the evangelical lutheran good samaritan society and affiliates consolidated financial statements ...

76 Pages·2016·0.27 MB·English

THE EVANGELICAL LUTHERAN
GOOD SAMARITAN SOCIETY AND AFFILIATES

CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2015 AND 2014
THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES
TABLE OF CONTENTS
YEARS ENDED DECEMBER 31, 2015 AND 2014
INDEPENDENT AUDITORS' REPORT 1 
CONSOLIDATED FINANCIAL STATEMENTS 
CONSOLIDATED BALANCE SHEETS 3 
CONSOLIDATED STATEMENTS OF OPERATIONS 5 
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS 6 
CONSOLIDATED STATEMENTS OF CASH FLOWS 7 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 8 
INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTAL INFORMATION 35 
SUPPLEMENTAL INFORMATION 
CONSOLIDATED DEPARTMENTAL SUMMARY OF OPERATING EXPENSES 36 
CONSOLIDATED SUMMARY OF RESOURCE DEVELOPMENT ACTIVITY 38 
2015 CONSOLIDATING FINANCIAL STATEMENTS 
CONSOLIDATING BALANCE SHEET 39 
CONSOLIDATING STATEMENT OF OPERATIONS 43 
CONSOLIDATING STATEMENT OF CHANGES IN NET ASSETS 45 
CONSOLIDATING STATEMENT OF CASH FLOWS 47 
2015 CONSOLIDATING OBLIGATED GROUP FINANCIAL STATEMENTS 
CONSOLIDATING OBLIGATED GROUP BALANCE SHEET 51 
CONSOLIDATING OBLIGATED GROUP STATEMENT OF OPERATIONS 53 
CONSOLIDATING OBLIGATED GROUP STATEMENT OF CHANGES IN NET ASSETS 54 
CONSOLIDATING OBLIGATED GROUP STATEMENT OF CASH FLOWS 55 
2014 CONSOLIDATING FINANCIAL STATEMENTS 
CONSOLIDATING BALANCE SHEET 56 
CONSOLIDATING STATEMENT OF OPERATIONS 60
THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES
TABLE OF CONTENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 2015 AND 2014
CONSOLIDATING STATEMENT OF CHANGES IN NET ASSETS 62 
CONSOLIDATING STATEMENT OF CASH FLOWS 64 
2014 CONSOLIDATING OBLIGATED GROUP FINANCIAL STATEMENTS 
CONSOLIDATING OBLIGATED GROUP BALANCE SHEET 68 
CONSOLIDATING OBLIGATED GROUP STATEMENT OF OPERATIONS 70 
CONSOLIDATING OBLIGATED GROUP STATEMENT OF CHANGES IN NET ASSETS 71 
CONSOLIDATING OBLIGATED GROUP STATEMENT OF CASH FLOWS 72
CliftonLarsonAllen LLP
CLAconnect.com

INDEPENDENT AUDITORS' REPORT

Board of Directors
The Evangelical Lutheran Good Samaritan Society
and Affiliates
Sioux Falls, South Dakota

We have audited the accompanying consolidated financial statements of The Evangelical Lutheran
Good Samaritan Society and Affiliates (the Society) (a North Dakota corporation) and its subsidiaries,
which comprise the consolidated balance sheets as of December 31, 2015 and 2014, and the related
consolidated statements of operations, changes in net assets, 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.

Auditors’ 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 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 consolidated 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 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.

An independent member of Nexia International (1)
Board of Directors
The Evangelical Lutheran Good Samaritan Society
and Affiliates

Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of the Society and its subsidiaries as of December 31, 2015 and 2014,
and the results of their operations and their cash flows for the years then ended in accordance with
accounting principles generally accepted in the United States of America.

CliftonLarsonAllen LLP
Minneapolis, Minnesota
April 25, 2016

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THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2015 AND 2014
(DOLLAR AMOUNTS IN THOUSANDS)

