Financial Statements (Together with Independent Auditors’ Report) Years Ended February 28, 2015 and 2014
TOURETTE ASSOCIATION OF AMERICA INC. FINANCIAL STATEMENTS (Together with Independent Auditors’ Report) YEARS ENDED FEBRUARY 28, 2015 AND 2014
CONTENTS Page
Independent Auditors' Report ......................................................................................................................................... 1 Statements of Financial Position ................................................................................................................................... 2 Statements of Activities .................................................................................................................................................. 3 Statements of Functional Expenses........................................................................................................................... 4-5 Statements of Cash Flows ............................................................................................................................................. 6 Notes to Financial Statements ................................................................................................................................. 7-14
Marks Paneth LLP 685 Third Avenue New York, NY 10017 P 212.503.8800 F 212.370.3759 www.markspaneth.com
New York City Washington, DC New Jersey Long Island Westchester Cayman Islands
INDEPENDENT AUDITOR’S REPORT The Board of Directors Tourette Association of America Inc. We have audited the accompanying financial statements of Tourette Association of America Inc. (formerly known as, Tourette Syndrome Association, Inc.) (the “Association”), which comprise the statements of financial position as of February 28, 2015 and 2014, and the related statements of activities, functional expenses and cash flows for the years then ended, and the related notes to the financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Tourette Association of America Inc. as of February 28, 2015 and 2014, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
New York, NY June 18, 2015
TOURETTE ASSOCIATION OF AMERICA INC. STATEMENTS OF FINANCIAL POSITION AS OF FEBRUARY 28, 2015 AND 2014
2015 ASSETS Cash and cash equivalents (Note 2C and 11) Grants receivable (Note 2G) Contributions receivable (Notes 2G and 5) Investments (Notes 2D, 2M, and 3) Prepaid expenses and other assets Property and equipment, net (Notes 2E and 4) Investments - permanently restricted (Notes 2B, 2M, 3 and 12) TOTAL ASSETS LIABILITIES Accounts payable and accrued expenses (Note 6) Research grants payable (Note 9) Deferred revenue (Note 2H)
2014
$
667,384 66,240 526,351 15,172,824 296,622 41,292 326,000
$
670,301 115,546 594,015 17,311,763 226,322 42,957 326,000
$
17,096,713
$
19,286,904
$
362,411 1,011,937 69,744
$
607,676 832,812 70,847
TOTAL LIABILITIES
1,444,092
1,511,335
14,776,799 549,822 326,000
16,777,822 671,747 326,000
15,652,621
17,775,569
COMMITMENTS (Note 7) NET ASSETS (Note 2B) Unrestricted Temporarily restricted (Note 10) Permanently restricted (Note 12) TOTAL NET ASSETS TOTAL LIABILITIES AND NET ASSETS
$
17,096,713
The accompanying notes are an integral part of these financial statements.
$
19,286,904
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TOURETTE ASSOCIATION OF AMERICA INC. STATEMENTS OF ACTIVITIES FOR THE YEARS ENDED FEBRUARY 28, 2015 AND 2014
For the Year Ended February 28, 2015 Temporarily Permanently Unrestricted Restricted Restricted SUPPORT AND REVENUE: Public Support: Fund raising events revenue (Note 5) Less: direct benefits to donors (Note 2K) Net fundraising events revenue
$
Grants, contributions and bequests (Notes 2F and 2J) Membership dues Total Public Support
1,980,671 (592,747) 1,387,924
$
486,283 128,022 2,002,229
Government Support: N.Y.C. counseling grant C.D.C. grant NIH/NINDS grant (Note 9) Total Government Support
-
$
501,597 501,597
-
$
Total 2015
1,980,671 (592,747) 1,387,924
Unrestricted
$
2,385,934 (657,698) 1,728,236
-
987,880 128,022 2,503,826
439,847 150,363 2,318,446
For the Year Ended February 28, 2014 Temporarily Permanently Restricted Restricted
$
-
$
1,102,061 1,102,061
-
Total 2014
` $
2,385,934 (657,698) 1,728,236
-
1,541,908 150,363 3,420,507
865,486 865,486
-
-
865,486 865,486
3,362 718,877 789,098 1,511,337
-
-
3,362 718,877 789,098 1,511,337
Revenue: Investment activity (Note 3) Sales - emblems, audio visuals and publications Conference income Total Revenue
751,040 12,336 131,487
1,560 -
-
752,600 12,336 131,487
1,689,845 14,224 58,369
1,953 -
-
1,691,798 14,224 58,369
894,863
1,560
-
896,423
1,762,438
1,953
-
1,764,391
Net assets released from restrictions (Notes 2B and 10)
625,082
(625,082)
-
4,387,660
(121,925)
-
4,265,735
6,191,320
TOTAL SUPPORT AND REVENUE EXPENSES: Program services Management and general Fundraising TOTAL EXPENSES
(599,099)
-
-
504,915
-
6,696,235
-
-
4,708,932 899,495 780,256
4,692,599 882,225 677,764
-
-
4,692,599 882,225 677,764
6,388,683
-
-
6,388,683
6,252,588
-
-
6,252,588
-
(2,122,948)
-
443,647
(2,001,023)
(121,925)
Net assets - beginning of year
16,777,822
671,747
$
599,099
4,708,932 899,495 780,256
CHANGE IN NET ASSETS
NET ASSETS - END OF YEAR
-
14,776,799
$
549,822
326,000 $
326,000
(61,268)
17,775,569 $
15,652,621
504,915
16,839,090 $
The accompanying notes are an integral part of these financial statements.
