FIRST UNITED METHODIST CHURCH OF FORT WORTH

Transcription

1 FIRST UNITED METHODIST CHURCH OF FORT WORTH Fort Worth, Texas Consolidated Financial Statements Years Ended December 31, 2012 and 2011

2 Consolidated Financial Statements Years Ended December 31, 2012 and 2011 TABLE OF CONTENTS Page Independent Auditors' Report 1-2 Consolidated Financial Statements Consolidated Statements of Financial Position 3 Consolidated Statements of Activities 4-5 Consolidated Statements of Cash Flows 6 Notes to Consolidated Financial Statements 7-13 Supplementary Information: Consolidating Statement of Financial Position By Fund 14 Consolidating Statement of Activities By Fund 15

3 INDEPENDENT AUDITORS REPORT To the Finance and Audit Committees First United Methodist Church of Fort Worth We have audited the accompanying consolidated financial statements of First United Methodist Church of Fort Worth (the Church ), a Texas non-profit corporation, which comprise the consolidated statement of financial position as of December 31, 2012, and the related consolidated statements of activities and cash flows for the year 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 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 consolidated financial statements based on our audit. We conducted our audit 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 consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors 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 auditors consider internal control relevant to the Church 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 Church 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of First United Methodist Church of Fort Worth as of December 31, 2012, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

4 Report on Supplementary Information Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The supplemental information on pages is presented for purpose of additional analysis and is 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 audit 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. Other Matter The consolidated financial statements of the Church as of December 31, 2011, were audited by other auditors whose report dated June 29, 2012, expressed an unqualified opinion on those consolidated financial statements. Arlington, Texas June 12, 2013

5 Consolidated Statements of Financial Position December 31, 2012 and 2011 Page 3 ASSETS Cash $ 1,992,726 $ 1,847,643 Accounts receivable 3,339 10,084 Prepaid expenses 39,247 36,258 Property and equipment, net 9,380,571 9,412,801 Restricted cash 280, ,566 Beneficial interest in perpetual trusts 1,061, ,611 Total assets $ 12,757,236 $ 12,581,963 LIABILITIES AND NET ASSETS Accounts payable and accrued expenses $ 257,937 $ 170,323 Funds held for others 73,405 53,986 Deferred income 33,045 56,904 Total liabilities 364, ,213 Net assets Unrestricted Undesignated 9,456,238 9,322,839 Designated 326, ,859 9,782,451 9,626,698 Temporarily restricted 2,507,331 2,570,985 Permanently restricted 103, ,067 Total net assets 12,392,849 12,300,750 Total liabilities and net assets $ 12,757,236 $ 12,581,963 The accompanying notes are an integral part of these consolidated financial statements.

6 Consolidated Statement of Activities Year Ended December 31, 2012 Page 4 Temporarily Permanently Unrestricted Restricted Restricted Total Revenues and other support: Contributions $ 4,496,615 $ 1,353,419 $ - $ 5,850,034 Program fees 654,148 70, ,039 Net unrealized and realized gain - 65,626-65,626 Loss on the disposal of property and equipment (6,523) - - (6,523) Other revenue 419, ,027 Net assets released from restrictions 1,553,590 (1,553,590) - - Total revenues and other support 7,116,857 (63,654) - 7,053,203 Expenses: Program services 5,653, ,653,757 General and administrative 812, ,348 Depreciation 494, ,999 Total expenses 6,961, ,961,104 Change in net assets 155,753 (63,654) - 92,099 Net assets at beginning of year 9,626,698 2,570, ,067 12,300,750 Net assets at end of year $ 9,782,451 $ 2,507,331 $ 103,067 $ 12,392,849 The accompanying notes are an integral part of these consolidated financial statements.