2015 2014
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 1 7,468 $ 15,600
Investments 3 34,002 384,047
Accounts Receivable, Net 9 8,515 8 3,846
Notes and Other Current Receivables 1,547 1,911
Inventory 3,965 4,016
Prepaid Expenses 6,375 3,544
Securities Lending - Collateral Held for Loaned Securities 1 9,754 2 5,325
Total Current Assets 4 81,626 518,289
ASSETS LIMITED AS TO USE
Investments 1 27,258 7 5,051
Securities Lending - Investments Loaned to Broker 1 9,716 2 5,127
Total Assets Limited as to Use, Less Current Portion 1 46,974 100,178
PROPERTY AND EQUIPMENT
Land and Land Improvements 1 68,391 160,874
Buildings and Improvements 1,498,497 1,447,061
Furniture and Equipment 2 88,879 262,085
Vehicles 1 9,731 1 8,815
Total 1,975,498 1,888,835
Less: Accumulated Depreciation ( 1,053,330) (998,174)
Subtotal 9 22,168 890,661
Construction and Development 1 27,943 110,593
Total Property and Equipment 1,050,111 1,001,254
OTHER ASSETS
Investments 3 3,336 3 3,804
Other Assets 7 4,002 3 3,878
Unamortized Financing Fees 7,071 4,446
Total Other Assets 1 14,409 7 2,128
Total Assets $ 1,793,120 $ 1,691,849

See accompanying Notes to Consolidated Financial Statements.
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2015 2014
LIABILITIES AND NET ASSETS
CURRENT LIABILITIES
Current Maturities of Long-Term Debt $ 1 9,920 $ 15,519
Resident Funds and Prepaid Rents 9,138 5,560
Accounts Payable 4 5,296 4 0,221
Accrued Expenses:
Salaries and Wages 1 9,999 1 7,196
Vacation 2 7,694 2 6,987
Employee Benefits and Payroll Taxes 1 2,548 1 0,217
Insurance 3 6,355 3 8,698
Interest 1,927 1,569
Current Portion of Housing Entry Fees 8,687 8,687
Securities Lending - Payable Under Investment Loan Agreement 2 0,268 2 5,874
Other Current Liabilities 9,835 8,808
Total Current Liabilities 2 11,667 199,336
LONG-TERM DEBT, Less Current Maturities 7 02,515 590,021
OTHER LIABILITIES
Non-Refundable Housing Entry Fees 1 9,015 1 7,775
Refundable Housing Entry Fees 9 7,979 8 7,297
Annuities and Other Liabilities 8,617 9,165
Total Other Liabilities 1 25,611 114,237
Total Liabilities 1,039,793 9 03,594
NET ASSETS
Unrestricted:
Unrestricted 6 64,487 697,970
Non-Controlling Interest 1 1,601 1 1,890
Total Unrestricted 6 76,088 709,860
Temporarily Restricted 5 8,622 5 9,589
Permanently Restricted 1 8,617 1 8,806
Total Net Assets 7 53,327 788,255
Total Liabilities and Net Assets $ 1,793,120 $ 1,691,849

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THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2015 AND 2014
(DOLLAR AMOUNTS IN THOUSANDS)

2015 2014
OPERATING REVENUE
Housing and Services $ 968,015 $ 938,525
Resource Development 4,784 8,428
Net Assets Released from Restrictions
for Operating Purposes 2,539 3,077
Other Revenue 3 6,439 3 2,242
Total Operating Revenue 1,011,777 9 82,272
OPERATING EXPENSE
Housing and Services 6 88,063 669,892
Administrative 1 76,429 168,143
Employee Health Benefits 5 1,058 4 6,468
Resource Development 3,402 3,972
General Insurance 1 9,011 2 1,583
Interest 2 3,517 2 2,971
Depreciation 7 4,078 6 9,352
Total Operating Expense 1,035,558 1,002,381
OPERATING LOSS (23,781) (20,109)
NONOPERATING GAINS (LOSSES) AND OTHER SUPPORT
Interest Income 8,009 6,415
Realized Gain on Investments 9,647 4,559
Unrealized Gain (Loss) on Investments (15,994) 1 3,306
Loss on Disposal and Impairment of Property (8,465) (10,149)
Loss on Extinguishment of Debt (4,560) (1,355)
Total Nonoperating Gains (Losses) and Other Support (11,363) 1 2,776
DEFICIT OF REVENUE OVER EXPENSE (35,144) (7,333)
Net Assets Released from Restrictions for Capital Purposes 3,354 7,880
Change in Non-Controlling Interest 947 1,477
CHANGE IN UNRESTRICTED NET ASSETS BEFORE
DISCONTINUED OPERATIONS (30,843) 2,024
LOSS FROM DISCONTINUED OPERATIONS (2,929) (7,361)
CHANGE IN UNRESTRICTED NET ASSETS $ (33,772) $ (5,337)