16,777,822
166,832 $
671,747
326,000 $
326,000
17,331,922 $
17,775,569
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TOURETTE ASSOCIATION OF AMERICA INC. STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED FEBRUARY 28, 2015 (With Comparative Totals for the year ended February 28, 2014)
Public Education Salaries Payroll taxes and employee benefits
$
729,502 185,770
Professional Education $
87,947 25,287
Program Services Center for Disease Control Program $
310,560 76,133
Support Services Total Program Services
Research $
348,708 75,117
$
1,476,717 362,307
Management and General $
486,313 107,740
TOTAL 2015
Fundraising $
437,148 83,868
$
2,400,178 553,915
TOTAL 2014 $
2,258,323 568,697
Total Salaries and Related Costs
915,272
113,234
386,693
423,825
1,839,024
594,053
521,016
2,954,093
2,827,020
Occupancy (Note 7) Repairs and maintenance Depreciation Telephone and internet Postage and mail services Printing and publications Supplies Insurance Professional fees (Note 2F) Consultants Travel expenses Registration, filing fees and membership Other conferences and meetings National conference Chapter support (Note 8) Promotional expenses Recruitment and training Research grants (Note 9) Genetic analysis and lab pathology (Note 9) Miscellaneous Uncollectible receivables
69,473 4,112 10,694 26,527 49,764 28,105 19,836 21,055 17,671 23,509 11,149 2,758 66,207 266,889 28,068 245,325 20,334 1,577 -
9,072 547 1,422 698 2,586 727 2,474 10,676 -
251 33,711 140,359 7,921 6,556 149,251 305 67,897 56,500 16,042 -
21,550 1,297 3,374 9,701 15,236 17,261 8,194 13,882 64,374 14,703 27,238 393 14,119 11,094 1,925 934,200 287,532 3,787 -
100,095 5,956 15,490 37,177 101,297 186,452 38,425 34,937 82,045 44,768 187,638 3,456 158,899 266,889 28,068 312,919 38,301 934,200 287,532 5,364 -
55,272 3,378 8,783 4,095 5,232 12,591 9,718 71,264 81,085 20,451 11,235 200 19,743 2,395
37,167 2,258 5,871 3,457 25,120 20,885 27,870 1,620 46,086 27,675 20,518 533 620 23,391 16,169 -
192,534 11,592 30,144 44,729 131,649 207,337 78,886 46,275 153,309 171,939 235,764 35,209 159,432 266,889 28,068 313,539 61,892 934,200 287,532 41,276 2,395
189,995 9,710 21,705 30,005 157,850 191,466 89,108 44,202 179,742 107,580 214,806 26,293 174,193 45,551 86,500 18,905 1,729,156 62,713 46,088 -
865,486
$ 1,873,685
TOTAL EXPENSES
$
1,828,325
$
141,436
$
$
4,708,932
$
The accompanying notes are an integral part of these financial statements.
