78,355
Property, Plant & Equipment are pledged as collateral for the Columbia Union Revolving Fund note payable set forth in Note 9.
9
POTOMAC ADVENTIST BOOK AND HEALTH FOOD CENTER Notes to the Special-Purpose Financial Schedules Years Ended January 31, 2015, 2014, 2013, 2012, and 2011
Note 8 – Accounts Payable Trade Wages Accrued Payroll Potomac Conference Sales Taxes Miscellaneous Accounts Receivable Credit Balances Total Accounts Payable, Current Accrued Retirement Allowance Payable Total Accounts Payable, Long-term
2015 227,242 27,340 99,038 9,445 7,888 37,773 408,726
2014 216,255 42,692 172,569 8,812 211 37,512 478,051
2013 220,845 29,088 324,143 8,795 207 33,216 616,294
2012 286,712 58,223 83,407 11,838 4,522 32,142 476,844
2011 225,711 43,209 101,935 10,182 24,574 4,167 41,191 450,969
30,581 30,581
30,074 30,074
26,806 26,806
26,657 26,657
20,808 20,808
Note 9 – Notes Payable Columbia Union Revolving Fund (4.25%), $13,500 monthly, 240 months Potomac Conference, 1.25%** Total Notes Payable, 2015
2015 Total 2,164,773 595,527 2,760,300
2014 Total
2013 Total
2012 Total
2011 Total
464,236 2,532,418 2,996,654
913,733 2,532,418 3,446,151
1,337,204 2,532,418 3,869,623
1,749,519 2,532,418 4,281,937
Principal amounts due in each of the next five years are:
2016 2017 2018 2019 2020 Future Total
162,000 74,581 77,814 81,186 84,704 2,280,015 2,760,300
**The Potomac Conference of Seventh-day Adventists made appropriations equal to the interest charged on the loan for the fiscal years ended January 31, 2015.
Note 10 – Advertising & Selling Expense Salary & Allowances Retirement Contribution Advertising Bad Debts Bank Fees Campmeeting Credit Card Discounts Depreciation Freight & Postage Insurance Office & Computer Orchard Center CAM Repairs & Maintenance Sales Tax Adjustment Telephone Truck Expense Unrelated Business Income Taxes LivingWell Program Food Demonstration Utilities Total Advertising & Selling Expense
2015 935,936 146,636 47,061 (68) 7,079 8,789 98,213 35,045 52,927 10,805 31,506 3,771 35,151 293 12,744 461 12,425 3,155 1,121 63,002 1,506,054
2014 1,023,278 151,760 53,017 1,882 8,284 11,240 95,497 39,779 48,403 17,354 38,004 1,639 37,930 128 14,935 474 32,893 38,575 328 74,497 1,689,897
10
2013 1,053,529 146,794 60,256 6,883 9,192 91,581 40,386 45,335 21,321 42,284 4,181 38,614 13,996 531 15,865 20,756 68,300 1,679,804
2012 1,039,944 153,673 80,626 (5,151) 5,479 11,002 100,866 32,608 51,844 13,600 38,764 6,569 37,470 33 13,455 527 19,490 219 68,365 1,669,383
2011 969,470 145,898 63,878 (5,280) 5,103 13,780 95,479 29,086 51,553 17,709 32,462 9,111 33,916 13,455 479 18,211 (997) 77,118 1,570,431
POTOMAC ADVENTIST BOOK AND HEALTH FOOD CENTER Notes to the Special-Purpose Financial Schedules Years Ended January 31, 2015, 2014, 2013, 2012, and 2011
Note 11 – General & Administrative Expense Salary & Allowances Retirement Contribution Contributed Services Depreciation Insurance Miscellaneous Office & Computer Orchard Center CAM Real & Personal Property Taxes Repairs & Maintenance Telephone Utilities Total General & Administrative Expense
2015 233,984 36,659 28,710 17,496 5,395 2,944 15,518 1,858 4,384 17,313 6,277 31,031 401,569
2014 255,820 37,940 30,837 19,859 8,664 18,974 819 3,575 18,936 7,456 37,192 440,072
2013 263,382 36,698 31,233 20,162 10,645 21,111 2,087 2,785 19,278 6,988 34,099 448,468
2012 259,986 38,418 24,704 16,280 6,790 19,353 3,280 4,650 18,707 6,718 34,131 433,017
2011 242,368 36,475 25,413 14,521 8,841 2,018 15,989 4,488 1,435 16,705 6,627 37,983 412,863
Note 12 – Pension & Other Post-Retirement Benefits Defined benefit plans The Organization participates in the following non-contributory, defined benefit plans: 1. The defined benefit pension plan known as the Seventh-day Adventist Retirement Plan of the North American Division (NADRP). This plan, which covers substantially all employees of the Organizations, is administered by the General Conference of Seventh-day Adventists, North American Division (NAD), in Silver Spring, Maryland, and is exempt from the Employee Retirement Income Security Act of 1974 as a "multipleemployer" plan of a church-related agency. This plan provides primarily monthly pension benefits based on years of service and other factors. The NAD Committee voted to freeze accrual of service credit in NADRP effective December 31, 1999, except for employees who chose the career completion option, and to start a new defined contribution plan effective January 1, 2000. Certain employees will continue to be eligible for future benefits under this plan. The Organizations continue to make contributions to this plan, at rates determined annually by the plan. 2.