See accompanying Notes to Consolidated Financial Statements.
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THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 2015 AND 2014
(DOLLAR AMOUNTS IN THOUSANDS)

2015
Temporarily Permanently
Unrestricted Restricted Restricted Total
Deficit of Revenue over Expense $ ( 35,144) $ - $ - $ (35,144)
Net Assets Released from
Restrictions for Capital Purposes 3 ,354 - - 3,354
Net Assets Released from Restrictions - (5,893) - (5,893)
Restricted Contributions - 4,926 1 47 5,073
Change in Non-Controlling Interest 947 - - 947
Decrease in Beneficial Interest
in Perpetual Trust - - (336) (336)
Change in Net Assets before
Discontinued Operations (30,843) (967) (189) (31,999)
Loss from Discontinued Operations (2,929) - - (2,929)
Change in Net Assets ( 33,772) (967) (189) ( 34,928)
Net Assets - Beginning of year 709,860 59,589 18,806 788,255
Net Assets - End of Year $ 676,088 $ 58,622 $ 18,617 $ 753,327
2014
Temporarily Permanently
Unrestricted Restricted Restricted Total
Deficit of Revenue over Expense $ ( 7,333) $ - $ - $ ( 7,333)
Net Assets Released from
Restrictions for Capital Purposes 7 ,880 - - 7,880
Net Assets Released from Restrictions - ( 10,957) - ( 10,957)
Restricted Contributions - 10,436 2 04 10,640
Change in Non-Controlling Interest 1 ,477 - - 1,477
Decrease in Beneficial Interest
in Perpetual Trust - - (109) (109)
Change in Net Assets before
Discontinued Operations 2 ,024 (521) 95 1,598
Loss from Discontinued Operations (7,361) (55) - (7,416)
Change in Net Assets (5,337) (576) 95 (5,818)
Net Assets - Beginning of Year 715,197 60,165 18,711 794,073
Net Assets - End of Year $ 709,860 $ 59,589 $ 18,806 $ 788,255

See accompanying Notes to Consolidated Financial Statements.
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THE EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY AND AFFILIATES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2015 AND 2014
(DOLLAR AMOUNTS IN THOUSANDS)

2015 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Change in Net Assets $ (34,928) $ (5,818)
Adjustments to Reconcile Change in Net Assets
to Net Cash Provided by Operating Activities:
Reconciling Items Included in Discontinued Operations 2,728 6,110
Depreciation 74,078 69,352
Amortization (719) 57
Provision for Bad Debts 1,129 (2,496)
Housing Entry Fees and Annuities Revenue (3,404) (3,278)
Realized and Unrealized (Gain) Loss on Investments 6,347 (17,865)
Change in Beneficial Interest in Perpetual Trusts 3 36 109
Loss on Disposal and Impairment of Property 8,465 10,149
Loss on Refinancing of Debt 4,560 1,355
Change in Non-Controlling Interest (947) (1,477)
Reclassification of Restricted Contributions (2,463) (4,812)
Change in Assets:
Accounts Receivable (10,451) 6,115
Other Current Assets (2,906) 618
Change in Liabilities:
Resident Funds, Prepaid Rents and
Accounts Payable 1,954 5,270
Accrued Expenses and Other Current Liabilities 9,108 (1,772)
Net Cash Provided by Operating Activities 52,887 61,617
CASH FLOWS FROM INVESTING ACTIVITIES
Change in Investments 4 81 29,436
Change in Notes Receivable and Other Assets (7,049) (3,450)
Business Acquisitions (37,000) (18,250)
Property Additions (131,783) (110,877)
Proceeds from Sale of Property 6,029 3,541
Net Cash Used by Investing Activities (169,322) (99,600)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Annuities Issued and Housing
Entry Fees 27,742 21,086
Refund of Housing Entry Fees (12,924) (11,448)
Payment of Financing Fees (3,552) (513)
Proceeds from Long-Term Debt Borrowings 121,965 27,000
Repayment of Long-Term Debt (18,314) (12,348)
Proceeds from Contributions 3,386 6,277
Net Cash Provided by Financing Activities 118,303 30,054
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,868 (7,929)
Cash and Cash Equivalents - Beginning of Year 15,600 23,529
CASH AND CASH EQUIVALENTS - END OF YEAR $ 17,468 $ 15,600

See accompanying Notes to Consolidated Financial Statements.
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