899,495
$
780,256
$
6,388,683
$
6,252,588
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TOURETTE ASSOCIATION OF AMERICA INC. STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED FEBRUARY 28, 2014
Program Services Center for Professional Disease Control Education Program
Public Education Salaries Payroll taxes and employee benefits
$
Total Salaries and Related Costs Occupancy (Note 7) Repairs and maintenance Depreciation Telephone and internet Postage and mail services Printing and publications Supplies Insurance Professional fees (Note 2F) Consultants Travel expenses Registration, filing fees and membership Other conferences and meetings National conference Chapter support (Note 8) Promotional expenses Recruitment and training Research grants (Note 9) Genetic analysis and lab pathology (Note 9) Miscellaneous TOTAL EXPENSES
$
630,253 175,685
$
129,210 31,199
$
299,131 73,687
Support Services Total Program Services
Research $
349,618 85,561
$
1,408,212 366,132
Management and General $
459,815 117,760
TOTAL 2014
Fundraising $
390,296 84,805
$
2,258,323 568,697
805,938
160,409
372,818
435,179
1,774,344
577,575
475,101
2,827,020
69,462 3,622 6,661 14,199 49,627 60,514 21,716 20,112 29,048 34,662 12,239 3,599 102,490 45,551 16,797 703 1,937
8,484 442 877 737 1,637 2,678 2,570 14 -
410 35,779 74,893 12,908 3,176 115,981 365 47,844 45,961 8,384 -
21,063 1,028 2,298 7,307 22,350 17,735 13,180 13,261 69,137 16,564 33,602 500 23,859 23,178 1,729,156 62,713 5,245
99,009 5,092 9,836 22,653 109,393 155,820 50,374 33,373 98,185 54,402 161,836 4,464 174,193 45,551 85,936 9,087 1,729,156 62,713 7,182
61,263 3,107 9,232 3,979 4,518 13,715 9,282 81,557 49,233 26,357 10,866 9,818 21,723
29,723 1,511 2,637 3,373 43,939 35,646 25,019 1,547 3,945 26,613 10,963 564 17,183
189,995 9,710 21,705 30,005 157,850 191,466 89,108 44,202 179,742 107,580 214,806 26,293 174,193 45,551 86,500 18,905 1,729,156 62,713 46,088
718,519
$ 2,497,355
1,298,877
$
177,848
$
$
4,692,599
The accompanying notes are an integral part of these financial statements.
$
882,225
$
677,764
$
6,252,588
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TOURETTE ASSOCIATION OF AMERICA INC. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED FEBRUARY 28, 2015 AND 2014
2015 CASH FLOWS FROM OPERATING ACTIVITIES: Change in net assets
$
Adjustments to reconcile change in net assets to net cash used in operating activities: Depreciation expense Realized gain on investments Unrealized loss (gain) on investments Amortization of discount on contributions Uncollectible receivables
(2,122,948)
2014
$
443,647
30,144 (871,702) 588,471 (6,041) 2,395
21,705 (358) (1,346,355) 15,220 -
(2,379,681)
(866,141)
49,306 71,310 (70,300)
(29,858) (423,934) (57,439)
Decrease (increase) in liabilities: Accounts payable and accrued expenses Research grants payable Deferred revenue
(245,265) 179,125 (1,103)
26,865 150,897 65,347
Net Cash Used in Operating Activities
(2,396,608)
(1,134,263)
(28,479) 5,608,549 (3,186,379)
(17,344) 4,125,145 (3,113,845)
Subtotal Changes in operating assets and liabilities: Decrease (increase) in assets: Grants receivable Contributions receivable Prepaid expenses and other assets
CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment Proceeds from sales of investments Purchases of investments Net Cash Provided by Investing Activities
2,393,691
NET DECREASE IN CASH AND CASH EQUIVALENTS
(2,917)
Cash and cash equivalents - beginning of year CASH AND CASH EQUIVALENTS - END OF YEAR
993,956
(140,307)
670,301 $
667,384
The accompanying notes are an integral part of these financial statements.
