Page 1

YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY FINANCIAL REPORT June 30, 2017 and 2016


CONTENTS

PAGE

INDEPENDENT AUDITOR’S REPORT ............................................................................. 1 and 2

CONSOLIDATED FINANCIAL STATEMENTS Consolidated Statements of Financial Position ...........................................................................3 Consolidated Statements of Activities .............................................................................. 4 and 5 Consolidated Statements of Cash Flows ........................................................................... 6 and 7 Notes to Consolidated Financial Statements ............................................................ 8 through 28

ADDITIONAL INFORMATION INDEPENDENT AUDITOR’S REPORT ON ADDITIONAL INFORMATION .......................29 Consolidating Statements of Financial Position............................................................ 30 and 31 Consolidating Statements of Activities ......................................................................... 32 and 33


ANDERSON ZURMUEHLEN & CO., P.C. • CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS ADVISORS

402 NORTH BROADWAY,4th FLOOR • P.O. BOX 20435 • BILLINGS, MONTANA 59104-0435 TEL: 406.245.5136 • FAX: 406.245.6056 • WEB: www.azworld.com

M EM BER : A M ER IC A N I N STI TUTE O F C ERTI FI ED P UBLI C A C C O UN TA N TS

INDEPENDENT AUDITOR’S REPORT

To the Board of Directors of Yellowstone Boys and Girls Ranch Foundation, Inc., and Subsidiary Billings, Montana

We have audited the accompanying consolidated financial statements of Yellowstone Boys and Girls Ranch Foundation, Inc. (a nonprofit corporation) and its subsidiary, which comprise the consolidated statements of financial position as of June 30, 2017 and 2016, and the related consolidated statements of activities and cash flows for the years then ended, and the related notes to the consolidated financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated 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 consolidated 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 consolidated 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 audits to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated 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 consolidated 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 consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

-1-


ANDERSON ZURMUEHLEN & CO., P.C.

CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS ADVISORS

Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Yellowstone Boys and Girls Ranch Foundation, Inc. and subsidiary as of June 30, 2017 and 2016, and the changes in their net assets and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Billings, Montana November 16, 2017

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CONSOLIDATED FINANCIAL STATEMENTS


YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF FINANCIAL POSITION June 30, 2017 and 2016

(Restated) 2016

2017 ASSETS Cash and cash equivalents Restricted cash and cash equivalents Investment interest receivable Investments - securities Investments - real estate Investments - other Notes and contracts receivable Other receivables Property and equipment, net Other assets Investments held in trusts Total assets

$

769,445 1,313,702 4,113 62,830,047 2,935,789 601,186 361,718 6,216,424 79,461 26,146 31,560,037 $106,698,068

$

2,045,802 30,555 56,633,994 2,822,009 597,592 1,027,597 7,078,725 97,136 54,367 31,729,264 $102,117,041

$

$

LIABILITIES AND NET ASSETS LIABILITIES Checks written in excess of bank balances Accounts payable and accrued expenses Long term grants Annuity obligations Trust obligations Total liabilities

60,524 1,151,686 7,213,377 17,778,564 26,204,151

538,269 53,590 1,352,457 7,793,156 19,264,411 29,001,883

NET ASSETS Unrestricted: Trusts Other Total unrestricted

3,284,766 17,055,843 20,340,609

2,820,841 17,727,581 20,548,422

Temporarily restricted

15,613,298

10,281,526

Permanently restricted: Trusts Other Total permanently restricted

10,497,895 34,042,115 44,540,010

9,644,009 32,641,201 42,285,210

80,493,917

73,115,158

$106,698,068

$102,117,041

Total net assets Total liabilities and net assets

The Notes to Consolidated Financial Statements are an integral part of these statements. -3-


YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY CONSOLIDATED STATEMENT OF ACTIVITIES Year Ended June 30, 2017

REVENUES AND SUPPORT Contributions Legacies and bequests Gift value of annuities Gift value of trusts Investment income, net Royalty income Grants from not for profits Other revenues Total revenues and support NET ASSETS RELEASED FROM RESTRICTIONS Satisfaction of program restrictions Appropriation of endowment earnings Net assets permanently restricted EXPENSES Program grants Deferred giving program General and administrative Fundraising Total expenses OTHER CHANGES IN NET ASSETS Change in value of split-interest agreements - annuities Change in value of split-interest agreements - trusts Change in net assets NET ASSETS, beginning of year NET ASSETS, end of year

Unrestricted

Temporarily Restricted

Permanently Restricted

$

$

$

620,080 311,402 14,418 306,654 328,043 130,104 734,017 8,986 2,453,704

352,736 900,453 1,253,189

204,874 6,299,105 80,982 6,584,961

(352,736) (900,453) (1,253,189)

73,129 8,842 134,683 201,533 418,187

Totals $

898,083 320,244 149,101 508,187 6,627,148 211,086 734,017 8,986 9,456,852

-

-

3,087,600 334,943 825,329 401,441 4,649,313

-

-

3,087,600 334,943 825,329 401,441 4,649,313

237,146

-

498,176

735,322

497,461 734,607

-

1,338,437 1,836,613

1,835,898 2,571,220

5,331,772

2,254,800

7,378,759

20,548,422

10,281,526

42,285,210

73,115,158

$ 20,340,609

$ 15,613,298

$ 44,540,010

$ 80,493,917

(207,813)

The Notes to Consolidated Financial Statements are an integral part of this statement. -4-


YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY CONSOLIDATED STATEMENT OF ACTIVITIES (RESTATED) Year Ended June 30, 2016

Unrestricted REVENUES AND SUPPORT Contributions Legacies and bequests Gift value of annuities Gift value of trusts Investment loss, net Royalty income Grants from Not For Profits Other revenues Total revenues and support NET ASSETS RELEASED FROM RESTRICTIONS Satisfaction of program restrictions Appropriation of endowment earnings Net assets permanently restricted EXPENSES Program grants Deferred giving program General and administrative Fundraising Total expenses OTHER CHANGES IN NET ASSETS Change in value of split-interest agreements - annuities Change in value of split-interest agreements - trusts