7 Consolidated Statement of Activities Year Ended December 31, 2011 Page 5 Temporarily Permanently Unrestricted Restricted Restricted Total Revenues and other support: Contributions $ 4,145,532 $ 1,490,171 $ - $ 5,635,703 Program fees 641, ,466 Net unrealized and realized loss - (67,575) - (67,575) Other revenue 320, ,433 Net assets released from restrictions 1,311,156 (1,311,156) - - Total revenues and other support 6,418, ,440-6,530,027 Expenses: Program services 5,361, ,361,753 General and administrative 813, ,082 Depreciation 585, ,996 Total expenses 6,760, ,760,831 Change in net assets (342,244) 111,440 - (230,804) Net assets at beginning of year 9,968,942 2,459, ,067 12,531,554 Net assets at end of year $ 9,626,698 $ 2,570,985 $ 103,067 $ 12,300,750 The accompanying notes are an integral part of these consolidated financial statements.

8 Consolidated Statements of Cash Flows Years Ended December 31, 2012 and 2011 Page Cash flows from operating activities: Change in net assets $ 92,099 $ (230,804) Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation 494, ,996 Loss on disposal of property and equipment 6,523 - Net unrealized and realized (gain) loss (65,627) 67,574 Contributions restricted for building and improvements (86,241) (230,861) (Increase) decrease in assets: Accounts receivable 6,745 11,319 Prepaid Expenses (2,989) 4,069 Increase (decrease) in liabilities: Accounts payable and accrued expenses 87,614 (12,785) Funds held for others 19,419 (15,018) Deferred income (23,859) 5,914 Net cash provided by operating activities 528, ,404 Cash flows from investing activities: Change in cash restricted for building and improvements (549) (747) Purchases of property and equipment (469,292) (223,970) Net cash used in investing activities (469,841) (224,717) Cash flows from financing activities: Contributions restricted for building and improvements 86, ,861 Change in cash 145, ,548 Cash at beginning of year 1,847,643 1,656,095 Cash at end of year $ 1,992,726 $ 1,847,643 The accompanying notes are an integral part of these consolidated financial statements.

9 Notes to Financial Statements Page Organization and Nature of Activities First United Methodist Church of Fort Worth (the Church ), a Texas non-profit corporation, serves various charitable, educational, religious and/or missionary undertakings. The majority of the Church's revenues and support are contributed by its members who reside in the greater Fort Worth area. The Church extends its ministry through another nonprofit entity, the First Street Methodist Mission, (the Mission ). The Mission is affiliated with the Church as a result of management and financial control. The financial statements of this entity are consolidated with the financial statements of the Church. All intercompany transactions have been eliminated. The Church and Mission are exempt from federal income taxes under section 501(c)(3) of the Internal Revenue Code as other than a private foundation. 2 - Significant Accounting Policies Basis of Accounting - The consolidated financial statements of the Church have been prepared on the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned, and expenses are recorded when the obligation is incurred. The consolidated financial statements of the Church have been prepared using accounting principles generally accepted in the United States of America. Basis of Presentation - As required by the Not-for-Profit Entities Classification of Net Assets topic of the Financial Accounting Standards Board Accounting Standards Codification ( FASB ASC ), the Church reports information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. Revenue Recognition - Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support, depending on the existence and/or nature of any donor restrictions. All donor-restricted contributions are reported as an increase in temporarily or permanently restricted net assets, depending on the nature of the restriction. When a restriction expires (that is, when a stipulated time restriction ends or purpose restriction is accomplished), temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Cash and Cash Equivalents - The Church considers all short-term investments with an original maturity of three months or less to be cash equivalents. Restricted cash is held in escrow as per the agreement described in Note 10. Property and Equipment - Property and equipment are recorded at cost, if purchased, and fair market value at date of donation, if contributed. Land, buildings, improvements and equipment on hand prior to March 31, 1986 are stated at estimated value based upon insurance values and appraisal district valuations as of that date. Depreciation is calculated using the straight-line method over the estimated useful lives of the respective assets as follows: Building and improvements 7 to 40 years Furniture, fixtures, and equipment 3 to 10 years Vehicles 5 years Donated Assets - Donated marketable securities and other noncash donations are recorded as contributions at their estimated fair values at the date of donation. Compensated Absences - Employees of the Church, administrative and ministerial, are entitled to paid vacation depending upon length of service and other factors. Any unused vacation benefits expire at the end of each calendar year. Accordingly, no liability has been recorded in the accompanying consolidated financial statements. The Church s policy is to recognize the cost of compensated absences when paid to employees.