810,608 $
670,301
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TOURETTE ASSOCIATION OF AMERICA INC. NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 2015 AND 2014
NOTE 1 – ORGANIZATION AND NATURE OF ACTIVITIES Tourette Association of America Inc. (formally known as Tourette Syndrome Association, Inc.) (the “Association”) was incorporated in the State of New York as a not-for-profit organization in 1972. The Association has been granted exemption from federal income tax pursuant to Section 501(c)(3) of the Internal Revenue Code. The Association is dedicated to making life better for all people affected by Tourette and other Tic Disorders. The only nationwide, organization serving this community, the Association works to raise awareness, fund research, and provide on-going support. A network of 32 chapters and more than 55 support groups extends outreach across the country. The following is a summary of programs provided by the Association: Public Education – Development and dissemination of informational materials, resource and referral information to the general public and to persons affected by Tourette Syndrome. Promotion of awareness and understanding of Tourette Syndrome through websites, media activity and conferences. The national organization assists its 32 affiliated chapters and 125 support groups in the United States and overseas contacts in providing grassroots services for organization members and the public, including family coping strategies, advocacy, educator awareness, increasing employer, government, and law enforcement sensitivity, and other initiatives. Professional Education – Provides for the education and awareness of Tourette Syndrome to medical, scientific, educational and allied professionals through development of educational materials, conducting conferences and distribution of research updates, insurance and health care information. Center for Disease Control Program – The Association and Center for Disease Control and Prevention (“CDC”) is in its eleventh year of a medical education partnership which is part of a larger appropriation from the U.S. Congress. Through the partnership, the Association seeks to achieve increased access to awareness of available support services and treatments for TS among the community, public, healthcare and educational professionals. Research – The Tourette Association has developed and manages a diverse portfolio of research and medical programs for Tourette and Tic disorders. These include a grants program which supports all areas of scientific research, and a Centers of Excellence Program which aims to facilitate consistent and high quality care for all people with these conditions. The Association’s research and medical programs, which are overseen by external advisory boards of experts, will continue to advance our understanding of and improve our ability to manage Tourette and Tic disorders well into the future. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. The Association prepares its financial statements using the accrual basis of accounting. The Association adheres to accounting principles generally accepted in the United States of America (“U.S. GAAP”). B. The Association distinguishes between contributions that increase permanently and temporarily restricted net assets and unrestricted net assets depending on the existence and/or nature of any donor restrictions. The Association reports gifts of cash and other assets as restricted support if they are received with donor stipulations that limit the use of 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 statements of activities as net assets released from restrictions. Unrestricted net assets are resources available for support of the Association’s operations over which the Board has discretionary control. Temporarily restricted net assets are released from donor restrictions by incurring expenses satisfying the restricted purpose of providing program services or the passage of time. As of February 28, 2015 and 2014, temporarily restricted net assets are available for public and professional education services, and include certain time restricted contributions.
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TOURETTE ASSOCIATION OF AMERICA INC. NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 2015 AND 2014
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Permanently restricted net assets represent the principal of an endowment fund. The Board of Directors has interpreted the New York-enacted version of Uniform Prudent Management of Institutional Funds Act (“UPMIFA”) as allowing the Association to appropriate for expenditure or accumulate so much of an endowment fund as the Association determines is prudent for the uses, benefits, purposes and duration for which the endowment fund is established, (currently the Public Education program). The donor has reserved the right to change the program designation. The Association’s permanently restricted net assets of $326,000 are included in the accompanying statements of financial position. Investment income or loss (including gains and losses on investment and interest) is included in the statements of activities as increases in temporarily restricted net assets until appropriated for expenditure. C. The Association considers all highly liquid debt instruments purchased with maturities of 90 days or less (except money market funds held by investment trustees for long-term investment) to be cash and cash equivalents. D. Investments in common stocks are reported at fair value based upon quoted market value. Investments in certificates of deposit are carried at cost, which approximates fair value because of the short maturities of certificates of deposit. E. Property and equipment is stated at cost less accumulated depreciation. These amounts do not purport to represent replacement or realizable values. Property and equipment is capitalized provided its cost is $1,000 or more and its useful life is greater than one year. Depreciation is provided on a straight-line basis over the estimated useful life of the asset. F. Donated goods and services are recognized in the accompanying financial statements if the services or goods enhance or create non-financial assets or require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased, if not provided by donation. The Association receives contributed legal services that are valued at the standard market rates that would have been incurred by the Association to obtain such services. Contributed services are reported as revenue and expense in the accompanying statements of activities, because they meet the criteria as prescribed by U.S. GAAP. The contributed legal services for the years ended February 28, 2015 and 2014 amounted to $117,809 and $145,242, respectively. Additionally, the Association received donated securities which are valued at fair market value at the date of donation. During the fiscal years ending February 28, 2015 and 2014 donated securities valued at $61,291 and $10,426 have been included in the statements of activities. G. Contributions receivable are recorded at net realizable value. Unless material, the Association does not discount them to present value. Grants receivable consist of receivables from CDC in 2015 and consists of receivables from CDC and the National Institutes of Health in 2014. As of February 28, 2015 and 2014, the Association determined that no allowance for uncollectible receivables was necessary. The determination is based on a combination of factors, such as management’s assessment of the aged basis of its government funding sources, estimates of the creditworthiness of its donors, current economic conditions and historical information. H. Revenue from government grants and contracts designated for use toward specific activities is recognized in the period when expenses have been incurred in compliance with the grantor’s conditions. Cash received in excess of revenue recognized is recorded as deferred revenue. As of February 28, 2015 and 2014, the Association received $69,744 and $70,847, respectively, of advances from grantors that will be applied to expenses to be incurred in the next year.