$ 7,488,475 3,274,654 72,024 182,126 (116,804) 130,619 150,766 20,215 11,202,075

453,076 490,216 943,292 3,702,187 374,508 823,712 359,463 5,259,870

Temporarily Restricted

Permanently Restricted

$

$

47,786 (801,050) 80,400 (672,864)

(453,076) (491,694) (68,809) (1,013,579) -

2,485 6,703 172,049 1,073,423 1,254,660

Totals $ 7,538,746 3,281,357 244,073 1,255,549 (917,854) 211,019 150,766 20,215 11,783,871

1,478 68,809 70,287

-

-

3,702,187 374,508 823,712 359,463 5,259,870

(204,811)

-

(533,264)

(738,075)

(167,548) (372,359)

-

523,069 (10,195)

355,521 (382,554)

Change in net assets

6,513,138

(1,686,443)

1,314,752

6,141,447

NET ASSETS, beginning of year, as previously reported

13,607,373

11,967,969

40,943,605

66,518,947

427,911

-

26,853

454,764

14,035,284

11,967,969

40,970,458

66,973,711

$ 20,548,422

$ 10,281,526

$ 42,285,210

$ 73,115,158

Prior period adjustments- See Note 15 NET ASSETS, beginning of year, as restated NET ASSETS, end of year

The Notes to Consolidated Financial Statements are an integral part of this statement. -5-


YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended June 30, 2017 and 2016

2017

(Restated) 2016

$ 7,378,759

$ 6,141,447

CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets Adjustments to reconcile change in net assets to net cash flows from operating activities: Depreciation Loss on disposal of property and equipment Unrealized losses on investments, net Realized (gains) losses on investments, net Contributions of real estate and mineral rights Contributions of other receivables Change in value of split interest agreements Contributions restricted for long-term purposes: Contributions, legacies and bequests Gift value of annuities Gift value of trusts Changes in assets and liabilities: Investment interest receivable Other assets Checks written in excess of bank balances Accounts payable and accrued expenses Long term grants payable Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from investments, net Payments received on notes and contracts receivable Loans made on notes receivable Purchases of property and equipment Net cash flows from investing activities

19,473 14,887 2,622,321 (7,640,331) (143,691) 862,301 (2,571,220)

29,125 955,052 1,382,580 (1,237,500) (6,674,827) 382,554

(81,971) (134,683) (201,533)

(9,188) (172,049) (1,073,423)

26,442 28,221 (538,269) 6,934 (200,771) (553,131)

13,313 (10,012) 538,269 16,676 1,352,457 1,634,474

5,398,345 819,879 (154,000) (16,685) 6,047,539

1,656,715 40,574 (722,814) (7,915) 966,560

The Notes to Consolidated Financial Statements are an integral part of these statements. -6-


YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) Years Ended June 30, 2017 and 2016

(Restated) 2016

2017 CASH FLOWS FROM FINANCING ACTIVITIES Contributions restricted for long-term purposes: Contributions, legacies and bequests Gift value of annuities Gift value of trusts Trusts and annuities obligation payments Trusts distributions to remaindermen Net cash flows from financing activities

$

Net changes in cash and cash equivalents

81,971 134,683 201,533 (2,718,993) (3,156,257) (5,457,063)

$

9,188 172,049 1,073,423 (2,926,904) (73,608) (1,745,852)

37,345

855,182

2,045,802

1,190,620

Cash and cash equivalents, end of year

$ 2,083,147

$ 2,045,802

Shown in the statement of financial position as: Cash and cash equivalents Restricted cash and cash equivalents

$

$

Cash and cash equivalents, beginning of year

769,445 1,313,702 $ 2,083,147

2,045,802 $ 2,045,802

The Notes to Consolidated Financial Statements are an integral part of these statements. -7-


YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2017 and 2016

NOTE 1.

SIGNIFICANT ACCOUNTING POLICIES

Organization and Nature of Activities Yellowstone Boys and Girls Ranch Foundation, Inc. (the Foundation) is a non-profit public benefit corporation. The mission of the Foundation is to support, promote, advance and enable charitable, religious and educational organizations and programs whose services primarily benefit youth and adults with special needs. The Foundation primarily directs its support to the Yellowstone Boys and Girls Ranch which provides residential and community based care and treatment for emotionally troubled youth and K-12 education at the Yellowstone Academy. The Foundation’s main source of support is contributions and investment income. In February 2007, the Foundation formed a limited liability company, Yellowstone Foundation Properties, LLC. This company holds certain real estate donated to or purchased by the Foundation. Basis of Consolidation The accompanying consolidated financial statements include the accounts of the Foundation and its wholly-owned subsidiary, Yellowstone Foundation Properties, LLC. Significant intercompany transactions and balances have been eliminated in consolidation. Basis of Presentation The accompanying statements are presented in accordance with accounting principles generally accepted in the United States of America (GAAP), as codified by the Financial Accounting Standards Board. Basis of Accounting The Foundation 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. Accordingly, net assets of the Foundation and changes therein are classified and reported as follows: •

Unrestricted Net AssetsNet assets that are not subject to donor-imposed stipulations and donor restricted contributions whose restrictions are met in the same reporting period.

Temporarily Restricted Net AssetsNet assets subject to donor-imposed stipulations that may or will be met either by actions of the Foundation and/or the passage of time.

Permanently Restricted Net AssetsNet assets subject to donor-imposed stipulations that they be maintained permanently by the Foundation. The income earned from the investment of these assets is available for use by the Foundation in accordance with donor restrictions.