10 Notes to Financial Statements Page Significant Accounting Policies (continued) Investment Policy - The investments are owned and held by a trustee where all investment decisions are made. The trustee is responsible for all investment decisions, managing the trust and determining the strategy to achieve objectives per the provisions of the trust document. The Church has a beneficial interest in the assets held by the trustee. The Board of Trustees of the Church has interpreted the Uniform Prudent Management of Institutional Funds Act (UPMIFA) as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. The State and the Church have both adopted UPMIFA. As a result of this interpretation, the Church classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the Church in a manner consistent with the standard of prudence prescribed by UPMIFA. Funds with Deficiencies - From time to time, the fair value of assets associated with individual donor restricted endowment funds may fall below the level that the donor or UPMIFA requires the Church to retain as a fund of perpetual duration. In accordance with GAAP, deficiencies of this nature are reported in unrestricted net assets. The Church s endowment did not have a deficiency as of December 31, 2012 and Use of Estimates - Management used estimates and assumptions in preparing these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. Those estimates and assumptions affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were used. Concentrations of Credit Risk - The Church maintains deposits with highly reputable financial institutions, which at times are in excess of the federally insured limit. It is the opinion of management that the solvency of the financial institutions is sufficient to cover any related exposure. Income Taxes - The Church follows the Income Taxes topic of the FASB ASC, which prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. The Church is not aware of any activities that would jeopardize its tax-exempt status and is not aware of any activities that are subject to tax on unrelated business income, other than those reported on Form 990T. As of December 31, 2012, the Church has no uncertain tax positions that qualify for either recognition or disclosure in the consolidated financial statements and does not expect this to change in the next twelve months. Subsequent Events - Subsequent events have been evaluated through June 12, 2013, which is the date the consolidated financial statements were available to be issued.

11 Notes to Financial Statements Page Property and Equipment The following is a summary of property and equipment in service as of December 31: Land $ 4,090,066 $ 4,090,066 Buildings and improvements 18,237,161 18,194,281 Furniture, fixtures and equipment 2,810,735 3,075,573 Vehicles 76,964 76,964 Construction in progress 598, ,417 25,813,779 25,634,301 Less accumulated depreciation (16,433,208) (16,221,500) Net property and equipment $ 9,380,571 $ 9,412,801 Depreciation expense for the years ended December 31, 2012 and 2011 amounted to $494,999 and $585,996, respectively. 4 - Beneficial Interest in Perpetual Trusts The beneficial interest in perpetual trusts represents the fair value of trusts established from the bequest of Saul B. Sells known as the Helen F. Sells Charitable Trust and a 10% split interest in a trust established from the bequest of Sheila E. Allen. These assets are held in trust by banks as trustees of the trusts. Because the present value of the future cash flows from the trust cannot be reasonably determined, the reported value of the Church s beneficial interest is measured by its share of the fair value of the trusts assets, which amounted to $1,061,238 and $995,611 at December 31, 2012 and 2011, respectively. 5 - Fair Value Measurements The Church follows the Fair Value Measurements topic of the FASB ASC for all financial assets and liabilities measured at fair value on a recurring basis. The topic establishes a framework for measuring fair value and enhances disclosure requirements for fair value measurements. The topic defines fair value as 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. The topic establishes market or observable inputs as the preferred sources of values, followed by assumptions based on hypothetical transactions in the absence of market inputs. The topic establishes a hierarchy for grouping these assets and liabilities, based on the significance level of the following inputs: Level I Quoted prices in active markets for identical assets or liabilities. Level II Quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations whose inputs are observable or whose significant drivers are observable. Level III Significant inputs to the valuation model are unobservable.