The defined benefit health care plan known as the General Conference of Seventh-day Adventist North American Division Retiree Auxiliary Healthcare Assistance and Death Benefit Plan (RAHAP). This plan, which covers substantially all employees of the Organization, is administered by NAD in Silver Spring, Maryland, and is exempt from the Employee Retirement Income Security Act of 1974 as a “multiple-employer” plan of a church-related agency. This plan provides primarily health-care benefits which supplement Medicare benefits. The extent of these benefits is based on years of service and the beneficiary’s monthly contribution.
Accounting standards define these plans as “multiemployer” plans. As such, it is not required, nor is it possible, to determine the actuarial value of accumulated benefits or plan net assets for employees of the Organization apart from other plan participants. Information about the required contributions to these plans, the actuarial obligation for future benefits, and the funded status of these plans, is presented in the tables below. Required contributions from the Organization: For the year ended January 31, 2015 For the year ended January 31, 2014 For the year ended January 31, 2013 For the year ended January 31, 2012 For the year ended January 31, 2011 Because the following information is not publicly available, it is required to be disclosed on the basis of information received from each plan. Total contributions received from all employers: For the plan year ended January 31, 2015* For the plan year ended January 31, 2014 For the plan year ended January 31, 2013 For the plan year ended January 31, 2012 For the plan year ended January 31, 2011 Whether the Organization’s contributions were more than or less than 5% of the total contributions received by each plan: For the plan year ended January 31, 2015* For the plan year ended January 31, 2014 For the plan year ended January 31, 2013 For the plan year ended January 31, 2012 For the plan year ended January 31, 2011
11
NADRP 101,693 90,596 81,825 114,124 123,347
RAHAP 40,142 35,761 32,299 123,346 124,926
101,806,557 91,820,841 88,114,315 88,687,413 86,381,495
37,344,915 35,959,775 32,072,730 32,212,355 31,037,165
less than less than less than less than
less than less than less than less than
TOTAL 141,835 126,357 114,124 237,470 248,273
POTOMAC ADVENTIST BOOK AND HEALTH FOOD CENTER Notes to the Special-Purpose Financial Schedules Years Ended January 31, 2015, 2014, 2013, 2012, and 2011
Note 12 – Pension and other post-retirement benefits (continued) Plan net assets available for benefits: For the plan year ended January 31, 2015* For the plan year ended January 31, 2014 For the plan year ended January 31, 2013 For the plan year ended January 31, 2012 For the plan year ended January 31, 2011
NADRP 218,023,700 209,924,999 193,148,475 185,118,134 198,283,923
RAHAP 66,446,449 71,035,285 62,771,811 59,165,497 62,164,536
Actuarial obligation and funded status Because the following information is not publicly available, it is required to be disclosed on the basis of information received from each plan. Date of plan year-end for latest actuarial information Actuarial liability for future benefits Value of net assets available for benefits Plan funded status as of date of last actuarial data
12/31/2013 1,481,982,124 209,924,999 Less than 65%
12/31/2012 1,013,326,701 62,771,811 Less than 65%
*Data for January 31, 2015 not yet available. Risks and other information The risks of participating in multiemployer plans are different from single-employer plans, in the following aspects: ● Assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating employers. ● If a participating employer stops contributing to a plan, the unfunded obligations of the plan may be borne by the remaining participating employers. ● If the Organization chooses to stop participating in a multiemployer plan, the Organization may be required to pay the plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability. Other information about risks and contingencies related to these plans are as follows: ● Information about the plans is not publicly available, so no “certified zone status” has been determined. ● The Organization's required contributions are not the subject of any collective bargaining agreement. ● No funding improvement plans or rehabilitation plans had been implemented or were pending. ● The Organization has not paid any “surcharge” to either of the plans. ● No minimum contribution for future periods has been determined or required of the Organization. Defined contribution plan Effective January 1, 2000, the Organization participates in a defined contribution retirement plan known as "The Adventist Retirement Plan." This plan, which covers substantially all employees of the Organization, is administered by NAD in Silver Spring, Maryland, and is exempt from the Employee Retirement Income Security Act of 1974 as a multiple-employer plan of a church-related agency. The Organization contributed $52,454, $60,074, $65,720, $62,896, and $53,270 to the plan for the years ended January 31, 2015, 2014, 2013, 2012, and 2011 respectively, based on a stated percentage of each employee’s earnings and a stated matching percentage of certain employee voluntary contributions. Investment management of the accumulated contributions designated for each employee is provided under an agreement between NAD Corporation and GreatWest Life & Annuity Insurance Company.