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YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016

NOTE 1.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Basis of Accounting (Continued) Revenues are reported as increases in unrestricted net assets unless use of the related assets is limited by donor-imposed restrictions. Expenses are reported as decreases in unrestricted net assets. Gains and losses on investments and other assets are reported as increases or decreases in unrestricted net assets unless their use is restricted by explicit donor stipulation or by law. Expirations of temporary restrictions on net assets (i.e., the donor-stipulated purpose has been fulfilled and/or the stipulated time period has elapsed) are reported as reclassifications between the applicable classes of net assets. Contributions, including unconditional promises to give, are recognized as revenues in the period received. Promises to give that are scheduled to be received more than one year after the statement of financial position date are shown as increases in temporarily or permanently restricted net assets and are reclassified to unrestricted net assets when the cash is received and any purpose restrictions are met. Conditional promises to give are not recognized until they become unconditional, that is when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value on the date contributed. It is the policy of the Foundation to report 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 specifying how the assets are to be used and gifts of cash or other assets that must be used to acquire long-lived assets are recorded as restricted support. Absent explicit donor stipulations about how long those long-lived assets must be maintained, the Foundation reports expirations of donor restrictions when the donated or acquired long-lived assets are placed in service. Fair Value Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs, using the market value approach. GAAP establishes a fair value hierarchy, which prioritizes the valuation inputs into three broad levels: Level 1: Quoted market prices available through public exchange venues for identical assets or liabilities. Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, 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 for substantially the full term of the assets or liabilities. Level 3: Unobservable inputs for the asset or liability due to little or no market activity at the measurement date. -9-


YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016

NOTE 1.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fair Value (Continued) The Foundation’s policy for determining the timing of significant transfers between Levels 1, 2 and 3 is at the end of the reporting period. There were no transfers for the years ended June 30, 2017 and 2016. Following is a description of the valuation methodologies used for investments measured at fair value. There have been no changes in the methodologies used at June 30, 2017 and 2016. Equity securities: Common stocks are valued at the closing price reported in the active market in which the individual securities are traded. Mutual funds:

Valued at market traded price of shares.

Debt securities:

Valued at market traded prices.

Real estate:

Valued at the lesser of most recent appraised value or listed sale value.

Alternative investments: Valued at the net asset value (NAV) of shares held at year-end. Commercial annuities:

Valued at cash surrender value.

The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Foundation believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. Cash and Cash Equivalents The Foundation’s cash balances in its general operating account is swept to an institutional money market fund daily. For purposes of reporting cash flows, the Foundation considers all highly liquid investments with original maturities of three months or less to be cash equivalents. FDIC coverage is limited to $250,000 per account holder. From time to time, certain bank accounts that are subject to limited FDIC coverage exceed their insured limits. At June 30, 2017 and 2016, bank accounts exceeded insured limits by $1,638,300 and $1,070,791, respectively. Concentrations of Credit Risk The Foundation attempts to diversify its investment holdings across various industries as well as in various types of investment holdings. At June 30, 2017 and 2016, the Foundation held investments in marketable securities of corporations, primarily in the following industries: capital and industrial goods, financial institutions, technology, and energy. The investment in marketable debt securities includes bonds issued by corporations and the United States Treasury and shares held in diversified bond funds.

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YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016

NOTE 1.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Investments – Securities and Investments Held in Trust Investments are stated at fair value, determined based on quoted market prices (if available), or estimated using quoted market prices for similar securities. Investments are classified within the level of lowest significant input considered in determining fair value. Investments classified within Level 3, whose fair value measurement considers several inputs, may include Level 1 or Level 2 inputs as components of the overall fair value measurement. Unrealized gains and losses are reported with other investment income in the change in net assets in the accompanying statements of activities. Certain investments, such as money market accounts and notes receivable, are stated at historical or amortized cost. Alternative investments include institutional funds, private equity funds, and limited liability partnerships. Institutional funds are multi-strategy, commingled equity and bond funds. Private equity funds are primarily comprised of investments in limited partnerships. The partnerships generally represent restricted investment securities whose values have been estimated by the managing partner of the partnership in the absence of readily ascertainable market values. Investments - Real Estate Investments in real estate represent real estate received from donors or purchased by the Foundation for investment purposes. Real estate is recorded at its estimated fair value. Fair values are based upon periodic third-party valuations and other periodic inputs, thus, these holdings are categorized as Level 3-valued investments. Realized gains or losses on sales of real estate are recognized upon disposition based on a specific identification basis. Investments - Other Other investments consist of mineral rights, oil royalties, and commercial annuities donated to the Foundation. The donated property is stated at the estimated fair value at the time of donation. Commercial annuities are revalued to cash surrender value at the end of each reporting period. Notes and Contracts Receivable Notes and contracts receivable bear interest at rates ranging from 3.5% to 5% and are receivable in various monthly, quarterly, and annual payments through 2021. These notes and contracts are primarily from estate assets donated to the Foundation. Management believes these receivables are either collectible or adequately secured. Accordingly, an allowance for doubtful accounts is not deemed necessary as of June 30, 2017 and 2016.

- 11 -


YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016

NOTE 1.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Property and Equipment Property and equipment acquisitions with an original value of at least $500 are recorded at cost, if purchased, or fair market value at date of donation, if donated. Depreciation expense for the years ended June 30, 2017 and 2016, was $19,473 and $29,125 respectively. Property and equipment is depreciated using the straight-line method based on the estimated useful lives of the assets as follows:

Building and improvements Furniture, fixtures, and equipment Computer software

8 - 30 years 4 - 12 years 6 years

Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Long-lived assets and certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is determined by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If the carrying amount exceeds the future cash flows, the assets are considered to be impaired and the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceed the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less estimated costs to sell. Split-Interest Agreements The Foundation has entered into split-interest agreements for which the Foundation is the trustee. The Foundation has segregated these assets as separate and distinct funds, independent from other funds and not to be applied to payment of the debts and obligations of the Foundation or any other purpose other than annuity benefits specified in the agreements. Assets are recorded at fair value, when possible. Liabilities incurred in the exchange portion of the agreement are also recognized based on each arrangement’s terms and actuarial assumptions. The liabilities are revalued annually using present value techniques, which factor in actuarial life expectancy tables and Internal Revenue Service discount rates that were in effect at the time the of the original gift. Discount rates range from 1.2% to 10.6%. The following types of agreements are in effect during the years ended June 30, 2017 and 2016: Charitable Gift Annuity Agreements and Charitable Remainder Trusts Under these agreements, the donor contributes assets in exchange for regular distributions to the donor or other beneficiaries, over a period of time, based on life expectancies of the beneficiaries. Distributions are based on the value of the assets contributed and terms specified in the agreement. When the agreement matures, the remaining assets are available for the Foundation’s use, or they are distributed to a separately designated charitable organization.