12 Notes to Financial Statements Page Fair Value Measurements (continued) The table below summarizes the beneficial interest in perpetual trusts by level as of December 31, 2012 and 2011: Assets at Fair Value as of December 31, 2012 Level I Level II Level III Total Beneficial interest in perpetual trusts Sheila E. Allen Trust $ 156,414 $ 20,601 $ - $ 177,015 Saul B. Sells Trust 806,183 78, ,223 Total assets at fair value $ 962,597 $ 98,641 $ - $ 1,061,238 Assets at Fair Value as of December 31, 2011 Level I Level II Level III Total Beneficial interest in charitable trusts Sheila E. Allen Trust $ 164,062 $ - $ - $ 164,062 Saul B. Sells Trust 831, ,549 Total assets at fair value $ 995,611 $ - $ - $ 995,611 The Church's assets recorded at fair value are the beneficial interest in perpetual trusts and are valued based on information obtained from the trustees regarding the trust holdings, the value of these holdings and other pertinent information. As of December 31, 2012, the trusts have invested in a diversified portfolio with an emphasis on domestic common stocks and mutual funds. In addition, investments have been made in international common stocks and mutual funds, domestic and international fixed income securities and structured alternative investments. 6 - Related Parties The Methodist Justice Ministry ( MJM ) is organized to provide free legal advice and representation to people in the community whose incomes are at 125% or less of federal poverty guidelines. MJM is self funded although funds have been contributed to MJM by members of the Church. The First Methodist Church of Fort Worth Foundation, Inc. (the Foundation ) is organized to receive and preserve gifts and bequests which are intended to benefit the Church and to support and assist in carrying out the purposes and programs of the Church. The Church has determined not to include the net assets and operating results of MJM or the Foundation in these financial statements as control of these organizations does not exist through a majority voting interest or board representation.

13 Notes to Financial Statements Page Related Parties (continued) A summary of financial data of the Foundation at December 31, 2012 and 2011 follows: Total assets $ 47,088,844 $ 42,182,675 Total liabilities 271, ,349 Net assets $ 46,817,220 $ 41,961,326 The Church received contributions from the Foundation as follows: Unrestricted cash contributions $ 400,000 $ 400,000 Restricted/designated cash contributions 629, , Restrictions on Net Assets $ 1,029,822 $ 655,285 Temporarily restricted net assets relate to funds contributed to the Church for future program expense and property acquisitions: Property acquisitions $ 456,546 $ 499,673 Program expenses 841, ,389 Advance pledges 251, ,379 Beneficial interest in perpetual trusts 958, ,544 Permanently restricted net assets consist of the following: $ 2,507,331 $ 2,570, Beneficial interest in perpetual trusts $ 103,067 $ 103,067 The income from the permanently restricted net assets may be used to support specific program services. The income is recorded as temporarily restricted until distributed by the Trustee and used by the Church.

14 Notes to Financial Statements Page Endowment Funds Changes in endowment net assets for the years ended December 31, 2012 and 2011 are as follows: Temporarily Permanently Unrestricted Restricted Restricted Total Endowment net assets, $ - $ 60,995 $ 103,067 $ 164,062 December 31, 2011 Net appreciation (realized and unrealized) - 12,953-12,953 Endowment net assets, December 31, 2012 $ $ 73,948 $ 103,067 $ 177,015 Temporarily Permanently Unrestricted Restricted Restricted Total Endowment net assets, $ - $ 76,413 $ 103,067 $ 179,480 December 31, 2010 Net depreciation (realized and unrealized) - (15,418) - (15,418) Endowment net assets, December 31, 2011 $ $ 60,995 $ 103,067 $ 164, Retirement Plan The Church participates in two retirement plans of the General Board of Pensions of the United Methodist Church. A defined benefit plan is available only to clergy, and the Church contributes toward this plan amounts determined by the Central Texas Conference of the United Methodist Church. A defined contribution plan is available to both clergy and lay employees. For lay employees, the Church contributed 3% of participating employees' compensation. For clergy, the Church contributed 3% of participating clergy persons' compensation for both years. For the years ended December 31, 2012 and 2011, pension expense was $148,994 and $154,496, respectively Commitments and Contingencies The Church has entered into various operating lease agreements for office equipment. Total operating lease expense for the years ended December 31, 2012 and 2011 was $44,452 and $39,476, respectively. On October 6, 2004 the Church leased 170 striped parking spaces, owned by the Church, to a third party. The lease was renewed on November 30, 2011, for an additional 36 months.

