MULTIPLE SCLEROSIS ASSOCIATION OF AMERICA, INC. AND AFFILIATES Consolidated Financial Statements For the Year Ended June 30, 2009 (With Summarized Financial Information for the Year Ended June 30, 2008) and Report Thereon MULTIPLE SCLEROSIS ASSOCIATION OF AMERICA, INC. AND AFFILIATES TABLE OF CONTENTS _______________ Page Independent Auditor’s Report...................................................................................................................... 1-2 Financial Statements Consolidated Statement of Financial Position............................................................................ 3 Consolidated Statement of Activities ......................................................................................... 4 Statement of Functional Expenses........................................................................ 5 ent of Cash Flows ...................................................................................... 6 Notes to Consolidated Financial Statements .........................................................................7-16 Supplemental Consolidating Information Consolidating Statement of Financial Position 17 Consolidating Statement of Activities 18 INDEPENDENT AUDITOR’S REPORT To the Board of Directors of the Multiple Sclerosis Association of America, Inc. and Affiliates We have audited the accompanying consolidated ...
MULTIPLE SCLEROSIS ASSOCIATION OF AMERICA, INC. AND AFFILIATES Consolidated Financial Statements For the Year Ended June 30, 2009 (With Summarized Financial Information for the Year Ended June 30, 2008)
and Report Thereon
MULTIPLE SCLEROSIS ASSOCIATION OF AMERICA, INC. AND AFFILIATES TABLE OF CONTENTS _______________
Page Independent Auditors Report...................................................................................................................... 1-2 Financial Statements Consolidated Statement of Financial Position............................................................................ 3 Consolidated Statement of Activities ......................................................................................... 4 Consolidated Statement of Functional Expenses........................................................................ 5 Consolidated Statement of Cash Flows ...................................................................................... 6 Notes to Consolidated Financial Statements ......................................................................... 7-16 Supplemental Consolidating Information Consolidating Statement of Financial Position ........................................................................ 17 Consolidating Statement of Activities ...................................................................................... 18
INDEPENDENT AUDITORS REPORT
To the Board of Directors of the Multiple Sclerosis Association of America, Inc. and Affiliates C O N S U L T I N G We have audited the accompanying consolidated statement of financial position of the A C C O U N T I N G Multiple Sclerosis Association of America, Inc. and Affiliates (MSAA) as of June 30, T E C H N O L O G Y 2009, and the related consolidated statements of activities, functional expenses and cash flows for the year then ended. These financial statements are the responsibility of Certified Public MSAAs management. Our responsibility is to express an opinion on these financial Accountants statements based on our audit. We did not audit the financial statements of the affiliates of MSAA, which statements reflect total assets and revenue constituting 59% and 12%, respectively, of the related consolidated totals. The financial statements of the affiliates of MSAA, as of June 30, 2009, were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for the affiliates, is based solely on the report of the other auditors. Theprior year summarized comparative information has been derived from MSAAs consolidated financial statements for the year ended June 30, 2008, and, in our report dated November 5, 2008, we expressed an unqualified opinion on those consolidated financial statements. 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 financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of MSAAs internal controls over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the reports of the other auditors provide a reasonable basis for our opinion. In our opinion, based on our audit and the reports of the other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Multiple Sclerosis Association of America, Inc. and Affiliates as of June 30, 2009, and the changes in its net assets and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
Our audit was conducted for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. The accompanying consolidating information as of and for the year ended June 30, 2009 on pages 17 and 18 is presented for purposes of additional analysis and is not a required part of the basic consolidated financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic consolidated financial statements and, in our opinion, is fairly stated in relation to the basic consolidated financial statements taken as a whole. RAFFA, P.C. Washington, DC November 13, 2009