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YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016

NOTE 1.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Split-Interest Agreements (Continued) Charitable Gift Annuity Agreements and Charitable Remainder Trusts (Continued) The difference between the fair value of the assets received and the liability to the donor or other beneficiary is recognized as contribution revenue at the date of inception. During the term of the arrangement, annuity benefits, amortizations, and revaluations in the assets and liabilities are recognized in the accompanying statements of activities as “Changes in value of split-interest agreements and payments to beneficiaries.” These changes are classified as permanently restricted, temporarily restricted, or unrestricted net assets—depending on the classification used when the contribution was recognized initially. Charitable Lead Trusts Under these agreements, the donor transfers assets to the Foundation to hold in trust. The annual distributions from the trust are deemed contributions to either the Foundation, or an unrelated charitable organization. At the end of the specified time, the remaining assets are distributed to the designated beneficiary. Revocable Trusts Under these agreements, the donor transfers assets to the Foundation to hold in trust. The full value of the asset transferred is reported as a liability, as the donor has the legal right to remove such assets from the trust. Legacies and Bequests The Foundation is a named beneficiary in a number of testamentary wills. The value of the Foundation’s interest is unknown until the benefits are received. As a result, benefits received from legacies and bequests are recognized as revenue when the Foundation’s interest becomes irrevocable and unassignable, which is usually at the time the assets are received. Income Tax Matters The Internal Revenue Service has determined that the Foundation is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code. The Foundation is deemed not to be a private foundation. Yellowstone Foundation Properties, LLC is a single-member limited liability company; accordingly, it is deemed to be a disregarded entity for income tax purposes, and no provision for income taxes is presented in the accompanying financial statements.

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YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016

NOTE 1.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Reclassifications Certain reclassifications have been made to the 2016 financial statements in order for them to be in conformity with the 2017 presentation. These reclassifications were immaterial and have no effect on previously reported net income or net assets. Subsequent Events Management has evaluated subsequent events through November 16, 2017, the date which the financial statements were available to be issued.

NOTE 2.

RESTRICTED CASH AND CASH EQUIVALENTS

Restricted cash and cash equivalents as of June 30, 2017 and 2016, include amounts for the following purposes:

2016

2017 Annuity obligations Advised funds Endowments Johnson scholarship fund Yellowstone Foundation Properties, LLC

$

219,971 7,884 1,066,630 5,015 14,202 $ 1,313,702

- 14 -

$

634,976 4,287 1,290,627 22,015 93,897 $ 2,045,802


YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016

NOTE 3.

INVESTMENTS – SECURITIES

Investments in securities are comprised of the following: Fair Value as of June 30, 2017 Level 1 Level 3 Total

Cost Money market accounts Equity securities: Large cap managed accounts International Small/mid cap US domestic bond Mutual funds: Allocation - conservative Allocation - world Emerging markets Intermediate bonds Global bonds Non-traditional bond High yield International Large cap growth Large cap value Real estate investment trust Small/mid cap Mutual bond funds: Corporate bond Government agencies Collateralized mortgage obligations Alternative investments

$

$

544,393

544,393

- 15 -

$

-

$

-

$

544,393

20,077,083 2,487,098 4,805,913 12,310,423

-

20,077,083 2,487,098 4,805,913 12,310,423

326,568 515,979 594,320 763,701 449,222 77,653 891,605 669,243 2,496,024 2,362,215 36,400 852,157

-

326,568 515,979 594,320 763,701 449,222 77,653 891,605 669,243 2,496,024 2,362,215 36,400 852,157

950,491 1,723,431 586,228 $ 52,975,754

9,309,900 9,309,900

950,491 1,723,431 586,228 9,309,900 $ 62,830,047

$


YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016

NOTE 3.

INVESTMENTS - SECURITIES (CONTINUED) Fair Value as of June 30, 2016 Level 1 Level 3 Total

Cost Money market accounts Certificates of deposit Equity securities: Large cap managed accounts Mutual funds: Allocation - conservative Allocation - world Intermediate bonds Global bonds Non-traditional bond High yield International International - growth Large cap growth Large cap value Real estate investment trust Small/mid cap Mutual bond funds: Corporate bond Government agencies Foreign Collateralized mortgage obligations Private equity Alternative investments

$

$

957,286

957,286

$

1,290,774

$

-

$

957,286 1,290,774

17,945,385

-

17,945,385

219,250 747,678 834,595 614,108 82,734 498,639 5,841,163 701,099 3,542,082 3,666,028 35,000 3,268,217

-

219,250 747,678 834,595 614,108 82,734 498,639 5,841,163 701,099 3,542,082 3,666,028 35,000 3,268,217

3,917,889 4,019,622 138,142 1,239,207 $ 48,601,612

1,533,711 5,541,385 7,075,096

3,917,889 4,019,622 138,142 1,239,207 1,533,711 5,541,385 $ 56,633,994

$

Investments held to satisfy annuity obligations amounted to $8,681,296 and $9,057,380, as of June 30, 2017 and 2016, respectively, and are included in Investments-securities in the accompanying statements of financial position.

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YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016

NOTE 3.

INVESTMENTS - SECURITIES (CONTINUED)

The components of investment income for the years ended June 30, 2017 and 2016, are as follows:

Unrestricted Funds

2017 Interest and dividends Net unrealized gains (losses), net Net realized gains

$

$

2016

Unrestricted Funds

Interest and dividends Net unrealized gains (losses), net Net realized losses

NOTE 4.

129,491 163,325 35,227 328,043

Temporarily Restricted Funds

Total

$ 1,479,647 $ 1,609,138 (2,785,646) (2,622,321) 7,605,104 7,640,331 $ 6,299,105 $ 6,627,148 Temporarily Restricted Funds

Total

$

107,558 $ 1,312,220 $ 1,419,778 44,715 (999,767) (955,052) (1,113,503) (1,382,580) (269,077) $ (116,804) $ (801,050) $ (917,854)

INVESTMENTS – OTHER

Other investments are comprised of the following: 2016

2017 Mineral and oil rights Commercial annuities

$ $

- 17 -

175,500 425,686 601,186

$ $

175,500 422,092 597,592


YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016

NOTE 5.

INVESTMENTS ACTIVITY – LEVEL 3

Investment activity specific to investments valued with Level 3 inputs for the years ended June 30, 2017 and 2016, are reflected in the tables below.