15 Notes to Financial Statements Page Commitments and Contingencies (continued) Future minimum lease payments and receipts on operating leases are as follows: Rental Payments Rentals to be Received 2013 $ 26,844 $ 126, , , ,408 - On September 3, 2009 the Church entered into a contract for $1,850,000 to repair and expand the organ in the sanctuary on or before thirty-six (36) months after the date of the agreement. During 2012, the organ repair and expansion completion date was extended to December The initial payment of $277,500 will be held in escrow until the date it is paid to the Organ builder at the time the final payment is made, with all accrued interest thereon. Payments relating to this contract totaled $277,500 and $0 for years ending December 31, 2012 and 2011, respectively. Payments per the contract for the organ project are as follows: Future payments: Payment 4: Fifteen percent ( 15%) of the contract price when the mechanisms are complete and delivered to the premises of organ builder $ 277,500 Payment 5: Twenty percent ( 20% ) of the contract price when the project is delivered to the premises of purchaser 370,000 Final payment: Upon acceptance of the project by purchaser, the purchaser shall make the final payment, consisting of twenty-five percent ( 25%) of the contract price 462,500 Total future payments 1,110,000 Payments made: Payment 1: Five percent ( 5% ) of the contract price when pipes for the project are ordered 92,500 Payment 2: Five percent ( 5% ) of the contract price when chest parts and mechanisms are ordered 92,500 Initial payment held in escrow by purchaser, fifteen percent (15%) of the contract price, plus accrued interest. Payment will be released from escrow at the same time as final payment 277,500 Payment 3: Fifteen percent ( 15% ) of the contract price when pipe work is complete and delivered to the premises of organ builder 277,500 Total payments $ 1,850,000

16 SUPPLEMENTARY INFORMATION

17 Consolidating Statement of Financial Position - By Fund December 31, 2012 Page 14 ASSETS Temporarily Permanently Budget Designated Restricted Restricted Weekday Mission Total Cash $ 221,813 $ 326,213 $ 881,778 $ - $ 147,456 $ 415,466 $ 1,992,726 Accounts receivable ,067 2,272 3,339 Prepaid expenses 36,492-2, ,247 Property and equipment, net 9,380, ,380,571 Restricted cash , ,115 Beneficial interest in perpetual trusts , , ,061,238 Total assets $ 9,638,876 $ 326,213 $ 2,048,871 $ 177,015 $ 148,523 $ 417,738 $ 12,757,236 LIABILITIES AND NET ASSETS Accounts payable and accrued liabilities $ 241,002 $ - $ 16,363 $ - $ - $ 572 $ 257,937 Funds held for others , ,405 Deferred revenue 4, ,670-33,045 Total liabilities 245,377-89,768-28, ,387 Net assets Unrestricted Undesignated 9,393, ,739-9,456,238 Designated - 326, ,213 9,393, , ,739-9,782,451 Temporarily restricted - - 1,959,103 73,948 57, ,166 2,507,331 Permanently restricted , ,067 Total net assets 9,393, ,213 1,959, , , ,166 12,392,849 Total liabilities and net assets $ 9,638,876 $ 326,213 $ 2,048,871 $ 177,015 $ 148,523 $ 417,738 $ 12,757,236

18 Consolidating Statement of Activities - By Fund Year Ended December 31, 2012 Page 15 Temporarily Permanently Budget Designated Restricted Restricted Weekday Mission Total Revenues and other support: Contributions $ 4,444,620 $ 51,995 $ 764,455 $ - $ - $ 588,964 $ 5,850,034 Program fees , ,039 Net unrealized and realized gain ,674 12, ,627 Loss on the disposal of property and equipment (6,523) (6,523) Other revenue 419, ,026 Interfund transfers 451,791 (7,256) (412,467) - (42,186) 10,118 - Total revenues and other support 5,308,914 44, ,662 12, , ,082 7,053,203 Expenses: Program services 3,884,870 22, , , ,029 5,653,757 General and administrative 812, ,348 Depreciation 494, ,999 Total expenses 5,192,217 22, , , ,029 6,961,104 Change in net assets 116,697 22,354 (125,974) 12,953 13,016 53,053 92,099 Net assets at beginning of year 9,276, ,859 2,085, , , ,113 12,300,750 Net assets at end of year $ 9,393,499 $ 326,213 $ 1,959,103 $ 177,015 $ 119,853 $ 417,166 $ 12,392,849