MULTIPLE SCLEROSIS ASSOCIATION OF AMERICA, INC. AND AFFILIATES CONSOLIDATED STATEMENT OF FINANCIAL POSITION June 30, 2009 (With Summarized Financial Information as of June 30, 2008) _______________ 2009 2008 $ 1,470,360 $ 2,429,941 509,302 601,778 54,043 41,473 104,288 85,134 2,137,993 3,158,326 2,227,856 2,678,951 300,000 300,000 1,177,621 1,024,182 7,592,055 7,688,905 $ 13,435,525 $ 14,850,364
MULTIPLE SCLEROSIS ASSOCIATION OF AMERICA, INC. AND AFFILIATES CONSOLIDATED STATEMENT OF ACTIVITIES For the Year Ended June 30, 2009 (With Summarized Financial Information for the Year Ended June 30, 2008) _______________
REVENUE AND SUPPORT Contributions Donated materials, services and equipment Grants and bequests Rental income Investment income (loss) Miscellaneous income Special events Net assets released from restrictions: Satisfaction of program restrictions TOTAL REVENUE AND SUPPORT EXPENSES Program Services Patient services Public education, referral & counseling Housing Total Program Services Supporting Services Fundraising General and administrative Total Supporting Services TOTAL EXPENSES Change in Net Assets NET ASSETS, BEGINNING OF YEAR NET ASSETS, END OF YEAR
Contract services Public service announcements Patient assistance Salaries and wages Occupancy Payroll taxes and fringe benefits Depreciation and amortization Licenses and fees Professional fees/counseling Interest Office supplies and expenses Postage, printing and mailing costs Miscellaneous Travel Bank and investment management fees Special events Publications Telephone Advertising Data processing and list costs TOTAL EXPENSES
MULTIPLE SCLEROSIS ASSOCIATION OF AMERICA, INC. AND AFFILIATES CONSOLIDATED STATEMENT OF CASH FLOWS For the Year Ended June 30, 2009 Increase (Decrease) in Cash and Cash Equivalents (With Summarized Financial Information for the Year Ended June 30, 2008) _______________
CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities Depreciation and amortization Net unrealized and realized losses on investments Loss on exchange of leased assets Changes in assets and liabilities Pledges receivable Accounts receivable Prepaid expenses and other assets Accounts payable and accrued expenses Tenant security deposits NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Purchases of investments Proceeds from sales of investments Deposits to restricted cash for replacement reserves and interest Purchases and construction of property and equipment NET CASH USED IN INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on capital lease obligations Proceeds from note payable Principal payment on note payable Principal payments on mortgage payable Principal payments on line of credit NET CASH USED IN FINANCING ACTIVITIES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR CASH AND CASH EQUIVALENTS, END OF YEAR SUPPLEMENTAL CASH FLOW INFORMATION Actual cash payments for interest
MULTIPLE SCLEROSIS ASSOCIATION OF AMERICA, INC. AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended June 30, 2009 _______________ Organization and Summary of Significant Accounting Policies Organization The Multiple Sclerosis Association of America, Inc. (the Association) was incorporated as a nonprofit organization in 1970. The mission of the Association is to ease the day-to-day challenges of individuals with MS and their caregivers through service, education and research. These activities are funded primarily through contributions from individuals. The affiliates of the Association, Multiple Sclerosis Housing, Inc. (MSH), Multiple Sclerosis Handicapped Housing, Inc. (MSHH), MSAA Housing for the Disabled, Inc. (MSAA HFD), MSAA Housing for Independent Living, Inc. (MSAA HIL) and MSAA Jacksonville, Inc., (collectively referred to as the Affiliates) have been organized to acquire real property in various locations and to construct and operate thereon an apartment complex for elderly and handicapped persons. Such projects are regulated by the U.S. Department of Housing and Urban Development (HUD) as to rent charges and operating methods. Principles of Consolidation The consolidated financial statements of the Association and Affiliates (collectively referred to as MSAA) have been prepared on the accrual basis of accounting and include the accounts of the Multiple Sclerosis Association of America, Inc. and its affiliates; Multiple Sclerosis Housing, Inc.; Multiple Sclerosis Handicapped Housing, Inc.; MSAA Housing for the Disabled, Inc.; MSAA Housing for Independent Living, Inc.; and MSAA Jacksonville, Inc. All material intercompany balances and transactions have been eliminated. Cash and Cash Equivalents MSAA considers all money market funds to be cash equivalents. Investments Investments are comprised of bond and equity mutual funds and are recorded in the accompanying consolidated financial statements at fair value. Fair value is 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. Fair Value Measurement Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements , defines fair value and establishes a framework for measuring fair value for those assets and liabilities that are measured at fair value on a recurring basis. In accordance with SFAS No.