June 30, 2016 Unrealized gain Realized gain (loss), net Contributions, issuance, and settlements June 30, 2017

June 30, 2015 Unrealized loss Realized gain (loss), net Contributions, issuance, and settlements June 30, 2016

Alternative Investments

Real Estate

Total

$ 7,075,096 201,920 2,032,884 $ 9,309,900

$ 2,822,009 113,780 $ 2,935,789

$ 9,897,105 201,920 2,146,664 $ 12,245,689

Alternative Investments

Real Estate

Total

$ 4,524,713 $ 1,843,434 $ (45,790) 463 (177,250) 1,155,825 2,595,710 $ 7,075,096 $ 2,822,009 $

6,368,147 (45,790) (176,787) 3,751,535 9,897,105

The alternative investments are valued using Level 3 category inputs and are reported at net asset values calculated by the third party investment manager. These investments are made via Merrill Lynch utilizing subscription agreements, prospectuses, and offering documents. The Foundation had committed to funding $6,250,000 toward private equity funds within this program. As of June 30, 2017, $3,486,250 of further funding commitments remain outstanding and will be satisfied upon notice of equity call from the funds, by selling other funds and new cash. By design, these investments should be considered illiquid in nature but generally cash out in 10-15 years.

- 18 -


YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016

NOTE 6.

INVESTMENTS HELD IN TRUSTS

Investments held in trusts consist of the following: Fair Value as of June 30, 2017 Level 1 Level 3 Total

Cost Cash Notes receivable Certificates of Deposit Mutual Funds: Allocation World Moderate Allocation Bond Funds: High Yield Intermediate Multi Muni Short Term World Commodities Equity Funds: Emerging Markets International Large Cap International Small Cap Large Cap Mid Cap Small Cap Equipment / Personal property Annuities Real estate

$ 1,691,363 1,513,813

$ 3,205,176

- 19 -

$

292,740

$

-

$ 1,691,363 1,513,813 292,740

2,057,028 477,466

-

2,057,028 477,466

296,462 3,022,084 931,762 200,135 451,170 635,450 457,352

-

296,462 3,022,084 931,762 200,135 451,170 635,450 457,352

180,080 2,879,502 215,795 9,640,662 2,021,539 1,262,854 2,957,280 $ 27,979,361

500 375,000 375,500

180,080 2,879,502 215,795 9,640,662 2,021,539 1,262,854 500 2,957,280 375,000 $ 31,560,037

$


YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016

NOTE 6.

INVESTMENTS HELD IN TRUSTS (CONTINUED)

Fair Value as of June 30, 2016 Level 1 Level 3 Total

Cost Cash Notes receivable Certificates of Deposit Mutual Funds: Allocation World Moderated Allocation Bond Funds: High Yield Intermediate Multi Muni Short Term World Commodities Equity Funds: Emerging Markets International Large Cap International Small Cap Large Cap Mid Cap Small Cap Equipment / Personal property Annuities Real estate

$ 1,260,890 1,441,708

$ 2,702,598

$

244,699

$

-

$ 1,260,890 1,441,708 244,699

2,023,905 502,973

-

2,023,905 502,973

339,837 2,829,157 1,019,196 216,979 517,634 629,814 381,899

-

339,837 2,829,157 1,019,196 216,979 517,634 629,814 381,899

154,798 2,535,481 250,846 9,194,673 1,778,750 1,035,816 4,929,709 $ 28,586,166

40,500 400,000 440,500

154,798 2,535,481 250,846 9,194,673 1,778,750 1,035,816 40,500 4,929,709 400,000 $ 31,729,264

$

Investment activity specific to investments held in trust valued with Level 3 inputs for the years ended June 30, 2017 and 2016, are reflected in the table below.

2017 Balance, beginning of year Contributions, issuance, and settlements Balance, end of year

$ $ - 20 -

440,500 (65,000) 375,500

2016 $

545,000 (104,500) $ 440,500


YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016

NOTE 7.

OTHER RECEIVABLE

The Foundation has knowledge of irrevocable interests it has in trusts held by other third-party Trustees. As soon as the Foundation becomes aware of an irrevocable interest in a trust held by a third-party and the fair market value of the assets, the Foundation records the present value of those interests in other receivables. During the year ended June 30, 2016, the Foundation was named as the beneficiary for a Charitable Lead Annuity Trust. The Foundation has recorded the estimated present value of the future payment stream as a receivable at June 30, 2017 and 2016. Quarterly payments are expected through 2032.

NOTE 8.

PROPERTY AND EQUIPMENT

Property and equipment as of June 30, 2017 and 2016, are comprised of the following:

2016

2017 Buildings Furniture, fixtures, and equipment Computer software

$

431,560 253,631 12,530 697,721 (618,260) $ 79,461

Less - accumulated depreciation Net property and equipment

NOTE 9.

$

431,560 267,596 13,393 712,549 (615,413) $ 97,136

TRUST OBLIGATIONS

As of June 30, 2017 and 2016, the Foundation’s trust obligations were comprised of the following:

Charitable remainder trusts Revocable trusts Remainder due to third parties Total trust obligations

- 21 -

2017

2016

$15,638,295 1,246,234 894,035 $17,778,564

$15,849,319 1,212,804 2,202,288 $19,264,411


YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016

NOTE 10. NET ASSETS Unrestricted Net Assets Unrestricted net assets are comprised of the following as of June 30, 2017 and 2016:

Undesignated Board-designated Trusts Annuities Total unrestricted

2017

(Restated) 2016

$ 9,498,502 5,342,575 3,284,766 2,214,766 $20,340,609

$10,810,236 4,658,306 2,820,841 2,259,039 $20,548,422

At June 30, 2017 and 2016, net assets were designated for the following purposes:

General endowment Sinking fund Spiritual life Scholarship endowment

2017

2016

$ 3,682,102 1,221,265 158,954 280,254 $ 5,342,575

$ 3,182,316 1,084,000 141,990 250,000 $ 4,658,306

Temporarily Restricted Net Assets Temporarily restricted net assets are available for the following purposes as of June 30, 2017 and 2016:

Advised funds Johnson scholarship Contributions - YBGR Endowment fund Total

- 22 -

2017

2016

$ 1,678,681 1,127,373 204,874 12,602,370 $ 15,613,298

$ 1,541,988 1,008,859 7,730,679 $ 10,281,526


YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016

NOTE 10. NET ASSETS (CONTINUED) Permanently Restricted Net Assets Permanently restricted net assets as of June 30, 2017 and 2016, are restricted to:

Investments held in perpetuity, the income from which is expendable to support: Activities of the Foundation Trust obligations Annuity obligations Total

2017

(Restated) 2016

$ 34,788,962 10,497,895 (746,847) $ 44,540,010

$ 33,834,609 9,644,009 (1,193,408) $ 42,285,210

NOTE 11. ENDOWMENT The Foundation’s endowment consists of numerous individual funds. The endowment includes donor-restricted endowment funds. As required by GAAP, net assets associated with endowment funds are classified and reported based on the existence or absence of donorimposed restrictions. Interpretation of Relevant Law The Board of Directors has interpreted the Montana Uniform Prudent Management of Institutional Funds Act (MUPMIFA) as assuming institutions will attempt to preserve the fair value of original gifts as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of the interpretation, the Foundation 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) any 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 Foundation in a manner consistent with the standard of prudence prescribed by MUPMIFA. In accordance with MUPMIFA, the Foundation considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: 1) 2) 3) 4) 5) 6)

The duration and preservation of the fund; The purposes of the Foundation and the donor-restricted endowment fund; General economic conditions; The possible effect of inflation and deflation; The expected total return from income and the appreciation of investments; Other resources of the Foundation; and - 23 -


YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016

NOTE 11. ENDOWMENT (CONTINUED) Interpretation of Relevant Law (Continued) 7) The investment policies of the Foundation. Funds with Deficiencies From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the permanently restricted value. In accordance with GAAP, the deficiencies of this nature are reported in unrestricted net assets. As of June 30, 2017, there were no funds with deficiencies. Return Objectives and Risk Parameters The Foundation has adopted investment and spending policies for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment while seeking to maintain the purchasing power of the endowment assets. Endowment assets include those assets of donor-restricted funds that the Foundation must hold in perpetuity or for a donorspecified period(s) as well as board-designated funds. The policy approved by the Board of Directors invests the endowment assets for long-term growth of the Fund, exclusive of contributions or withdrawals. The policy is intended to earn a long-term rate of return, through a combination of investment income and capital appreciation, in excess of the Fund’s annual distribution rate that equals or exceeds the rate of inflation. Strategies Employed for Achieving Objectives To satisfy its long-term, rate-of-return objectives, the Foundation 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). The Foundation targets a diversified asset allocation including cash equivalents, fixed income, equity securities, and alternative investments to achieve its long-term return objectives within prudent risk constraints. Spending Policy and How the Investment Objectives Relate to Spending Policy It is the policy of the Foundation to annually appropriate an amount determined pursuant to the seven factors contained in MUPMIFA, as previously shown in this note. In establishing this policy, the Foundation considered the long-term expected return on its endowment. Accordingly, over the long term, the Foundation expects the current spending policy to allow its endowment to grow. This is consistent with the Foundation’s objective to maintain the purchasing power of the endowment assets held in perpetuity, or for a donor-specified term, as well as to provide additional real growth through new gifts and investment return.

- 24 -


YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016

NOTE 11.

ENDOWMENT (CONTINUED)

Spending Policy and How the Investment Objectives Relate to Spending Policy (Continued) Endowment net asset composition by type of fund as of June 30, 2017 and 2016, are as follows: Unrestricted

Temporarily Restricted

Permanently Restricted

Total

$

-

$ 12,602,370

$ 34,788,962

$47,391,332

Unrestricted

Temporarily Restricted

Permanently Restricted

Total

$

$ 7,730,679

$ 33,834,609

$41,565,288

2017 Donor-restricted 2016 (Restated) Donor-restricted

-

Changes in net asset composition by type of fund for the years ended June 30, 2017 and 2016 are as follows: 2017 Endowment net assets - beginning of year Contributions Unrealized losses Royalty income Realized gains Interest and dividends, net of fees Net appropriation of endowment assets for expenditures Transfers: Matured annuities Donor advised funds Matured trusts Endowment net assets - end of the year

Temporarily Restricted

Permanently Restricted

$ 7,730,679 $ 33,834,609 81,971 (2,962,660) 80,982 7,540,619 1,113,203 (900,453) $ 12,602,370

- 25 -

186,298 686,084 $ 34,788,962

Total $ 41,565,288 81,971 (2,962,660) 80,982 7,540,619 1,113,203 (900,453) 186,298 686,084 $ 47,391,332


YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016

NOTE 11.

ENDOWMENT (CONTINUED)

Spending Policy and How the Investment Objectives Relate to Spending Policy (Continued) 2016 (Restated) Endowment net assets - beginning of year Contributions Unrealized losses Royalty income Realized losses Interest and dividends, net of fees Net appropriation of endowment assets for expenditures Transfers: Matured annuities Donor advised funds Matured trusts Endowment net assets - end of the year

Temporarily Restricted

Permanently Restricted

$ 9,211,556 $ 33,483,896 9,188 (873,512) 80,400 (1,105,248) 907,699 (490,216) $ 7,730,679

107,905 70,287 163,333 $ 33,834,609

Total $ 42,695,452 9,188 (873,512) 80,400 (1,105,248) 907,699 (490,216) 107,905 70,287 163,333 $ 41,565,288

NOTE 12. RETIREMENT PLAN The Foundation has a defined contribution retirement plan that covers all employees. The Foundation makes contributions based upon a percentage of eligible employees’ salaries. Contributions to the plan were $37,578 and $26,044 for the years ended June 30, 2017 and 2016, respectively.

NOTE 13. ASSOCIATED PARTIES The Foundation is associated with a separate corporation, Yellowstone Boys and Girls Ranch, Inc. (YBGR). YBGR is independently controlled by its own Board of Directors. YBGR is a favored grantee of the Foundation. Grants and other miscellaneous contributions made to YBGR from the Foundation amounted to $2,984,392 and $4,135,901 for the years ended June 30, 2017 and 2016, respectively. For the year ended June 30, 2016, $1,352,457 of the grants outlined above were reported as a long-term grant commitment payable by the Foundation to the YBGR. This amount represented a total commitment of $1,958,550 payable over 20 years, as discounted to present value using 1.8%. The present value of the long-term grant commitment at June 30, 2017, is $1,151,686. - 26 -


YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016

NOTE 13. ASSOCIATED PARTIES (CONTINUED) During the year ended June 30, 2016, the Foundation loaned the Ranch $722,813 for campus water related projects, the amount which is recorded under Notes Receivable in the accompanying financial statements. This short term loan accrued no interest, and was repaid in the year ended June 30, 2017. During the year ended June 30, 2017, the Foundation loaned the Ranch $154,000 at 3% for 7 years. At June 30, 2017 the balance was $149,148 and is recorded under Notes Receivable in the accompanying financial statements.