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TOURETTE ASSOCIATION OF AMERICA INC. NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 2015 AND 2014
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) I.
The preparation of financial statements in conformity with U.S. GAAP in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
J.
The Association recognizes bequests when the bequests become known and when the individual’s will is declared valid by the probate court.
K. The direct cost of special events includes expenses for the benefit of the donor. For example, meals, facilities and rental are considered direct costs of special events. L. The cost of providing the various program and other activities of the Association have been summarized on a functional basis in the statements of functional expenses. Accordingly, certain expenses have been allocated among the programs and supporting services benefited. M. Fair value measurements are based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, a fair value hierarchy prioritizes observable and unobservable inputs used to measure fair value into three levels, as described in Note 3. NOTE 3 – INVESTMENTS AND FAIR VALUE MEASUREMENTS Investments consist of the following at February 28, 2015 and 2014: 2015 Money market $ Certificates of deposit Equity securities: Domestic Corporate Equity International Equity Mutual funds: US – Mid Cap US – Small Cap US – Large Value US – Large Growth International Developed Markets
1,792,076 877,064
20,913 -
715,548 344,038 1,731,074 918,712 311,986
1,287,583 881,607 2,585,942 1,719,177 819,208
Total common stock
6,690,498
7,314,430
Total
$
186,841 8,621,485
2014
15,498,824
$
$
443 10,322,890
17,637,763
Certain of the Association’s investments are subject to market volatility that could substantially change their fair values in the near term. Investment activity consists of the following for the years ended February 28, 2015 and 2014: 2015 Dividends and interest Realized gain Unrealized (loss) gain
2014
$
469,369 871,702 (588,471)
$
345,085 358 1,346,355
$
752,600
$
1,691,798
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TOURETTE ASSOCIATION OF AMERICA INC. NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 2015 AND 2014
NOTE 3 – INVESTMENTS AND FAIR VALUE MEASUREMENTS (Continued) The fair value hierarchy defines three levels as follows: Level 1: Valuations based on quoted prices (unadjusted) in an active market that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Valuations based on observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in inactive markets; or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data. The Association does not have investments in Level 2. Level 3: Valuations based on unobservable inputs are used when little or no market data is available. The fair value hierarchy gives lowest priority to Level 3 inputs. The Association does not have investments in Level 3. In determining fair value, the Association utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible in its assessment of fair value. Financial assets are carried at fair value at February 28, 2015 are classified in the table below as follows: ASSETS CARRIED AT FAIR VALUE:
Level 1
Investments: Money market funds Equity securities Mutual funds TOTAL ASSETS CARRIED AT FAIR VALUE
$
$
186,841 2,669,140 4,021,358 6,877,339
Financial assets are carried at fair value at February 28, 2014 are classified in the table below as follows: ASSETS CARRIED AT FAIR VALUE:
Level 1
Investments: Money market funds Equity securities Mutual funds TOTAL ASSETS CARRIED AT FAIR VALUE
$
$
443 20,913 7,293,517 7,314,873
The Association’s policy is to recognize transfers in and transfers out between fair value levels as of the beginning of the period in which the transfer takes place. During the years ended February 28, 2015 and 2014, no such transfers between fair value levels occurred. NOTE 4 – PROPERTY AND EQUIPMENT Property and equipment consists of the following as of February 28, 2015 and February 28, 2014:
2015 Office equipment Computer equipment
$
Total cost Less: accumulated depreciation Net book value
108,195 142,098
$
250,293 (209,001) $
41,292
2014
Estimated Useful Lives
103,521 126,493
5 Years 3 Years
230,014 (187,057) $
42,957 - 10-
TOURETTE ASSOCIATION OF AMERICA INC. NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 2015 AND 2014
NOTE 4 – PROPERTY AND EQUIPMENT (Continued) During the years ended February 28, 2015 and 2014, the Association wrote-off fully depreciated equipment in the amount of $8,200 and $45,522, respectively. Depreciation expense amounted to $30,144 and $21,705 for the years ended February 28, 2015 and February 28, 2014, respectively. NOTE 5 – CONTRIBUTIONS RECEIVABLE Contributions receivable are scheduled to be received as of February 28, 2015 and 2014 as follows: Amounts due in less than one year Amounts due in one to five years