Note 13 – Basis of Special Presentation The accompanying special-purpose schedules include only the accounts and activity of the ABC, which is a department of the Conference. Compliance with Statement of Financial Accounting Standards No. 117 of the Financial Accounting Standards Board would require the whole organization to be included in general-use financial statements. The Conference believes this special presentation is useful to analyze this department apart from the rest of the entity.
Note 14 – Contributed Services Under provisions of Financial Accounting Standards Board Statement of Financial Accounting Standards No. 116, contributions of services shall be recognized if the services received (a) create or enhance nonfinancial assets or (b) require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. The ABC has received the services of the General Conference Auditing Service who have audited the financial statements for the years ended January 31, 2015, 2014, 2013, 2012, and 2011. The amount of contributed services recognized as revenues for the periods are $28,710, $30,837, $31,232, $25,704, and $25,413 for the years then ended, respectively. These amounts are product of the number of person-hours spent in performing the audit and the cost-recovery rate established by the General Conference of Seventh-day Adventists.
12
POTOMAC ADVENTIST BOOK AND HEALTH FOOD CENTER Notes to the Special-Purpose Financial Schedules Years Ended January 31, 2015, 2014, 2013, 2012, and 2011
Note 15 – Operating Lease The ABC is the lessor of 19,181 square feet of its store space (approximately 48% of the property) at Cherry Hill Road to Staples, the Office Superstore East, Inc., an operating lease with an initial term of three years expiring January 31, 2018 with two options for five additional lease years each. Cost and accumulated depreciation of the whole building and land is disclosed in Note 7. The cost or fair value of the portion of the property under lease is not objectively determinable. Commissions and legal fees related to the signing of the lease have been treated as Other Assets in the financial statements and will be amortized by the ABC over the life of the lease, as disclosed in Note 7. Minimum future rentals to be received on the non-cancelable lease as of January 31, 2015 for each of the next five years and in the aggregate are:
Year ended January 31, 2016 2017 2018 2019 2020 Future Total
Amount 365,206 365,206 365,206 1,095,619
Note 16 – Working Capital & Liquidity Working Capital Current Assets Current Liabilities Actual Working Capital Recommended Working Capital*
2015 2,167,696 (648,495) 1,519,200 1,138,415
Working Capital Surplus (Deficit)
380,785
Percent of Recommended Working Capital Available Current Ratio
2014 1,836,176 (1,016,005) 820,171 1,306,428
2013 2,157,822 (1,091,634) 1,066,188 1,291,317
2012 2,078,148 (947,248) 1,130,900 1,187,660
2011 2,025,895 (895,489) 1,130,406 1,213,325
(486,257)
(225,129)
(56,760)
(82,919)
133.45%
62.78%
82.57%
95.22%
93.17%
3.34:1
1.81:1
1.98:1
2.19:1
2.26:1
Liquidity Statement Cash & Cash Equivalents Total Liquid Assets
865,375 865,375
359,150 359,150
489,965 489,965
511,425 511,425
459,495 459,495
Current Liabilities Total Commitments
648,495 648,495
1,016,005 1,016,005
1,091,634 1,091,634
947,248 947,248
895,489 895,489
Liquid Assets Surplus (Deficit)
216,880
Percent of Liquid Assets to Commitments
133.44%
*Calculation of Recommended Working Capital Accounts Receivable, Net Inventories Allocated Net Worth (Reserve) Total Recommended Working Capital
192,583 945,832 1,138,415
(656,855)
(601,669)
(435,823)
(435,994)
35.35%
44.88%
53.99%
51.31%
206,212 1,100,216 1,306,428
13
213,472 1,077,845 1,291,317
214,130 973,530 1,187,660
215,552 988,909 8,864 1,213,325