NOTE 14. COMMITMENTS AND CONTINGENCIES Funding Commitment As of June 30, 2017 and 2016, the Foundation had committed up to $2,553,709 and $2,922,400, respectively, of grant funding to the Yellowstone Boys and Girls Ranch, if needed. Contingent Gain The Foundation has been the recipient of several lots of land, which had been transferred to the Foundation inclusive of mineral and oil rights at the time of the gift. In September 2012, the Foundation contracted with a consulting firm to estimate the oil and gas reserves, and the potential future income from exploring these reserves. The present value of this future income flow was estimated at $2,348,000. The ultimate realization of this income stream is dependent on future exploration, extraction activities, and changes in market prices of the underlying asset. Accordingly, this amount is not recorded in the accompanying consolidated financial statements.

NOTE 15. RESTATEMENT AND PRIOR PERIOD ADJUSTMENT The Foundation has a long-term grant liability payable to an associated party that was recognized in the prior year. Subsequent to the issuance of the June 30, 2016, financial statements, it was determined the interest rate used to calculate the present value of the future liability was incorrect. The June 30, 2016, balance was recalculated using the correct interest rate. The adjustment resulted in a restatement of the June 30, 2016 statements to reduce the previously reported liability by $534,606 and the corresponding unrestricted program expenses by the same amount.

- 27 -


YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) June 30, 2017 and 2016

NOTE 15. RESTATEMENT AND PRIOR PERIOD ADJUSTMENT (CONTINUED) The Foundation posted a prior period adjustment for trusts the Foundation has an irrevocable interest in, which are held by another third-party Trustee. As soon as the Foundation becomes aware of these they record the asset. There were six irrevocable trust interests that were not recorded prior to the year ended June 30, 2016 that were known. The adjustment was made to unrestricted net assets for $378,344, permanently restricted net assets for $25,554, and other receivables for $403,898. The Foundation also made an adjustment to restate the June 30, 2016 statements to reduce the unrestricted change in value of split-interest agreements – trusts for $49,567 and permanently restricted change in value of split-interest agreements – trusts for $1,299 on the Statement of Activities for irrevocable interests that were known in 2016 but not recorded. The following Statement of Financial Position line items, as of and for the year ended June 30, 2016, were affected by the restatement and prior period adjustment. Statement of Financial Position

As Originally Reported

Other receivable

$ 6,674,827

$

403,898

$ 7,078,725

Long term grants

$ 1,887,063

$

(534,606)

$ 1,352,457

Unrestricted net assets

$ 19,635,472

$

912,950

$ 20,548,422

Permanently restricted net assets

$ 42,259,656

$

25,554

$ 42,285,210

- 28 -

Effect of Change

As Adjusted


ADDITIONAL INFORMATION


ANDERSON ZURMUEHLEN & CO., P.C. • CERTIFIED PUBLIC ACCOUNTANTS & BUSINESS ADVISORS

402 NORTH BROADWAY,4th FLOOR • P.O. BOX 20435 • BILLINGS, MONTANA 59104-0435 TEL: 406.245.5136 • FAX: 406.245.6056 • WEB: www.azworld.com

M EM BER : A M ER IC A N I N STI TUTE O F C ERTI FI ED P UBLI C A C C O UN TA N TS

INDEPENDENT AUDITOR’S REPORT ON ADDITIONAL INFORMATION

To the Board of Directors of Yellowstone Boys and Girls Ranch Foundation, Inc. Billings, Montana

We have audited the consolidated financial statements of Yellowstone Boys and Girls Ranch Foundation, Inc. and subsidiary as of and for the years ended June 30, 2017 and 2016, and our report thereon dated November 16, 2017, which expressed an unmodified opinion on those consolidated financial statements, appears on page 2. Our audits were conducted for the purpose of forming an opinion on the consolidated financial statements taken as a whole. The accompanying consolidating statements of financial position and consolidating statements of activities are presented for purposes of additional analysis and are not a required part of the consolidated 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 consolidated financial statements. The information has been subjected to the auditing procedures applied in the audits of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated 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 consolidated financial statements as a whole.

Billings, Montana November 16, 2017

- 29 -


(T H I S P A G E I N T E N T I O N A L L Y L E F T B L A N K)


YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY CONSOLIDATING STATEMENT OF FINANCIAL POSITION June 30, 2017

Yellowstone Boys & Girls Yellowstone Ranch Foundation Foundation, Inc. Properties, LLC ASSETS Cash and cash equivalents Restricted cash and cash equivalents Investment interest receivable Investments - securities Investments - real estate Investments - other Investments held in trusts Notes and contracts receivable Notes receivable - Yellowstone Boys and Girls Ranch, Inc. Property and equipment, net Investment in Yellowstone Foundation Properties, LLC Other assets Total assets

$

755,243 1,313,702 4,113 62,830,047 604 599,186 31,560,037 361,718

$

14,202 2,935,185 2,000 -

Eliminating Entries $

Consolidated Total -

$

-

769,445 1,313,702 4,113 62,830,047 2,935,789 601,186 31,560,037 361,718

6,216,424 79,461

-

6,216,424 79,461

2,443,368 534,165 $106,698,068

$ 2,951,387

(2,443,368) (508,019) $ (2,951,387)

26,146 $106,698,068

$

$

$

$

LIABILITIES AND NET ASSETS LIABILITIES Accounts payable and accrued expenses Long term grants Annuity obligations Trust obligations Total liabilities NET ASSETS Unrestricted Temporarily restricted Permanently restricted Total net assets Total liabilities and net assets

60,524 1,151,686 7,213,377 17,778,564 26,204,151

508,019 508,019

(508,019) (508,019)