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MULTIPLE SCLEROSIS ASSOCIATION OF AMERICA, INC. AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended June 30, 2009 _______________ Organization and Summary of Significant Accounting Policies (continued) Fair Value Measurement (continued) 157, MSAA has categorized its applicable financial instruments into a required fair value hierarchy. Thefair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). For MSAA, the financial assets and liabilities reported at fair value are based upon quoted prices for identical assets or liabilities in an active market that MSAA has the ability to access (Level 1). As of and for the year ended June 30, 2009, only MSAA’s investments, as described in Note 2 of these consolidated financial statements, were measured at fair value on a recurring basis and subject to SFAS 157. Pledges Receivable MSAA reports unconditional promises to give as contributions. All pledges are expected to be collected in less than one year and are recorded at the estimated amount to be ultimately realized. Accrued expenses include the costs related to the solicitation of pledges receivable. Property and Equipment, and Related Depreciation and Amortization Property and equipment are recorded at cost. Depreciation is recorded principally on a straight-line basis over the estimated useful lives of the respective assets, which range from five to seven years for furniture and equipment and thirty to forty years for the buildings. Expenditures for major repairs and improvements are capitalized; conversely, expenditures for minor repairs and maintenance costs are expensed as incurred. Upon the retirement or disposal of assets, the cost and accumulated depreciation are eliminated from the respective accounts and the resulting gain or loss, if any, is included in revenue or expenses in the accompanying consolidated statement of activities. Classification of Net Assets The net assets of MSAA are reported as follows: • Unrestricted net assets represent the portion of expendable funds that are available for support of MSAA’s operations. Also included in unrestricted net assets are $300,000 of funds for the charitable gift annuity program and $1,500,000 of funds designated by the Board of Directors to serve as a working capital reserve. • Temporarily restricted net assets represent funds that are specifically restricted by donors and the U.S. Department of Housing and Urban Development (HUD) for use in various programs.
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MULTIPLE SCLEROSIS ASSOCIATION OF AMERICA, INC. AND AFFILIATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Year Ended June 30, 2009 _______________ Organization and Summary of Significant Accounting Policies (continued) Revenue Recognit o i n Unrestricted contributions are reported as revenue in the year in which payments are received and/or unconditional promises are made. MSAA reports gifts of cash and other assets as temporarily restricted if they are received with donor stipulations that limit the use of the donated assets. 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. MSAA receives capital advances from HUD under Section 811 of the National Affordable Housing Act of 1996. These advances are reported as temporarily restricted support when received. The capital advances bear no interest and are not required to be repaid as long as the housing remains available to disabled persons for at least forty years. Failure to keep the housing available to disabled persons would result in HUD billing the owner for the entire capital advance outstanding plus interest since the date of the first advance. The entire amount of the capital advances will be released from temporarily restricted net assets upon the expiration of the 40-year term of the agreements, which range from the years 2033 to 2039. Rental income is recognized as rentals become due. All leases between MSAA and the tenants of the property are operating leases. Donated Materials, Services and Equipment Donated materials, services and equipment are recorded as revenue and expenses at their estimated fair value at the date of donation. Donations include the value of public service announcements by various media and are included in public service announcements in the accompanying consolidated statement of functional expenses based on the functional areas benefited. MSAAs programs are also furthered through the contribution of time from unpaid volunteers. For the year ended June 30, 2009, volunteers have contributed over 7,887 hours to MSAAs program services. These services are not reflected in the accompanying consolidated statement of activities because they do not meet the necessary criteria for recognition under accounting principles generally accepted in the United States of America.