$
Discount (at 1.57%) $
2015 230,530 305,000 535,530 (9,179) 526,351
$
$
2014 199,235 410,000 609,235 (15,220) 594,015
The discount is reflected as a reduction to grants, contributions and bequest in the accompanying statements of activities. NOTE 6 – PENSION PLAN AND DEFERRED COMPENSATION PLANS The Association sponsors a qualified defined contribution pension plan for substantially all of its full-time employees. Eligibility requirements include a minimum of two years of employment with the Association or two years in the non-profit health field, social service field or with a nonprofit educational institution. Contributions paid to the pension plan are made monthly by the Association at a rate of 6% of each employee’s monthly salary. In addition, the Association maintains a voluntary contribution 403(b) plan covering all eligible employees with no matching contributions. Pension expense for the years ended February 28, 2015 and 2014 amounted to $107,192 and $113,282, respectively. Effective March 1, 2007, the Association instituted a deferred compensation plan. The plan covered one employee who retired from the Association during fiscal year 2014. The Association accrued a contribution in the amount of $50,000, plus interest, for each plan year through 2013. As of February 28, 2014, the Association has paid out the balance on the deferred compensation plan. NOTE 7 – COMMITMENTS AND CONTINGENCIES A. The Association has no uncertain tax positions as of February 28, 2015 and 2014 in accordance with Accounting Standards Codification (“ASC”) Topic 740, which provides standards for establishing and classifying any tax provisions for uncertain tax positions. The Association is no longer subject to federal or state and local income tax examinations by tax authorities for years ended before 2012. B. The Association has a five-year lease for real property where the Association is obligated under various lease agreements for the use of equipment through March 2017. Following are the future minimum lease payments under the lease for real property and the leases for the equipment for the years ending after February 28, 2015: Real Property 2016 2017 2018 2019
$
$
173,977 178,305 148,588 500,870
Equipment $
$
16,402 11,733 9,588 3,196 40,919
Total $
$
190,379 190,038 158,176 3,196 541,789
Rent expense for the years ended February 28, 2015 and 2014 amounted to $184,484 and $180,410, respectively, and is included in occupancy expense in the accompanying financial statements.
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TOURETTE ASSOCIATION OF AMERICA INC. NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 2015 AND 2014
NOTE 8 – AFFILIATED CHAPTERS Affiliates of the Association include 32 chapters in the United States operating pursuant to a group exemption letter as exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code. Affiliates operate as chapters of the Association pursuant to chapter agreements. Each chapter adopts by-laws which conform to the standard chapter by-laws provided by the Association. Each chapter elects its own Board of Directors in accordance with the adopted by-laws. Accordingly, management has determined that these chapters are not to be consolidated under current U.S. GAAP and therefore operations of these chapters are not included in the accompanying financial statements. For the years ended February 28, 2015 and 2014, the Association distributed $28,068 and $45,551, respectively, to various chapters. The distributions are based on an agreement between the chapters and the Association and calls for 24-28% to be paid to the chapters from the membership dues received by the Association. NOTE 9 – RESEARCH GRANTS Research grants payable consists of the following as of February 28, 2015 and 2014: 2015 Amounts due to research institutions under both National Institutes of Health – National Institute of Neurological Disorders and Strokes (“NIH/NINDS”) grants
$
Board approved research grants to be paid subsequent to year end
-
2014
$
1,011,937 $
1,011,937
36,540
796,272 $
832,812