60,524 1,151,686 7,213,377 17,778,564 26,204,151

20,340,609 15,613,298 44,540,010 80,493,917

2,443,368 2,443,368

(2,443,368) (2,443,368)

20,340,609 15,613,298 44,540,010 80,493,917

$106,698,068

$ 2,951,387

$ (2,951,387)

$106,698,068

Refer to Independent Auditor’s Report on Additional Information. - 30 -


YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY CONSOLIDATING STATEMENT OF FINANCIAL POSITION (RESTATED) June 30, 2016

Yellowstone Boys & Girls Yellowstone Ranch Foundation Foundation, Inc. Properties, LLC ASSETS Restricted cash and cash equivalents Investment interest receivable Investments - securities Investments - real estate Investments - other Investments held in trusts Notes and contracts receivable Other receivables Property and equipment, net Investment in Yellowstone Foundation Properties, LLC Other assets Total assets

2,791,494 5,439 -

Eliminating Entries $

Consolidated Total

$ 2,045,802 30,555 56,633,994 30,515 592,153 31,729,264 1,027,597 7,078,725 97,136

$

-

2,382,811 562,386 $102,210,938

$ 2,796,933

(2,382,811) (508,019) $ (2,890,830)

$

$

$

$ 2,045,802 30,555 56,633,994 2,822,009 597,592 31,729,264 1,027,597 7,078,725 97,136 54,367 $102,117,041

LIABILITIES AND NET ASSETS LIABILITIES Checks written in excess Accounts payable and accrued expenses Long term grants Annuity obligations Trust obligations Total liabilities NET ASSETS Unrestricted Temporarily restricted Permanently restricted Total net assets Total liabilities and net assets

632,166

(93,897)

-

538,269

53,590 1,352,457 7,793,156 19,264,411 29,095,780

508,019 414,122

(508,019) (508,019)

53,590 1,352,457 7,793,156 19,264,411 29,001,883

20,548,422 10,281,526 42,285,210 73,115,158

2,382,811 2,382,811

(2,382,811) (2,382,811)

20,548,422 10,281,526 42,285,210 73,115,158

$102,210,938

$ 2,796,933

$ (2,890,830)

$102,117,041

Refer to Independent Auditor’s Report on Additional Information. - 31 -


YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY CONSOLIDATING STATEMENT OF ACTIVITIES Year Ended June 30, 2017

Yellowstone Boys & Girls Yellowstone Ranch Foundation Foundation, Inc. Properties, LLC REVENUES AND SUPPORT Contributions Legacies and bequests Gift value of annuities Gift value of trusts Investment income, net Royalty income Grants from Not For Profits Other revenues Investment income -Yellowstone Foundation Properties, LLC Total revenues and support EXPENSES Program grants Deferred giving program General and administrative Fundraising Total expenses

$

754,392 320,244 149,101 508,187 6,627,148 211,086 734,017 (1,486)

$

143,691 10,472

Eliminating Entries $

Consolidated Total -

$

898,083 320,244 149,101 508,187 6,627,148 211,086 734,017 8,986

60,557 9,363,246

154,163

3,087,600 334,943 731,723 401,441 4,555,707

93,606 93,606

-

3,087,600 334,943 825,329 401,441 4,649,313

735,322

-

-

735,322

(60,557) (60,557)

9,456,852

OTHER CHANGES IN NET ASSETS Change in value of split interest agreements - annuities Change in value of split interest agreements - trusts Total other changes in net assets

1,835,898

-

-

1,835,898

2,571,220

-

-

2,571,220

Change in net assets

7,378,759

60,557

(60,557)

7,378,759

73,115,158

2,382,811

(2,382,811)

73,115,158

-

-

NET ASSETS, beginning of year Distributions to member NET ASSETS, end of year

$ 80,493,917

$

2,443,368

$ (2,443,368)

Refer to Independent Auditor’s Report on Additional Information. - 32 -

$ 80,493,917


YELLOWSTONE BOYS AND GIRLS RANCH FOUNDATION, INC. AND SUBSIDIARY CONSOLIDATING STATEMENT OF ACTIVITIES (RESTATED) Year Ended June 30, 2016

Yellowstone Boys & Girls Yellowstone Ranch Foundation Foundation, Inc. Properties, LLC REVENUES AND SUPPORT Contributions Legacies and bequests Gift value of annuities Gift value of trusts Investment loss, net Royalty income Administrative fees Other revenues Investment income -Yellowstone Foundation Properties, LLC Total revenues and support EXPENSES Program grants Deferred giving program General and administrative Fundraising Total expenses OTHER CHANGES IN NET ASSETS Change in value of split interest agreements - annuities Change in value of split interest agreements - trusts Total other changes in net assets Change in net assets NET ASSETS, beginning of year, as previously reported Prior period adjustments, See Note 15 NET ASSETS, beginning of the year, as restated Distributions to member NET ASSETS, end of year

$ 7,435,873 2,128,857 244,073 1,255,549 (917,854) 211,019 150,766 20,215

$

102,873 1,152,500 -

Eliminating Entries $

Consolidated Total -

(1,245,567) (1,245,567)

$ 7,538,746 3,281,357 244,073 1,255,549 (917,854) 211,019 150,766 20,215 11,783,871

1,245,567 11,774,065

1,255,373

3,702,187 374,508 813,906 359,463 5,250,064

9,806 9,806

-

(738,075)

-

-

(738,075)

355,521

-

-

355,521

(382,554)

-

-

(382,554)

3,702,187 374,508 823,712 359,463 5,259,870

6,141,447

1,245,567

(1,245,567)

6,141,447

66,518,947

451,369

(451,369)

66,518,947

454,764

-

66,973,711

451,369

(451,369)

66,973,711

-

685,875

(685,875)

-

$ 73,115,158

$ 2,382,811

$ (2,382,811)

$ 73,115,158

-

Refer to Independent Auditor’s Report on Additional Information. - 33 -

454,764


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Yellowstone Foundation Financial Report June 30, 2017  

Yellowstone Boys and Girls Ranch Foundation Audited Financial Statements June 30, 2017.

Yellowstone Foundation Financial Report June 30, 2017  

Yellowstone Boys and Girls Ranch Foundation Audited Financial Statements June 30, 2017.