In 2007, the Association was awarded a grant from the NIH/NINDS to cover a four-year period ending August 31, 2011, totaling $4.9 million. The Association obtained two no cost extensions until August 31, 2013 to close out the grant. In addition, a supplemental grant was awarded in September 2012 for $1,367,929 with an end date of August 31, 2013. In 2013, the Association received extensions for both the grant and the supplemental grant through February 28, 2014 and was not extended. Revenue recognized from NIH/NINDS grants for the years ended February 28, 2015 and 2014 amounted to $0 and $789,098, respectively. Direct research grant expenses for genetic analysis and lab pathology amounted to $934,200 and $1,729,156, for the years ended February 28, 2015 and 2014, respectively. While the NIH Grants have ended, genetics research continues as well as the process to apply for future funding. In addition to NIH funding, the Association’s direct research grant program continues to fund studies in many areas of specialty, such as, epidemiology, neuropathology, imaging, clinical trials, and a new Center of Excellence Program. NOTE 10 – TEMPORARILY RESTRICTED NET ASSETS As of February 28, 2015 and 2014, temporarily restricted net assets were available for the following purposes: 2015
2014
Public and Professional Education For future periods
$
165,042 384,780
$
186,967 484,780
Total
$
549,822
$
671,747
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TOURETTE ASSOCIATION OF AMERICA INC. NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 2015 AND 2014
NOTE 10 – TEMPORARILY RESTRICTED NET ASSETS (Continued) Temporarily restricted net assets were released from donor restrictions by incurring expenses satisfying the restricted purpose, by the occurrence of other events specified by donors or the passage of time during the years ended February 28, 2015 and 2014: 2014
2015 Public and Professional Education Research
$
173,674 451,408
$
42,495 556,604
Total
$
625,082
$
599,099
NOTE 11 – CONCENTRATIONS Cash and cash equivalents that potentially subject the Association to a concentration of credit risk include cash accounts with various financial institutions that exceeded the Federal Deposit Insurance Corporation (“FDIC”) insurance limits of up to $250,000 per depositor. As of February 28, 2015 and 2014, there were approximately $525,000 and $259,000, respectively, of cash and cash equivalents held by banks that exceeded FDIC limits. Such excess includes outstanding checks. NOTE 12 – ENDOWMENT NET ASSETS The Association’s Board recognizes that NYPMIFA permits the Board to appropriate for expenditure all earnings of such endowment funds (both realized and unrealized) with a presumption of prudence to a ceiling of 7% annually based on a quarterly rolling five-year average of such earnings. The Board explicitly appropriated all earnings of the endowment fund as of and prior to February 28, 2011, whether deemed spent or not as temporarily restricted, to be used to fund the Public Education program. The Association’s endowment investment policy is to invest in certificates of deposit and equities based on an asset allocation with the objective of the preservation of capital as well as to provide for long term growth of principal without undue risk. Annual spending from the endowment fund for the education program is established by the donor and unless authorized by the donor, the appropriations from the endowment fund should not deplete the real dollar value of the endowment fund. Any unappropriated earnings that would otherwise be considered unrestricted by the donor will be reflected as temporarily restricted. Changes in endowment net assets for the year ended February 28, 2015 are as follows:
Investment activity: Interest and dividends Total investment activity
Temporarily Restricted
Permanently Restricted
$
$
Expenditures for Public Education program
1,560 1,560
-
Total $
1,560 1,560
(1,560)
-
(1,560)
Total change in endowment net assets
-
-
-
Endowment net assets, beginning of year
-
326,000
326,000
Endowment net assets, end of year
$
-
$
326,000
$
326,000
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TOURETTE ASSOCIATION OF AMERICA INC. NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 2015 AND 2014
NOTE 12 – ENDOWMENT NET ASSETS (Continued) Changes in endowment net assets for the year ended February 28, 2014 are as follows: Temporarily Restricted Investment activity: Interest and dividends Total investment activity
$
Expenditures for Public Education program
1,953 1,953
Permanently Restricted $
-
Total $
1,953 1,953
(1,953)
-
(1,953)
Total change in endowment net assets
-
-
-
Endowment net assets, beginning of year
-
326,000
Endowment net assets, end of year
$
-
$
326,000
326,000 $
326,000
NOTE 13 – SUBSEQUENT EVENTS The Association has evaluated for potential recognition and disclosure, events subsequent to the date of the statements of financial position through June 18, 2015, the date the financial statements were available to be issued.
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